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<SEC-DOCUMENT>0000891092-01-500630.txt : 20010917
<SEC-HEADER>0000891092-01-500630.hdr.sgml : 20010917
ACCESSION NUMBER:		0000891092-01-500630
CONFORMED SUBMISSION TYPE:	N-14 8C/A
PUBLIC DOCUMENT COUNT:		16
FILED AS OF DATE:		20010914

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MUNIYIELD FUND INC
		CENTRAL INDEX KEY:			0000879361
		STANDARD INDUSTRIAL CLASSIFICATION:	 []
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-14 8C/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-65242
		FILM NUMBER:		1737569

	BUSINESS ADDRESS:	
		STREET 1:		800 SCUDDERS MILL RD
		CITY:			PLAINSBORO
		STATE:			NJ
		ZIP:			08543-9011
		BUSINESS PHONE:		6092822800

	MAIL ADDRESS:	
		STREET 1:		PO BOX 9011
		STREET 2:		C/O MERRILL LYNCH ASSET MANAGEMENT
		CITY:			PRINCETON
		STATE:			NJ
		ZIP:			08543-9011
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-14 8C/A
<SEQUENCE>1
<FILENAME>file001.htm
<DESCRIPTION>FORM N-14 8C/A
<TEXT>
<html>
<head>
<title> N-14 </title>
</head>
<body>











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<p><table width=600><tr>
    <td  align=center><font size=2><B>&lt;R&gt;As filed with the Securities and
      Exchange Commission on September 14, 2001</B></font></td>
  </tr></table>

<table width=600><tr>
    <td align=right><font size=2><B>Securities Act File No. 333-65242&lt;/R&gt;
      <BR>
      Investment Company Act File No. 811-06435</B></font></td>
  </tr></table>

<TABLE WIDTH=600><TR><TD>
<HR ALIGN=LEFT WIDTH=100% SIZE=4 noshade>
<HR ALIGN=LEFT WIDTH=100% SIZE=1 noshade>
</TR>
  </TABLE>

<table width=600><tr><td  align=center><font size=3><B>SECURITIES AND
EXCHANGE COMMISSION <BR>
      <font size="2">Washington, D.C. 20549</font></B></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>

<table width=600><tr><td  align=center><font size=4><B>FORM N-14 <BR>
      <font size="2">REGISTRATION STATEMENT <BR>
      UNDER <BR>
      THE SECURITIES ACT OF 1933</font></B></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>

<table width=600>
  <tr>
    <td height="28" width="30"  align=left valign="top"><font size=2>[X]<B><br>
      </B>[ &nbsp;&nbsp;]<B> </B></font></td>
    <td  align=center height="28"><font size=2><b>&lt;R&gt;Pre-Effective Amendment
      No. 1&lt;/R&gt; <br>
      Post-Effective Amendment No. <br>
      <font size="1"> (Check appropriate box or boxes)</font></b></font></td>
    <td  align=center height="28" width="30">&nbsp;</td>
  </tr>
</table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>

<table width=600><tr>
    <td  align=center><font size="5"><b>MuniYield Fund, Inc.</b></font> <BR>
      <font size=1><b>(Exact Name of Registrant as Specified in Charter)</b></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>

<table width=600><tr><td  align=center><font size=2><B>(609) 282-2800 <BR>
      <font size="1">(Area Code and Telephone Number)</font></B></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>

<table width=600><tr><td  align=center><font size=2><B>800 Scudders Mill
Road <BR>
      Plainsboro, New Jersey 08536 <font size="1"><BR>
      (Address of Principal Executive Offices: Number, Street, City, State, Zip
      Code)</font></B></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<table width=600><tr><td  align=center><font size=2><B>Terry K.
Glenn <BR>
      MuniYield Fund, Inc. <br>
      800 Scudders Mill Road, Plainsboro, New Jersey 08536 <BR>
      Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011 <BR>
      <font size="1"> (Name and Address of Agent for Service)</font></B></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr align="center">
    <td colspan="2"> <font size="2"><i><b>Copies to: </b></i></font></td>
  </tr>
  <tr>
    <td align="center" width="300"> <font size="2"><b>Frank P. Bruno, Esq. <br>
      SIDLEY AUSTIN BROWN &amp; WOOD <font size="1">LLP</font><br>
      One World Trade Center <br>
      New York, New York 10048-0557 </b></font></td>
    <td align="center" width="300"> <font size="2"><b>&lt;R&gt;Philip L. Kirstein,
      Esq.&lt;/R&gt; <br>
      FUND ASSET MANAGEMENT, L.P.<br>
      800 Scudders Mill Road <br>
      Plainsboro, New Jersey 08543-9011 </b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate
Date of Proposed Public Offering:</B> As soon as practicable after the Registration
Statement becomes effective under the Securities Act of 1933.</FONT></td></tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>


<p><table width=600><tr><td  align=center><font size=2><B>Calculation of
Registration Fee Under the Securities Act of 1933</B></font></td></tr></table>



<TABLE CELLSPACING=0 CELLPADDING=0 width="600">
  <TR valign="bottom">
    <TD colspan="10">
      <hr size="2" noshade width="100%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="5" width="227"> <b><font size="1">Title of Securities Being Registered
      </font> </b></TD>
    <TD rowspan="5" width="10">&nbsp; </TD>
    <TD rowspan="5" align="center" width="77"><b><font size="1">Amount being <br>
      Registered(1) </font></b></TD>
    <TD rowspan="5" align="center" width="7">&nbsp; </TD>
    <TD rowspan="5" align="center" colspan="2"> <b><font size="1">Proposed <br>
      Maximum <br>
      Offering <br>
      Price <br>
      Per Unit(1) </font> </b></TD>
    <TD rowspan="5" align="center" width="10"></TD>
    <TD rowspan="5" align="center" width="102"> <b><font size="1">Proposed <br>
      Maximum <br>
      Aggregate <br>
      Offering <br>
      Price(1) </font> </b></TD>
    <TD rowspan="5" align="center" width="7"><b></b></TD>
    <TD rowspan="5" align="center" width="80"> <b><font size="1">Amount of <br>
      Registration <br>
      Fee(3) </font> </b></TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD colspan="10">
      <hr size="1" noshade width="100%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD width="227" height="18">
      <P><font size="2">Common Stock ($.10 par value) </font>
    </TD>
    <TD width="10" height="18">&nbsp;&nbsp;</TD>
    <TD width="77" align="center" height="18">
      <P><font size="2">6,356,590</font>
    </TD>
    <TD width="7" height="18"><font size="2">&nbsp;&nbsp;</font></TD>
    <TD align="right" width="60" height="18">
      <P><font size="2">$13.37</font>
    </TD>
    <TD width="18" height="18"><font size="2">&nbsp;&nbsp;</font></TD>
    <TD width="10" height="18">&nbsp;&nbsp;</TD>
    <TD width="102" align="center" height="18">
      <P><font size="2">$84,987,605.63</font>
    </TD>
    <TD width="7" height="18"><font size="2">&nbsp;&nbsp;</font></TD>
    <TD width="80" align="center" height="18">
      <P><font size="2">$21,246.90</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="10" >
      <hr size="1" noshade width="100%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD width="227">
      <P><font size="2">Auction Market Preferred Stock, <br>
        &nbsp;Series F ($.10 par value) </font>
    </TD>
    <TD width="10"></TD>
    <TD width="77" align="center">
      <P><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;1,720</font>
    </TD>
    <TD width="7"></TD>
    <TD align="right" width="60">
      <P><font size="2">$25,000</font>
    </TD>
    <TD width="18" align="left">
      <P><font size="2">(2)</font>
    </TD>
    <TD width="10">&nbsp;</TD>
    <TD width="102" align="center">
      <P><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;$43,000,000</font>
    </TD>
    <TD width="7"></TD>
    <TD width="80" align="center">
      <P><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;$10,750</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD colspan="10" >
      <hr size="2" noshade width="100%">
    </TD>
  </TR>
</TABLE>



















<table width=600><tr><td width=3% valign=top><font size="1">(1)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Estimated
solely for the purpose of calculating the filing fee.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(2)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Represents
the liquidation preference of a share of preferred stock after the
reorganization.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(3)
</font></td>
    <td width=2%><font size="1">&lt;R&gt;</font></td>
    <td width=95%><font size="1">Previously paid by wire transfer to the designated
      lockbox of the Securities and Exchange Commission in Pittsburgh, Pennsylvania.&lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.</B></FONT></td></tr></table>

<TABLE WIDTH=600><TR><TD>
<HR ALIGN=LEFT WIDTH=100% SIZE=1 noshade>
<HR ALIGN=LEFT WIDTH=100% SIZE=4 noshade>
</TR>
  </TABLE>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td  align=center><font size=2><B>MERRILL LYNCH
MUNICIPAL STRATEGY FUND, INC. <BR>P.O. BOX 9011 <BR>PRINCETON, NEW JERSEY 08543-9011</B></font></td></tr></table>


<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>

<table width=600><tr><td  align=center><font size=2><B>NOTICE OF SPECIAL
MEETING OF STOCKHOLDERS <BR>To Be Held on October 24, 2001</B></font></td></tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<p><table width=600><tr>
    <td><font size=2>T<font size="1">O</font> T<font size="1">HE </font>S<font size="1">TOCKHOLDERS</font>
      <font size="1">OF</font></font></td>
  </tr></table>

<table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;M<font size="1">ERRILL LYNCH</font>
      M<font size="1">UNICIPAL </font>S<font size="1">TRATEGY</font> F<font size="1">UND</font>,
      I<font size="1">NC</font>.:</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTICE
IS HEREBY GIVEN that a special meeting of stockholders (the &#147;Meeting&#148;) of
Merrill Lynch Municipal Strategy Fund, Inc. (&#147;Municipal Strategy&#148;) will be held
at the offices of Fund Asset Management, L.P., 800 Scudders Mill Road,
Plainsboro, New Jersey on Wednesday, October 24, 2001 at 9:30 a.m. Eastern time
for the following purposes:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To
approve or disapprove an Agreement and Plan of Reorganization (the &#147;Agreement
and Plan&#148;) contemplating (i) the acquisition of substantially all of the assets
and the assumption of substantially all of the liabilities of Municipal
Strategy by MuniYield Fund, Inc. (&#147;MuniYield&#148;), in return solely for an equal
aggregate value of newly issued shares of common stock of MuniYield and shares
of a newly created series of Auction Market Preferred Stock (&#147;AMPS&#148;) of
MuniYield to be designated Series F, and (ii) the distribution by Municipal
Strategy of the shares of MuniYield common stock to the holders of common stock
of Municipal Strategy (plus cash in lieu of fractional shares) and the shares
of Series F AMPS of MuniYield to the holders of Series A AMPS of Municipal
Strategy. A vote in favor of this proposal also will constitute a vote in favor
of the liquidation and dissolution of Municipal Strategy under Maryland
corporate law and the termination of Municipal Strategy&#146;s registration under
the Investment Company Act of 1940, as amended; and</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) To
transact such other business as properly may come before the Meeting or any
adjournment thereof.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of Municipal Strategy has fixed the close of business on
August 27, 2001 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Meeting or any adjournment thereof.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
complete list of the stockholders of Municipal Strategy entitled to vote at the
Meeting will be available and open to the examination of any stockholder of
Municipal Strategy for any purpose germane to the Meeting during ordinary
business hours from and after October 10, 2001, at the offices of Municipal
Strategy, 800 Scudders Mill Road, Plainsboro, New Jersey.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are
cordially invited to attend the Meeting. Stockholders who do not expect to
attend the Meeting in person are requested to complete, date and sign the
enclosed form of proxy and return it promptly in the envelope provided for that
purpose. <B>If you have been provided with the opportunity on your proxy card or
voting instruction form to provide voting instructions via telephone or the
Internet, please take advantage of these prompt and efficient voting options.
The enclosed proxy is being solicited on behalf of the Board of Directors of
Municipal Strategy.</B></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you have any questions
      regarding the enclosed proxy material or need assistance in voting your
      shares of common stock or shares of AMPS, please contact our proxy solicitor,
      Georgeson Shareholder at <br>
      1-888-856-3062.&lt;/R&gt;</font></td>
  </tr></table>


<p>
<p>
<table width=600>
  <tr>
    <td width="321"><FONT SIZE="2"></FONT></td>
    <td width="267" align="left">
      <p><font size="2">By Order of the Board of Directors,</font></p>
      <p><font size="2">A<font size="1">LICE</font> A. P<font size="1">ELLEGRINO
        </font><br>
        <i>Secretary</i></font></p>
    </td>
  </tr>
</table>

<p><table width=600><tr><td><font size=2>Plainsboro, New Jersey <BR>
      &lt;R&gt;Dated: September 14, 2001&lt;/R&gt;</font></td>
  </tr></table>


<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>PROXY STATEMENT OF</B>&lt;/R&gt;<B>
      <BR>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC. <BR>
      FOR USE AT A SPECIAL MEETING OF STOCKHOLDERS <BR>
      To Be Held on October 24, 2001</B></font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<table width=600><tr><td  align=center><font size=2><B>PROSPECTUS OF <BR>
MUNIYIELD FUND, INC. <BR>P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 <BR>(609)
282-2800</B></font></td></tr></table>


<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Proxy Statement and Prospectus is furnished to you because you are a
stockholder of Merrill Lynch Municipal Strategy Fund, Inc. (&#147;Municipal
Strategy&#148;). A special meeting of the stockholders of Municipal Strategy will be
held on October 24, 2001 (the &#147;Meeting&#148;) to consider the items listed below and
discussed in greater detail in this Proxy Statement and Prospectus. The Board
of Directors of Municipal Strategy is requesting the stockholders of Municipal
Strategy to submit a proxy to be used at the Meeting to vote the shares held by
the stockholder submitting the proxy.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy has outstanding shares of common stock (&#147;Municipal Strategy Common
Stock&#148;), par value $.10 per share, and shares of Auction Market Preferred Stock
(&#147;AMPS&#148;), designated Series A (&#147;Municipal Strategy Series A AMPS&#148;), with a par
value of $.10 per share and a liquidation preference of $25,000 per share.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders
are being asked to consider the following proposal:</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. To approve or disapprove
      an Agreement and Plan of Reorganization between Municipal Strategy and MuniYield
      Fund, Inc. (&#147;MuniYield&#148;).</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. To transact such other business
      as may properly come before the Meeting.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Agreement and Plan of Reorganization that you are being asked to consider
involves a transaction that will be referred to in this Proxy Statement and
Prospectus as the &#147;Reorganization.&#148; The Reorganization involves the combination
of two funds into one. The two funds are:</font></td></tr></table>

<p><table width=600>
<tr><td width=60>&nbsp;</td>
<td width=540><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield,
which will be the surviving fund, and</font></td></tr></table>

<p><table width=600>
<tr><td width=60>&nbsp;</td>
<td width=540><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield
and Municipal Strategy are sometimes referred to herein collectively as the
&#147;Funds&#148; and individually as a &#147;Fund,&#148; as the context requires. The fund
resulting from the Reorganization is sometimes referred to herein as the
&#147;Combined Fund.&#148;</font></td></tr></table>

<p><table width=600><tr>
    <td align=right><FONT SIZE="2"><I>(continued on next page)</I></FONT></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>




<table width=600><tr><td  align=center><font size=2><B>The Securities and
Exchange Commission has not approved or disapproved these securities <BR>or passed
upon the adequacy of this Proxy Statement and Prospectus. <BR>Any representation to
the contrary is a criminal offense.</B></font></td></tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>



<table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>The date of this Proxy Statement
      and Prospectus is September 14, 2001.</B>&lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td><hr size=1 noshade align=CENTER width=150></td></tr></table>


<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the Reorganization,
      MuniYield will acquire substantially all of the assets and liabilities of
      Municipal Strategy in return for newly issued shares of common stock of
      MuniYield (&#147;MuniYield Common Stock&#148;) with a par value of $.10
      per share, and shares of a newly created series of AMPS, with a par value
      of $.10 per share and a liquidation preference of $25,000 per share, to
      be designated Series F (&#147;MuniYield Series F AMPS&#148;). Municipal
      Strategy will distribute the MuniYield Common Stock (plus cash in lieu of
      fractional shares) and MuniYield Series F AMPS received in the Reorganization
      to its stockholders and will then liquidate and dissolve under Maryland
      law and terminate its registration under the Investment Company Act of 1940,
      as amended (the &#147;Investment Company Act&#148;). MuniYield will continue
      to operate as a registered, non-diversified, closed-end investment company
      with the investment objective and policies described in this Proxy Statement
      and Prospectus.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the Reorganization, MuniYield
      will issue shares of its common stock to Municipal Strategy based on the
      net asset value of the assets transferred to MuniYield by Municipal Strategy.
      These shares will then be distributed by Municipal Strategy to its stockholders
      based on the net asset value of the shares held by each stockholder just
      prior to the Reorganization. A holder of Municipal Strategy Common Stock
      will receive MuniYield Common Stock (plus cash in lieu of fractional shares).
      A holder of Municipal Strategy Series A AMPS will receive MuniYield Series
      F AMPS. All references to the Municipal Strategy Common Stock will include
      shares of common stock representing Dividend Reinvestment Plan shares held
      in the book deposit accounts of holders of Municipal Strategy Common Stock.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Proxy Statement and Prospectus serves as a prospectus of MuniYield in
connection with the issuance of MuniYield Common Stock and MuniYield Series F
AMPS in the Reorganization.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Proxy Statement and Prospectus sets forth the information about the Funds that
stockholders of Municipal Strategy should know before considering the
Reorganization and should be retained for future reference. The Board of
Directors of Municipal Strategy authorized the solicitation of proxies in
connection with the Reorganization solely on the basis of this Proxy Statement
and Prospectus and the accompanying documents.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
address of the principal executive offices of MuniYield and Municipal Strategy
is 800 Scudders Mill Road, Plainsboro, New Jersey 08536, and the telephone
number is 1-609-282-2800.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
MuniYield Common Stock is listed on the New York Stock Exchange (the &#147;NYSE&#148;)
under the symbol &#147;MYD&#148; and may be bought or sold at the then prevailing market
price on each day the NYSE is open for trading. Municipal Strategy engages in a
continuous offering of Municipal Strategy Common Stock and Municipal Strategy
Series A AMPS. Municipal Strategy Common Stock is not listed on any exchange
and no secondary market presently exists for Municipal Strategy Common Stock,
nor is it currently expected that a secondary market will develop. Municipal
Strategy Series A AMPS are not traded on any stock exchange or automated
quotation system. Municipal Strategy Series A AMPS can be purchased at an
auction or through broker-dealers who maintain a secondary market in the AMPS.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
the Reorganization, MuniYield Common Stock will continue to be listed on the
NYSE under the symbol &#147;MYD.&#148; MuniYield Series F AMPS will not be traded on any
stock exchange or automated quotation system. MuniYield Series F AMPS will be
available for purchase at an auction or through broker-dealers who maintain a
secondary market in the AMPS. Reports, proxy materials and other information
concerning MuniYield may be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005. Reports, proxy materials and other
information concerning Municipal Strategy may be inspected at its principal
executive office.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp;













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<p>&nbsp;</p><table width=600>
  <tr>
    <td  align=center><font size=2><b>TABLE OF CONTENTS</b></font></td>
  </tr>
</table>
<br>
<table cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td colspan="2"><font size=2>&lt;R&gt;</font></td>
    <td></td>
    <td align="center"><font size="1"><b>Page</b></font>
      <hr width="80%" size="1" align="center">
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#1">INTRODUCTION</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#1a">SUMMARY</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;&nbsp;</td>
    <td>
      <p><font size="2"><a href="#1b">The Reorganization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#1c">What Will Be the Result of the Reorganization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#2">Reasons for the Reorganization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">2</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#3">Pro Forma Fee Table</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">3</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#4">RISK FACTORS AND SPECIAL CONSIDERATIONS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">12</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#4a">Trading at a Discount</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">12</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#4b">Secondary Market</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">12</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#4c">Non-Diversified Status</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">12</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#4d">Interest Rate and Credit Risk</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">12</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#5">High Yield or &#147;Junk&#148; Bonds</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">13</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#5a">Private Activity Bonds</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">13</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#5c">Rating Agency Guidelines</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">13</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#5d">Indexed and Inverse Floating Rate Securities</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">13</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#5e">Options and Futures Transactions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">13</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#6">Antitakeover Provisions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">14</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#6a">Leverage</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">14</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#6b">Portfolio Management and Other Considerations</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">14</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#7">COMPARISON OF THE FUNDS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">15</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#7a">Financial Highlights</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">15</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#8">Investment Objectives and Policies</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">19</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#9">Description of Municipal Bonds</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">21</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#10">Other Investment Policies</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">22</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#11">Information Regarding Options and Futures
        Transactions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">23</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#12">Investment Restrictions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">26</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#13">Rating Agency Guidelines</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">27</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#14">Portfolio Composition</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">28</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#15">Portfolio Transactions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">29</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#16">Portfolio Turnover</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">30</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#16a">Net Asset Value</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">30</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#17">Capital Stock</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">31</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td align="left"><font size="2"><a href="#18">Preferred Stock</a></font></td>
    <td></td>
    <td align="right"><font size="2">32</font> </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#18a">Certain Provisions of the Charters</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">32</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#19">Management of the Funds</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">33</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#20">Code of Ethics</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">36</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#20a">Voting Rights</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">36</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#21">Stockholder Inquiries</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">37</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#21a">Dividends and Distributions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">37</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#22">Automatic Dividend Reinvestment Plan</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">38</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#23">Mutual Fund Investment Option</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">40</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#23a">Liquidation Rights of Holders of AMPS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">40</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#23b">Tax Rules Applicable to the Funds and Their
        Stockholders</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">40</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#24">Tax Treatment of Options and Futures Transactions</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">43</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#25">AGREEMENT AND PLAN OF REORGANIZATION</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">44</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#25a">General</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">44</font>
    </td>
  </tr>
</table>


<font size=2>&lt;/R&gt;</font>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>













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<p><br>
  <font size=2>&lt;R&gt;</font>
<table cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#26">Procedure</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">45</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#26a">Terms of the Agreement and Plan of Reorganization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">45</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#27">Potential Benefits to Stockholders as a
        Result of the Reorganization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">47</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#28">Surrender and Exchange of Stock Certificates</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">49</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#28a">Tax Consequences of the Reorganization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">49</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#29">Capitalization</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">51</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#29a">INFORMATION CONCERNING THE MEETING</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">51</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#29b">Date, Time and Place of Meeting</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">51</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#29c">Solicitation, Revocation and Use of Proxies</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">51</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#29d">Record Date and Outstanding Shares</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">51</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#30">Security Ownership of Certain Beneficial
        Owners and Management</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">52</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#30a">Voting Rights and Required Vote</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">52</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td></td>
    <td>
      <p><font size="2"><a href="#30b">Appraisal Rights</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">52</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#31">ADDITIONAL INFORMATION</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">53</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#32">CUSTODIAN</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">54</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#32a">TRANSFER AGENT, DIVIDEND DISBURSING AGENT
        AND REGISTRAR</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">54</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#32b">ACCOUNTING SERVICES PROVIDER</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">54</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#32c">LEGAL OPINIONS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">54</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#32d">EXPERTS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">54</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#32e">LEGAL PROCEEDINGS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">54</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#33">STOCKHOLDER PROPOSALS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">55</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#F1">INDEX TO FINANCIAL STATEMENTS</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">F-1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2"><font size="2"><a href="#I1">APPENDIX I: INFORMATION PERTAINING
      TO EACH FUND</a></font> </td>
    <td><font size="2">&nbsp;&nbsp;</font></td>
    <td align="right">
      <p><font size="2">I-1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#II1">APPENDIX II: AGREEMENT AND PLAN OF REORGANIZATION</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">II-1</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <p><font size="2"><a href="#III1">APPENDIX III: RATINGS OF MUNICIPAL BONDS
        AND COMMERCIAL PAPER</a></font>
    </td>
    <td></td>
    <td align="right">
      <p><font size="2">III-1</font>
    </td>
  </tr>
</table>
<font size=2>&lt;/R&gt;</font>
<p>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;










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<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="1"></a>INTRODUCTION </B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Proxy Statement
      and Prospectus is furnished in connection with the solicitation of proxies
      on behalf of the Board of Directors of Municipal Strategy for use at the
      Meeting to be held at the offices of Fund Asset Management, L.P. (&#147;FAM&#148;),
      800 Scudders Mill Road, Plainsboro, New Jersey on Wednesday, October 24,
      2001, at 9:30 a.m., Eastern time. The mailing address for each of the Funds
      is P.O. Box 9011, Princeton, New Jersey 08543-9011. The approximate mailing
      date of this Proxy Statement and Prospectus is September 20, 2001. &lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any person giving a proxy may
      revoke it at any time prior to its exercise (1) by executing a superseding
      proxy, (2) by giving written notice of the revocation to the Secretary of
      Municipal Strategy at the address indicated above, or (3) by voting in person
      at the Meeting. All properly executed proxies received prior to the Meeting
      will be voted at the Meeting in accordance with the instructions marked
      thereon or otherwise as provided therein. Unless instructions to the contrary
      are marked, properly executed proxies will be voted <b>&#147;FOR&#148;</b>
      Item 1 to approve the Agreement and Plan of Reorganization between MuniYield
      and Municipal Strategy (the &#147;Agreement and Plan&#148;). </font></td>
  </tr></table>

<font size=2>&lt;R&gt;</font><br>
<table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to Item 1, assuming
      the required quorum is present at the Meeting, approval of the Agreement
      and Plan will require the affirmative vote of a majority of the outstanding
      shares of (1) Municipal Strategy Common Stock and Municipal Strategy Series
      A AMPS, voting together as a single class, and (2) Municipal Strategy Series
      A AMPS, voting separately as a class. See &#147;Information Concerning the
      Meeting.&#148; </font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors of Municipal
      Strategy has fixed the close of business on August 27, 2001 as the record
      date (the &#147;Record Date&#148;) for the determination of stockholders
      entitled to notice of and to vote at the Meeting and at any adjournment
      thereof. On the Record Date, stockholders of Municipal Strategy will be
      entitled to one vote for each share of stock held, with no shares of stock
      having cumulative voting rights. As of the Record Date, Municipal Strategy
      had outstanding 7,919,993 shares of common stock and 1,720 shares of Series
      A AMPS. To the knowledge of the management of Municipal Strategy, no person
      or entity owns beneficially or of record 5% or more of the outstanding shares
      of capital stock of Municipal Strategy as of the Record Date.&lt;/R&gt;
      </font></td>
  </tr></table>


<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of Municipal Strategy knows of no business other than that
discussed above which will be presented for consideration at the Meeting. If
any other matter is properly presented, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment.</font></td></tr></table>


<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Proxy Statement and Prospectus serves as a prospectus of MuniYield under the
Securities Act, in connection with the issuance of shares of MuniYield Common
Stock and MuniYield Series F AMPS to Municipal Strategy pursuant to the terms
of the Agreement and Plan. </font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="1a"></a>SUMMARY</B></font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
following is a summary of certain information contained elsewhere in this Proxy
Statement and Prospectus (including documents incorporated by reference) and is
qualified in its entirety by reference to the more complete information
contained in this Proxy Statement and Prospectus and in the Agreement and Plan
attached hereto as Appendix II.</I></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="1b"></a>The Reorganization </B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
separate meetings of the Boards of Directors of Municipal Strategy and
MuniYield held on June 7, 2001 and June 20, 2001, respectively, each Board
unanimously approved the transaction whereby (i) MuniYield would acquire
substantially all of the assets and would assume substantially all of the
liabilities of Municipal Strategy, (ii) MuniYield would simultaneously issue to
Municipal Strategy shares of MuniYield Common Stock and MuniYield Series F
AMPS, (iii) the shares of MuniYield Common Stock would be subsequently
distributed to the holders of Municipal Strategy Common Stock (plus cash in
lieu of fractional shares), (iv) the shares of MuniYield Series F AMPS would be
subsequently distributed to the holders of Municipal Strategy Series A AMPS,
and (v) Municipal Strategy would be deregistered and dissolved, as described
below. </font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="1c"></a>What Will Be the Result of the Reorganization
      </B></font></td>
  </tr></table>


<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the
Agreement and Plan is approved and the Reorganization is completed:</font></td></tr></table>


<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>MuniYield
will acquire substantially all of the assets and assume substantially all of
the liabilities of Municipal Strategy; </font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 8, page: 8" -->




<br>
<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>Stockholders
of Municipal Strategy will become stockholders of MuniYield;
</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>Stockholders
of Municipal Strategy Common Stock will receive full shares of MuniYield Common
Stock (plus cash in lieu of fractional shares) equal to the aggregate net asset
value of the shares of Municipal Strategy Common Stock currently owned by such
stockholders; and </font></td></tr></table>


<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>&lt;R&gt;Stockholders of Municipal Strategy Series
      A AMPS will receive shares of MuniYield Series F AMPS equal to the aggregate
      liquidation preference of the Municipal Strategy Series A AMPS currently
      owned by such stockholders.</font></td>
  </tr></table>


<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Reorganization will be
      structured as a tax-free transaction for federal tax purposes. Neither Fund
      will recognize gain or loss in the Reorganization and the stockholders of
      neither Fund will recognize gain or loss upon the exchange of his or her
      shares for MuniYield Common Stock or MuniYield Series F AMPS, as applicable,
      in the Reorganization (except to the extent that a holder of Municipal Strategy
      Common Stock receives cash representing an interest in fractional shares
      of MuniYield Common Stock). Stockholders should consult their tax advisers
      regarding the effect of the Reorganization in light of their individual
      circumstances.&lt;/R&gt; </font></td>
  </tr></table>



<p><table width=600><tr>
    <td><font size=2><B><a name="2"></a>Reasons for the Reorganization </B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Boards of Directors of Municipal Strategy and MuniYield have approved the
Agreement and Plan. The Board of Directors of Municipal Strategy recommends
that you vote to approve the Agreement and Plan. </font></td></tr></table>


<p><table width=600><tr><td><font size=2><I>Municipal Strategy
</I></font></td></tr></table>


<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors
      of Municipal Strategy has determined that Municipal Strategy common stockholders
      are likely to benefit from the Reorganization and believes that the Reorganization is in the
      best interests of Municipal Strategy and its common stockholders. In addition, the Board of Municipal Strategy has determined, with respect
      to net asset value, that the interests of existing stockholders will not
      be diluted as a result of the Reorganization.  &lt;/R&gt;</font></td>
  </tr></table>


<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
reaching its decision the Board considered a number of factors including the
following: </font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>&lt;R&gt;After the Reorganization, Municipal Strategy
      common stockholders will be invested in a substantially larger non-diversified,
      leveraged, closed-end fund with an investment objective and policies substantially
      similar to Municipal Strategy&#146;s investment objective and policies.
      As of July 31, 2001 the net assets of Municipal Strategy (including assets
      attributable to Municipal Strategy Series A AMPS) were approximately $122&nbsp;
      million. Assuming that the Reorganization had taken place on July 31, 2001,
      the Combined Fund (including assets attributable to AMPS) would have had
      net assets of approximately $896&nbsp;&nbsp;million; &lt;/R&gt;</font></td>
  </tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>After
the Reorganization, Municipal Strategy common stockholders should experience
lower expenses per share, economies of scale and greater flexibility in
portfolio management; </font></td></tr></table>


<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>&lt;R&gt;After the Reorganization, Municipal Strategy
      common stockholders will benefit from the fact that the Combined Fund will
      not pay the administrative fee currently paid to FAM by Municipal Strategy;
      &lt;/R&gt; </font></td>
  </tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>After
the Reorganization, Municipal Strategy common stockholders will no longer be
subject to the expenses associated with Municipal Strategy&#146;s required yearly
prospectus updates; </font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>After
the Reorganization, Municipal Strategy common stockholders will no longer be
subject to the expenses of conducting quarterly tender offers;
</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>After
the Reorganization, Municipal Strategy common stockholders will no longer be
subject to a contingent deferred sales charge (&#147;CDSC&#148;) upon the sale of shares
held for less than three years; </font></td></tr></table>


<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>&lt;R&gt;After the Reorganization, Municipal Strategy
      common stockholders will be able to sell their shares on each day that the
      NYSE is open for trading at the market price on that day; the market price
      may be lower or higher than th net asset value of the shares and transactions
      in shares may be subject to brokerage commission or other charges; and
      </font></td>
  </tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>After the Reorganization, subject to certain limitations,
      the stockholders of Municipal Strategy may benefit from the ability of the
      Combined Fund to use the net realized capital losses of each Fund to offset
      future net realized capital gains of the Combined Fund, if any. As of July
      31, 2001, each Fund had net realized capital losses that may, subject to
      certain limitations, be shared by the stockholders of the Combined Fund.
      &lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
2</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 9, page: 9" -->






<p><table width=600><tr><td><font size=2><I>MuniYield</I></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the pro forma
      total operating expense ratio of the Combined Fund is not expected to be
      significantly lower than MuniYield&#146;s current operating expense ratio,
      MuniYield common stockholders will not be adversely affected by the Reorganization
      since FAM has agreed to bear all Reorganization expenses attributable to
      MuniYield and MuniYield may otherwise benefit from an increase in the Combined
      Fund&#146;s level of net assets.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is
not anticipated that the Reorganization will directly benefit the holders of
shares of any series of AMPS of either Fund. However, the Reorganization will
not adversely affect the holders of shares of any series of AMPS of either
Fund. The expenses of the Reorganization will not be borne by the holders of
shares of AMPS of either Fund. </font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors of MuniYield has determined,  with respect to net asset value, that the interests of existing stockholders will not be diluted as a result of the Reorganization. See &#147;Pro Forma
      Fee Table&#148; below and &#147;Agreement and Plan of Reorganization&#151;Potential
      Benefits to Stockholders as a Result of the Reorganization.&#148; &lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If all
of the requisite approvals are obtained, it is anticipated that the
Reorganization will occur as soon as practicable after such approval, provided
that the Funds have obtained prior to that time a favorable opinion of counsel
concerning the tax consequences of the Reorganization as set forth in the
Agreement and Plan. Under the Agreement and Plan, however, the Board of
Directors of either Fund may cause the Reorganization to be postponed or
abandoned in certain circumstances should such Board determine that it is in
the best interest of the stockholders of that Fund to do so. The Agreement and
Plan may be terminated, and the Reorganization abandoned, whether before or
after approval by the Municipal Strategy stockholders, at any time prior to the
Closing Date (as defined below), (i) by mutual consent of the Boards of
Directors of the Funds, or (ii) by the Board of Directors of either Fund, if
any condition to that Fund&#146;s obligations has not been fulfilled or waived by
such Fund&#146;s Board of Directors. </font></td></tr></table>


<p><table width=600><tr>
    <td><font size=2><B><a name="3"></a>Pro Forma Fee Table </B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B>&lt;R&gt;Fee Table for Common Stockholders
      of MuniYield, <BR>
      Municipal Strategy and the Pro Forma Combined Fund <BR>
      as of April 30, 2001* (Unaudited)(a)&lt;/R&gt;</B></font></td>
  </tr></table>



<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
table illustrates, based on average net assets attributable to common stock,
the expenses incurred by each Fund individually and the estimated pro forma
expenses to be incurred by the Combined Fund after the Reorganization:</font></td></tr></table>


<br>
<P></P>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD width="265"><font size=2>&lt;R&gt;</font></TD>
    <TD width="10"><font size="1">&nbsp;&nbsp;&nbsp;</font></TD>
    <TD colspan="5" align="center">
      <P><b><font size="1">Actual</font></b>
      <hr noshade size="1" width="93%" align="left">
      <b> </b></TD>
    <TD colspan="2" align="center">
      <P><b><font size="1">Pro Form</font></b>
      <hr noshade size="1" width="90%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD width="265">&nbsp;</TD>
    <TD width="10">&nbsp;</TD>
    <TD colspan="2" align="center">
      <b><font size="1">MuniYield</font></b>
      <hr noshade size="1" width="90%">
      <b> </b></TD>
    <TD align="center" colspan="2">
      <b><font size="1">Municipal Strategy</font></b>
      <hr noshade size="1" width="95%">
      <b> </b><b></b></TD>
    <TD align="center" width="16">&nbsp;&nbsp;&nbsp;</TD>
    <TD colspan="2" align="center">
      <b><font size="1">Combined Fund</font></b>
      <hr noshade size="1" width="90%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD width="265">
      <P><font size="2"><b>Common Stockholder Transaction Expenses</b></font>
    </TD>
    <TD width="10"><font size="2"></font></TD>
    <TD width="67"><font size="2"></font></TD>
    <TD width="21"><font size="2"></font></TD>
    <TD width="85"><font size="2"></font></TD>
    <TD width="45"><font size="2"></font></TD>
    <TD width="16">&nbsp;</TD>
    <TD width="50"><font size="2"></font></TD>
    <TD width="41"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="3" width="265">
      <P><font size="2">Maximum Sales Load (as a percentage of the<br>
        &nbsp;&nbsp;</font><font size="2">offering price) imposed on purchases
        of<br>
        &nbsp;&nbsp;</font><font size="2">common stock </font>
    </TD>
    <TD rowspan="3" width="10"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD rowspan="3" align="right" width="67"><font size="2"></font><font size="2"></font>
      <P><font size="2">None </font>
    </TD>
    <TD rowspan="3" align="left" width="21"><font size="2"></font><font size="2"></font>
      <P><font size="2">(b) </font>
    </TD>
    <TD rowspan="3" align="center" colspan="2"><font size="2"></font><font size="2"></font>
      <P><font size="2">None </font>
      <font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD rowspan="3" width="16">&nbsp;</TD>
    <TD rowspan="3" align="right" width="50"><font size="2"></font><font size="2"></font>
      <P><font size="2">None </font>
    </TD>
    <TD rowspan="3" align="left" width="41"><font size="2"></font><font size="2"></font>
      <P><font size="2">(b)(c) </font>
    </TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD rowspan="2" width="265">
      <P><font size="2">Dividend Reinvestment and Cash<br>
        &nbsp;&nbsp;</font><font size="2">Purchase Plan Fees </font>
    </TD>
    <TD rowspan="2" width="10"><font size="2"></font><font size="2"></font></TD>
    <TD align="right" rowspan="2" width="67"><font size="2"></font>
      <P><font size="2">None </font>
    </TD>
    <TD align="left" rowspan="2" width="21"><font size="2"></font><font size="2"></font></TD>
    <TD align="center" rowspan="2" colspan="2"><font size="2"></font>
      <P><font size="2">None </font>
      <font size="2"></font><font size="2"></font></TD>
    <TD rowspan="2" width="16">&nbsp;</TD>
    <TD align="right" rowspan="2" width="50"><font size="2"></font>
      <P><font size="2">None </font>
    </TD>
    <TD align="left" rowspan="2" width="41"><font size="2"></font><font size="2"></font></TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD rowspan="4" width="265">
      <P><font size="2">Contingent Deferred Sales Charge<br>
        &nbsp;&nbsp;</font><font size="2">(as a percentage of original purchase
        <br>
        &nbsp;&nbsp;</font><font size="2">price or net asset value at the <br>
        &nbsp;&nbsp;</font><font size="2">time of repurchase)(d) </font>
    </TD>
    <TD rowspan="4" width="10"><font size="2"></font><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD align="right" rowspan="4" width="67"><font size="2"></font><font size="2"></font><font size="2"></font>
      <P><font size="2">None </font>
    </TD>
    <TD align="left" rowspan="4" width="21"><font size="2"></font><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD align="center" rowspan="4" colspan="2">
      <P><font size="2">3.0% during the first<br>
        </font><font size="2">year, decreasing 1.0%<br>
        </font><font size="2">annually thereafter to<br>
        </font><font size="2">0.0% after the third year </font>
      </TD>
    <TD rowspan="4" width="16">&nbsp;</TD>
    <TD align="right" rowspan="4" width="50"><font size="2"></font><font size="2"></font><font size="2"></font><font size="2">None
      </font></TD>
    <TD align="left" rowspan="4" width="41"><font size="2"></font><font size="2"></font><font size="2"></font><font size="2"></font></TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD rowspan="3" width="265">
      <P><font size="2"><b>Annual Expenses (as a percentage of average<br>
        &nbsp;&nbsp;</b></font><b><font size="2">net assets attributable to common
        stock <br>
        &nbsp;&nbsp;for the six months ended April 30, 2001(e)) </font></b>
    </TD>
    <TD rowspan="3" width="10"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD align="right" rowspan="3" width="67"><font size="2"></font><font size="2"></font></TD>
    <TD align="left" rowspan="3" width="21"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD rowspan="3" width="85"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD rowspan="3" width="45"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD rowspan="3" width="16">&nbsp;</TD>
    <TD align="right" rowspan="3" width="50"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
    <TD align="left" rowspan="3" width="41"><font size="2"></font><font size="2"></font><font size="2"></font></TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD width="265">
      <P><font size="2">Investment Advisory Fees(f)</font>
    </TD>
    <TD width="10"><font size="2"></font></TD>
    <TD align="right" width="67">
      <P><font size="2">0.75</font>
    </TD>
    <TD align="left" width="21">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" width="85">
      <P><font size="2">0.76</font>
    </TD>
    <TD align="left" width="45">
      <P><font size="2">%</font>
    </TD>
    <TD align="left" width="16">&nbsp;</TD>
    <TD align="right" width="50">
      <P><font size="2">0.75</font>
    </TD>
    <TD align="left" width="41">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="top">
    <TD width="265">
      <P><font size="2">Other Expenses</font>
    </TD>
    <TD width="10"><font size="2"></font></TD>
    <TD align="right" width="67">
      <P><font size="2">0.25</font>
      <hr noshade size="1" width="40%" align="right">
    </TD>
    <TD align="left" width="21">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" width="85">
      <P><font size="2">1.29</font>
      <hr noshade size="1" width="30%" align="right">
    </TD>
    <TD align="left" width="45">
      <P><font size="2">%(g)</font>
    </TD>
    <TD align="left" width="16">&nbsp;</TD>
    <TD align="right" width="50">
      <P><font size="2">0.24</font>
      <hr noshade size="1" width="50%" align="right">
    </TD>
    <TD align="left" width="41">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="top">
    <TD width="265">
      <P><font size="2">Total Annual Expenses(h)</font>
    </TD>
    <TD width="10"><font size="2"></font></TD>
    <TD align="right" width="67">
      <P><font size="2">1.00</font>
      <hr noshade size="2" width="40%" align="right">
    </TD>
    <TD align="left" width="21">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" width="85">
      <P><font size="2">2.05</font>
      <hr noshade size="2" width="30%" align="right">
    </TD>
    <TD align="left" width="45">
      <P><font size="2">%</font>
    </TD>
    <TD align="left" width="16">&nbsp;</TD>
    <TD align="right" width="50">
      <P><font size="2">0.99</font>
      <hr noshade size="2" width="50%" align="right">
    </TD>
    <TD align="left" width="41">
      <P><font size="2">%</font>
    </TD>
  </TR>
</TABLE>

<font size=2>&lt;R&gt;</font>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
expenses for the Combined Fund represent the estimated annualized expenses as
of April 30, 2001 assuming MuniYield had acquired the assets and assumed the
liabilities of Municipal Strategy as of that date. </font></td></tr></table>


<table width=600><tr><td width=3% valign=top><font size="1">(a)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">No information
is presented with respect to AMPS because no Fund&#146;s operating expenses are, and
the expenses of the Reorganization will not be, borne by the holders of AMPS of
either Fund. Generally, AMPS are sold at a fixed liquidation preference of
$25,000 per share and investment return is set at an auction.
</font></td></tr></table>


<p><table width=600><tr><td align=right><FONT SIZE="1"><I>(footnotes continued on
next page)</I></FONT></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
3</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 10, page: 10" -->






<p><table width=600><tr><td><font size=1><I>(footnotes continued from previous
page)</I></font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(b)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Shares
of common stock purchased in the secondary market may be subject to brokerage
commissions or other charges. </font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(c)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">No
sales load will be charged on the issuance of shares in the Reorganization.
Shares of common stock are not available for purchase from the Combined Fund
but may be purchased through a broker-dealer subject to individually negotiated
commission rates. </font></td></tr></table>


<table width=600><tr><td width=3% valign=top><font size="1">(d)
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">&lt;R&gt;No CDSC will apply to shares of MuniYield
      Common Stock issued to Municipal Strategy in the Reorganization, nor will
      any CDSC be due on shares of Municipal Strategy Common Stock exchanged for
      shares of MuniYield Common Stock in connection with the Reorganization.&lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(e)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
pro forma annual operating expenses for the Combined Fund are projections for a
12-month period. </font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(f)
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">&lt;R&gt;Based on average net assets for the
      six months ended April 30, 2001 of each Fund and the Combined Fund (excluding
      assets attributable to AMPS). If assets attributable to AMPS are included,
      the Investment Advisory Fee for each Fund and the Combined Fund would be
      0.50% of average net assets. </font></td>
  </tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(g)
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Includes the administrative fee paid by Municipal
      Strategy to FAM at the rate of 0.25% of average daily net assets including
      the proceeds from the issuance of AMPS. &lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(h)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Based
on average net assets (excluding assets attributable to AMPS) for the six
months ended April 30, 2001 of Municipal Strategy, MuniYield and the Combined
Fund and excludes FAM&#146;s voluntary waiver of a portion of the advisory fee
and/or reimbursement of certain other expenses with respect to Municipal
Strategy. Including such fee waiver and/or expense reimbursement applicable to
Municipal Strategy, the Total Annual Expenses for Municipal Strategy would have
been 1.90%. If assets attributable to AMPS are included, the Total Annual
Expenses for MuniYield, Municipal Strategy (excluding the advisory fee waiver
and/or expense reimbursement applicable to Municipal Strategy) and the Combined
Fund would be 0.67%, 1.34% and 0.66%, respectively. If assets attributable to
AMPS and the above described advisory fee waiver and/or expense reimbursement
applicable to Municipal Strategy are included, the Total Annual Expenses for
Municipal Strategy would have been 1.24%. It is not anticipated that FAM will
waive its advisory fee or reimburse expenses with respect to the Combined Fund
on an ongoing basis after the Reorganization. </font></td></tr></table>


<p><table width=600><tr><td><font size=2><B>Examples:</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2><B>Cumulative Expenses Paid on Shares
of Common Stock for the Periods Indicated:</B></font></td></tr></table>


<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">
      <p align="center"><b><font size="1">1 Year</font></b>
      <hr noshade size="1">
    </td>
    <td align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">
      <p align="center"><b><font size="1">3 Years</font></b>
      <hr noshade size="1">
    </td>
    <td align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">
      <p align="center"><b><font size="1">5 Years</font></b>
      <hr noshade size="1">
    </td>
    <td align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    <td align="center">
      <p align="center"><b><font size="1">10 Years</font></b>
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td rowspan="4">
      <p><font size="2">An investor would pay the following expenses<br>
        </font><font size="2">on a $1,000 investment assuming (1) the operating
        <br>
        </font><font size="2">expense ratio for each Fund set forth above and
        <br>
        </font><font size="2">(2) a 5% annual return throughout the period: </font>
    </td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
    <td rowspan="4">&nbsp;</td>
  </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom">
    <td>
      <p><font size="2">MuniYield</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$10</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$32</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$&nbsp;&nbsp;55</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$122</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td>
      <p><font size="2">Municipal Strategy*</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$21</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$64</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$110</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$238</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td>
      <p><font size="2">Combined Fund**</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$10</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$32</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$&nbsp;&nbsp;55</font>
    </td>
    <td>&nbsp;</td>
    <td align="center">
      <p><font size="2">$121</font>
    </td>
  </tr>
</table>
<table width=600>
  <tr>
    <td>
      <hr size=1 noshade align=left  width=75>
    </td>
  </tr>
</table>
<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">&lt;R&gt;Assumes that the investor is not tendering
      shares at the end of the period. &lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">**
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Assumes
that the Reorganization had taken place on April 30, 2001.
</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing Fee
      Table and Examples are intended to assist investors in understanding the
      costs and expenses that a MuniYield or Municipal Strategy stockholder bears
      directly or indirectly as compared to the costs and expenses that would
      be borne by such investors taking into account the Reorganization. The Examples
      set forth above assume that all dividends were reinvested and uses a 5%
      annual rate of return as mandated by Commission regulations. The Examples
      should not be considered a representation of past or future expenses or
      annual rates of return. Actual expenses or annual rates of return may be
      more or less than those assumed for purposes of the Examples. See &#147;Summary,&#148;
      &#147;Comparison of the Funds&#148; and &#147;Agreement and Plan of Reorganization&#151;Potential
      Benefits to Stockholders as a Result of the Reorganization.&#148;&lt;/R&gt;</font></td>
  </tr></table>



<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="115"> <font size=2>
      <p><b>MuniYield</b>
      </font></td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2>
      <p>MuniYield was incorporated under the laws of the State of Maryland on
        September 20, 1991, and commenced operations on November 20, 1991. <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2>
      <p>MuniYield currently has outstanding common stock and five series of AMPS,
        designated Series A, Series B, Series C, Series D and Series E (collectively,
        the &#147;MuniYield AMPS&#148;). <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2> &lt;R&gt;As of July 31, 2001,
      MuniYield had net assets (including assets attributable to MuniYield AMPS)
      of approximately $774 million.&lt;/R&gt; </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="115"> <font size=2>
      <p><b>Municipal Strategy</b>
      </font></td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2>
      <p>Municipal Strategy was incorporated under the laws of the State of Maryland
        on July 13, 1994, and commenced operations on November 3, 1995. <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2>
      <p>Municipal Strategy has outstanding common stock and one series of AMPS,
        designated Series A.
      </font></td>
  </tr>
</table>
<br>
<br>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
4</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>














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<!-- MARKER LABEL="sheet: 11, page: 11" -->









<br>
<br>
<table 0 cellspacing=0 cellpadding=0 width=600 border="0">
  <tr>
    <td valign="TOP" width="115">&nbsp;</td>
    <td valign="TOP" width="127">&nbsp;</td>
    <td valign="TOP" width="358">
      <p><font size="2">&lt;R&gt;As of July 31, 2001, Municipal Strategy had net
        assets (including assets attributable to Municipal Strategy Series A AMPS)
        of approximately $122&nbsp;million.</font>
    </td>
  </tr>
</table>


<br>
<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD colspan="2"> <FONT SIZE=2>
      <P><b>Comparison of the Funds</b>
      </FONT> </TD>
    <TD WIDTH="164" align="center"> <FONT SIZE=2>
      <P><font size="1"><b>MuniYield</b></font>
      </FONT>
      <hr noshade size="1">
    </TD>
    <TD WIDTH="13" align="center">&nbsp;</TD>
    <TD WIDTH="180" align="center"> <FONT SIZE=2>
      <P><font size="1"><b>Municipal Strategy</b></font>
      </FONT>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="133">
      <P></P>
    </TD>
    <TD WIDTH="108" VALIGN="top"> <FONT SIZE=2>
      <P>Fund Structure
      </FONT></TD>
    <TD WIDTH="164" VALIGN="top"> <FONT SIZE=2>
      <P>Closed-end fund with its common stock listed on the NYSE
      </FONT></TD>
    <TD WIDTH="13" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="180" VALIGN="top"> <FONT SIZE=2>
      <P>Continuously offered closed-end fund
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="133">&nbsp;</TD>
    <TD WIDTH="108" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="164" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="13" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="180" VALIGN="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="133">&nbsp;</TD>
    <TD WIDTH="108" VALIGN="top"> <FONT SIZE=2>
      <P>Liquidity
      </FONT></TD>
    <TD WIDTH="164" VALIGN="top"> <FONT SIZE=2>
      <P>Common stock trades at market price (which may be higher or lower than
        net asset value) on the NYSE on each day the NYSE is open for trading
      </FONT></TD>
    <TD WIDTH="13" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="180" VALIGN="top"> <FONT SIZE=2>
      <P>Fund makes quarterly tender offers to purchase its common stock from
        stockholders at net asset value per share (less any applicable CDSC)
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="133">&nbsp;</TD>
    <TD WIDTH="108" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="164" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="13" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="180" VALIGN="top">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="133">&nbsp;</TD>
    <TD WIDTH="108" VALIGN="top"> <FONT SIZE=2>
      <P>Purchases and<br>
        Sales of Common<br>
        Stock
      </FONT></TD>
    <TD WIDTH="164" VALIGN="top"> <FONT SIZE=2>
      <P>Investors purchase and sell common stock through a registered broker-dealer
        on the NYSE, and transactions in shares may be subject to brokerage commissions
        or other charges
      </FONT></TD>
    <TD WIDTH="13" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="180" VALIGN="top"> <FONT SIZE=2>
      <P>Investors purchase common stock from FAM Distributors, Inc. or from other
        selected securities dealers or financial intermediaries, and may sell
        their shares by tendering common stock to the Fund on a quarterly basis
        &lt;/R&gt;
      <P>&nbsp;
      </FONT></TD>
  </TR>
</TABLE>

<br>
<table 0 cellspacing=0 cellpadding=0 width=600 border="0">
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357"><font size=2><i>Investment Objectives and Policies.</i>
      Each Fund is a non-diversified, leveraged, closed-end, management investment
      company. The Funds have substantially similar investment objectives and
      policies. Each Fund seeks to provide stockholders with as high a level of
      current income exempt from Federal income tax as is consistent with its
      investment policies. <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357"><font size=2>&lt;R&gt;Each Fund seeks to achieve
      its investment objective by investing primarily in a portfolio of long term
      investment grade municipal obligations the interest on which, in the opinion
      of bond counsel to the issuer, is exempt from Federal income taxes (&#147;Municipal
      Bonds&#148;). Under normal circumstances, at least 80% of each Fund&#146;s
      total assets will be invested in Municipal Bonds. <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357"><font size=2><i>Investment Grade Municipal Obligations.</i>
      Each Fund generally will invest at least 75% of its total assets in Municipal
      Bonds that are rated investment grade by Moody&#146;s Investors Service,
      Inc. (&#147;Moody&#146;s&#148;), Standard &amp; Poor&#146;s (&#147;S&amp;P&#148;)
      or Fitch, Inc. (&#147;Fitch&#148;). See Appendix III&#151;&#147;Ratings
      of Municipal Bonds and Commercial Paper.&#148; Each Fund also may buy unrated
      securities that are considered by FAM to be of comparable quality. &lt;/
      R&gt; </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357"> <font size=2>
      <p> <i>High Yield Securities or &#147;Junk&#148; Bonds.</i> Each Fund may
        invest up to 25% of its total assets in Municipal Bonds rated in lower,
        non-investment grade categories by Moody&#146;s, S&amp;P or Fitch or in
        comparable unrated bonds. These so-called &#147;junk&#148; bonds have
        the potential to generate high current income for shareholders, but also
        subject each Fund and its shareholders to greater credit and overall market
        risk. In addition, these bonds are frequently traded only in markets where
        the number of potential purchasers and sellers, if any, is very limited.
        See Appendix III&#151;&#147;Ratings of Municipal Bonds and Commercial
        Paper.&#148;
      </font></td>
  </tr>
</table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
5</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>













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<p>&nbsp;</p>
<table 0 cellspacing=0 cellpadding=0 border="0" width=600>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2"><i>Private Activity Bonds.</i>&nbsp;Each Fund may invest
        in certain tax-exempt securities that are classified as &#147;private
        activity bonds&#148; that may subject certain investors to a Federal alternative
        minimum tax. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">Leverage.&nbsp;Each Fund seeks to enhance the yield to
        its common stockholders by issuing AMPS. See &#147;Risk Factors and Special
        Considerations&#151;Leverage.&#148; <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">&lt;R&gt;<i>Portfolio Maturity.</i>&nbsp;Each Fund intends
        to invest primarily in long-term Municipal Bonds with maturities of more
        than ten years. As of July 31, 2001, the weighted average maturity of
        the portfolio of MuniYield and Municipal Strategy was 18.62 years and
        19.52 years, respectively. The average maturity of each Fund&#146;s portfolio
        securities, and therefore each Fund&#146;s portfolio as a whole, will
        vary based upon FAM&#146;s assessment of economic and market conditions.
        See &#147;Comparison of the Funds&#151;Investment Objective and Policies.&#148;
        &lt;/R&gt;<br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2"><i>Capital Stock.</i>&nbsp;Each Fund has outstanding common
        stock and at least one series of AMPS that are sold principally at auction.
        The voting and dividend rights of holders of common stock of each Fund
        are equivalent. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">&lt;R&gt;As of July 31, 2001, (i) the net asset value
        per share of MuniYield Common Stock was $13.58 and
        the market price per share was $13.72; and (ii) the
        net asset value per share of Municipal Strategy Common Stock was $9.32.
        &lt;/R&gt; </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">Each series of AMPS of each Fund has a liquidation preference
        of $25,000 per share plus accumulated but unpaid dividends and is sold
        principally at auction. See &#147;Comparison of the Funds&#151;Capital
        Stock.&#148; </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">Auctions generally have been held and will be held every
        seven days for MuniYield Series E AMPS and Municipal Strategy Series A
        AMPS, and every 28 days for Series A, B, C and D AMPS of MuniYield. </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">&lt;R&gt;The auctions for MuniYield Series F AMPS to be
        issued in the Reorganization will be held every seven days with the same
        auction and payment dates as the Municipal Strategy Series A AMPS. See
        &#147;Comparison of the Funds&#151;Capital Stock.&#148; The applicable
        dividend for a particular dividend period for each series of AMPS of each
        Fund will be determined by an auction conducted by the auction agent on
        the business day next preceding the start of that dividend period. The
        auction agent for each Fund is The Bank of New York (&#147;BONY&#148;).
        &lt;/R&gt; </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="1">&nbsp;</td>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">The following table provides information about the dividend
        rates for each series of AMPS of each Fund as of a recent auction date:
        </font>
    </td>
  </tr>
</table>
<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="193"><font size=2>&lt;R&gt;</font></td>
    <td width="104" align="center"> <font size=2>
      <p><b><font size="1">Auction Date </font></b>
      </font>
      <hr noshade size="1" width="95%">
    </td>
    <td width="130" align="center"> <font size=2>
      <p><b><font size="1">Fund </font></b>
      </font>
      <hr noshade size="1" width="95%">
    </td>
    <td align="center" colspan="2"> <font size=2>
      <p><b><font size="1">Dividend <br>
        Period </font></b>
      </font>
      <hr noshade size="1" width="95%">
    </td>
    <td width="50" align="center"> <font size=2>
      <p><b><font size="1">Series</font></b>
      </font>
      <hr noshade size="1" width="95%">
    </td>
    <td colspan="2" align="center"> <font size=2>
      <p><b><font size="1">Dividend <br>
        Rate </font></b>
      </font>
      <hr noshade size="1" width="95%">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="193">&nbsp;</td>
    <td width="104" align="right"> <font size=2>
      <p>September 4, 2001
      </font></td>
    <td width="130" align="center"> <font size=2>
      <p>MuniYield
      </font></td>
    <td width="55" align="right"> <font size=2>
      <p>28 days
      </font></td>
    <td width="12" align="center">&nbsp;</td>
    <td width="50" align="center"> <font size=2>
      <p>A
      </font></td>
    <td width="29" align="right"> <font size=2>
      <p>2.50
      </font></td>
    <td width="25"> <font size=2>
      <p>%
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="193">&nbsp;</td>
    <td width="104" align="right"> <font size=2>
      <p>August 14, 2001
      </font></td>
    <td width="130" align="center"> <font size=2>
      <p>MuniYield
      </font></td>
    <td width="55" align="right"> <font size=2>
      <p>28 days
      </font></td>
    <td width="12" align="center">&nbsp;</td>
    <td width="50" align="center"> <font size=2>
      <p>B
      </font></td>
    <td width="29" align="right"> <font size=2>
      <p>2.50
      </font></td>
    <td width="25"> <font size=2>
      <p>%
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="193">&nbsp;</td>
    <td width="104" align="right"> <font size=2>
      <p>August 28, 2001
      </font></td>
    <td width="130" align="center"> <font size=2>
      <p>MuniYield
      </font></td>
    <td width="55" align="right"> <font size=2>
      <p>28 days
      </font></td>
    <td width="12" align="center">&nbsp;</td>
    <td width="50" align="center"> <font size=2>
      <p>C
      </font></td>
    <td width="29" align="right"> <font size=2>
      <p>2.40
      </font></td>
    <td width="25"> <font size=2>
      <p>%
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="193">&nbsp;</td>
    <td width="104" align="right"> <font size=2>
      <p>August 28, 2001
      </font></td>
    <td width="130" align="center"> <font size=2>
      <p>MuniYield
      </font></td>
    <td width="55" align="right"> <font size=2>
      <p>28 days
      </font></td>
    <td width="12" align="center">&nbsp;</td>
    <td width="50" align="center"> <font size=2>
      <p>D
      </font></td>
    <td width="29" align="right"> <font size=2>
      <p>2.40
      </font></td>
    <td width="25"> <font size=2>
      <p>%
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="193">&nbsp;</td>
    <td width="104" align="right"> <font size=2>
      <p>September 4, 2001
      </font></td>
    <td width="130" align="center"> <font size=2>
      <p>MuniYield
      </font></td>
    <td width="55" align="right"> <font size=2>
      <p>7 days
      </font></td>
    <td width="12" align="center">&nbsp;</td>
    <td width="50" align="center"> <font size=2>
      <p>E
      </font></td>
    <td width="29" align="right"> <font size=2>
      <p>2.45
      </font></td>
    <td width="25"> <font size=2>
      <p>%
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="193">&nbsp;</td>
    <td width="104" align="right"> <font size=2>
      <p>August 22, 2001
      </font></td>
    <td width="130" align="center"> <font size=2>
      <p>Municipal Strategy
      </font></td>
    <td width="55" align="right"> <font size=2>
      <p>7 days
      </font></td>
    <td width="12" align="center">&nbsp;</td>
    <td width="50" align="center"> <font size=2>
      <p>A
      </font></td>
    <td width="29" align="right"> <font size=2>
      <p>2.40
      </font></td>
    <td width="25"> <font size=2>
      <p>%
      </font></td>
  </tr>
</table>


<font size=2>&lt;/R&gt;</font>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
6</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>













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<p>

<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2"><i>Liquidity.</i>&nbsp;MuniYield Common Stock is listed
        on the NYSE and may be bought or sold at market price on each day the
        NYSE is open for trading. On any given day, the market price for MuniYield
        Common Stock on the NYSE may be higher or lower than the net asset value
        of the MuniYield Common Stock. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2">&lt;R&gt;Municipal Strategy engages in a continuous offering
        of Municipal Strategy Common Stock. Municipal Strategy Common Stock is
        not listed on any exchange and no secondary market presently exists for
        Municipal Strategy Common Stock, nor is it currently expected that a secondary
        market will develop. To provide liquidity for stockholders of Municipal
        Strategy, the Fund&#146;s Board of Directors considers, on a quarterly
        basis, whether the Fund should make a tender offer for its common stock.
        In a tender offer, the Fund purchases outstanding Municipal Strategy Common
        Stock at the Fund&#146;s net asset value (less any applicable CDSC) on
        the last day of the offer. &lt;/R&gt;</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2">Municipal Strategy&#146;s Board of Directors is not required
        to authorize the making of a tender offer and there can be no assurance
        that a tender offer will be made during any particular quarter. If a tender
        offer is not made, stockholders may be unable to sell their shares. Since
        the inception of Municipal Strategy, however, the Board has authorized
        a tender offer each quarter. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2">&lt;R&gt;If the Reorganization is consummated, the tender
        offer of Municipal Strategy that concluded on August 20, 2001 will have
        been the Fund&#146;s final tender offer. &lt;/R&gt;<br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2"><i>Contingent Deferred Sales Charge.</i> Stockholders
        of MuniYield do not pay any CDSC because the Fund&#146;s common stock
        trades on the NYSE. If common stockholders of Municipal Strategy sell
        their stock back to the Fund during a tender offer and they have held
        those shares for less than three years when the tender offer begins, they
        may have to pay a CDSC. This charge varies depending on how long a shareholder
        has owned the tendered shares. The amount of the charge is based on how
        much the shareholder paid for the tendered shares or their net asset value,
        whichever amount is less. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2">&lt;R&gt;<i>Portfolio Management.</i>&nbsp;The investment
        adviser for each Fund is FAM. Mr. Roberto W. Roffo currently manages the
        investment portfolio of each Fund and will manage the Combined Fund after
        the Reorganization. &lt;/R&gt;<br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2"><i>Advisory and Administrative Fees.</i>&nbsp;FAM is responsible
        for the management of each Fund&#146;s investment portfolio and for providing
        administrative services to each Fund. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="244">&nbsp;</td>
    <td valign="TOP" width="356">
      <p><font size="2">Pursuant to a separate investment advisory agreement between
        FAM and each Fund, each Fund pays FAM a monthly advisory fee at the annual
        rate of 0.50% of each Fund&#146;s average net assets, including proceeds
        from the issuance of AMPS. The fee paid by MuniYield is computed on average
        weekly net assets. In comparison, Municipal Strategy&#146;s fee is calculated
        on average daily net assets. </font>
    </td>
  </tr>
</table>
<p><table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
7</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>





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<p>&nbsp;
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">Municipal Strategy also pays FAM a monthly administrative
        fee at the annual rate of 0.25% of its average daily net assets, including
        proceeds from the issuance of AMPS. MuniYield does not pay an administrative
        fee to FAM and the Combined Fund will not pay a separate administrative
        fee to FAM. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">Since the commencement of operations of Municipal Strategy
        to the present, FAM has waived a portion of the advisory fee due from
        Municipal Strategy and/or reimbursed certain other expenses. The fee waiver
        and/or expense reimbursement with respect to Municipal Strategy is voluntary
        and may be reduced or discontinued by FAM at any time without notice to
        stockholders. It is not anticipated that FAM will waive any portion of
        its advisory fee and/or reimburse expenses with respect to the Combined
        Fund after the Reorganization. See &#147;Comparison of the Funds&#151;Management
        of the Funds.&#148; <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">&lt;R&gt;<i>Overall Expense Ratio.</i> As stated above,
        since the commencement of operations of Municipal Strategy, FAM has voluntarily
        waived a portion of its advisory fee and/or reimbursed certain other expenses.
        &lt;/R&gt; </font> <br>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">FAM has not waived fees or reimbursed expenses with respect
        to MuniYield. It is not anticipated that FAM will waive its advisory fee
        and/or reimburse expenses with respect to the Combined Fund on an ongoing
        basis. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357">
      <p><font size="2">The table below summarizes the total annualized operating
        expense ratio for MuniYield, Municipal Strategy (excluding any advisory
        fee waivers and/or expense reimbursements) and the Combined Fund based
        on their respective average net assets (excluding assets attributable
        to AMPS) for the six month period ended April 30, 2001. </font>
    </td>
  </tr>
</table>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="243">&nbsp;</td>
    <td width="162">&nbsp;</td>
    <td align="center" colspan="2"><font size=1><b>Average <br>
      Net Assets <br>
      (Excluding Assets <br>
      Attributable to <br>
      AMPS) for the <br>
      Six Month <br>
      Period Ended <br>
      April 30, 2001 </b></font>
      <hr noshade size="1">
    </td>
    <td width="12" align="center"> <font size=2>
      <p>
      </font></td>
    <td colspan="2" align="center"> <font size=2>
      <p><b><font size="1">Total <br>
        Annualized <br>
        Operating <br>
        Expense Ratio </font></b>
      </font>
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="243">&nbsp;</td>
    <td width="162"> <font size=2>
      <p>MuniYield
      </font></td>
    <td width="94" align="right"> <font size=2>
      <p>$507,503,509
      </font></td>
    <td width="15">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="42" align="right"> <font size=2>
      <p>1.00
      </font></td>
    <td width="32"> <font size=2>
      <p>%
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="243">&nbsp;</td>
    <td width="162"> <font size=2>
      <p>Municipal Strategy
      </font></td>
    <td width="94" align="right"> <font size=2>
      <p>$&nbsp;&nbsp;81,220,051
      </font></td>
    <td width="15">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="42" align="right"> <font size=2>
      <p>2.05
      </font></td>
    <td width="32"> <font size=2>
      <p>%*
      </font></td>
  </tr>
  <tr valign="bottom">
    <td width="243">&nbsp;</td>
    <td width="162"> <font size=2>
      <p>Combined Fund**
      </font></td>
    <td width="94" align="right"> <font size=2>
      <p>$588,723,560
      </font></td>
    <td width="15">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="42" align="right"> <font size=2>
      <p>0.99
      </font></td>
    <td width="32"> <font size=2>
      <p>%
      </font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width="237">&nbsp;</td>
    <td width="351">
      <hr size=1 noshade align=left  width=75>
    </td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=43% align=right valign=top><font size="1">* </font></td>
    <td width=2%>&nbsp;</td>
    <td width=55%><font size="1">Including fee waivers and/or expense reimbursements
      applicable to Municipal Strategy, the total annualized operating expense
      ratio for Municipal Strategy would have been 1.90%.</font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=43% align=right valign=top><font size="1">** </font></td>
    <td width=2%>&nbsp;</td>
    <td width=55%><font size="1">Assumes that the Reorganization had taken place
      on April 30, 2001.</font></td>
  </tr>
</table>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="243">&nbsp;</td>
    <td valign="TOP" width="357"> <font size=2>
      <p>The table below summarizes the total annualized operating expense ratio
        for MuniYield, Municipal Strategy (excluding any advisory fee waivers
        and/or expense reimbursements) and the Combined Fund based on their respective
        average net assets (including assets attributable to AMPS) for the six
        month period ended April 30, 2001.
      </font></td>
  </tr>
</table>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
8</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp;













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<!-- MARKER LABEL="sheet: 14, page: 14" -->






<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="241">&nbsp;</td>
    <td width="163">&nbsp;</td>
    <td align="center" colspan="2"><font size=1><b>Average Net Assets <br>
      (Including Assets <br>
      Attributable to <br>
      AMPS) for the <br>
      Six Month <br>
      Period Ended <br>
      April 30, 2001 </b></font>
      <hr noshade size="1">
    </td>
    <td width="13" align="center">
      <p>
    </td>
    <td colspan="2" align="center"> <font size=1> <b>Total <br>
      Annualized <br>
      Operating <br>
      Expense Ratio </b></font>
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="241">&nbsp;</td>
    <td width="163">
      <p><font size="2">MuniYield </font>
    </td>
    <td width="95" align="right">
      <p><font size="2">$757,503,509 </font>
    </td>
    <td width="13">&nbsp;</td>
    <td width="13">&nbsp;</td>
    <td width="41" align="right">
      <p><font size="2">0.67 </font>
    </td>
    <td width="32">
      <p><font size="2">% </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="241">&nbsp;</td>
    <td width="163">
      <p><font size="2">Municipal Strategy </font>
    </td>
    <td width="95" align="right">
      <p><font size="2">$124,220,051 </font>
    </td>
    <td width="13">&nbsp;</td>
    <td width="13">&nbsp;</td>
    <td width="41" align="right">
      <p><font size="2">1.34 </font>
    </td>
    <td width="32">
      <p><font size="2">%* </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="241">&nbsp;</td>
    <td width="163">
      <p><font size="2">Combined Fund** </font>
    </td>
    <td width="95" align="right">
      <p><font size="2">$881,723,560 </font>
    </td>
    <td width="13">&nbsp;</td>
    <td width="13">&nbsp;</td>
    <td width="41" align="right">
      <p><font size="2">0.66 </font>
    </td>
    <td width="32">
      <p><font size="2">% </font>
    </td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width="237">&nbsp;</td>
    <td width="351">
      <hr size=1 noshade align=left  width=75>
    </td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=43% align=right valign=top><font size="1">* </font></td>
    <td width=2%>&nbsp;</td>
    <td width=55%><font size="1">Including fee waivers and/or expense reimbursements
      applicable to Municipal Strategy, the total annualized operating expense
      ratio for Municipal Strategy would have been 1.24%.</font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=43% align=right valign=top><font size="1">** </font></td>
    <td width=2%>&nbsp;</td>
    <td width=55%><font size="1">Assumes that the Reorganization had taken place
      on April 30, 2001.</font></td>
  </tr>
</table>
<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2> &lt;R&gt;<i>Purchases and Sales
      of Common Stock and AMPS.</i> Investors typically purchase and sell shares
      of MuniYield Common Stock at market price through a registered broker-dealer
      on each day that the NYSE is open for trading, and may incur a brokerage
      commission or other charge set by the broker-dealer. Alternatively, investors
      may purchase or sell shares of MuniYield Common Stock through privately
      negotiated transactions with existing stockholders. <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2>
      <p>Investors typically can purchase shares of Municipal Strategy Common
        Stock from FAM Distributors, Inc., other selected securities dealers or
        other financial intermediaries, including Merrill Lynch, Pierce, Fenner
        &amp; Smith Incorporated (&#147;Merrill Lynch&#148;). The Fund offers
        its common stock on a best efforts basis through such distributors at
        a price equal to the next determined net asset value per share without
        a front-end sales charge. Shares are sold subject to certain minimum initial
        and subsequent purchase requirements.<br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="358"> <font size=2>
      <p>Municipal Strategy Common Stock is not listed on any exchange and no
        secondary market presently exists for Municipal Strategy Common Stock,
        nor is it currently expected that a secondary market will develop. To
        provide liquidity for stockholders of Municipal Strategy, the Fund&#146;s
        Board of Directors considers, on a quarterly basis, whether the Fund should
        make a tender offer for its common stock. See &#147;Liquidity.&#148; <br>
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="242">&nbsp;</td>
    <td valign="TOP" width="358">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="242"> <font size=2>
      <p>&nbsp;
      </font></td>
    <td valign="TOP" width="358"><font size=2>Purchase and sale procedures for
      the AMPS of each Fund are identical. Such AMPS generally are purchased and
      sold at separate auctions conducted on a regular basis by BONY, as the auction
      agent for each Fund&#146;s AMPS (in such capacity, the &#147;Auction Agent&#148;).
      Unless otherwise permitted by the Funds, existing and potential holders
      of AMPS may participate in auctions only through their broker-dealers. Broker-dealers
      submit the orders of their respective customers who are existing and potential
      holders of AMPS to the Auction Agent. On or prior to each auction date for
      the AMPS (the business day next preceding the first day of each dividend
      period), each holder may submit orders to buy, sell or hold AMPS to its
      broker-dealer.&lt;/R&gt;</font></td>
  </tr>
</table>
<p>&nbsp;
<p>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
9</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp;









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<p>

<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2">Outside of these auctions, shares of AMPS may be purchased
        or sold through broker-dealers for the AMPS in a secondary trading market
        maintained by the broker-dealers. However, no assurance can be given that
        a secondary market will develop, or, if it does develop, that it will
        provide holders with a liquid trading market for the AMPS of either Fund.
        <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2"><i>&lt;R&gt;Ratings of AMPS.</i>&nbsp;The AMPS of each Fund have
        been assigned a rating of AAA from S&amp;P and aaa from Moody&#146;s.
        See &#147;Comparison of the Funds&#151;Rating Agency Guidelines.&#148;
        <br>
        &lt;/R&gt;
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2">Portfolio Transactions. The portfolio transactions in
        which the Funds may engage are substantially similar, as are the procedures
        for such transactions. See &#147;Comparison of the Funds&#151;Portfolio
        Transactions.&#148; </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359" rowspan="4">
      <p><font size="2"><i>Dividends and Distributions.</i>&nbsp;The methods of
        dividend payment and distributions are identical with respect </font><font size="2">to
        the common stock and the AMPS of each </font><font size="2">Fund. See
        &#147;Comparison of the Funds&#151;Dividends and Distributions.&#148;
        <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2"><i>Net Asset Value.</i> MuniYield determines its net asset
        value per share of common stock as of the close of business on the NYSE
        (generally, 4:00 p.m., Eastern time) (the &#147;NYSE close of business&#148;)
        on the last business day of each week. Municipal Strategy determines its
        net asset value as of the NYSE close of business once daily on each day
        the NYSE is open for trading. <br>
        </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2">For purposes of determining the net asset value of a share
        of common stock of each Fund, the value of the securities held by the
        Fund plus any cash or other assets (including interest accrued but not
        yet received) minus all liabilities (including accrued expenses) and the
        aggregate liquidation value of the outstanding shares of AMPS of the Fund
        is divided by the total number of shares of common stock of the Fund outstanding
        at such time. Expenses, including fees payable to FAM, are accrued daily.
        See &#147;Comparison of the Funds&#151;Net Asset Value.&#148; </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2"><i>Voting Rights.</i>&nbsp;The corresponding voting rights
        of the holders of shares of each Fund&#146;s common stock are substantially
        similar. The corresponding voting rights of the holders of shares of each
        Fund&#146;s AMPS are also substantially similar. See &#147;Comparison
        of the Funds&#151;Capital Stock.&#148; </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="241">&nbsp;</td>
    <td valign="TOP" width="359">
      <p><font size="2"><i>Stockholder Services.</i>&nbsp;An automatic dividend
        reinvestment plan is available to holders of shares of common stock of
        each Fund. See &#147;Comparison of the Funds&#151;Automatic Dividend Reinvestment
        Plan.&#148; Other stockholder services, including the provision of annual
        and semi-annual reports, are the same for each Fund. </font>
    </td>
  </tr>
</table>
<p>
<p>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
10</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp;









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<!-- MARKER LABEL="sheet: 16, page: 16" -->



<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="244"><font size=2>&lt;R&gt;</font></td>
    <td colspan="5" align="center">
      <p><font size="2"><b>Outstanding Securities of MuniYield and<br>
        Municipal Strategy as of July 31, 2001</b> </font>
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom" align="center">
    <td width="244" height="90">&nbsp;</td>
    <td width="137" height="90">
      <p><font size="2"><b>Title of Class</b> </font>
      <hr noshade size="1" width="95%">
    </td>
    <td colspan="2" height="90">
      <p><font size="2"><b>Amount<br>
        Authorized</b> </font>
      <hr noshade size="1" width="95%">
    </td>
    <td width="57" align="center" height="90">
      <p><font size="2"><b>Amount<br>
        Held By<br>
        Fund for<br>
        Its Own<br>
        Account</b> </font>
      <hr noshade size="1" width="95%">
    </td>
    <td width="77" height="90">
      <p><font size="2"><b>Amount<br>
        Outstanding<br>
        Exclusive of<br>
        Amount Shown<br>
        in Previous<br>
        Column</b> </font>
      <hr noshade size="1" width="95%">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2"><i>MuniYield</i> </font>
    </td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">Common Stock </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">199,990,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">38,560,928 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">&nbsp;</td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">AMPS </font>
    </td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series A </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">1,800 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">1,800 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series B </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">1,800 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">1,800 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series C </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">1,800 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">1,800 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series D </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">1,800 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">1,800 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series E </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">2,800 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">2,800 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">&nbsp;</td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2"><i>Municipal Strategy</i> </font>
    </td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">&nbsp;</td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">Common Stock </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">199,960,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">8,434,658 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">AMPS </font>
    </td>
    <td width="72" align="right">&nbsp;</td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">&nbsp;</td>
    <td width="77" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series A </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">8,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">1,720 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series B </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">8,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">0 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series C </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">8,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">0 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series D </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">8,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">0 </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="244">&nbsp;</td>
    <td width="137">
      <p><font size="2">&nbsp;&nbsp;Series E </font>
    </td>
    <td width="72" align="right">
      <p><font size="2">8,000 </font>
    </td>
    <td width="13" align="center">&nbsp;</td>
    <td width="57" align="center">
      <p><font size="2">0 </font>
    </td>
    <td width="77" align="right">
      <p><font size="2">0 </font>
    </td>
  </tr>
</table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" width="161"> <font size=2>
      <p><b>Tax Considerations</b>
      </font></td>
    <td valign="TOP" width="83">&nbsp;</td>
    <td valign="TOP" width="356"> <font size=2>
      <p>The Funds will receive an opinion of counsel with respect to the Reorganization
        to the effect that, among other things, neither Fund will recognize gain
        or loss on the transaction and no stockholder of Municipal Strategy will
        recognize gain or loss upon the exchange of his or her shares for MuniYield
        Common Stock or MuniYield Series F AMPS, as applicable, in the Reorganization
        (except to the extent that a holder of Municipal Strategy Common Stock
        receives cash representing an interest in fractional shares of MuniYield
        Common Stock in the Reorganization). The completion of the Reorganization
        is subject to the receipt of such opinion of counsel.
      </font></td>
  </tr>
  <tr>
    <td valign="TOP" width="161">&nbsp;</td>
    <td valign="TOP" width="83">&nbsp;</td>
    <td valign="TOP" width="356">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="161">&nbsp;</td>
    <td valign="TOP" width="83">&nbsp;</td>
    <td valign="TOP" width="356">
      <p>
      <font size=2>The Reorganization will not affect the status of MuniYield as a regulated
        investment company. See &#147;Agreement and Plan of Reorganization&#151;Tax
        Consequences of the Reorganization.&#148; <font size=2>&lt;/</font><font size=2>R&gt;
        </font>
      </font>
      <font size=2>
      <p>&nbsp;
      </font></td>
  </tr>
</table>
<p>&nbsp;
<p>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
11</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="4"></a>RISK FACTORS AND SPECIAL
      CONSIDERATIONS</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment objective,
      policies and restrictions of MuniYield and Municipal Strategy are substantially
      similar. Each Fund invests primarily in long term municipal obligations,
      the interest on which, in the opinion of bond counsel to the issuer, is
      exempt from Federal income tax (&#147;Municipal Bonds&#148;). Therefore,
      many of the investment risks associated with an investment in MuniYield
      are substantially similar to the investment risks associated with an investment
      in Municipal Strategy. These investment risks will also apply to an investment
      in the Combined Fund after the Reorganization. The principal difference
      in risk between MuniYield and Municipal Strategy results from the fact that
      MuniYield Common Stock trades at market value on the NYSE and shares may
      trade at prices that may be higher or lower than the net asset value of the
      shares. Conversely, Municipal Strategy Common Stock is not listed on any
      exchange and no secondary market presently exists for its common stock,
      nor is it currently expected that a secondary market will develop. Investors
      have been able, however, to tender their shares to Municipal Strategy for
      purchase at net asset value on a quarterly basis.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The risk
factors to which an investment in MuniYield is subject are summarized below. It
is expected that the Reorganization itself will not adversely affect the rights
of holders of shares of common stock or of any series of AMPS of either Fund or
create any additional risks.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
where noted, each Fund is subject to the following risks:</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="4a"></a>Trading at a Discount</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Closed-end funds that
      are listed on an exchange, such as MuniYield, are subject to the risk that
      the market price of their common stock may trade at a price that is lower
      than their net asset value, commonly referred to as &#147;trading at a discount.&#148;
      Shares may also trade at a price higher than (a &#147;premium above&#148;)
      net asset value. Each Fund is designed primarily for long-term investors
      and should not be considered a vehicle for trading purposes.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal Strategy Common Stock
      is not listed on any exchange and no secondary market presently exists for
      its common stock, nor is it expected that a secondary market will develop.
      As long as there is no secondary market for Municipal Strategy Common Stock,
      the Fund is not subject to the risk that its shares will trade at a discount
      from net asset value. To provide liquidity to shareholders, the Fund&#146;s
      Board of Directors considers making tender offers once each quarter to purchase
      the Fund&#146;s shares (less any applicable CDSC) at net asset value. However,
      shares of Municipal Strategy Common Stock are less liquid than shares of
      funds traded on a stock exchange, and shareholders who tender shares of
      Municipal Strategy Common Stock held for less than three years may pay a
      CDSC. The Board of Directors of Municipal Strategy is not obligated to authorize
      any tender offer, and there may be quarters in which no tender offer is
      made. If the Board does not authorize a tender offer, shareholders may be
      unable to sell their shares. Since the inception of Municipal Strategy,
      however, the Board has authorized a tender offer each quarter. The most
      recent tender offer by Municipal Strategy for its shares of common stock
      concluded on August 20, 2001. If the Reorganization is consummated, that
      will have been the Fund&#146;s final tender offer.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="4b"></a>Secondary Market For AMPS</B>&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealers
intend to maintain a secondary trading market in the AMPS of each Fund outside
of the auctions; however, they have no obligation to do so and there can be no
assurance that a secondary market for the AMPS of each Fund will develop or, if
it does develop, that it will provide AMPS holders with a liquid trading
market. Neither Fund&#146;s AMPS will be registered on any stock exchange or on any
automated quotation system. An increase in the level of interest rates likely
will have an adverse effect on the secondary market price of the AMPS of each
Fund, and a selling stockholder may sell AMPS between auctions at a price per
share of less than $25,000.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="4c"></a>Non-Diversified Status</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund is registered as a &#147;non-diversified&#148; investment company. This means that
each Fund may invest a greater percentage of its assets in the obligations of a
single issuer than a diversified investment company. Since either Fund may
invest a relatively high percentage of its assets in a limited number of
issuers, it may be more exposed to the effects of a single economic, political
or regulatory occurrence than a Fund that invests more widely. Even as a
non-diversified fund, each Fund must meet the diversification requirements of
applicable Federal income tax laws.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="4d"></a>Interest Rate and Credit Risk</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund invests
      primarily in long term Municipal Bonds that are subject to interest rate
      and credit risk. Interest rate risk is the risk that prices of Municipal
      Bonds generally increase when interest rates decline and&lt;/R&gt;</font></td>
  </tr></table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
12</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;decrease when interest rates increase. Prices of
      longer-term securities generally change more in response to interest rate
      changes than prices of shorter term securities. Credit risk is the risk
      that the issuer of a security owned by a Fund will be unable to pay the
      interest or principal when due. The degree of credit risk depends on both
      the financial condition of the issuer and the terms of the obligation.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="5"></a>High Yield or Junk Bonds</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund may invest up to
      25% of its total assets in debt securities commonly known as junk bonds.
      Investments in high yield securities entail a higher level of credit risk
      (loss of income and/or principal) than investments in higher rated securities.
      Securities rated in the lower rating categories are considered to be predominantly
      speculative with respect to capacity to pay interest and repay principal.
      Issuers of high yield securities may be highly leveraged and may not have
      available to them more traditional methods of financing. New issuers also
      may be inexperienced in managing their debt burden. The issuer&#146;s ability
      to service its debt obligations may be adversely affected by business developments
      unique to the issuer, the issuer&#146;s inability to meet specific projected
      business forecasts or the inability of the issuer to obtain additional financing.
      High yield securities may be unsecured and may be subordinated to other
      creditors of the issuer.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="5a"></a>Private Activity Bonds</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund may invest
      in certain tax-exempt securities classified as private activity bonds. These
      bonds may subject certain investors in a Fund to a Federal alternative minimum
      tax.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="5c"></a>Rating Agency Guidelines</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund has received ratings of AAA from S&amp;P and aaa from Moody&#146;s with respect to
its AMPS. In order to maintain these ratings, the Funds are required to
maintain portfolio holdings that meet the specified guidelines of such rating
agencies. These guidelines may impose asset coverage or portfolio composition
requirements that are stricter than those imposed by the Investment Company
Act. The Funds do not expect these requirements or guidelines to prevent the
investment adviser from managing each Fund&#146;s portfolio in accordance with each
Fund&#146;s investment objective and policies. See Appendix III&#151;&#147;Ratings of
Municipal Bonds and Commercial Paper.&#148;&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of each Fund, without stockholder approval, may amend, alter
or repeal certain definitions or restrictions that have been adopted by a Fund
pursuant to the rating agency guidelines, if a Fund receives confirmation from
the rating agencies that any such amendment, alteration or repeal would not
impair the ratings then assigned to shares of AMPS.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="5d"></a>Indexed and Inverse Floating Rate Securities</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may invest in securities whose potential returns are directly related to
changes in an underlying index or interest rate, known as indexed securities.
The return on indexed securities will rise when the underlying index or
interest rate rises and fall when the index or interest rate falls. Each Fund
may also invest in securities whose return is inversely related to changes in
an interest rate (inverse floaters). In general, income on inverse floaters
will decrease when short term interest rates increase and increase when short
term interest rates decrease. Investments in inverse floaters may subject a
Fund to the risks of reduced or eliminated interest payments and losses of
principal. In addition, certain indexed securities and inverse floaters may
increase or decrease in value at a greater rate than the underlying interest
rate, which effectively leverages a Fund&#146;s investment. As a result, the market
value of such securities will generally be more volatile than that of fixed
rate, tax exempt securities. Both indexed securities and inverse floaters are
derivative securities and can be considered speculative.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="5e"></a>Options and Futures Transactions</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund may engage
      in certain options and futures transactions to reduce its exposure to interest
      rate movements. If a Fund incorrectly forecasts market value, interest rates
      or other factors, that Fund&#146;s performance could suffer. Each Fund also
      may suffer a loss if the other party to the transaction fails to meet its
      obligations. The Funds are not required to use hedging and each Fund may
      choose not to do so. The Funds cannot guarantee that any hedging strategies
      they use will work.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
13</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2><B><a name="6"></a>Antitakeover Provisions</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Articles of Incorporation of each Fund (in each case, a &#147;Charter&#148;) and Maryland
law include provisions that could limit the ability of other entities or
persons to acquire control of that Fund or to change the composition of its
Board of Directors. Such provisions could limit the ability of stockholders to
sell their shares at a premium over prevailing market prices by discouraging a
third party from seeking to obtain control of the Fund.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="6a"></a>Leverage</B></font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Issuance
of Preferred Stock.</I> Each Fund is leveraged through the issuance of AMPS. The
preferred stock may represent up to approximately 35% of a Fund&#146;s capital,
including the capital raised by issuing the preferred stock.</FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The issuance and ongoing
      expenses of the preferred stock are borne by each of the Funds and reduce
      the net asset value of that Fund&#146;s common stock. In addition, at times
      when a Fund is required to allocate taxable income to preferred stockholders,
      the AMPS may require, and it is expected that the terms of any other preferred
      stock may also require, that Fund to make an additional distribution to
      its preferred stockholders (an &#147;Additional Distribution&#148;). The
      amount of this Additional Distribution approximately equals the tax liability
      resulting from the allocation and the Additional Distribution.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Risks</I>.
The use of leverage creates certain risks for common stockholders, including
higher volatility of both the net asset value and the market value of the
common stock. Since any decline in the value of a Fund&#146;s investments will
affect only the common stockholders, the use of leverage will cause a Fund&#146;s
net asset value and market price to decrease more than if the Fund was not
leveraged. In addition, fluctuations in dividend rates paid on, and the amount
of taxable income allocable to any holder of, AMPS and any other preferred
stock will affect the yield to common stockholders. There can be no
assurance that the Fund will earn a higher return on its investments than the
then current dividend rate (and any Additional Distribution) it pays on the
preferred stock.</FONT></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
certain conditions, the benefits of leverage to common stockholders will be
reduced, and the Fund&#146;s leveraged capital structure could result in a lower
rate of return to common stockholders than if the Fund were not leveraged.
During times of rising interest rates, the value of the Fund&#146;s portfolio and
the net asset value of its shares may decline. The Fund&#146;s leverage structure
may exaggerate any such decline. In addition, the Fund may invest in securities
that create investment leverage, such as inverse floating obligations, which
may further exaggerate any decline.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In an extreme case, a decline
      in net asset value could affect a Fund&#146;s ability to pay dividends on
      its common stock. Failure to make such dividend payments could adversely
      affect the Fund&#146;s qualification as a regulated investment company under
      the Federal tax laws. See &#147;Comparison of the Funds&#151;Tax Rules Applicable
      to the Funds and Their Stockholders.&#148; However, each Fund intends to
      take all measures necessary to continue to make common stock dividend payments.
      If a Fund&#146;s current investment income were not sufficient to meet dividend
      requirements on either the common stock or the preferred stock, it could
      be necessary for the Fund to liquidate certain of its investments.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund has the authority to redeem its AMPS for any reason. Redemption of the
preferred stock or insufficient investment income to make dividend payments may
reduce the net asset value of the common stock and require a Fund to liquidate
a portion of its investments at a time when it may be disadvantageous, in the
absence of such extraordinary circumstances, to do so.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="6b"></a>Portfolio Management and Other Considerations</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The portfolio management
      strategies of the Funds are substantially similar. In the event of an increase
      in short term or medium term rates or other changes in market conditions
      to the point where a Fund&#146;s leverage could adversely affect holders
      of common stock as noted above, or in anticipation of such changes, each
      Fund may attempt to shorten the average maturity of its investment portfolio,
      which would tend to offset the negative impact of leverage on holders of
      its common stock. Each Fund also may attempt to reduce the degree to which
      it is leveraged by redeeming AMPS pursuant to the provisions of the applicable
      Articles Supplementary that establish the rights and preferences of each
      series of AMPS or otherwise purchasing shares of AMPS. Purchases and sales
      or redemptions of AMPS, whether on the open market or in negotiated transactions,
      are subject to limitations under the Investment Company Act. In determining
      whether or not it is in the best interest of a Fund and its stockholders
      to redeem or repurchase outstanding preferred stock, its Board of Directors
      will take into account a variety of factors, including market conditions,
      the ratio of preferred stock to common stock, and the expenses associated
      with such redemption or repurchase. If market conditions subsequently change,
      each Fund may sell previously unissued shares of AMPS or shares of AMPS
      that the Fund previously issued but later repurchased or redeemed.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
14</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Investment Company Act, a Fund is not permitted to issue shares of
preferred stock unless immediately after such issuance the net asset value of a
Fund&#146;s portfolio is at least 200% of the liquidation value of the outstanding
preferred stock (expected to equal the original purchase price of the
outstanding shares of preferred stock plus any accumulated and unpaid dividends
thereon and any accumulated and unpaid Additional Distributions). In addition,
a Fund is not permitted to declare any cash dividend or other distribution on
its common stock unless, at the time of such declaration, the net asset value
of a Fund&#146;s portfolio (determined after deducting the amount of such dividend
or distribution) is at least 200% of such liquidation value. As of May 31,
2001, MuniYield&#146;s capital structure included 10,000 shares of AMPS representing
approximately 33% of the Fund&#146;s capital, and the asset coverage with respect to
the AMPS was approximately 302% and Municipal Strategy&#146;s capital structure
included 1,720 shares of AMPS representing approximately 36% of the Fund&#146;s
capital, and the asset coverage with respect to the AMPS was approximately
276%. To the extent possible, each Fund intends to purchase or redeem shares of
preferred stock from time to time to maintain asset coverage of preferred stock
of at least 200%.</font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="7"></a>COMPARISON OF THE FUNDS</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="7a"></a>Financial Highlights</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>MuniYield.</I>
      The financial information in the table below has been audited (except where
      noted) in conjunction with the annual audit of the financial statements
      of MuniYield by Deloitte &amp; Touche <font size="1">LLP</font>, independent
      auditors. The financial information for the six month period ended April
      30, 2001 is unaudited and has been provided by FAM. The following per share
      data and ratios have been derived from information provided in the financial
      statements of MuniYield.&lt;/R&gt;</FONT></td>
  </tr></table>


<br>
<table 0 cellspacing=0 cellpadding=0 width=640>
  <tr valign="top">
    <td width="131"></td>
    <td align="center" valign="bottom" colspan="2">
      <p><font size="2"><b><font size="1">For the<br>
        Six Months<br>
        Ended<br>
        April 30,</font></b> </font>
    </td>
    <td colspan="16" align="center" valign="bottom"> <b><font size=2> <font size="1">For
      the Year Ended October 31,</font></font> </b>
      <hr noshade size="1" width="95%">
    </td>
    <td align="center" colspan="2"><b><font size=2><font size=2><font size=2><font size="1">For
      the</font></font><br>
      <font size="1">Period<br>
      November 29,<br>
      1991&#134;&#134; to</font></font><br>
      <font size="1">October 31,</font></font></b></td>
  </tr>
  <tr valign="top">
    <td width="131"><b></b></td>
    <td align="center" colspan="2">
      <p><font size="2"><b><font size="1">2001</font></b> </font>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"> <b><font size=2> <font size="1">2000</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"> <b><font size=2> <font size="1">1999</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"> <b><font size=2> <font size="1">1998</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"> <b><font size=2> <font size="1">1997</font></font>
      </b>
      <hr noshade size="1" width="40%">
    </td>
    <td colspan="2" align="center"><b><font size=2><font size="1">1996</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"><b><font size=2><font size="1">1995</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"><b><font size=2><font size="1">1994</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td colspan="2" align="center"><b><font size=2><font size="1">1993</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1992</font></font>
      </b>
      <hr noshade size="1" width="40%">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131"><b></b></td>
    <td align="center" colspan="2" valign="top">
      <p><font size="2"><b><font size="1">(Unaudited)</font></b> </font>
    </td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td width="42"><b></b></td>
    <td width="29"><b></b></td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td width="38"><b></b></td>
    <td width="8"><b></b></td>
    <td align="center" width="41"><b></b></td>
    <td width="14"><b></b></td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2"><b>Increase (Decrease) in Net Asset Value: </b></font>
    </td>
    <td width="49">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="42">&nbsp;</td>
    <td width="29">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2"><b>Per Share Operating<br>
        &nbsp; Performance: </b></font>
    </td>
    <td width="49">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="42">&nbsp;</td>
    <td width="29">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Net asset value, beginning of <br>
        &nbsp;&nbsp;period </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">$13.08 </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;13.21 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;16.27 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;16.09 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">$&nbsp;15.68 </font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;15.47 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;14.35 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;16.80 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$14.69 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">$&nbsp;14.18 </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr size="1" noshade>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Investment income &#151; &nbsp;&nbsp;net</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">.52</font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.09</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.12</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.19</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">1.24</font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.26</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.27</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.29</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.31</font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">1.18</font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Realized and &nbsp;&nbsp;unrealized gain<br>
        &nbsp;&nbsp;(loss) on investments<br>
        &nbsp;&nbsp;&#151; net </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(.17</font>
    </td>
    <td align="left" width="10">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.08 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(2.34 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">.49 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">.65 </font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">.23 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.34 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(2.23 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">2.27 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">.57 </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Total from investment<br>
        &nbsp;&nbsp;operations </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">.35 </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.01 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(1.22 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">1.68 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">1.89 </font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">1.49 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">2.61 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.94 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">3.58 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">1.75 </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Less dividends and<br>
        &nbsp;&nbsp;distributions to &nbsp;&nbsp;Common <br>
        &nbsp;&nbsp;Stock shareholders: </font>
    </td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">&nbsp;</td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">&nbsp;</td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Investment income &nbsp;&nbsp;&#151; net</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(.43</font>
    </td>
    <td align="left" width="10">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.87</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.95</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.97</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="42">
      <p><font size="2">(1.00</font>
    </td>
    <td align="left" width="29">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.04</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.00</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.07</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.11</font>
    </td>
    <td align="left" width="8">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="41">
      <p><font size="2">(.89</font>
    </td>
    <td align="left" width="14">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Realized gain on <br>
        &nbsp;&nbsp;investments &#151; net </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.38 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.26 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="42">
      <p><font size="2">(.22 </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.22 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.23 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.16 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="41">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">In excess of realized &nbsp;&nbsp;gain on investments
        &nbsp;&nbsp;&#151; net </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.27 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">(.01 </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Total dividends and<br>
        &nbsp;&nbsp; distributions to &nbsp;&nbsp;Common<br>
        &nbsp;&nbsp;Stock shareholders </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(.43</font>
    </td>
    <td align="left" width="10">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.87 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.60 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.23 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="42">
      <p><font size="2">(1.23 </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.04 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.22 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.30 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(1.27 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="41">
      <p><font size="2">(.89 </font>
    </td>
    <td align="left" width="14">
      <p><font size="2">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Capital charge resulting from<br>
        &nbsp;&nbsp;issuance of Common Stock </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">(.02 </font>
    </td>
    <td align="left" width="14">
      <p><font size="2">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Effect of Preferred &nbsp;&nbsp;Stock<br>
        &nbsp;&nbsp;activity:&#134;&#134;&#134;&#134; </font>
    </td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">&nbsp;</td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">&nbsp;</td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">&nbsp;&nbsp;Dividends and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;distributions<br>
        &nbsp;&nbsp;&nbsp;&nbsp; to Preferred Stock <br>
        &nbsp;&nbsp;&nbsp;&nbsp;shareholders: </font>
    </td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">&nbsp;</td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">&nbsp;</td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">&nbsp;</td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Investment income<br>
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#151; net </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(.13</font>
    </td>
    <td align="left" width="10">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.27 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.17 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.18 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="42">
      <p><font size="2">(.20 </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.24 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.23 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.18 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.17 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="41">
      <p><font size="2">(.19 </font>
    </td>
    <td align="left" width="14">
      <p><font size="2">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Realized gain on<br>
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; investments &#151;&nbsp;&nbsp;&nbsp;&nbsp;
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;net </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.04 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.09 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="42">
      <p><font size="2">(.05 </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.04 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.03 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.03 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="41">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">In excess of realized &nbsp;&nbsp;gain on investments
        &nbsp;&nbsp;&#151; net </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">(.03 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">&#134;&#134;&#134;&#134;&#134; </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Capital charge &nbsp;&nbsp;resulting from<br>
        &nbsp; issuance of Preferred<br>
        &nbsp;&nbsp;Stock </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">&#151; </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">(.14 </font>
    </td>
    <td align="left" width="14">
      <p><font size="2">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Total effect of &nbsp;&nbsp;Preferred Stock<br>
        &nbsp;&nbsp;activity </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(.13</font>
    </td>
    <td align="left" width="10">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.27 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.24 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.27 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="42">
      <p><font size="2">(.25 </font>
    </td>
    <td align="left" width="29">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.24 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.27 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.21 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="38">
      <p><font size="2">(.20 </font>
    </td>
    <td align="left" width="8">
      <p><font size="2">) </font>
    </td>
    <td align="right" width="41">
      <p><font size="2">(.33 </font>
    </td>
    <td align="left" width="14">
      <p><font size="2">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="1">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="1">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">
      <p><font size="2">Net asset value, end &nbsp;&nbsp;of&nbsp;period </font>
    </td>
    <td align="right" width="49">
      <p><font size="2">$12.87 </font>
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;13.08 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;13.21 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;16.27 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <p><font size="2">$&nbsp;16.09 </font>
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;15.68 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;15.47 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;14.35 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <p><font size="2">$&nbsp;16.80 </font>
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <p><font size="2">$&nbsp;14.69 </font>
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="131">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="10">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="29">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="38">
      <hr noshade size="2">
    </td>
    <td align="left" width="8">&nbsp;</td>
    <td align="right" width="41">
      <hr noshade size="2">
    </td>
    <td align="left" width="14">&nbsp;</td>
  </tr>
</table>
<table width=640>
  <tr>
    <td align=right><font size=2><i><font size="1">(table continued on next page)
      </font></i></font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
15</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 21, page: 21" -->






<p><table width=600><tr><td><font size=1><I>(table continued from previous
page) </I></font></td></tr></table>

<p><font size=2>&lt;R&gt;</font> </p>
<table 0 cellspacing=0 cellpadding=0 width=645>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="center" colspan="2"><font size="1"><b>For the<br>
      Six Months<br>
      Ended<br>
      April 30,</b> </font></td>
    <td align="center" colspan="24"><b><font size=2><font size="1">For the Year
      Ended October 31,</font></font> </b>
      <hr noshade size="1" width="95%">
    </td>
    <td align="center" colspan="3"><b><font size=2><font size=2><font size=2><font size="1">For
      the</font></font><br>
      <font size="1">Period<br>
      November 29,<br>
      1991&#134;&#134; to</font></font><br>
      <font size="1">October 31,</font></font></b></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="center" colspan="2">
      <p><font size="1"><b>2001</b> </font>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center" colspan="3"><b><font size=2><font size="1">2000</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1999</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1998</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1997</font></font>
      </b>
      <hr noshade size="1" width="40%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1996</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1995</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1994</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1993</font></font>
      </b>
      <hr noshade size="1" width="50%">
    </td>
    <td align="center" colspan="3"><b><font size=2><font size="1">1992</font></font>
      </b>
      <hr noshade size="1" width="40%">
    </td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="center" colspan="2"><font size="1"><b>(Unaudited)</b> </font></td>
    <td align="right">&nbsp;</td>
    <td align="right" colspan="2">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Market price per<br>
      &nbsp; share, end of <br>
      &nbsp; period </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;13.45 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;12.625 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;12.875 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;16.875 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;15.875 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;14.875 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;14.375 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;12.125 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;16.75 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;15.125 </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Total Investment <br>
      &nbsp;&nbsp;Return:** </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp; </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Based on market<br>
      &nbsp;&nbsp;price per share </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">10.05 </font></td>
    <td> <font size="1">%&#134;&#134;&#134; </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.26 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">(15.35 </font></td>
    <td> <font size="1">)% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">14.74 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">15.56 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">10.88 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">29.76 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">(20.94 </font></td>
    <td> <font size="1">)% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">19.91</font></td>
    <td align="left"> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">7.06 </font></td>
    <td> <font size="1">%&#134;&#134;&#134; </font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Based on net asset <br>
      &nbsp;&nbsp;value per share </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">1.64 </font></td>
    <td> <font size="1">%&#134;&#134;&#134; </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">6.28 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">(9.92 </font></td>
    <td> <font size="1">)% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">9.15 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">11.11 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">8.61 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">18.00 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">(6.71 </font></td>
    <td> <font size="1">)% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">23.83</font></td>
    <td align="left"> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">9.99 </font></td>
    <td> <font size="1">%&#134;&#134;&#134; </font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Ratios Based on <br>
      &nbsp;&nbsp;Average Net <br>
      &nbsp;&nbsp;Assets of<br>
      &nbsp;&nbsp;Common Stock: </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Total expenses*** </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">1.00 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.99 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.93 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.89 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.91 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Total investment <br>
      &nbsp;&nbsp;income &#151; net*** </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">7.87 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">8.35 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">7.42 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">7.43 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">7.81 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Amount of <br>
      &nbsp;&nbsp; dividends to<br>
      &nbsp;&nbsp;Preferred Stock <br>
      &nbsp;&nbsp;shareholders </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">1.91 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">2.07 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">1.11 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">1.10 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">1.28 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Investment income<br>
      &nbsp;&nbsp;&#151; net, to Common<br>
      &nbsp;&nbsp;Stock&nbsp;shareholders </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.96 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">6.28 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">6.31 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">6.33 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">6.53 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Ratios Based on <br>
      &nbsp;&nbsp;Total Average<br>
      &nbsp;&nbsp;Net Assets: ***&#134; </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Total expenses, net <br>
      &nbsp;&nbsp;of reimbursement </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.67 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.65 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.63 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.58 </font></td>
    <td> <font size="1">%* </font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Total expenses </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.67 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.65 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.63 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">.65 </font></td>
    <td> <font size="1">%* </font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Total investment<br>
      &nbsp;&nbsp; income &#151; net </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.27 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.56 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.17 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.26 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.48 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.64 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.91 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.76 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">5.72 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">6.08 </font></td>
    <td> <font size="1">%* </font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Ratios Based on Average<br>
      &nbsp;&nbsp;Net Assets of Preferred<br>
      &nbsp;&nbsp;Stock: </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Dividends to <br>
      &nbsp;&nbsp;Preferred<br>
      &nbsp;&nbsp;Stockshareholders </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">3.88 </font></td>
    <td> <font size="1">%* </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">4.12 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">2.55 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">2.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">3.02 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">&#151; </font></td>
    <td><font size="1">&#135;&#135;</font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Supplemental <br>
      &nbsp;&nbsp;Data: </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Net assets, net <br>
      &nbsp;&nbsp;of Preferred <br>
      &nbsp;&nbsp;Stock, end of <br>
      &nbsp;&nbsp;period <br>
      &nbsp;&nbsp;(in thousands) </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">495,409 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">501,361 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">506,030 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">611,222 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">596,320 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">581,124 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">573,400 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">531,657 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">619,775 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">526,287 </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Preferred Stock <br>
      &nbsp;&nbsp; outstanding, <br>
      &nbsp;&nbsp;end of period<br>
      &nbsp;&nbsp;(in thousands) </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">$250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000<br>
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">250,000 </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Portfolio<br>
      &nbsp;&nbsp;turnover </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">36.66 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">103.44 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">78.42 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">91.63 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">111.45 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">96.74 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">52.99 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">44.27 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">25.58 </font></td>
    <td> <font size="1">% </font></td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">66.45 </font></td>
    <td> <font size="1">% </font></td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade size="2">
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Leverage: </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Asset coverage<br>
      &nbsp;&nbsp;per $1,000 </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;2,982 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;3,005 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;3,024 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;3,445 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;3,385 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;3,324 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;3,294 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">3,127 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;3,479 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;3,105 </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade size="2">
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1"><b>Dividends Per<br>
      &nbsp;&nbsp;Share on <br>
      &nbsp;&nbsp;Preferred <br>
      &nbsp;&nbsp; Stock<br>
      &nbsp;&nbsp;Outstanding:<br>
      &nbsp;&nbsp;&#134;&#134;&#134;&#134;&#134;&#134; </b></font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Series A &#151; <br>
      &nbsp;&nbsp;Investment <br>
      &nbsp;&nbsp;income &#151; net </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;450 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;1,052 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;588 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;694 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;747<br>
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;894 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;887 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;598 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;560
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;680
      </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Series B &#151; <br>
      &nbsp;&nbsp;Investment <br>
      &nbsp;&nbsp;income &#151; net </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;542 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;1,009 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;595 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;687 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;751
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;897 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;850 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;733 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;554
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;690
      </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Series C &#151;<br>
      &nbsp;&nbsp;Investment <br>
      &nbsp;&nbsp;income &#151; net </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;466 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;1,032 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;687 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;643 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;763
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;998 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;827 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;647 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;566
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;685
      </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Series D &#151;<br>
      &nbsp;&nbsp; Investment<br>
      &nbsp;&nbsp;income &#151; net </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;468 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;1,035 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;694 </font></td>
    <td>&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"> <font size="1">$&nbsp;637 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;762
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;888 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;897 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;659 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;556
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;688
      </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade align="right">
    </td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td> <font size="1">Series E &#151;<br>
      &nbsp;&nbsp; Investment<br>
      &nbsp;&nbsp;&nbsp;income &#151; net </font></td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;481 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;1,038 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;627 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;656 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;752
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;875 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;759 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;707 </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;542
      </font></td>
    <td>&nbsp;</td>
    <td align="right"><font size="1">$</font></td>
    <td align="right"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;688
      </font></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
    <td align="right" colspan="2">
      <hr noshade>
    </td>
    <td>&nbsp;</td>
  </tr>
</table>

<table width=600>
  <tr>
    <td>
      <hr size=1 noshade align=left  width=75>
    </td>
  </tr>
</table>
<table width=600><tr>
    <td width=3% align=right valign=top><font size="1">*</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1"> Annualized. </font></td>
  </tr></table>
<table width=600><tr><td width=3% align=right valign=top><font size="1">**
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Total
investment returns based on market value, which can be significantly greater or
lesser than the net asset value, may result in substantially different returns.
Total investment returns exclude the effects of sales charges.
</font></td></tr></table>


<table width=600><tr><td width=3% align=right valign=top><font size="1">***
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Do
not reflect the effect of dividends to Preferred Stock shareholders.
</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">&#134;</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1"> Includes
Common and Preferred Stock average net assets. </font></td></tr></table>

<table width=600><tr>
    <td width=3% align=right valign=top><font size="1">&#134;&#134;</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Commencement of operations. </font></td>
  </tr></table>


<table width=600>
  <tr>
    <td width=3% align=right valign=top><font size="1">&#135;&#135;</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Prior to the fiscal year ended October 31, 1997,
      the Fund only reported ratios with respect to Total Average Net Assets.
      &lt;/R&gt;</font></td>
  </tr>
</table>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
16</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 22, page: 22" -->




<p><table width=600><tr>
    <td><font size=1><I>(footnotes continued from previous page) &lt;R&gt;</I></font></td>
  </tr></table>

<table width=600><tr>
    <td width=8% align=right valign=top><font size="1">&#134;&#134;&#134;</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1"> Aggregate total investment return. </font></td>
  </tr></table>

<table width=600><tr>
    <td width=8% align=right valign=top><font size="1">&#134;&#134;&#134;&#134;</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">MuniYield&#146;s Preferred Stock was issued on December
      23, 1991.</font></td>
  </tr></table>

<table width=600><tr>
    <td width=8% align=right valign=top><font size="1">&#134;&#134;&#134;&#134;&#134;</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Amount is less than $.01 per share.</font></td>
  </tr></table>

<table width=600><tr><td width=8% align=right valign=top><font size="1">&#134;&#134;&#134;&#134;&#134;&#134;</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1"> Dividends per share have been adjusted to reflect
      a two-for-one stock split that occurred on December 1, 1994. &lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Municipal Strategy.</I>
      The financial information in the table below has been audited (except where
      noted) in conjunction with the annual audit of the financial statements
      of Municipal Strategy by Deloitte &amp; Touche <font size="1">LLP</font>, independent
      auditors. The financial information for the six month period ended April
      30, 2001 is unaudited and has been provided by FAM. The following per share
      data and ratios have been derived from information provided in the financial
      statements of Municipal Strategy.</FONT></td>
  </tr></table>



<br>
<table 0 cellspacing=0 cellpadding=0 width=640>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="center" colspan="2">
      <p><b><font size="1">For the Six<br>
        Months Ended <br>
        April 30, </font> </b>
    </td>
    <td colspan="8" align="center">
      <p><b><font size="1">For the Year Ended October 31,</font></b>
      <hr noshade size="1">
    </td>
    <td align="center" colspan="2"><b><font size="1">For the<br>
      Period <br>
      November 3, <br>
      1995&#134;&#134; to <br>
      October 31, </font></b></td>
  </tr>
  <tr valign="bottom" align="center">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td colspan="2">
      <p><b><font size="1">2001</font></b>
      <hr noshade size="1" width="90%">
    </td>
    <td colspan="2">
      <p><b><font size="1">2000</font></b>
      <hr noshade size="1" width="90%">
    </td>
    <td colspan="2">
      <p><b><font size="1">1999</font></b>
      <hr noshade size="1" width="90%">
    </td>
    <td colspan="2"><b><font size="1">1998</font></b>
      <hr noshade size="1" width="90%">
    </td>
    <td colspan="2"><b><font size="1">1997</font></b>
      <hr noshade size="1" width="90%">
    </td>
    <td colspan="2"><b><font size="1">1996</font></b>
      <hr noshade size="1" width="90%">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="center" colspan="2" valign="top">
      <p><b><font size="1">(Unaudited)</font> </b>
    </td>
    <td width="42">&nbsp;</td>
    <td width="13">&nbsp;</td>
    <td width="49">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="49">&nbsp;</td>
    <td width="13">&nbsp;</td>
    <td width="49">&nbsp;</td>
    <td width="13">&nbsp;</td>
    <td width="52">&nbsp;</td>
    <td width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Increase (Decrease) in Net Asset Value: </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td width="42"><font size="1"></font></td>
    <td width="32"><font size="1"></font></td>
    <td width="42"><font size="1"></font></td>
    <td width="13"><font size="1"></font></td>
    <td width="49"><font size="1"></font></td>
    <td width="17"><font size="1"></font></td>
    <td width="49"><font size="1"></font></td>
    <td width="13"><font size="1"></font></td>
    <td width="49"><font size="1"></font></td>
    <td width="13"><font size="1"></font></td>
    <td width="52"><font size="1"></font></td>
    <td width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Per Share Operating Performance: </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td width="42"><font size="1"></font></td>
    <td width="32"><font size="1"></font></td>
    <td width="42"><font size="1"></font></td>
    <td width="13"><font size="1"></font></td>
    <td width="49"><font size="1"></font></td>
    <td width="17"><font size="1"></font></td>
    <td width="49"><font size="1"></font></td>
    <td width="13"><font size="1"></font></td>
    <td width="49"><font size="1"></font></td>
    <td width="13"><font size="1"></font></td>
    <td width="52"><font size="1"></font></td>
    <td width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Net asset value, beginning of period</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">$ 8.75</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">$ 8.89</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$&nbsp;&nbsp; 10.96</font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$&nbsp;&nbsp; 10.87</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$&nbsp;&nbsp; 10.17</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">$&nbsp; 10.00</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Investment income &#151; net</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">.31</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">.72</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">.71</font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">.73</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">.75</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">.68</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Realized and unrealized gain (loss)<br>
        &nbsp;&nbsp;on investments &#151; net </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">.10 </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">(.14 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(1.75 </font>
    </td>
    <td align="left" width="17">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">.35 </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">.70 </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">.21 </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total from investment operations</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">.41</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">.58</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">(1.04</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.08</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">1.45</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">.89</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Less dividends and distributions to<br>
        &nbsp;&nbsp;Common Stock shareholders: </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Investment income &#151; net</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">(.23</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">(.49</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.58</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.60</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.59</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">(.59</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Realized gain on investments &#151; net</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">&#134;</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">(.19</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">In excess of realized gain on<br>
        &nbsp;&nbsp;investments &#151; net </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">(.27 </font>
    </td>
    <td align="left" width="17">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total dividends and distributions to<br>
        &nbsp;&nbsp;Common Stock shareholders </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">(.23 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="42">
      <p><font size="1">(.49 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.85 </font>
    </td>
    <td align="left" width="17">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.79 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.59 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">) </font>
    </td>
    <td align="right" width="52">
      <p><font size="1">(.59 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><b><font size="1">Effect of Preferred Stock activity: &#134;&#134;&#134;&#134;</font>
        </b>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><b><font size="1">Dividends and distributions to Preferred<br>
        &nbsp;&nbsp;Stock shareholders: </font> </b>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Investment income &#151; net</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">(.08</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">(.23</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.13</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.13</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.16</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">(.09</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Realized gain on investments &#151; net</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">&#134;</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">(.07</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">In excess of realized gain on investments &#151; net</font>
    </td>
    <td width="5">
      <p>&nbsp;
    </td>
    <td align="right" width="42"><font size="1">&#151;</font></td>
    <td align="left" width="32">
      <p>&nbsp;
    </td>
    <td align="right" width="42"><font size="1">&#151;</font></td>
    <td align="left" width="13">
      <p>&nbsp;
    </td>
    <td align="right" width="49">
      <p><font size="1">(.05</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49"><font size="1">&#151;</font> </td>
    <td align="left" width="13">
      <p>&nbsp;
    </td>
    <td align="right" width="49"><font size="1">&#151;</font></td>
    <td align="left" width="13">
      <p>&nbsp;
    </td>
    <td align="right" width="52"><font size="1">&#151;</font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Capital charge resulting from issuance of <br>
        &nbsp;&nbsp;Preferred Stock </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">&#151;</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">&#151; </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">(.04 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">) </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total effect of Preferred Stock activity</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">(.08</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">(.23</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.18</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.20</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(.16</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">)</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">(.13</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="1">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="1">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Net asset value, end of period</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">$8.85</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">$8.75</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$8.89</font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$10.96</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$10.87</font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">$10.17</font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Total Investment Return:**</b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Based on net asset value per share</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">3.73</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%&#134;&#134;&#134;</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">4.09</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">(11.94</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">)%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">8.28</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">13.08</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">7.81</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%&#134;&#134;&#134;</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Ratios Based on Average Net Assets of<br>
        &nbsp;&nbsp;Common Stock: </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total expenses, net of reimbursement***</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">1.90</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">1.88</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.75</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.61</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.37</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">.68</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total expenses***</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">2.05</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">2.04</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.90</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.80</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.83</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">1.60</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total investment income &#151; net***</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">6.99</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">8.14</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">6.98</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">6.65</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">7.14</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">6.86</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Amount of dividends to Preferred Stock <br>
        &nbsp;&nbsp;shareholders </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">1.84 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%* </font>
    </td>
    <td align="right" width="42">
      <p><font size="1">2.56 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.31 </font>
    </td>
    <td align="left" width="17">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.21 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.53 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="52">
      <p><font size="1">.94 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%* </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Investment income &#151; net, to Common <br>
        &nbsp;&nbsp;Stock shareholders </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">5.15 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%* </font>
    </td>
    <td align="right" width="42">
      <p><font size="1">5.58 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">5.67 </font>
    </td>
    <td align="left" width="17">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">5.44 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="49">
      <p><font size="1">5.61 </font>
    </td>
    <td align="left" width="13">
      <p><font size="1">% </font>
    </td>
    <td align="right" width="52">
      <p><font size="1">5.92 </font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%* </font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Ratios Based on Total Average Net <br>
        &nbsp;&nbsp;Assets: ***&#134;&#134;&#134;&#134;&#134; </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total expenses, net of reimbursement</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">1.24</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">1.15</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.17</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.12</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">.96</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">.53</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total expenses</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">1.34</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">1.25</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.27</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.25</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">1.28</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">1.26</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Total investment income &#151; net</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">4.57</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">4.99</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">4.66</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">4.61</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">5.01</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">5.40</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Ratios Based on Average Net Assets of<br>
        &nbsp;&nbsp;Preferred Stock: </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Dividends to Preferred Stock shareholders</font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">3.47</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
    <td align="right" width="42">
      <p><font size="1">4.05</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">2.63</font>
    </td>
    <td align="left" width="17">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">2.75</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="1">3.58</font>
    </td>
    <td align="left" width="13">
      <p><font size="1">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="1">3.49</font>
    </td>
    <td align="left" width="32">
      <p><font size="1">%*</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1"><b>Supplemental Data: </b></font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49"><font size="1"></font></td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52"><font size="1"></font></td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">
      <p><font size="1">Net assets, net of Preferred Stock,<br>
        &nbsp;&nbsp;end of period (in thousands) </font>
    </td>
    <td width="5"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">$78,479 </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
    <td align="right" width="42">
      <p><font size="1">$85,394 </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$102,174 </font>
    </td>
    <td align="left" width="17"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$115,339 </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="49">
      <p><font size="1">$101,463 </font>
    </td>
    <td align="left" width="13"><font size="1"></font></td>
    <td align="right" width="52">
      <p><font size="1">$83,573 </font>
    </td>
    <td align="left" width="32"><font size="1"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
    <td align="right" width="42">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="13">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="32">&nbsp;</td>
  </tr>
</table>

<font size="2">&lt;/R&gt;</font>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
17</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 23, page: 23" -->




<p>
<font size="2">&lt;R&gt;</font>
<table width=600><tr><td><font size=1><I>(table continued from
previous page)</I></font></td></tr></table>


<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="232"><b></b></td>
    <td width="24"><b>&nbsp;&nbsp;&nbsp;&nbsp;</b></td>
    <td align="center" colspan="2">
      <p><b><font size=2><font size=2><font size="1">For the Six</font></font><br>
        <font size="1">Months Ended </font></font><br>
        <font size="1">April 30, </font></b> <b></b>
    </td>
    <td colspan="8" align="center">
      <p><font size="2"><b><font size="1">For the Year Ended October 31, </font></b>
        </font>
      <hr noshade size="1" width="95%">
      <font size=2></font></td>
    <td align="center" colspan="2"><b><font size=2><font size=2><font size=2><font size=2><font size=2><font size="1">For
      the</font></font><br>
      <font size="1">Period</font></font><br>
      <font size="1">November 3, </font></font><br>
      <font size="1">1995&#134;&#134; to </font></font><br>
      <font size="1">October 31, </font></font></b><b></b></td>
  </tr>
  <tr valign="bottom">
    <td width="232"><b></b></td>
    <td width="24"><b></b></td>
    <td align="center" colspan="2">
      <p><font size="2"><b><font size="1">2001</font></b> </font>
      <hr noshade size="1" width="40%">
    </td>
    <td align="center" colspan="2"> <b><font size=2> <font size="1">2000</font></font></b>
      <hr noshade size="1" width="40%">
    </td>
    <td align="center" colspan="2"> <b><font size=2> <font size="1">1999</font></font></b>
      <hr noshade size="1" width="40%">
    </td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1998</font></font></b>
      <hr noshade size="1" width="40%">
      <b></b></td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1997</font></font></b>
      <hr noshade size="1" width="40%">
      <b></b></td>
    <td align="center" colspan="2"><b><font size=2><font size="1">1996</font></font></b>
      <hr noshade size="1" width="40%">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="232"><b></b></td>
    <td width="24"><b></b></td>
    <td align="center" colspan="2" valign="top">
      <p><b><font size="1">(Unaudited)</font></b> <b></b>
    </td>
    <td width="49"><b></b></td>
    <td width="12"><b></b></td>
    <td width="49"><b></b></td>
    <td width="12"><b></b></td>
    <td width="49"><b></b></td>
    <td width="12"><b></b></td>
    <td width="49"><b></b></td>
    <td width="12"><b></b></td>
    <td width="52"><b></b></td>
    <td width="17"><b></b></td>
  </tr>
  <tr valign="bottom">
    <td rowspan="2" width="232">
      <p><font size="1">Preferred Stock outstanding, end of<br>
        &nbsp;&nbsp;</font><font size="1">&nbsp;period (in thousands) </font>
        <font size=2></font>
    </td>
    <td rowspan="2" width="24">&nbsp;</td>
    <td rowspan="2" align="right" width="53">
      <p><font size="2">$43,000 </font>
    </td>
    <td rowspan="2" align="left" width="18">&nbsp;</td>
    <td rowspan="2" align="right" width="49">
      <p><font size="2">$44,900 </font>
    </td>
    <td rowspan="2" align="left" width="12">&nbsp;</td>
    <td rowspan="2" align="right" width="49">
      <p><font size="2">$58,000 </font>
    </td>
    <td rowspan="2" align="left" width="12">&nbsp;</td>
    <td rowspan="2" align="right" width="49">
      <p><font size="2">$48,000 </font>
    </td>
    <td rowspan="2" align="left" width="12">&nbsp;</td>
    <td rowspan="2" align="right" width="49">
      <p><font size="2">$48,000 </font>
    </td>
    <td rowspan="2" align="left" width="12">&nbsp;</td>
    <td rowspan="2" align="right" width="52">
      <p><font size="2">$38,000 </font>
    </td>
    <td rowspan="2" align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom">
    <td width="232"><font size="1"></font></td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <hr noshade size="2">
    </td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="232">
      <p><font size="1">Portfolio turnover</font>
    </td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <p><font size="2">20.49</font>
    </td>
    <td align="left" width="18">
      <p><font size="2">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">115.52</font>
    </td>
    <td align="left" width="12">
      <p><font size="2">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">158.57</font>
    </td>
    <td align="left" width="12">
      <p><font size="2">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">141.53</font>
    </td>
    <td align="left" width="12">
      <p><font size="2">%</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">144.34</font>
    </td>
    <td align="left" width="12">
      <p><font size="2">%</font>
    </td>
    <td align="right" width="52">
      <p><font size="2">234.41</font>
    </td>
    <td align="left" width="17">
      <p><font size="2">%</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="232"><font size="1"></font></td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <hr noshade size="2">
    </td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="232">
      <p><font size="1"><b>Leverage: </b></font>
    </td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">&nbsp;</td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">&nbsp;</td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="232">
      <p><font size="1">Asset coverage per $1,000</font>
    </td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <p><font size="2">$&nbsp;&nbsp;2,825</font>
    </td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;2,902</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;2,762</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;3,403</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;3,114</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">
      <p><font size="2">$&nbsp;&nbsp;3,199</font>
    </td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="232"><font size="1"></font></td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <hr noshade size="2">
    </td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td rowspan="2" width="232">
      <p><font size="1"><b>Dividends Per Share on Preferred Stock<br>
        &nbsp;&nbsp;Outstanding: </b></font>
    </td>
    <td rowspan="2" width="24">&nbsp;</td>
    <td align="right" rowspan="2" width="53">&nbsp;</td>
    <td align="left" rowspan="2" width="18">&nbsp;</td>
    <td align="right" rowspan="2" width="49">&nbsp;</td>
    <td align="left" rowspan="2" width="12">&nbsp;</td>
    <td align="right" rowspan="2" width="49">&nbsp;</td>
    <td align="left" rowspan="2" width="12">&nbsp;</td>
    <td align="right" rowspan="2" width="49">&nbsp;</td>
    <td align="left" rowspan="2" width="12">&nbsp;</td>
    <td align="right" rowspan="2" width="49">&nbsp;</td>
    <td align="left" rowspan="2" width="12">&nbsp;</td>
    <td align="right" rowspan="2" width="52">&nbsp;</td>
    <td align="left" rowspan="2" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom">
    <td width="232">
      <p><font size="1">Investment income &#151; net</font>
    </td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <p><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;431</font>
    </td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;1,015</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;644</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;533</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;897</font>
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">
      <p><font size="2">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;564</font>
    </td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="232">&nbsp;</td>
    <td width="24">&nbsp;</td>
    <td align="right" width="53">
      <hr noshade size="2">
    </td>
    <td align="left" width="18">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="49">
      <hr noshade size="2">
    </td>
    <td align="left" width="12">&nbsp;</td>
    <td align="right" width="52">
      <hr noshade size="2">
    </td>
    <td align="left" width="17">&nbsp;</td>
  </tr>
</table>
<font size="2">&lt;/R&gt;</font>
<table width=600>
  <tr>
    <td>
      <hr size=1 noshade align=left  width=75>
    </td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">* </font></td>
    <td width=1%></td>
    <td width=93%><font size="1">Annualized. </font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">** </font></td>
    <td width=1%><font size="1"></font></td>
    <td width=93%><font size="1">Total investment returns exclude the effects
      of the CDSC, if any. (Municipal Strategy is a continuously offered closed-end
      fund, the shares of which are offered by the Fund at net asset value. No
      secondary market exists for the purchase of these shares.) FAM voluntarily
      waived a portion of its management fee. Without such waiver, the Fund&#146;s
      performance would have been lower.</font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">*** </font></td>
    <td width=1%><font size="1"></font></td>
    <td width=93%><font size="1">Do not reflect the effect of dividends to Preferred
      Stock shareholders. </font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">&#134;</font></td>
    <td width=1%>&nbsp;</td>
    <td width=93%><font size="1">&lt;R&gt;Amount is less than $.01 per share.&lt;/R&gt;</font></td>
  </tr>
  <tr>
    <td width=6% align=right valign=top><font size="1">&#134;&#134;</font></td>
    <td width=1%><font size="1"></font></td>
    <td width=93%><font size="1">Commencement of operations. </font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">&#134;&#134;</font><font size="1">&#134;</font></td>
    <td width=1%><font size="1"></font></td>
    <td width=93%><font size="1"> Aggregate total investment return.</font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">&#134;</font><font size="1">&#134;&#134;</font><font size="1">&#134;</font></td>
    <td width=1%><font size="1"></font></td>
    <td width=93%><font size="1"> Municipal Strategy&#146;s Preferred Stock was
      initially issued on March 11, 1996. </font></td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=6% align=right valign=top><font size="1">&#134;</font><font size="1">&#134;</font><font size="1">&#134;</font><font size="1">&#134;</font><font size="1">&#134;</font></td>
    <td width=1%><font size="1"></font></td>
    <td width=93%><font size="1"> Includes Common and Preferred Stock average
      net assets. </font></td>
  </tr>
</table>
<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>Per Share Data for Common Stock
      (Unaudited)</B>&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>MuniYield (Traded on NYSE)</I></FONT></td>
  </tr></table>

<font size="2">&lt;R&gt;</font>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td rowspan="4" width="172"><b></b></td>
    <td rowspan="4" width="14"><b><font size="1">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td rowspan="4" colspan="3" align="center">
      <p><b><font size="1">Market Price**</font></b>
      <hr noshade size="1">
    </td>
    <td rowspan="4" align="center" width="29"><b><font size="1">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td rowspan="4" colspan="3" align="center"><b><font size=2><b><font size="1">Net
      Asset Value</font></b></font></b>
      <hr noshade size="1">
      <b><font size=2><b><font size="1"> </font></b></font></b></td>
    <td rowspan="4" width="14"><b><font size="1">&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td rowspan="4" colspan="4" align="center">
      <p><b><font size="1">Premium<br>
        </font></b> <font size=2> <b><font size="1">(Discount) <br>
        </font></b></font><b><font size="1">to Net <br>
        </font></b><font size=2><b><font size="1">Asset Value </font></b></font>
      <hr noshade size="1" width="90%">
    </td>
  </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom"> </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2"><b><font size="1">&nbsp;&nbsp;&nbsp;Quarter Ended*</font></b>
        </font>
      <hr noshade size="1" width="50%" align="left">
    </td>
    <td width="14"><b></b></td>
    <td align="center" width="39">
      <p><font size="1"><b>High</b> </font>
      <hr noshade size="1">
    </td>
    <td align="center" width="29">&nbsp;</td>
    <td align="center" width="40">
      <p><font size="1"><b>Low</b> </font>
      <hr noshade size="1">
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="1"><b>High</b> </font>
      <hr noshade size="1">
    </td>
    <td align="center" width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="1"><b>Low</b> </font>
      <hr noshade size="1">
    </td>
    <td width="14">&nbsp;</td>
    <td colspan="2" align="center">
      <p><font size="1"><b>High</b> </font>
      <hr noshade size="1" width="70%">
    </td>
    <td colspan="2" align="center">
      <p><font size="1"><b>Low</b> </font>
      <hr noshade size="1" width="60%">
    </td>
  </tr>
  <tr valign="bottom" align="center">
    <td width="172"><b></b></td>
    <td width="14"><b></b></td>
    <td width="39">
      <p><font size="1"><b>$</b> </font>
    </td>
    <td width="29">&nbsp;</td>
    <td width="40">
      <p><font size="1"><b>$</b> </font>
    </td>
    <td width="29">&nbsp;</td>
    <td width="47">
      <p><font size="1"><b>$</b> </font>
    </td>
    <td width="19">&nbsp;</td>
    <td width="48">
      <p><font size="1"><b>$</b> </font>
    </td>
    <td width="14">&nbsp;</td>
    <td colspan="2">
      <p><font size="1"><b>%</b> </font>
    </td>
    <td colspan="2">
      <p><font size="1"><b>%</b></font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">January 31, 1999</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">17.187</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">16.062</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">16.36</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">15.40</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">8.34</font>
    </td>
    <td align="left" width="23">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">2.06</font>
    </td>
    <td align="left" width="28">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">April 30, 1999</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">16.25</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">15.187</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">15.58</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">15.32</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">4.37</font>
    </td>
    <td align="left" width="23">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">(1.25</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">July 31, 1999</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">15.625</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">14.00</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">15.35</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">14.52</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">1.79</font>
    </td>
    <td align="left" width="23">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">(4.37</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">October 31, 1999</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">14.188</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">12.375</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">14.53</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">13.02</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">(1.22</font>
    </td>
    <td align="left" width="23">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(7.42</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">January 31, 2000</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">13.00</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">11.25</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.55</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">12.51</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">(2.51</font>
    </td>
    <td align="left" width="23">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(12.38</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">April 30, 2000</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">12.25</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">11.125</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.24</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">12.50</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">(2.50</font>
    </td>
    <td align="left" width="23">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(13.49</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">July 31, 2000</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">12.625</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">11.375</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.18</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">12.49</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">(3.63</font>
    </td>
    <td align="left" width="23">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(9.58</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">October 31, 2000</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">13.063</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">12.25</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.45</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">13.03</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">(1.37</font>
    </td>
    <td align="left" width="23">
      <p><font size="2">)</font>
    </td>
    <td align="right" width="49">
      <p><font size="2">(7.27</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">January 31, 2001</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">14.11</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">12.313</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.46</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">12.84</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">6.57</font>
    </td>
    <td align="left" width="23">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">(5.00</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">April 30, 2001</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">13.94</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">13.28</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.51</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">12.87</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47">
      <p><font size="2">4.58</font>
    </td>
    <td align="left" width="23">&nbsp;</td>
    <td align="right" width="49">
      <p><font size="2">(.15</font>
    </td>
    <td align="left" width="28">
      <p><font size="2">)</font>
    </td>
  </tr>
  <tr valign="bottom">
    <td width="172">
      <p><font size="2">July 31, 2001</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="left" width="39">
      <p><font size="2">13.80</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="left" width="40">
      <p><font size="2">13.23</font>
    </td>
    <td width="29">&nbsp;</td>
    <td align="center" width="47">
      <p><font size="2">13.58</font>
    </td>
    <td width="19">&nbsp;</td>
    <td align="center" width="48">
      <p><font size="2">12.89</font>
    </td>
    <td width="14">&nbsp;</td>
    <td align="right" width="47"><font size="2">6.03 </font></td>
    <td align="left" width="23">&nbsp;</td>
    <td align="right" width="49"><font size="2">(.38</font> </td>
    <td align="left" width="28"><font size="2">)</font></td>
  </tr>
</table>
<font size="2">&lt;/R&gt;</font>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Calculations
are based on shares of common stock outstanding at the end of each quarter.</font></td></tr></table>


<table width=600>
  <tr>
    <td width=3% align=right valign=top><font size="1">** </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">As reported in the consolidated transaction operating
      system. </font> </td>
  </tr>
</table>
<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As shown above, from
      November 1, 1998 through July 31, 2001, share prices for MuniYield&#146;s
      Common Stock have fluctuated between a maximum premium of approximately
      8.34% and a maximum discount of approximately (13.49%). Although there is
      no reason to believe that this pattern should be affected by the Reorganization,
      it is not possible to predict whether shares of the Combined Fund will trade
      at a premium above or discount from net asset value following the Reorganization,
      or what the magnitude of any such premium or discount might be. &lt;/R&gt;</font></td>
  </tr></table>


<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
18</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<table width=600>
  <tr>
    <td><font size=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal Strategy</i></font></td>
  </tr>
</table>
<br>
<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=590>
  <TR valign="bottom">
    <TD WIDTH="15%"><font size="2">&lt;R&gt;</font></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD colspan="3" align="center"> <FONT SIZE=2>
      <P><b><font size="1">Net Asset Value</font></b>
      </FONT>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><b><font size="1">Quarter Ended*</font></b>
      </FONT>
      <hr noshade size="1" width="80%" align="left">
    </TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="center"> <FONT SIZE=2>
      <P><b><font size="1">High</font></b>
      </FONT>
      <hr noshade size="1">
    </TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="center"> <FONT SIZE=2>
      <P><b><font size="1">Low</font></b>
      </FONT>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%">&nbsp;</TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="center"> <FONT SIZE=2>
      <P><b><font size="1">$</font></b>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="center"> <FONT SIZE=2>
      <P><b><font size="1">$</font></b>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">January 31, 1999</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">11.00</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">10.52</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">April 30, 1999</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">10.66</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">10.48</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">July 31, 1999</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">10.55</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">9.90</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">October 31, 1999</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">9.89</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.76</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">January 31, 2000</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">9.11</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.39</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">April 30, 2000</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.89</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.39</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">July 31, 2000</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.81</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.31</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">October 31, 2000</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.96</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.71</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">January 31, 2001</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">9.22</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.07</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">April 30, 2001</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">9.23</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.85</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="15%"> <FONT SIZE=2>
      <P><font size="2">July 31, 2001</font>
      </FONT></TD>
    <TD WIDTH="61%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">9.32</font>
      </FONT></TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="6%" align="right"> <FONT SIZE=2>
      <P><font size="2">8.85</font>
      </FONT></TD>
  </TR>
</TABLE>



<font size="2">&lt;/R&gt;</font>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>


<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Calculations
are based on shares of common stock outstanding at the end of each quarter.
</font></td></tr></table>


<p><table width=600><tr>
    <td><font size=2><B><a name="8"></a>Investment Objectives and Policies </B></font></td>
  </tr></table>



<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The structure, organization
      and investment policies of the Funds are substantially similar. Each Fund
      seeks as high a level of current income exempt from Federal income tax as
      is consistent with its investment policies. Each Fund&#146;s investment
      objective is a fundamental policy that may not be changed without a vote
      of a majority of a Fund&#146;s outstanding voting securities, as defined
      below under &#147;Investment Restrictions.&#148;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund seeks to achieve
      its investment objective by investing primarily in a portfolio of long term,
      investment grade Municipal Bonds issued by or on behalf of states, territories
      and possessions of the United States and their political subdivisions, agencies
      or instrumentalities that pay interest which, in the opinion of bond counsel
      to the issuer, is exempt from Federal income taxes. Each Fund at all times,
      except during interim and temporary periods, will invest at least 80% of
      its total assets in Municipal Bonds. Each Fund at all times, except during
      temporary defensive periods, will maintain at least 75% of its total assets
      in Municipal Bonds that are rated investment grade by a nationally recognized
      statistical rating organization or, if unrated, are considered to be of
      comparable quality by FAM. Additionally, each Fund may invest up to 25%
      of its total assets in Municipal Bonds that are rated below investment grade
      by a nationally recognized statistical rating organization or are unrated
      but considered by FAM to be of comparable quality. Neither Fund has established
      a minimum percentage of assets that must be invested in such lower quality
      Municipal Bonds. Such lower quality Municipal Bonds are frequently traded
      only in markets where the number of potential purchasers and sellers, if
      any, is very limited.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ordinarily,
neither Fund intends to realize significant interest income that is subject to
Federal income tax. Each Fund will not invest more than 25% of its total assets
(taken at market value) in Municipal Bonds whose issuers are located in the
same state. Each Fund may invest all or a portion of its assets in certain
tax-exempt securities classified as &#147;private activity bonds&#148; (in general, bonds
that benefit non-governmental entities) that may subject certain investors in a
Fund to a Federal alternative minimum tax. Each Fund also may invest in
securities not issued by or on behalf of a state or territory or by an agency
or instrumentality thereof, if a Fund nevertheless believes such securities pay
interest or distributions that are exempt from Federal income taxation
(&#147;Non-Municipal Tax-Exempt Securities&#148;). Non-Municipal Tax-Exempt Securities
may include securities issued by other investment companies that invest in
Municipal Bonds, to the extent such investments are permitted by the Investment
Company Act. Other Non-Municipal Tax-Exempt Securities could include trust
certificates or other instruments evidencing interests in one or more long term
Municipal Bonds. Certain Non-Municipal Tax-Exempt Securities may be
characterized as derivative instruments. Non-Municipal Tax-Exempt Securities
that pay interest exempt from Federal income taxes will be considered
&#147;Municipal Bonds&#148; for purposes of each Fund&#146;s investment objective and
policies. At times, each Fund may seek to hedge its portfolio through the use
of futures transactions and options to reduce volatility in the net asset value
of its shares of common stock.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The investment grade
      Municipal Bonds in which each Fund primarily invests are those Municipal
      Bonds rated at the date of purchase in the four highest rating categories
      of S&amp;P, Moody&#146;s or Fitch or, if unrated, are considered to be of
      comparable quality by FAM. In the case of long term debt, the investment
      grade rating categories are AAA through BBB for S&amp;P and Fitch, and Aaa
      through Baa for Moody&#146;s. In the case of short term notes, the investment
      grade rating categories are SP-l+ through SP-3 for S&amp;P, MIG-1 through
      MIG-3 for Moody&#146;s&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
19</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 25, page: 25" -->







<p><table width=600><tr><td><font size=2>and F-1+ through F-3 for Fitch. In the
case of tax-exempt commercial paper, the investment grade rating categories are
A-1+ through A-3 for S&amp;P, Prime-1 through Prime-3 for Moody&#146;s and F-1+
through F-3 for Fitch. Obligations ranked in the lowest investment grade rating
category (BBB, SP-3 and A-3 for S&amp;P; Baa, MIG-3 and Prime-3 for Moody&#146;s;
and BBB and F-3 for Fitch), while considered &#147;investment grade,&#148; have certain
speculative characteristics. There may be sub-categories or gradations
indicating relative standing within the rating categories set forth above. See
Appendix III to this Proxy Statement and Prospectus for a description of S&amp;P&#146;s,
Moody&#146;s and Fitch&#146;s ratings of Municipal Bonds. Certain Municipal Bonds may be
entitled to the benefit of insurance as well as letters of credit or similar
credit enhancements issued by municipal bond issuers or other financial
institutions. In such instances, the Board of Directors and FAM will take into
account in assessing the quality of such bonds not only the creditworthiness of
the issuer of such bonds but also the creditworthiness of the financial
institution that provided such insurance or credit enhancement.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As noted above, each
      Fund may invest up to 25% of its assets in Municipal Bonds that are rated
      below investment grade or, if unrated, are considered to be of comparable
      quality by FAM. These high yield bonds are commonly referred to as junk
      bonds and are regarded as predominantly speculative as to the issuer&#146;s
      ability to make payments of principal and interest. Consequently, although
      such bonds can be expected to provide higher yields and be less subject
      to interest rate fluctuations, they may be subject to greater market price
      fluctuations and risk of loss of principal than lower yielding, higher rated
      fixed income securities. Such securities are particularly vulnerable to
      adverse changes in the issuer&#146;s industry and in general economic conditions.
      Issuers of high yield bonds may be highly leveraged and may not have available
      to them more traditional methods of financing. The risk of loss due to default
      by the issuer is significantly greater for the holders of these bonds because
      such securities may be unsecured and may be subordinated to other creditors
      of the issuer. In addition, while the high yield bonds in which the Funds
      may invest normally will not include securities that, at the time of investment,
      are in default or the issuers of which are in bankruptcy, there can be no
      assurance that such events will not occur after a Fund purchases a particular
      security, in which case that Fund may experience losses and incur costs.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;High
yield bonds frequently have call or redemption features that permit an issuer
to repurchase such bonds from a Fund, which may decrease the net investment
income to a Fund and dividends to shareholders in the event that a Fund is
required to replace a called security with a lower yielding security. Each Fund
may have difficulty disposing of certain high yield bonds because there may be
a thin trading market for such securities. Reduced secondary market liquidity
may have an adverse impact on market price and each Fund&#146;s ability to dispose
of particular issues when necessary to meet that Fund&#146;s liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. In addition, market quotations are generally
available on many high yield bond issues only from a limited number of dealers
and may not necessarily represent firm bids of such dealers or prices for
actual sales.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may invest in variable rate demand obligations (&#147;VRDOs&#148;) and VRDOs in the
form of participation interests (&#147;Participating VRDOs&#148;) in variable rate
tax-exempt obligations held by a financial institution, typically a commercial
bank. The VRDOs in which each Fund may invest are tax-exempt obligations, in
the opinion of counsel to the issuer, that contain a floating or variable
interest rate adjustment formula and an unconditional right of demand on the
part of the holder thereof to receive payment of the unpaid principal balance
plus accrued interest on a notice period not to exceed seven days.
Participating VRDOs provide a Fund with a specified undivided interest (up to
100%) in the underlying obligation and the right to demand payment of the
unpaid principal balance plus accrued interest on the Participating VRDOs from
the financial institution on a specified number of days&#146; notice, not to exceed
seven days. There is, however, the possibility that because of default or
insolvency, the demand feature of VRDOs or Participating VRDOs may not be
honored. Each Fund has been advised by its counsel that a Fund should be
entitled to treat the income received on Participating VRDOs as interest from
tax-exempt obligations.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
average maturity of each Fund&#146;s portfolio securities will vary based upon FAM&#146;s
assessment of economic and market conditions. The net asset value of the shares
of common stock of closed-end investment companies, such as the Funds, which
invest primarily in fixed-income securities, changes as the general levels of
interest rates fluctuate. When interest rates decline, the value of a
fixed-income portfolio generally can be expected to rise. Conversely, when
interest rates rise, the value of a fixed-income portfolio generally can be
expected to decline. Prices of longer-term securities generally fluctuate more
in response to interest rate changes than do short-term or medium-term
securities. These changes in net asset value are likely to be greater in the
case of a fund having a leveraged capital structure, such as that used by the
Funds. See &#147;Risk Factors and Special Considerations&#151;Leverage.&#148;</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
20</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund intends
      to invest primarily in long-term Municipal Bonds with maturities of more
      than ten years. Also, each Fund may invest in intermediate term Municipal
      Bonds with maturities of between three years and ten years. Each Fund may
      invest in short term, tax-exempt securities, short term U.S. Government
      securities, repurchase agreements or cash. Investments in such short term
      securities or cash will not exceed 20% of a Fund&#146;s total assets except
      during interim periods pending investment of the net proceeds of public
      offerings of that Fund&#146;s securities or in anticipation of the repurchase
      or redemption of that Fund&#146;s securities and temporary periods when,
      in the opinion of FAM, prevailing market or economic conditions warrant.
      The Funds do not ordinarily intend to realize significant interest income
      not exempt from Federal income taxes.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund is classified as non-diversified within the meaning of the Investment
Company Act, which means that the Funds are not limited by the Investment
Company Act in the proportion of their respective assets that they may invest
in securities of a single issuer. However, each Fund&#146;s investments will be
limited so as to qualify the Fund for the special tax treatment afforded
regulated investment companies (&#147;RICs&#148;) under the Federal tax laws. See
&#147;Comparison of the Funds&#151;Tax Rules Applicable to the Funds and Their
Stockholders.&#148; Requirements for qualification as a RIC include, among others,
limiting its investments so that, at the close of each quarter of the taxable
year, (i) not more than 25% of the market value of the Fund&#146;s total assets will
be invested in the securities (other than U.S. Government securities) of a
single issuer, and (ii) with respect to 50% of the market value of its total
assets, not more than 5% of the market value of its total assets will be
invested in the securities (other than U.S. Government securities) of a single
issuer. A fund that elects to be classified as &#147;diversified&#148; under the
Investment Company Act must satisfy, among other requirements, the foregoing 5%
requirement with respect to 75% of its total assets. To the extent that a Fund
assumes large positions in the securities of a small number of issuers, that
Fund&#146;s yield may fluctuate to a greater extent than that of a diversified
investment company as a result of changes in the financial condition or in the
market&#146;s assessment of the issuers.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="9"></a>Description of Municipal Bonds</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Bonds include debt obligations issued to obtain funds for various public
purposes, including construction of a wide range of public facilities,
refunding of outstanding obligations and obtaining funds for general operating
expenses and loans to other public institutions and facilities. In addition,
certain types of private activity bonds (&#147;PABs&#148;) are issued by or on behalf of
public authorities to finance various privately operated facilities, including
airports, public ports, mass commuting facilities, multifamily housing
projects, as well as facilities for water supply, gas, electricity, sewage or
solid waste disposal. For purposes of this Proxy Statement and Prospectus, such
obligations are Municipal Bonds if the interest paid thereon is exempt from
Federal income tax even though such bonds may be PABs. Also, for purposes of
this Proxy Statement and Prospectus, Non-Municipal Tax-Exempt Securities that
pay interest that is exempt from Federal income tax will be considered
Municipal Bonds.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The two
principal classifications of Municipal Bonds are &#147;general obligation&#148; bonds and
&#147;revenue&#148; bonds, which latter category includes PABs and, for bonds issued on
or before August 15, 1986, industrial development bonds or &#147;IDBs.&#148; General
obligation bonds are secured by the issuer&#146;s pledge of faith, credit and taxing
power for the repayment of principal and the payment of interest. Revenue or
special obligation bonds are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as from the user
of the facility being financed. PABs are in most cases revenue bonds and do not
generally constitute the pledge of the credit or taxing power of the issuer of
such bonds. The payment of principal and interest when due on revenue bonds
depends solely on the ability of the user of the facility financed by the bonds
to meet its financial obligations and the pledge, if any, of real and personal
property so financed as security for such payment. Municipal Bonds may also
include &#147;moral obligation&#148; bonds, which are normally issued by special purpose
public authorities. If an issuer of moral obligation bonds is unable to meet
its obligations, the repayment of such bonds becomes a moral commitment but not
a legal obligation of the state or municipality in question.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may purchase Municipal Bonds classified as PABs. Interest received on
certain PABs is treated as an item of &#147;tax preference&#148; for purposes of the
Federal alternative minimum tax and may impact the overall tax liability of
investors in a Fund. There is no limitation on the percentage of each Fund&#146;s
assets that may be invested in Municipal Bonds the interest on which is treated
as an item of &#147;tax preference&#148; for purposes of the Federal alternative minimum
tax. See &#147;Comparison of the Funds&#151;Tax Rules Applicable to the Funds and Their
Stockholders.&#148;</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
21</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also
included within the general category of Municipal Bonds are certificates of
participation (&#147;COPs&#148;) executed and delivered for the benefit of government
authorities or entities to finance the acquisition or construction of
equipment, land and/or facilities. COPs represent participation interests in a
lease, an installment purchase contract or a conditional sales contract
(hereinafter collectively referred to as &#147;lease obligations&#148;) relating to such
equipment, land or facilities. Although lease obligations do not constitute
general obligations of the issuer for which the issuer&#146;s unlimited tax power is
pledged, a lease obligation frequently is backed by the issuer&#146;s covenant to
budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain &#147;non-appropriation&#148; clauses, which
provide that the issuer has no obligation to make lease or installment purchase
payments in future years unless money is appropriated for such purpose on a
yearly basis. Although &#147;non-appropriation&#148; lease obligations are secured by the
lease property, disposition of such property in the event of foreclosure might
prove to be difficult and the proceeds thereof may not be sufficient to pay
principal and interest when due on such obligations.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal
tax legislation has limited the types and volume of bonds qualifying for the
Federal income tax exemption of interest. As a result, this legislation and
legislation that may be enacted in the future may affect the availability of
Municipal Bonds for investment by the Funds.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="10"></a>Other Investment Policies</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund has adopted certain other policies as set forth below:</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Borrowings</I>.
Each Fund is authorized to borrow money in amounts of up to 5% of the value of
its total assets at the time of such borrowings; provided, however, that
MuniYield is authorized to borrow moneys in excess of 5% of the value of its
total assets for the purpose of repurchasing its own common stock or redeeming
shares of preferred stock and Municipal Strategy is authorized to borrow money
in amounts of up to 33<FONT SIZE="1"><SUP>1</SUP></FONT>/<FONT SIZE="1">3</FONT>% of the value of its total assets at the time of such
borrowings to finance the repurchase of its own common stock pursuant to tender
offers or otherwise to redeem or repurchase shares of preferred stock or for
temporary, extraordinary or emergency purposes. Borrowings by each Fund
(commonly known, as with the issuance of preferred stock, as &#147;leveraging&#148;)
create an opportunity for greater total return since the Funds will not be
required to sell portfolio securities to repurchase or redeem shares but, at
the same time, such borrowings increase exposure to capital risk. In addition,
borrowed funds are subject to interest costs that may offset or exceed the
return earned on the borrowed funds.</FONT></td></tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>When-Issued Securities
      and Delayed Delivery Transactions.</I> Each Fund may purchase or sell Municipal
      Bonds on a delayed delivery basis or on a when-issued basis at fixed purchase
      or sale terms. These transactions arise when securities are purchased or
      sold by a Fund with payment and delivery taking place in the future. The
      purchase will be recorded on the date a Fund enters into the commitment,
      and the value of the obligation will thereafter be reflected in the calculation
      of that Fund&#146;s net asset value. The value of the obligation on the
      delivery day may be more or less than its purchase price. A separate account
      of a Fund will be established with its custodian, consisting of cash, cash
      equivalents or liquid Municipal Bonds having a market value at all times
      at least equal to the amount of the commitment.</FONT></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indexed and Inverse
      Floating Obligations.</I> Each Fund may invest in Municipal Bonds (and Non-Municipal
      Tax-Exempt Securities) yielding a return based on a particular index of
      value or interest rates. For example, each Fund may invest in Municipal
      Bonds that pay interest based upon maturity of certain Municipal Bonds (and
      Non-Municipal Tax-Exempt Securities) and on the value of an index. To the
      extent a Fund invests in these types of Municipal Bonds, that Fund&#146;s
      return on such Municipal Bonds will be subject to risk with respect to the
      value of the particular index including reduced or eliminated interest payments
      and losses of invested principal. Also, each Fund may invest in so-called
      &#147;inverse floating obligations&#148; or &#147;residual interest bonds&#148;
      on which the interest rates typically vary inversely with a short-term floating
      rate (which may be reset periodically by a Dutch auction, a remarketing
      agent, or by reference to a short-term tax-exempt interest rate index).
      Each Fund may purchase synthetically-created inverse floating rate bonds
      evidenced by custodial or trust receipts. Generally, income on inverse floating
      rate bonds will decrease when short-term interest rates increase, and will
      increase when short-term interest rates decrease. Such securities have the
      effect of providing a degree of investment leverage, since they may increase
      or decrease in value in response to changes, as an illustration, in market
      interest rates at a rate that is a multiple (typically two) of the rate
      at which fixed rate, long term, tax-exempt securities increase or decrease
      in response to such changes. As a result, the market values of such securities
      generally will be more volatile than the market values of fixed rate tax-exempt
      securities. To seek to limit the volatility of these securities, each Fund
      may purchase inverse floating obligations with shorter term maturities or
      limitations on the</FONT> <font size="2">&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
22</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>extent to which the interest rate may
vary. FAM believes that indexed and inverse floating obligations represent a
flexible portfolio management instrument for each Fund that allows FAM to vary
the degree of investment leverage relatively efficiently under different market
conditions.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Call
Rights.</I> Each Fund may purchase a Municipal Bond issuer&#146;s right to call all or a
portion of such Municipal Bond for mandatory tender for purchase (a &#147;Call
Right&#148;). A holder of a Call Right may exercise such right to require a
mandatory tender for the purchase of related Municipal Bonds, subject to
certain conditions. A Call Right that is not exercised prior to the maturity of
the related Municipal Bond will expire without value. The economic effect of
holding both the Call Right and the related Municipal Bond is identical to
holding a Municipal Bond as a non-callable security.</FONT></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Repurchase
Agreements.</I> Each Fund may invest in Municipal Bonds and U.S. Government
securities pursuant to repurchase agreements. Repurchase agreements may be
entered into only with a member bank of the Federal Reserve System or a primary
dealer in U.S. Government securities or an affiliate thereof. Under such
agreements, the seller agrees, upon entering into the contract, to repurchase
the security at a mutually agreed-upon time and price, thereby determining the
yield during the term of the agreement. A Fund may not invest in repurchase
agreements maturing in more than seven days if such investments, together with
all other illiquid investments, would exceed 15% of that Fund&#146;s net assets. In
the event of default by the seller under a repurchase agreement, a Fund may
suffer time delays and incur costs or possible losses in connection with the
disposition of the underlying securities. In general, for Federal income tax
purposes, repurchase agreements are treated as collateralized loans secured by
the securities &#147;sold.&#148; Therefore, amounts earned under such agreements will not
be considered tax-exempt interest.</FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="11"></a>Information Regarding Options and Futures
      Transactions</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may hedge all or a portion of its portfolio investments against
fluctuations in interest rates through the use of options and certain financial
futures contracts and options thereon. While each Fund&#146;s use of hedging
strategies is intended to reduce the volatility of the net asset value of the
common stock, the net asset value of the common stock will fluctuate. There can
be no assurance that a Fund&#146;s hedging transactions will be effective. In
addition, because of the leveraged nature of the common stock, hedging
transactions will result in a larger impact on the net asset value of the
common stock than would be the case if the common stock were not leveraged.
Furthermore, a Fund may only engage in hedging activities from time to time and
may not necessarily be engaging in hedging activities when movements in
interest rates occur. Neither Fund is required to enter into hedging
transactions and each may choose not to do so.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gains from transactions
      in options and futures contracts distributed to stockholders are taxable
      as ordinary income or, in certain circumstances, as long term capital gains
      to stockholders. See &#147;Comparison of the Funds&#151;Tax Treatment of
      Options and Futures Transactions.&#148; In addition, in order to obtain
      ratings of the AMPS from one or more nationally recognized statistical rating
      organizations, a Fund may be required to limit its use of hedging techniques
      in accordance with the specified guidelines of such rating organizations.
      See &#147;Rating Agency Guidelines.&#148;&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following is a description of the options and futures transactions in which
each Fund may engage, limitations on the Fund&#146;s use of such transactions and
risks associated with these transactions. The investment policies with respect
to the hedging transactions of a Fund are not fundamental policies and may be
modified by the Board of Directors of that Fund without the approval of that
Fund&#146;s stockholders.</font></td></tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Writing Covered
      Call Options.</I> Each Fund is authorized to write (<i>i.e.</i>, sell) covered
      call options with respect to Municipal Bonds it owns, thereby giving the
      holder of the option the right to buy the underlying security covered by
      the option from the Fund at the stated exercise price until the option expires.
      Each Fund writes only covered call options, which means that so long as
      the Fund is obligated as the writer of a call option, it will own the underlying
      securities subject to the option. Neither Fund may write covered call options
      on underlying securities in an amount exceeding 15% of the market value
      of its total assets.&lt;/R&gt;</FONT></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund receives a premium from writing a call option, which increases a Fund&#146;s
return on the underlying security in the event the option expires unexercised
or is closed out at a profit. By writing a call, a Fund limits its opportunity
to profit from an increase in the market value of the underlying security above
the exercise price of the option for as long as that Fund&#146;s obligation as a
writer continues. Covered call options serve as a partial hedge against a
decline in the price of the underlying security. Each Fund may engage in
closing transactions in order to terminate outstanding options that it has
written.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
23</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Purchase
of Options.</I> Each Fund may purchase put options in connection with its hedging
activities. By buying a put, a Fund has a right to sell the underlying security
at the exercise price, thus limiting its risk of loss through a decline in the
market value of the security until the put expires. The amount of any
appreciation in the value of the underlying security will be partially offset
by the amount of the premium paid for the put option and any related
transaction costs. Prior to its expiration, a put option may be sold in a
closing sale transaction; profit or loss from the sale will depend on whether
the amount received is more or less than the premium paid for the put option
plus the related transaction costs. A closing sale transaction cancels out a
Fund&#146;s position as the purchaser of an option by means of an offsetting sale of
an identical option prior to the expiration of the option it has purchased. In
certain circumstances, a Fund may purchase call options on securities held in
its portfolio on which it has written call options, or on securities which it
intends to purchase. Neither Fund will purchase options on securities if, as a
result of such purchase, the aggregate cost of all outstanding options on
securities held by that Fund would exceed 5% of the market value of that Fund&#146;s
total assets.</FONT></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial
Futures Contracts and Options.</I> Each Fund is authorized to purchase and sell
certain financial futures contracts and options thereon solely for the purposes
of hedging its investments in Municipal Bonds against declines in value and
hedging against increases in the cost of securities it intends to purchase. A
financial futures contract obligates the seller of a contract to deliver and
the purchaser of a contract to take delivery of the type of financial
instrument covered by the contract or, in the case of index-based financial
futures contracts, to make and accept a cash settlement, at a specific future
time for a specified price. A sale of financial futures contracts may provide a
hedge against a decline in the value of portfolio securities because such
depreciation may be offset, in whole or in part, by an increase in the value of
the position in the financial futures contracts or options. A purchase of
financial futures contracts may provide a hedge against an increase in the cost
of securities intended to be purchased, because such appreciation may be
offset, in whole or in part, by an increase in the value of the position in the
financial futures contracts.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
purchase or sale of a financial futures contract differs from the purchase or
sale of a security in that no price or premium is paid or received. Instead, an
amount of cash or securities acceptable to the broker equal to approximately 5%
of the contract amount must be deposited with the broker. This amount is known
as initial margin. Subsequent payments to and from the broker, called variation
margin, are made on a daily basis as the price of the financial futures
contract fluctuates making the long and short positions in the financial
futures contract more or less valuable.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may purchase and sell financial futures contracts based on The Bond Buyer
Municipal Bond Index, a price-weighted measure of the market value of 40 large
tax-exempt issues, and purchase and sell put and call options on such financial
futures contracts for the purpose of hedging Municipal Bonds that a Fund holds
or anticipates purchasing against adverse changes in interest rates. Each Fund
also may purchase and sell financial futures contracts on U.S. Government
securities and purchase and sell put and call options on such financial futures
contracts for such hedging purposes. With respect to U.S. Government
securities, currently there are financial futures contracts based on long-term
U.S. Treasury bonds, U.S. Treasury notes, GNMA Certificates and three-month
U.S. Treasury bills.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to policies adopted by its Board of Directors, each Fund also may engage in
transactions in other financial futures contracts, such as financial futures
contracts on other municipal bond indices that may become available, if FAM
should determine that there is normally sufficient correlation between the
prices of such financial futures contracts and the Municipal Bonds in which a
Fund invests to make such hedging appropriate.</font></td></tr></table>

<font size="2">&lt;R&gt;</font><br>
<table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Over-The-Counter Options.</I>
      Each Fund may engage in options and futures transactions on exchanges and
      in the over-the-counter markets (&#147;OTC options&#148;). In general, exchange-traded
      contracts are third-party contracts (<i>i.e.</i>, performance of the parties&#146;
      obligations is guaranteed by an exchange or clearing corporation) with standardized
      strike prices and expiration dates. OTC option transactions are two-party
      contracts with price and terms negotiated by the buyer and seller. See &#147;Restrictions
      on OTC Options&#148; below for information as to restrictions on the use
      of OTC options.&lt;/R&gt;</FONT></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Restrictions
on OTC Options.</I> Each Fund will engage in transactions in OTC options only with
banks or dealers that have capital of at least $50 million or whose obligations
are guaranteed by an entity having capital of at least $50 million. Certain OTC
options and assets used to cover OTC options written by the Funds are
considered to be illiquid. The illiquidity of such options or assets may
prevent a successful sale of such options or assets, result in a delay of sale,
or reduce the amount of proceeds that otherwise might be realized.</FONT></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
24</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Risk
Factors in Financial Futures Contracts and Options Thereon.</I> Utilization of
futures transactions involves the risk of imperfect correlation in movements in
the price of financial futures contracts and movements in the price of the
security that is the subject of the hedge. If the price of the financial
futures contract moves more or less than the price of the security that is the
subject of the hedge, a Fund will experience a gain or loss that will not be
completely offset by movements in the price of such security. There is a risk
of imperfect correlation where the securities underlying financial futures
contracts have different maturities, ratings, geographic compositions or other
characteristics different from those of the security being hedged. In addition,
the correlation may be affected by additions to or deletions from the index
that serves as a basis for a financial futures contract. Finally, in the case
of financial futures contracts on U.S. Government securities and options on
such financial futures contracts, the anticipated correlation of price
movements between the U.S. Government securities underlying the futures or
options and Municipal Bonds may be adversely affected by economic, political,
legislative or other developments which have a disparate impact on the
respective markets for such securities.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
regulations of the Commodity Futures Trading Commission, the futures trading
activities described herein will not result in a Fund being deemed a &#147;commodity
pool,&#148; as defined under such regulations, provided that such Fund adheres to
certain restrictions. In particular, a Fund may purchase and sell financial
futures contracts and options thereon (i) for bona fide hedging purposes,
without regard to the percentage of that Fund&#146;s assets committed to margin and
option premiums, and (ii) for non-hedging purposes, if, immediately thereafter
the sum of the amount of initial margin deposits on that Fund&#146;s existing
futures positions and option premiums entered into for non-hedging purposes do
not exceed 5% of the market value of the liquidation value of that Fund&#146;s
portfolio, after taking into account unrealized profits and unrealized losses
on any such transactions. Margin deposits may consist of cash or securities
acceptable to the broker and the relevant contract market.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When a
Fund purchases a financial futures contract, or writes a put option or
purchases a call option thereon, it will maintain an amount of cash, cash
equivalents (<i>e.g.</i>, commercial paper and daily tender adjustable notes) or
liquid securities in a segregated account with that Fund&#146;s custodian, so that
the amount so segregated plus the amount of initial and variation margin held
in the account of its broker equals the market value of the financial futures
contract, thereby ensuring that the use of such financial futures contract is
unleveraged.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
certain risks are involved in options and futures transactions, FAM believes
that, because the Funds will engage in options and futures transactions only
for hedging purposes, the options and futures portfolio strategies of the Funds
will not subject them to certain risks associated with speculation in options
and futures transactions.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
volume of trading in the exchange markets with respect to Municipal Bond
options may be limited, and it is impossible to predict the amount of trading
interest that may exist in such options. In addition, no assurance can be given
that viable exchange markets will continue.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund intends to enter into options and futures transactions, on an exchange or
in the over-the-counter market, only if there appears to be a liquid secondary
market for such options or futures. There can be no assurance, however, that a
liquid secondary market will exist at any specific time. Thus, it may not be
possible to close an option or futures transaction. The inability to close
options and futures positions also could have an adverse impact on a Fund&#146;s
ability to effectively hedge its portfolio. There is also the risk of loss by a
Fund of margin deposits or collateral in the event of bankruptcy of a broker
with which that Fund has an open position in an option or financial futures
contract.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
liquidity of a secondary market in a financial futures contract may be
adversely affected by &#147;daily price fluctuation limits&#148; established by commodity
exchanges that limit the amount of fluctuation in a financial futures contract
price during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. Prices have in the past
moved beyond the daily limit on a number of consecutive trading days.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If it is
not possible to close a financial futures position entered into by a Fund, that
Fund would continue to be required to make daily cash payments of variation
margin in the event of adverse price movements. In such a situation, if a Fund
has insufficient cash, it may have to sell portfolio securities to meet daily
variation margin requirements at a time when it may be disadvantageous to do so.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
25</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 31, page: 31" -->





<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
successful use of these transactions also depends on the ability of FAM to
forecast correctly the direction and extent of interest rate movements within a
given time frame. To the extent these rates remain stable during the period in
which a financial futures contract is held by a Fund or move in a direction
opposite to that anticipated, that Fund may realize a loss on the hedging
transaction that is not fully or partially offset by an increase in the value
of portfolio securities. As a result, a Fund&#146;s total return for such period may
be less than if it had not engaged in the hedging transaction. Furthermore, a
Fund will only engage in hedging transactions from time to time and may not
necessarily be engaging in hedging transactions when movements in interest
rates occur.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="12"></a>Investment Restrictions</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Funds have similar
      investment restrictions. The following are fundamental investment restrictions
      of MuniYield and may not be changed without the approval of the holders
      of a majority of the outstanding shares of common stock and the outstanding
      shares of AMPS and any other preferred stock, voting together as a single
      class, and a majority of the outstanding shares of AMPS and any other preferred
      stock, voting separately as a class. These fundamental restrictions will
      also be the fundamental restrictions of the Combined Fund. (For this purpose
      and under the Investment Company Act, for the common stock and AMPS voting
      together as a single class &#147;majority&#148; means the lesser of (i)
      67% of the shares of each class of capital stock represented at a meeting
      at which more than 50% of the outstanding shares of each class of capital
      stock are represented or (ii) more than 50% of the outstanding shares of
      each class of capital stock.) For the AMPS voting separately as a single
      class, &#147;majority&#148; means more than 50% of the outstanding AMPS
      MuniYield may not:&lt;/R&gt;</font></td>
  </tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2> 1)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Make investments for the purpose of exercising control or management.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2> 2)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Purchase securities of other investment companies, except in connection with a
merger, consolidation, acquisition or reorganization, or by purchase in the
open market of securities of closed-end investment companies and only if
immediately thereafter not more than 10% of MuniYield&#146;s total assets would be
invested in such securities.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>3)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Purchase or sell real estate, real estate limited partnerships, commodities or
commodity contracts; provided that the Fund may invest in securities secured by
real estate or interests therein or issued by companies that invest in real
estate or interests therein and MuniYield may purchase and sell financial
futures contracts and options thereon.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>4)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Issue senior securities other than preferred stock or borrow amounts in excess
of 5% of its total assets taken at market value; provided, however, that
MuniYield is authorized to borrow moneys in excess of 5% of the value of its
total assets for the purpose of repurchasing shares of common stock or
redeeming shares of preferred stock.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>5)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Underwrite securities of other issuers except insofar as MuniYield may be
deemed an underwriter under the Securities Act in selling portfolio securities.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>6)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Make loans to other persons, except that MuniYield may purchase Municipal Bonds
and other debt securities in accordance with its investment objective, policies
and limitations.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>7)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Purchase any securities on margin, except that MuniYield may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities (the deposit or payment by MuniYield of initial or
variation margin in connection with financial futures contracts and options
thereon is not considered the purchase of a security on margin).</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>8)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Make short sales of securities or maintain a short position or invest in put,
call, straddle or spread options, except that MuniYield may write, purchase and
sell options and futures on Municipal Bonds, U.S. Government obligations and
related indices or otherwise in connection with bona fide hedging activities.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=2>9)</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>
Invest more than 25% of its total assets (taken at market value at the time of
each investment) in securities of issuers in a single industry; provided that,
for purposes of this restriction, states, municipalities and their political
subdivisions are not considered to be part of any industry.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of restriction (9), the exception for states, municipalities and their
political subdivisions applies only to tax-exempt securities issued by such
entities.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
26</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy&#146;s fundamental investment restrictions are the same as MuniYield&#146;s
fundamental investment restrictions (1), (3), (4), (5), (6) and (9) above.
Municipal Strategy is subject to certain non-fundamental investment
restrictions set forth below. Two of those restrictions (b. and c.) are similar
to restrictions (7) and (8) of MuniYield.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
additional investment restriction adopted by each Fund, which may be changed by
the Board of Directors without shareholder approval, provides that neither Fund
may mortgage, pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by such Fund except as may be
necessary in connection with borrowings mentioned in investment restriction (4)
above or except as may be necessary in connection with transactions in
financial futures contracts and options thereon.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy has also adopted the following additional non-fundamental investment
restrictions, which may be changed by its Board of Directors without
shareholder approval. These restrictions provide that the Fund may not:</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.
</FONT></TD><TD width=90% valign=top><font size=2>Purchase securities of other
investment companies, except to the extent that such purchases are permitted by
applicable law. Applicable law currently prohibits the Fund from purchasing the
securities of other investment companies except if immediately thereafter not
more than (i) 3% of the total outstanding voting stock of such company is owned
by the Fund, (ii) 5% of the Fund&#146;s total assets, taken at market value, would
be invested in any one such company, (iii) 10% of the Fund&#146;s total assets,
taken at market value, would be invested in such securities, and (iv) the Fund,
together with other investment companies having the same investment adviser and
companies controlled by such companies, owns not more than 10% of the total
outstanding stock of any one closed-end investment company.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.
</FONT></TD><TD width=90% valign=top><font size=2>Purchase any securities on
margin, except that the Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio securities (the
deposit or payment by the Fund of initial or variation margin in connection
with financial futures contracts and options thereon is not considered the
purchase of a security on margin).</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.
</FONT></TD><TD width=90% valign=top><font size=2>Make short sales of
securities or maintain a short position or invest in put, call, straddle or
spread options, except that the Fund may write, purchase and sell options and
futures on Municipal Bonds, U.S. Government obligations and related indices or
otherwise in connection with bona fide hedging activities and may purchase and
sell Call Rights to require mandatory tender for the purchase of related
Municipal Bonds.</font></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a
percentage restriction on the investment or use of assets set forth above is
adhered to at the time a transaction is effected, later changes in percentages
resulting from changing values will not be considered a violation.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For so long as shares
      of AMPS are rated by Moody&#146;s, no Fund will change its additional investment
      restrictions unless it receives written confirmation from Moody&#146;s that
      engaging in such transactions would not impair the rating then assigned
      to the shares of AMPS by Moody&#146;s.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAM and
Merrill Lynch are owned and controlled by Merrill Lynch &amp; Co., Inc. (&#147;ML
&amp; Co.&#148;). Because of the affiliation of Merrill Lynch with FAM, each Fund is
prohibited from engaging in certain transactions involving Merrill Lynch except
pursuant to an exemptive order or otherwise in compliance with the provisions
of the Investment Company Act and the rules and regulations thereunder.
Included among such restricted transactions will be purchases from or sales to
Merrill Lynch of securities in transactions in which it acts as principal. An
exemptive order has been obtained that permits the Funds to effect principal
transactions with Merrill Lynch in high quality, short-term, tax-exempt
securities subject to conditions set forth in such order.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="13"></a>Rating Agency Guidelines</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund intends that, so long as shares of its AMPS are outstanding, the
composition of its portfolio will reflect guidelines established by Moody&#146;s and
S&amp;P in connection with a Fund&#146;s receipt of a rating for such shares on or
prior to their date of original issue of at least aaa from Moody&#146;s and AAA
from S&amp;P. Moody&#146;s and S&amp;P, which are nationally recognized statistical
rating organizations, issue ratings for various securities reflecting the
perceived creditworthiness of such securities. The guidelines for rating AMPS
have been developed by Moody&#146;s and S&amp;P in connection with issuances of
asset-backed and similar securities, including debt obligations and variable
rate preferred stock, generally on a case-by-case basis through discussions
with the issuers of these &lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
27</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 33, page: 33" -->





<p><table width=600><tr><td><font size=2>securities. The guidelines are
designed to ensure that assets underlying outstanding debt or preferred stock
will be sufficiently varied and of sufficient quality and amount to justify
investment grade ratings. The guidelines do not have the force of law but have
been adopted by each Fund in order to satisfy current requirements necessary
for Moody&#146;s and S&amp;P to issue the above-described ratings for shares of
AMPS, which ratings generally are relied upon by institutional investors in
purchasing such securities. The guidelines provide a set of tests for portfolio
composition and asset coverage that supplement (and in some cases are more
restrictive than) the applicable requirements under the Investment Company Act.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund may, but
      is not required to, adopt any modifications to these guidelines that hereafter
      may be established by Moody&#146;s or S&amp;P. Failure to adopt any such
      modifications, however, may result in a change in the ratings described
      above or a withdrawal of the ratings altogether. In addition, any rating
      agency providing a rating for the shares of AMPS, at any time, may change
      or withdraw any such rating. As set forth in the Articles Supplementary
      of each Fund, the Board of Directors, without stockholder approval, may
      modify certain definitions or restrictions that have been adopted by a Fund
      pursuant to the rating agency guidelines, provided the Board of Directors
      has obtained written confirmation from Moody&#146;s and S&amp;P that any
      such change would not impair the ratings then assigned by Moody&#146;s and
      S&amp;P to the AMPS. See &#147;Risk Factors and Special Considerations&#151;Ratings
      Considerations.&#148;&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For so
long as any shares of a Fund&#146;s AMPS are rated by Moody&#146;s or S&amp;P, as the
case may be, a Fund&#146;s use of options and financial futures contracts and
options thereon will be subject to certain limitations mandated by the rating
agencies.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="14"></a>Portfolio Composition</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are differences
      in concentration among the types of securities held in the portfolio of
      each Fund. For MuniYield, as of July 31, 2001, approximately 94.2%, 3.3%
      and 2.5% of its portfolio was invested in revenue bonds, general obligation
      bonds and cash equivalents, respectively; for Municipal Strategy, approximately
      81.0% and 19.0% of its portfolio was invested in revenue bonds and general
      obligation bonds,  respectively.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
the investment portfolios of the Funds must satisfy the same standards with
respect to credit quality, the actual securities owned by each Fund will not be
identical. As a result, there are certain differences in the composition of the
two investment portfolios. The tables below set forth ratings information as of
July 31, 2001 for the Municipal Bonds held by each Fund.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>MuniYield</I></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of July 31, 2001,
      approximately 96.9% and 3.1% of the market value of MuniYield&#146;s portfolio
      was invested in long term municipal obligations and short term municipal
      obligations, respectively. The following table sets forth certain information
      with respect to the composition of MuniYield&#146;s long term municipal
      obligation investment portfolio as of July 31, 2001.</font></td>
  </tr></table>


<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom" align="center">
    <TD rowspan="2" WIDTH="54"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2"></font></TD>
    <TD rowspan="2" WIDTH="47"><b></b> <FONT SIZE=2>
      <P><b><font size="1">S&amp;P </font></b>
      </FONT>
      <hr noshade size="1" width="90%">
      <FONT SIZE=2></FONT></TD>
    <TD rowspan="2" WIDTH="36">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" WIDTH="53"><b></b> <FONT SIZE=2>
      <P><b><font size="1">Moody&#146;s </font></b>
      </FONT>
      <hr noshade size="1" width="90%">
      <b><font size="1"> </font></b> <FONT SIZE=2></FONT></TD>
    <TD rowspan="2" WIDTH="36">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" WIDTH="109"><b></b> <FONT SIZE=2>
      <P><b><font size="1">Number of Issues </font></b>
      </FONT>
      <hr noshade size="1" width="80%">
      <b><font size="1"> </font></b> <FONT SIZE=2></FONT></TD>
    <TD rowspan="2" WIDTH="47">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" WIDTH="50">
      <P><b><font size="1">Value (in<br>
        </font></b><b><font size="1">Thousands) </font></b>
      <hr noshade size="1">
    </TD>
    <TD rowspan="2" WIDTH="48">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" colspan="2"><b></b>
      <P><b><font size="1">Percent </font></b>
      <hr noshade size="1" width="90%">
    </TD>
    <TD rowspan="2" WIDTH="60"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2"></font></TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;AAA</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;Aaa</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;62</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">$339,453</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">45.0</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"> <FONT SIZE=2>
      <P><font size="2">%</font>
      </FONT></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;AA</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;Aa</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;22</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">104,103</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">13.8</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;A</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;A</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;4</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">48,573</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">6.4</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;BBB</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;Baa</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;19</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">127,624</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">16.9</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;NR</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;NR</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;26</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">134,946</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">17.9</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54" height="18">&nbsp;</TD>
    <TD WIDTH="136" colspan="3" align="center" height="18">&nbsp;</TD>
    <TD WIDTH="36" height="18">&nbsp;</TD>
    <TD align="center" WIDTH="109" height="18">
      <hr noshade size="1" width="40%">
    </TD>
    <TD align="center" WIDTH="47" height="18">&nbsp;</TD>
    <TD align="right" WIDTH="50" height="18">
      <hr noshade size="1">
    </TD>
    <TD WIDTH="48" height="18">&nbsp;</TD>
    <TD align="right" WIDTH="42" height="18">
      <hr noshade size="1">
    </TD>
    <TD align="left" WIDTH="18" height="18">&nbsp;</TD>
    <TD WIDTH="60" height="18">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD WIDTH="136" colspan="3" align="center">
      <P><font size="2">Total</font> <font size="2"></font>
    </TD>
    <TD WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">133</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">$754,699</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">100.0</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"> <FONT SIZE=2>
      <P><font size="2">%</font>
      </FONT></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54">&nbsp;</TD>
    <TD WIDTH="136" colspan="3" align="center">&nbsp;</TD>
    <TD WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109">
      <hr noshade size="2" width="40%">
    </TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50">
      <hr noshade size="2">
    </TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42">
      <hr noshade size="2">
    </TD>
    <TD align="left" WIDTH="18">&nbsp;</TD>
    <TD WIDTH="60"><font size="2">&lt;/R&gt;</font></TD>
  </TR>
</TABLE>



<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>
<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Ratings:
Using the higher of S&amp;P&#146;s or Moody&#146;s rating on MuniYield&#146;s municipal
obligations. S&amp;P&#146;s rating categories may be modified further by a plus (+)
or minus (-) in AA, A and BBB ratings. Moody&#146;s rating categories may be
modified further by a 1, 2 or 3 in Aa, A and Baa ratings. See Appendix
III&#151;&#147;Ratings of Municipal Bonds and Commercial Paper.&#148;</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Municipal
Strategy</I></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of July 31, 2001,
      approximately 96.1% and 3.9% of the market value of Municipal Strategy&#146;s
      portfolio was invested in long term municipal obligations and short term
      municipal obligations, respectively. The following table sets forth certain
      information with respect to the composition of Municipal Strategy&#146;s
      long term municipal obligation investment portfolio as of July 31, 2001.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
28</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 34, page: 34" -->




<p><TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom" align="center">
    <TD rowspan="2" WIDTH="54" align="left"><font size="2">&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2"></font></TD>
    <TD rowspan="2" WIDTH="47"><b></b> <FONT SIZE=2>
      <P><b><font size="1">S&amp;P </font></b>
      </FONT>
      <hr noshade size="1" width="90%">
      <FONT SIZE=2></FONT></TD>
    <TD rowspan="2" WIDTH="36">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" WIDTH="53"><b></b> <FONT SIZE=2>
      <P><b><font size="1">Moody&#146;s </font></b>
      </FONT>
      <hr noshade size="1" width="90%">
      <b><font size="1"> </font></b> <FONT SIZE=2></FONT></TD>
    <TD rowspan="2" WIDTH="36">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" WIDTH="109"><b></b> <FONT SIZE=2>
      <P><b><font size="1">Number of Issues </font></b>
      </FONT>
      <hr noshade size="1" width="80%">
      <b><font size="1"> </font></b> <FONT SIZE=2></FONT></TD>
    <TD rowspan="2" WIDTH="47">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" WIDTH="50">
      <P><b><font size="1">Value (in<br>
        </font></b><b><font size="1">Thousands) </font></b>
      <hr noshade size="1">
    </TD>
    <TD rowspan="2" WIDTH="48">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD rowspan="2" colspan="2"><b></b>
      <P><b><font size="1">Percent </font></b>
      <hr noshade size="1" width="90%">
    </TD>
    <TD rowspan="2" WIDTH="60"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size="2"></font></TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;AAA</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;Aaa</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"><FONT SIZE=2>
      <P><font size="2">25</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">$&nbsp;&nbsp;61,473</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">52.2</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"> <FONT SIZE=2>
      <P><font size="2">%</font>
      </FONT></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;AA</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;Aa</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"><FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;9</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">22,326</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">19.0</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;A</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;A</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"><FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;1</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">2,638</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">2.2</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;BBB</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;Baa</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"><FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;6</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">9,625</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">8.2</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD align="left" WIDTH="47"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;&nbsp;NR</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="left" WIDTH="53"> <FONT SIZE=2>
      <P><font size="2">&nbsp;&nbsp;NR</font>
      </FONT></TD>
    <TD align="left" WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"><FONT SIZE=2>
      <P><font size="2">14</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">21,616</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">18.4</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"><font size="2"></font></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54">&nbsp;</TD>
    <TD WIDTH="136" colspan="3" align="center">&nbsp;</TD>
    <TD WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109">
      <hr noshade size="1" width="40%">
    </TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50">
      <hr noshade size="1">
    </TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42">
      <hr noshade size="1">
    </TD>
    <TD align="left" WIDTH="18">&nbsp;</TD>
    <TD WIDTH="60">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54"><font size="2"></font></TD>
    <TD WIDTH="136" colspan="3" align="center">
      <P><font size="2">Total</font> <font size="2"></font>
    </TD>
    <TD WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109"> <FONT SIZE=2>
      <P><font size="2">55</font>
      </FONT></TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50"> <FONT SIZE=2>
      <P><font size="2">$117,678</font>
      </FONT></TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42"> <FONT SIZE=2>
      <P><font size="2">100.0</font>
      </FONT></TD>
    <TD align="left" WIDTH="18"> <FONT SIZE=2>
      <P><font size="2">%</font>
      </FONT></TD>
    <TD WIDTH="60"><font size="2"></font></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="54">&nbsp;</TD>
    <TD WIDTH="136" colspan="3" align="center">&nbsp;</TD>
    <TD WIDTH="36">&nbsp;</TD>
    <TD align="center" WIDTH="109">
      <hr noshade size="2" width="40%">
    </TD>
    <TD align="center" WIDTH="47">&nbsp;</TD>
    <TD align="right" WIDTH="50">
      <hr noshade size="2">
    </TD>
    <TD WIDTH="48">&nbsp;</TD>
    <TD align="right" WIDTH="42">
      <hr noshade size="2">
    </TD>
    <TD align="left" WIDTH="18">&nbsp;</TD>
    <TD WIDTH="60">&nbsp;</TD>
  </TR>
</TABLE>




<font size="2">&lt;/R&gt;</font>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>
<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Ratings:
Using the higher of S&amp;P&#146;s or Moody&#146;s rating on Municipal Strategy&#146;s
municipal obligations. S&amp;P&#146;s rating categories may be modified further by a
plus (+) or minus (-) in AA, A and BBB ratings. Moody&#146;s rating categories may
be modified further by a 1, 2 or 3 in Aa, A and Baa ratings. See Appendix
III&#151;&#147;Ratings of Municipal Bonds and Commercial Paper.&#148;</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;<B>Performance</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below details for each Fund&#146;s common stock the yield and tax equivalent
yield for the 31 days ended May 31, 2001 and the average annual total return
for one and five  years ended May 31, 2001 and for the period from each Fund&#146;s inception to May 31, 2001.</font></td>
  </tr></table>


<br>
<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD WIDTH="145">&nbsp;</TD>
    <TD WIDTH="13">&nbsp;</TD>
    <TD WIDTH="56">
      <P><b></b>
    </TD>
    <TD WIDTH="37">&nbsp;</TD>
    <TD WIDTH="66">&nbsp;</TD>
    <TD WIDTH="29">&nbsp;</TD>
    <TD colspan="6" align="center"><b><font size="1">Average Annual Total Return</font></b>
      <hr noshade size="1" width="95%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD rowspan="3" WIDTH="145">&nbsp;</TD>
    <TD rowspan="3" WIDTH="13">&nbsp;</TD>
    <TD rowspan="3" colspan="2" align="center">
      <P><b><font size="1">Yield&#151;31 days <br>
        </font></b><b><font size="1">ended May 31, 2001 </font></b>
      <hr noshade size="1" width="95%">
      <b><font size="1"> </font></b> </TD>
    <TD rowspan="3" colspan="2" align="center">
      <P><b><font size="1">Tax Equivalent<br>
        </font></b><b><font size="1">Yield&#151;31 days <br>
        </font></b><b><font size="1">ended May 31, 2001&#134; </font></b>
      <hr noshade size="1" width="95%">
      <b><font size="1"> </font></b> </TD>
    <TD rowspan="3" colspan="2" align="center">
      <P><b><font size="1">One Year ended <br>
        </font></b><b><font size="1">May 31, 2001 </font></b>
      <hr noshade size="1" width="95%">
      <b><font size="1"> </font></b> </TD>
    <TD rowspan="3" colspan="2" align="center">
      <P><b><font size="1">Five Years ended<br>
        </font></b><b><font size="1">May 31,
        2001 </font></b>
      <hr noshade size="1" width="95%">
      <b><font size="1"> </font></b> </TD>
    <TD rowspan="3" colspan="2" align="center">
      <P><b><font size="1">Since<br>
        </font></b><b><font size="1">Inception to <br>
        </font></b><b><font size="1">May 31, 2001 </font></b>
      <hr noshade size="1" width="90%">
    </TD>
  </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom"> </TR>
  <TR valign="bottom">
    <TD WIDTH="145">
      <P><font size="2"><b>Municipal Strategy</b></font>
    </TD>
    <TD WIDTH="13">&nbsp;</TD>
    <TD align="right" WIDTH="56">
      <P><font size="2">5.27</font>
    </TD>
    <TD align="left" WIDTH="37">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="66">
      <P><font size="2">7.27</font>
    </TD>
    <TD align="left" WIDTH="29">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="61">
      <P><font size="2">12.26</font>
    </TD>
    <TD align="left" WIDTH="21">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="48">
      <P><font size="2">4.91</font>
    </TD>
    <TD align="left" WIDTH="32">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="50">
      <P><font size="2">4.52</font>
    </TD>
    <TD align="left" WIDTH="40">
      <P><font size="2">%*</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="145">
      <P><font size="2"><b>MuniYield</b></font>
    </TD>
    <TD WIDTH="13">&nbsp;</TD>
    <TD align="right" WIDTH="56">
      <P><font size="2">6.40</font>
    </TD>
    <TD align="left" WIDTH="37">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="66">
      <P><font size="2">8.83</font>
    </TD>
    <TD align="left" WIDTH="29">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="61">
      <P><font size="2">10.87</font>
    </TD>
    <TD align="left" WIDTH="21">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="48">
      <P><font size="2">5.17</font>
    </TD>
    <TD align="left" WIDTH="32">
      <P><font size="2">%</font>
    </TD>
    <TD align="right" WIDTH="50">
      <P><font size="2">7.40</font>
    </TD>
    <TD align="left" WIDTH="40">
      <P><font size="2">%**</font>
    </TD>
  </TR>
</TABLE>





<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>
<table width=600><tr><td width=3% align=right valign=top><font size="1">&#134;</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1"> Assumes
a 27.5% Federal income tax rate.</font><font size="2">&lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Municipal
Strategy commenced operations on November 3, 1995. </font></td></tr></table>

<table width=600>
  <tr>
    <td width=3% align=right valign=top><font size="1">**</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">MuniYield commenced operations on November 29,
      1991.</font></td>
  </tr>
</table>
<p><table width=600><tr>
    <td><font size=2><B><a name="15"></a>Portfolio Transactions</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
procedures for engaging in portfolio transactions are the same for each Fund.
Subject to policies established by the Board of Directors of each Fund, FAM is
primarily responsible for the execution of each Fund&#146;s portfolio transactions.
In executing such transactions, FAM seeks to obtain the best results for each
Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), size of order, difficulty of execution
and operational facilities of the firm involved and the firm&#146;s risk in
positioning a block of securities. While FAM generally seeks reasonably
competitive commission rates, the Funds do not necessarily pay the lowest
commission or spread available.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
Fund has any obligation to deal with any broker or dealer in the execution of
transactions in portfolio securities. Subject to obtaining the best price and
execution, securities firms that provide supplemental investment research to
FAM, including Merrill Lynch, may receive orders for transactions by a Fund.
Information so received will be in addition to, and not in lieu of, the
services required to be performed by FAM under its investment advisory
agreements with the Funds, and the expenses of FAM will not be reduced as a
result of the receipt of such supplemental research information.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund invests in securities that are primarily traded in the over-the-counter
markets, and each Fund normally deals directly with the dealers who make
markets in the securities involved, except in those circumstances where better
prices and execution are available elsewhere. Under the Investment Company Act,
except as permitted by exemptive order, persons affiliated with a Fund are
prohibited from dealing with the Fund as principals in the purchase and sale of
securities. Since transactions in the over-the-counter markets usually involve
transactions with dealers acting as principals for their own account, the Funds
do not deal with affiliated persons, including Merrill Lynch and its
affiliates, in connection with such transactions, except that, pursuant to an
exemptive order obtained by FAM, a Fund may engage in principal transactions
with Merrill Lynch in high quality, short-term, tax-exempt securities. An
affiliated person of a Fund may serve as its broker in over-the-counter
transactions conducted on an agency basis.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund also may purchase tax-exempt debt instruments in individually negotiated
transactions with the issuers of such securities. Because an active trading
market may not exist for such securities, the prices that a Fund may pay for
these securities or receive on their resale may be lower than that for similar
securities with a more liquid market.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
29</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 35, page: 35" -->





<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of each Fund has considered the possibility of recapturing
for the benefit of the Funds brokerage commissions, dealer spreads and other
expenses of possible portfolio transactions, such as underwriting commissions,
by conducting portfolio transactions through affiliated entities, including
Merrill Lynch. For example, brokerage commissions received by Merrill Lynch
could be offset against the investment advisory fees paid by the Fund to FAM.
After considering all factors deemed relevant, the Directors of each Fund made
a determination not to seek such recapture. The Directors will reconsider this
matter from time to time.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="16"></a>Portfolio Turnover</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally,
neither Fund purchases securities for short-term trading profits. However,
either Fund may dispose of securities without regard to the time that they have
been held when such action, for defensive or other reasons, appears advisable
to FAM. (The portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the particular fiscal year by
the monthly average of the value of the portfolio securities owned by a Fund
during the particular fiscal year. For purposes of determining this rate, all
securities whose maturities at the time of acquisition are one year or less are
excluded.) A high portfolio turnover rate results in greater transaction costs,
which are borne directly by a Fund, and also has certain tax consequences for
stockholders. The portfolio turnover rate for each Fund for the periods
indicated is set forth below:</font></td></tr></table>




<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD WIDTH="153">&nbsp;</TD>
    <TD colspan="2" align="center"> <font size="1"><b> For the Six Month Period
      <BR>
      Ended April 30, 2001 </b> </font>
      <hr noshade size="1">
    </TD>
    <TD WIDTH="21" align="center"> <font size="1"><b> &nbsp; </b></font></TD>
    <TD colspan="4" align="center"><font size="1"><b>For the Year Ended <br>
      October 31,</b> </font>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="153">&nbsp;</TD>
    <TD align="center" colspan="2" VALIGN="top"> <font size="1"><b> (Unaudited)
      </b></font></TD>
    <TD WIDTH="21" align="center">&nbsp;</TD>
    <TD align="center" colspan="2"> <font size="1"><b> 2000 </b> </font>
      <hr noshade size="1" width="95">
    </TD>
    <TD align="center" colspan="2"> <font size="1"><b> 1999 </b> </font>
      <hr noshade size="1" width="95">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="153"> <FONT SIZE=2> <font size="2">MuniYield</font> </FONT></TD>
    <TD WIDTH="111" align="right"> <FONT SIZE=2> <font size="2">36.66</font> </FONT></TD>
    <TD WIDTH="87" align="left"> <FONT SIZE=2> <font size="2">%</font> </FONT></TD>
    <TD WIDTH="21" align="center">&nbsp;</TD>
    <TD WIDTH="73" align="right"> <FONT SIZE=2> <font size="2">103.44</font> </FONT></TD>
    <TD WIDTH="41" align="left"> <FONT SIZE=2> <font size="2">%</font> </FONT></TD>
    <TD WIDTH="72" align="right" VALIGN="bottom"> <FONT SIZE=2> <font size="2">78.42</font>
      </FONT></TD>
    <TD WIDTH="40" align="left"> <FONT SIZE=2> <font size="2">%</font> </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="153">&nbsp;</TD>
    <TD WIDTH="111" align="center">&nbsp;</TD>
    <TD WIDTH="87" align="left">&nbsp;</TD>
    <TD WIDTH="21" align="center">&nbsp;</TD>
    <TD WIDTH="73" align="center">&nbsp;</TD>
    <TD WIDTH="41" align="center">&nbsp;</TD>
    <TD WIDTH="72" align="center">&nbsp;</TD>
    <TD WIDTH="40" align="left">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="153">&nbsp;</TD>
    <TD align="center" colspan="2"> <font size="1"><b> For the Six Month Period
      <BR>
      Ended April 30, 2001 </b> </font>
      <hr noshade size="1">
    </TD>
    <TD WIDTH="21" align="center">&nbsp;</TD>
    <TD align="center" colspan="4"> <font size="1"><b> For the Year Ended<BR>
      October 31, </b> </font>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="153">&nbsp;</TD>
    <TD align="center" colspan="2" VALIGN="top"> <font size="1"><b> (Unaudited)
      </b></font></TD>
    <TD WIDTH="21" align="center">&nbsp;</TD>
    <TD align="center" colspan="2"> <font size="1"><b> 2000 </b> </font>
      <hr noshade size="1" width="95">
    </TD>
    <TD align="center" colspan="2"> <font size="1"><b> 1999 </b> </font>
      <hr noshade size="1" width="95">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="153"> <FONT SIZE=2> <font size="2">Municipal Strategy</font> </FONT></TD>
    <TD WIDTH="111" align="right"> <FONT SIZE=2> <font size="2">20.49</font> </FONT></TD>
    <TD WIDTH="87" align="left"> <FONT SIZE=2> <font size="2">%</font> </FONT></TD>
    <TD WIDTH="21" align="center">&nbsp;</TD>
    <TD WIDTH="73" align="right"> <FONT SIZE=2> <font size="2">115.52</font> </FONT></TD>
    <TD WIDTH="41" align="left"> <FONT SIZE=2> <font size="2">%</font> </FONT></TD>
    <TD WIDTH="72" align="right"> <FONT SIZE=2> <font size="2">158.57</font> </FONT></TD>
    <TD WIDTH="40" align="left"> <FONT SIZE=2> <font size="2">%</font> </FONT></TD>
  </TR>
</TABLE>




<p><table width=600><tr>
    <td><font size=2><B><a name="16a"></a>Net Asset Value</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield
determines the net asset value per share of its common stock as of the NYSE
close of business on the last business day of each week. Municipal Strategy
determines its net asset value as of the NYSE close of business once daily on
each day the NYSE is open for trading. The NYSE generally closes at 4:00 p.m.
Eastern time. For purposes of determining the net asset value of a share of
common stock of each Fund, the value of the securities held by a Fund plus any
cash or other assets (including interest accrued but not yet received) minus
all liabilities (including accrued expenses) and the aggregate liquidation
value of the outstanding shares of AMPS is divided by the total number of
shares of common stock outstanding at such time. Expenses, including the fees
payable to FAM, are accrued daily.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Municipal Bonds in which each Fund invests are traded primarily in the
over-the-counter markets. In determining net asset value, each Fund uses the
valuations of portfolio securities furnished by a pricing service approved by
its Board of Directors. The pricing service typically values portfolio
securities at the bid price or the yield equivalent when quotations are readily
available. Market illiquidity may make it difficult for the Funds to obtain
accurate quotations for its holdings of high yield Municipal Bonds. Municipal
Bonds for which quotations are not readily available are valued at fair market
value on a consistent basis as determined by the pricing service using a matrix
system to determine valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of each Fund under the general
supervision of the Board of Directors of that Fund. The Board of Directors of
each Fund has determined in good faith that the use of a pricing service is a
fair method of determining the valuation of portfolio securities. Positions in
futures contracts are valued at closing prices for such contracts established
by the exchange on which they are traded, or if market quotations are not
readily available, are valued at fair value on a consistent basis using methods
determined in good faith by the Board of Directors of each Fund.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield
determines and makes available for publication weekly the net asset value of
its common stock. Currently, the net asset values of shares of publicly traded
closed-end investment companies investing in debt securities are published in
<I>Barron&#146;s</I>, the Monday edition of <I>The Wall Street Journal,</I> and the Monday and
Saturday editions of <I>The New York Times</I>.</FONT></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
30</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2><B><a name="17"></a>Capital Stock</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund has outstanding
      both common stock and AMPS. The MuniYield Common Stock is listed on the
      NYSE and may be bought or sold at market price on each day the NYSE is open
      for trading. The shares of MuniYield Common Stock commenced trading on the
      NYSE on November 29, 1991. As of July 31, 2001, the net asset value per
      share of MuniYield Common Stock was $13.58
      and the market price per share was $13.72.
      Municipal Strategy engages in a continuous offering of its common stock
      and Series A AMPS. Municipal Strategy Common Stock is not listed on any
      exchange and no secondary market presently exists for Municipal Strategy
      Common Stock, nor is it currently expected that a secondary market will
      develop. As of July 31, 2001, the net asset value per share of Municipal
      Strategy Common Stock was $9.32.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund is authorized to issue 200,000,000 shares of capital stock, all of which
shares initially were classified as common stock. The Board of Directors of
each Fund is authorized to classify or reclassify any unissued shares of
capital stock by setting or changing the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption. In connection with each
Fund&#146;s offering of shares of AMPS, MuniYield reclassified 10,000 shares of
unissued capital stock as AMPS (in connection with the Reorganization,
MuniYield intends to reclassify an additional 1,720 shares of unissued capital
stock as AMPS), and Municipal Strategy reclassified 40,000 shares of unissued
capital stock as AMPS.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Common
Stock</I></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of each Fund&#146;s
      common stock are entitled to share equally in dividends declared by a Fund&#146;s
      Board of Directors payable to holders of the common stock and in the net
      assets of a Fund available for distribution to holders of the common stock
      after payment of the preferential amounts payable to holders of any outstanding
      preferred stock. See &#147;Voting Rights&#148; and &#147;Liquidation
      Rights of Holders of AMPS.&#148; Holders of a Fund&#146;s common stock do
      not have preemptive or conversion rights and shares of a Fund&#146;s common
      stock are not redeemable. The outstanding shares of common stock of each
      Fund are fully paid and nonassessable.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;So long
as any shares of a Fund&#146;s AMPS or any other preferred stock are outstanding,
holders of that Fund&#146;s common stock will not be entitled to receive any
dividends of or other distributions from that Fund unless all accumulated
dividends on outstanding shares of that Fund&#146;s AMPS and any other preferred
stock have been paid, and unless asset coverage (as defined in the Investment
Company Act) with respect to such AMPS and any other preferred stock would be
at least 200% after giving effect to such distributions.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
market price for MuniYield Common Stock on the NYSE may be at a premium above
or a discount from the net asset value of the MuniYield Common Stock.
Conversely, Municipal Strategy engages in a continuous offering of its common
stock. In order to provide liquidity for stockholders of Municipal Strategy,
the Board of Directors of the Fund considers, on a quarterly basis, whether the
Fund should make a tender offer for its common stock. In a tender offer, the
Fund purchases outstanding common stock at the Fund&#146;s net asset value (less any
applicable CDSC) on the last day of the offer.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors
      of Municipal Strategy is not required to authorize the making of a tender
      offer and there can be no assurance that a tender offer will be made during
      any particular quarter. If a tender offer is not made, stockholders may
      be unable to sell their shares. Since the inception of Municipal Strategy,
      however, the Board has authorized a tender offer each quarter. If the Reorganization
      is completed, the tender offer that concluded on August 20, 2001 will have
      been the final tender offer by Municipal Strategy for its common stock.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contingent
Deferred Sales Charge</I></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of MuniYield
      do not pay any CDSC because the Fund&#146;s common stock trades on the NYSE.
      If common stockholders of Municipal Strategy sell their stock back to the
      Fund during a tender offer and they have held those shares for less than
      three years when the tender offer begins, they may have to pay a CDSC. This
      charge varies depending on how long a shareholder has owned the tendered
      shares. The amount of the charge is based on how much the shareholder paid
      for the tendered shares or their net asset value, whichever amount is less.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
31</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 37, page: 37" -->





<p><table width=600><tr>
    <td><font size=2><B><a name="18"></a>Preferred Stock</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield
currently has outstanding five series of AMPS and Municipal Strategy has
outstanding one series of AMPS. The AMPS of each Fund have a similar structure.
The AMPS of a Fund are shares of preferred stock of that Fund that entitle
their holders to receive dividends when, as and if declared by the Board of
Directors, out of funds legally available therefor, at a rate per annum that
may vary for the successive dividend periods. The AMPS of each Fund have a
liquidation preference of $25,000 per share; the AMPS of the Funds are not
traded on any stock exchange or automated quotation system. Each Fund&#146;s AMPS
can be purchased at an auction or through broker-dealers who maintain a
secondary market in the AMPS.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auctions
generally have been held and will be held every seven days for Series E AMPS of
MuniYield and Municipal Strategy Series A AMPS and every twenty-eight days for
Series A, B, C and D AMPS of MuniYield, unless the applicable Fund elects,
subject to certain limitations, to have a special dividend period. The
following table provides information about the dividend rates for each series
of AMPS of each Fund as of a recent auction.</font></td></tr></table>



<font size="2">&lt;R&gt;</font>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom" align="center">
    <TD WIDTH="152" align="left">
      <P><b><font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Auction Date</font></b>
      <hr noshade size="1" width="55%" align="left">
    </TD>
    <TD WIDTH="157">
      <P><b><font size="1">Fund</font></b>
      <hr noshade size="1" width="20%">
    </TD>
    <TD WIDTH="122">
      <P><b><font size="1">Dividend Period</font></b>
      <hr noshade size="1" width="65%">
    </TD>
    <TD WIDTH="97">
      <P><b><font size="1">Series</font></b>
      <hr noshade size="1" width="40%">
    </TD>
    <TD colspan="2">
      <P><b><font size="1">Dividend Rate</font></b>
      <hr noshade size="1" width="85%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="152">
      <P><font size="2">September 4, 2001</font>
    </TD>
    <TD align="center" WIDTH="157">
      <P><font size="2">MuniYield</font>
    </TD>
    <TD align="center" WIDTH="122">
      <P><font size="2">28 days</font>
    </TD>
    <TD align="center" WIDTH="97">
      <P><font size="2">A</font>
    </TD>
    <TD align="right" WIDTH="46">
      <P><font size="2">2.50</font>
    </TD>
    <TD align="left" WIDTH="26">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="152">
      <P><font size="2">August 14, 2001</font>
    </TD>
    <TD align="center" WIDTH="157">
      <P><font size="2">MuniYield</font>
    </TD>
    <TD align="center" WIDTH="122">
      <P><font size="2">28 days</font>
    </TD>
    <TD align="center" WIDTH="97">
      <P><font size="2">B</font>
    </TD>
    <TD align="right" WIDTH="46">
      <P><font size="2">2.50</font>
    </TD>
    <TD align="left" WIDTH="26">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="152">
      <P><font size="2">August 28, 2001</font>
    </TD>
    <TD align="center" WIDTH="157">
      <P><font size="2">MuniYield</font>
    </TD>
    <TD align="center" WIDTH="122">
      <P><font size="2">28 days</font>
    </TD>
    <TD align="center" WIDTH="97">
      <P><font size="2">C</font>
    </TD>
    <TD align="right" WIDTH="46">
      <P><font size="2">2.40</font>
    </TD>
    <TD align="left" WIDTH="26">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="152">
      <P><font size="2">August 28, 2001</font>
    </TD>
    <TD align="center" WIDTH="157">
      <P><font size="2">MuniYield</font>
    </TD>
    <TD align="center" WIDTH="122">
      <P><font size="2">28 days</font>
    </TD>
    <TD align="center" WIDTH="97">
      <P><font size="2">D</font>
    </TD>
    <TD align="right" WIDTH="46">
      <P><font size="2">2.40</font>
    </TD>
    <TD align="left" WIDTH="26">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="152">
      <P><font size="2">September 4, 2001</font>
    </TD>
    <TD align="center" WIDTH="157">
      <P><font size="2">MuniYield</font>
    </TD>
    <TD align="center" WIDTH="122">
      <P><font size="2">&nbsp;&nbsp;7 days</font>
    </TD>
    <TD align="center" WIDTH="97">
      <P><font size="2">E</font>
    </TD>
    <TD align="right" WIDTH="46">
      <P><font size="2">2.45</font>
    </TD>
    <TD align="left" WIDTH="26">
      <P><font size="2">%</font>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="152">
      <P><font size="2">August 22, 2001</font>
    </TD>
    <TD align="center" WIDTH="157">
      <P><font size="2">Municipal Strategy</font>
    </TD>
    <TD align="center" WIDTH="122">
      <P><font size="2">&nbsp;&nbsp;7 days</font>
    </TD>
    <TD align="center" WIDTH="97">
      <P><font size="2">A</font>
    </TD>
    <TD align="right" WIDTH="46">
      <P><font size="2">2.40</font>
    </TD>
    <TD align="left" WIDTH="26">
      <P><font size="2">%</font>
    </TD>
  </TR>
</TABLE>







<font size="2">&lt;/R&gt;</font>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Periodic
auctions are conducted for the AMPS of each Fund by the Auction Agent for the
Funds. The auctions require the participation of one or more broker-dealers,
each of whom enters into an agreement with the Auction Agent. After each
auction, the Auction Agent pays a service charge, from funds provided by the
issuing Fund, to each broker-dealer, at the annual rate of 0.25% calculated on
the basis of the purchase price of shares of the relevant AMPS placed by such
broker-dealer at such auction.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Investment Company Act, each Fund is permitted to have outstanding more
than one series of preferred stock as long as no single series has priority
over another series as to the distribution of assets of the Fund or the payment
of dividends. Holders of a Fund&#146;s preferred stock do not have preemptive rights
to purchase any shares of AMPS or any other preferred stock that might be
issued. The net asset value per share of a Fund&#146;s AMPS equals its liquidation
preference plus accumulated dividends per share.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
redemption provisions pertaining to the AMPS of each Fund are substantially
similar. It is anticipated that shares of AMPS of each Fund will generally be
redeemable at the option of the Fund at a price equal to their liquidation
preference of $25,000 plus accumulated but unpaid dividends (whether or not
earned or declared) to the date of redemption plus, under certain
circumstances, a redemption premium. Shares of AMPS will also be subject to
mandatory redemption at a price equal to their liquidation preference plus
accumulated but unpaid dividends to the date of redemption upon the occurrence
of certain specified events, such as the failure of the Fund to maintain the
asset coverage for the AMPS specified by Moody&#146;s and S&amp;P in connection with
their issuance of ratings on the AMPS.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="18a"></a>Certain Provisions of the Charters</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Fund&#146;s Charter
      includes provisions that could have the effect of limiting the ability of
      other entities or persons to acquire control of a Fund or to change the
      composition of its Board of Directors and could have the effect of depriving
      stockholders of an opportunity to sell their shares at a premium over prevailing
      market prices by discouraging a third party from seeking to obtain control
      of the Fund. A Director may be removed from office with or without cause
      by vote of the holders of at least 66<FONT SIZE="1"><SUP>2</SUP></FONT>/<FONT SIZE="1">3</FONT>% of the shares entitled to be voted
      on the matter. A Director elected by all of the holders of capital stock
      may be removed only by action of such holders, and a Director elected by
      the holders of AMPS and any other preferred stock may be removed only by
      action of the holders of AMPS and any other preferred stock.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, the Charter of each Fund requires the favorable vote of the holders
of at least 66<FONT SIZE="1"><SUP>2</SUP></FONT>/<FONT SIZE="1">3</FONT>% of all of a Fund&#146;s shares of capital stock, then entitled to
be voted, voting as a single class, to approve, adopt or authorize the
following:</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>a
merger or consolidation or statutory share exchange of the Fund with any other
corporation or entity, or</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
32</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>a
sale of all or substantially all of the Fund&#146;s assets (other than in the
regular course of the Fund&#146;s investment activities), or</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2>a
liquidation or dissolution of the Fund,</font></td></tr></table>

<p><table width=600><tr><td><font size=2>unless such action has been approved,
adopted or authorized by the affirmative vote of at least two-thirds of the
total number of Directors fixed in accordance with the by-laws, in which case
the affirmative vote of a majority of all of the votes entitled to be cast by
stockholders of the Fund, voting as a single class, is required. Such approval,
adoption or authorization of the foregoing also would require the favorable
vote of at least a majority of the Fund&#146;s shares of preferred stock then
entitled to be voted thereon, including the AMPS, voting as a separate class.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, conversion of a Fund to an open-end investment company would require
an amendment to that Fund&#146;s Charter. The amendment would have to be declared
advisable by the Board of Directors prior to its submission to stockholders.
Such an amendment would require the affirmative vote of the holders of at least
66<FONT SIZE="1"><SUP>2</SUP></FONT>/<FONT SIZE="1">3</FONT>% of a Fund&#146;s outstanding shares of capital stock (including the AMPS and
any other preferred stock) entitled to be voted on the matter, voting as a
single class (or a majority of such shares if the amendment was previously
approved, adopted or authorized by at least two-thirds of the total number of
Directors fixed in accordance with the by-laws), and the affirmative vote of at
least a majority of outstanding shares of preferred stock of that Fund
(including the AMPS), voting as a separate class. Such a vote also would
satisfy a separate requirement in the Investment Company Act that the change be
approved by the stockholders. Stockholders of an open-end investment company
may require the company to redeem their shares of common stock at any time
(except in certain circumstances as authorized by or under the Investment
Company Act) at their net asset value, less such redemption charge, if any, as
might be in effect at the time of a redemption. All redemptions will be made in
cash. If the Fund is converted to an open-end investment company, it could be
required to liquidate portfolio securities to meet requests for redemption and
the common stock no longer would be listed on a stock exchange. Conversion to
an open-end investment company would also require redemption of all outstanding
shares of preferred stock (including the AMPS) and would require changes in
certain of a Fund&#146;s investment policies and restrictions, such as those
relating to the issuance of senior securities, the borrowing of money and the
purchase of illiquid securities.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of each Fund has determined that the 66<FONT SIZE="1"><SUP>2</SUP></FONT>/<FONT SIZE="1">3</FONT>% voting
requirements described above, which are greater than the minimum requirements
under the Investment Company Act, are in the best interests of stockholders
generally. Reference should be made to the Charter of each Fund on file with
the Commission for the full text of these provisions.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="19"></a>Management of the Funds</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Directors and Officers.</i>
      The Board of Directors of MuniYield currently consists of six persons, five
      of whom are not &#147;interested persons,&#148; as defined in the Investment
      Company Act, of MuniYield. The Board of Directors of Municipal Strategy
      currently consists of eight persons, seven of whom are not &#147;interested
      persons&#148; of Municipal Strategy. Terry K. Glenn serves as President
      and a Director of each Fund. The Directors of each Fund are responsible
      for the overall supervision of the operations of the Fund and perform the
      various duties imposed on the directors of investment companies by the Investment
      Company Act and under applicable Maryland law. The Funds share some of the
      same officers. For further information regarding the Directors and officers
      of each Fund, see Appendix I&#151;&#147;Information Pertaining to Each Fund.&#148;&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Roberto
W. Roffo currently manages the investment portfolio of each Fund and will
manage the Combined Fund after the Reorganization. The portfolio manager is
primarily responsible for the day to day management of the applicable Fund&#146;s
portfolio. Biographical information about Mr. Roffo is contained in Appendix I
to this Proxy Statement and Prospectus.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Advisory and Administrative
      Arrangements. </i>FAM, which is owned and controlled by ML &amp; Co., serves
      as the investment adviser for MuniYield and Municipal Strategy pursuant
      to separate investment advisory agreements that are substantially similar,
      except for certain provisions in the investment advisory agreement for MuniYield
      relating to FAM&#146;s provision of administrative services to MuniYield.
      FAM provides each Fund with the same investment advisory and management
      services. As of July 2001, FAM and its affiliates had a total of approximately
      $535.5 billion in investment company and other portfolio assets under management
      (approximately $24.6 billion of which were invested in municipal securities).
      This amount includes assets managed for certain affiliates of FAM. FAM was
      organized as an investment adviser in 1977 and offers &lt;/R&gt;</font></td>
  </tr></table>


<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
33</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>investment advisory services to more
than 50 registered investment companies. The principal business address of FAM
is 800 Scudders Mill Road, Plainsboro, New Jersey 08536.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund&#146;s investment advisory agreement with FAM (each, an &#147;Investment Advisory
Agreement&#148;) provides that, subject to the supervision of the Board of Directors
of each Fund, FAM is responsible for the actual management of each Fund&#146;s
portfolio. The responsibility for making decisions to buy, sell or hold a
particular security for each Fund rests with FAM, subject to review by the
Board of Directors of that Fund.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAM
provides the portfolio management for each Fund. Such portfolio management
considers analyses from various sources (including brokerage firms with which
each Fund does business), makes the necessary investment decisions, and places
orders for transactions accordingly. FAM also is responsible for the
performance of certain administrative and management services for each Fund.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the
investment advisory services pursuant to each Fund&#146;s Investment Advisory
Agreement, each Fund pays a monthly fee at an annual rate of 0.50% of its
average net assets. MuniYield&#146;s average net assets are computed on a weekly
basis and Municipal Strategy&#146;s average net assets are computed on a daily basis
(<i>i.e.</i>, the average weekly or daily value, as applicable, of the total assets of
a Fund, including assets acquired from the sale of preferred stock, minus the
sum of accrued liabilities of the Fund and accumulated dividends on its shares
of preferred stock). For purposes of this calculation, average weekly or daily
net assets, as applicable, are determined at the end of each month on the basis
of the average net assets of the Fund for each week or day, as applicable
during the month. The assets for each weekly period are determined by averaging
the net assets at the last business day of a week with the net assets at the
last business day of the prior week. The average daily net assets are
determined at the end of each month on the basis of the average net assets of
Municipal Strategy for each day during the month.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
the commencement of operations of Municipal Strategy to the present, FAM has
waived a portion of its advisory fee and/or reimbursed certain other expenses.
The fee waiver and/or expense reimbursement with respect to Municipal Strategy
is voluntary and may be reduced or discontinued by FAM at any time without
notice to stockholders. After the Reorganization, the Combined Fund is expected
to pay FAM a monthly fee at the annual rate of 0.50% of its average weekly net
assets, including proceeds from the issuance of AMPS, as described above.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the fiscal years
      ended October 31, 1998, 1999 and 2000 and for the six month period ended April
      30, 2001, the fees paid by MuniYield to FAM pursuant to the Investment Advisory
      Agreement were $4,261,373, $4,104,482, $3,743,649 and $1,877,871, respectively
      (such fees based on average weekly net assets of approximately $854.2 million,
      $825.2 million, $748.9 million and $757.5 million, respectively). For the
      fiscal years ended October 31, 1998, 1999 and 2000 and for the six month period
      ended April 30, 2001, the fees paid by Municipal Strategy to FAM pursuant
      to the Investment Advisory Agreement were $787,978, $852,812, $746,301 and
      $307,998, respectively (such fees based on average daily net assets of approximately
      $158.0 million, $171.0 million, $149.3 million and $124.2 million, respectively).
      For the fiscal years ended October 31, 1998, 1999 and 2000 and for  the six month
      period ended April 30, 2001, FAM voluntarily waived $204,377, $170,562,
      $149,260 and $61,600, respectively, of the fees payable by Municipal Strategy
      pursuant to its Investment Advisory Agreement.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Administrative Services
      and Fees.</i> Under the terms of the administration agreement between Municipal
      Strategy and FAM (the &#147;Administration Agreement&#148;), FAM also performs
      or arranges for the performance of the administrative services (<i>i.e.</i>,
      services other than investment advice and related portfolio activities)
      necessary for the operation of Municipal Strategy, including administering
      shareholder accounts and handling shareholder relations. Pursuant to the
      MuniYield Investment Advisory Agreement, FAM provides similar services for
      MuniYield.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
administrative services, Municipal Strategy pays FAM a monthly fee at an annual
rate of 0.25% of the Fund&#146;s average daily net assets determined in the same
manner as the fee payable by the Fund under the Investment Advisory Agreement.
FAM may pay a portion of the fee received pursuant to the Administration
Agreement to its affiliate, Merrill Lynch, for administrative services rendered
in connection with the AMPS or other preferred stock of the Fund. MuniYield
does not pay a separate administrative fee to FAM. After the Reorganization,
the Combined Fund also will not pay a separate administrative fee to FAM.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the fiscal years
      ended October 31, 1998, 1999 and 2000 and for the six month period ended April
      30, 2001, the fees paid by Municipal Strategy pursuant to the Administration
      Agreement were $393,989, $426,406, &lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
34</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 40, page: 40" -->








<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;$373,150 and $153,999, respectively (such fees based
      on average daily net assets of approximately $158.0 million, $171.0 million,
      $149.3 million and $124.2 million, respectively).&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Payment
of Fund Expenses.</I> Each Fund&#146;s Investment Advisory Agreement obligates FAM to
provide investment advisory services and, in the case of MuniYield,
administrative services to the Fund. Under MuniYield&#146;s Investment Advisory
Agreement, FAM pays all compensation of and furnishes office space for officers
and employees of MuniYield connected with investment and economic research,
trading and investment management of MuniYield, as well as the compensation of
all Directors of MuniYield who are affiliated persons of FAM or any of its
affiliates. Under Municipal Strategy&#146;s Investment Advisory Agreement, FAM pays
all compensation of officers and employees of the Fund as well as the fees of
all Directors who are affiliated persons of ML &amp; Co. or its subsidiaries.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund pays all other expenses incurred in the operation of the Fund, including,
among other things, expenses for legal and auditing services, taxes, costs of
printing proxies, listing fees, if any, stock certificates and stockholder
reports, charges of the custodian and the transfer agent, dividend disbursing
agent and registrar, fees and expenses with respect to the issuance of AMPS,
Commission fees, fees and expenses of unaffiliated Directors, accounting and
pricing costs, insurance, interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses, mailing and other expenses properly
payable by the Fund.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Accounting
Services.</I> Each Fund entered into a separate agreement with State Street Bank
and Trust Company (&#147;State Street&#148;), effective January 1, 2001, pursuant to
which State Street provides certain accounting services to each Fund. Each Fund
pays a fee for these services. Prior to January 1, 2001, FAM provided
accounting services to each Fund and was reimbursed by each Fund in connection
with such services. FAM continues to provide certain accounting services to
each Fund and MuniYield and Municipal Strategy reimburse FAM for these services.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below shows the amounts paid by each Fund to State Street and to FAM for
the periods indicated.</font></td></tr></table>




<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD WIDTH="286"> <FONT SIZE=2>
      <P><i>MuniYield</i></font></td>
    <TD WIDTH="42">&nbsp;</TD>
    <TD WIDTH="33">&nbsp;</td>
    <TD WIDTH="46">&nbsp;</td>
    <TD WIDTH="35">&nbsp;</TD>
    <TD WIDTH="59">&nbsp;</td>
    <TD WIDTH="39" align="right">&nbsp;</td>
    <TD WIDTH="58" align="right">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="286" align="center"><b><font size="1">Period</font></b>
      <hr noshade size="1" align="center" width="10%">
    </TD>
    <TD colspan="3" align="center">
      <P><b><font size="1">Paid to State Street</font></b>
      <hr noshade size="1">
    </td>
    <TD WIDTH="35">&nbsp;</TD>
    <TD colspan="3" align="center">
      <P> <b><font size=1>Paid to FAM</font></b>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="286"> <FONT SIZE=2>
      <P>Fiscal year ended October 31, 1998</font></td>
    <TD WIDTH="42">&nbsp;</TD>
    <td width="33" align="right" valign="bottom"> <font size=2>
      <p>N/A</font></td>
    <TD WIDTH="46" align="right">&nbsp;</TD>
    <TD WIDTH="35">&nbsp;</TD>
    <TD WIDTH="59" align="right"><font size="2">$</font></td>
    <TD WIDTH="39" align="right"> <FONT SIZE=2>
      <P>&nbsp;86,625</font></td>
    <TD WIDTH="58" align="right">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="286"> <FONT SIZE=2>
      <P>Fiscal year ended October 31, 1999</font></td>
    <TD WIDTH="42">&nbsp;</TD>
    <td width="33" align="right" valign="bottom"> <font size=2>
      <p>N/A</font></td>
    <TD WIDTH="46" align="right">&nbsp;</TD>
    <TD WIDTH="35">&nbsp;</TD>
    <TD WIDTH="59" align="right"><font size="2">$</font></td>
    <TD WIDTH="39" align="right"> <FONT SIZE=2>
      <P>103,026</font></td>
    <TD WIDTH="58" align="right">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="286"> <FONT SIZE=2>
      <P>Fiscal year ended October 31, 2000</font></td>
    <TD WIDTH="42">&nbsp;</TD>
    <td width="33" align="right" valign="bottom"> <font size=2>
      <p>N/A</font></td>
    <TD WIDTH="46" align="right">&nbsp;</TD>
    <TD WIDTH="35">&nbsp;</TD>
    <TD WIDTH="59" align="right"><font size="2">$</font></td>
    <TD WIDTH="39" align="right"> <FONT SIZE=2>
      <P>115,121</font></td>
    <TD WIDTH="58" align="right">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="286"> <FONT SIZE=2>
      <P>For the six months ended April 30, 2001</font></td>
    <td width="42" align="right" valign="bottom"><font size="2">$</font></td>
    <td width="33" align="right" valign="bottom"> <font size=2>
      <p>70,706</font></td>
    <TD WIDTH="46" align="left"><font size=2>*</font></td>
    <td width="35" valign="bottom"> <font size=2>
      <p>&nbsp;</font></td>
    <TD WIDTH="59" align="right"><font size=2>$</font></td>
    <TD WIDTH="39" align="right"> <FONT SIZE=2>
      <P>&nbsp;54,031</font></td>
    <TD WIDTH="58" align="right">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="286">&nbsp;</TD>
    <TD WIDTH="42">&nbsp;</TD>
    <td width="33" valign="bottom">&nbsp;</td>
    <TD WIDTH="46">&nbsp;</TD>
    <td width="35" valign="bottom">&nbsp;</td>
    <TD WIDTH="59" align="right">&nbsp;</TD>
    <TD WIDTH="39" align="right">&nbsp;</TD>
    <TD WIDTH="58" align="right">&nbsp;</TD>
  </TR>
</TABLE>

<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="286">
      <p><font size="2"><i>Municipal Strategy</i></font></td>
    <td width="43">&nbsp;</td>
    <td width="33" valign="bottom">&nbsp;</td>
    <td width="46">&nbsp;</td>
    <td width="35" valign="bottom">&nbsp;</td>
    <td width="69" align="right">&nbsp;</td>
    <td width="34" align="right">&nbsp;</td>
    <td width="52" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="286" align="center" height="20"><b><font size="1">Period</font></b>
      <hr noshade size="1" align="center" width="10%">
    </td>
    <td colspan="3" align="center" height="20">
      <p> <font size=1><b>Paid to State Street</b></font>
      <hr noshade size="1">
    </td>
    <td width="35" valign="bottom" height="20">
      <p>&nbsp;
    </td>
    <td align="center" colspan="3" height="20"><b><font size=1>Paid to FAM</font></b>
      <hr noshade size="1">
    </td>
  </tr>
  <tr valign="bottom">
    <td width="286">
      <p><font size="2">Fiscal year ended October 31, 1998</font></td>
    <td width="43">&nbsp;</td>
    <td width="33" align="right" valign="bottom">
      <p><font size="2">N/A</font></td>
    <td width="46" align="right">&nbsp;</td>
    <td width="35" valign="bottom">&nbsp;</td>
    <td width="69" align="right"><font size=2>$</font></td>
    <td width="34" align="right">
      <p><font size="2">65,847</font></td>
    <td width="52" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="286">
      <p><font size="2">Fiscal year ended October 31, 1999</font></td>
    <td width="43">&nbsp;</td>
    <td width="33" align="right" valign="bottom">
      <p><font size="2">N/A</font></td>
    <td width="46" align="right">&nbsp;</td>
    <td width="35" valign="bottom">&nbsp;</td>
    <td width="69" align="right"><font size=2>$</font></td>
    <td width="34" align="right">
      <p><font size="2">55,031</font></td>
    <td width="52" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="286">
      <p><font size="2">Fiscal year ended October 31, 2000</font></td>
    <td width="43">&nbsp;</td>
    <td width="33" align="right" valign="bottom">
      <p><font size="2">N/A</font></td>
    <td width="46" align="right">&nbsp;</td>
    <td width="35" valign="bottom">&nbsp;</td>
    <td width="69" align="right"><font size=2>$</font></td>
    <td width="34" align="right">
      <p><font size="2">86,990</font></td>
    <td width="52" align="right">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="286">
      <p><font size="2">For the six months ended April 30, 2001</font></td>
    <td width="43" align="right" valign="bottom"><font size="2">$</font></td>
    <td width="33" align="right" valign="bottom">
      <p><font size="2">11,318</font></td>
    <td width="46" align="left"><font size=2>*</font></td>
    <td width="35" valign="bottom">
      <p>&nbsp;
    </td>
    <td width="69" align="right"><font size=2>$</font></td>
    <td width="34" align="right">
      <p><font size="2">8,000</font></td>
    <td width="52" align="right">&nbsp;</td>
  </tr>
</table>




<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Represents
payments pursuant to the agreement with State Street commencing January 1, 2001.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Duration
and Termination of Investment Advisory and Administration Agreements.</I> Unless
earlier terminated as described below, the Investment Advisory Agreement
between each Fund and FAM will continue from year to year if approved annually
(a) by the Board of Directors of the Fund or by a majority of the outstanding
shares of a Fund&#146;s Common Stock and AMPS, voting together as a single class,
and (b) by a majority of the Directors of a Fund who are not parties to such
contract or &#147;interested persons,&#148; as defined in the Investment Company Act, of
any such party. The contract is not assignable and it may be terminated without
penalty on 60 days&#146; written notice at the option of either party thereto or by
the vote of the stockholders of the Fund. Municipal Strategy&#146;s Administration
Agreement is subject to the same duration and termination requirements.</FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities held by
      a Fund may also be held by, or be appropriate investments for, other funds
      or investment advisory clients for which FAM or its affiliates act as an
      adviser. Because of different objectives or other factors, a particular
      security may be bought for an advisory client when other clients are selling
      the same security. If purchases or sales of securities by FAM for a Fund
      or other funds for which it acts as investment adviser or for advisory clients
      arise for consideration at or about the same time, transactions in such
      securities will be made, insofar as feasible, for the respective funds and
      clients in a manner deemed equitable to all. Transactions effected&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
35</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>by FAM (or its affiliates) on behalf
of more than one of its clients during the same period may increase the demand
for securities being purchased or the supply of securities being sold, causing
an adverse effect on price.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="20"></a>Code of Ethics</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors
      of each Fund has adopted a Code of Ethics pursuant to Rule 17j-1 under the
      Investment Company Act that covers each Fund, MLIM, FAM and FAMD. The Code of Ethics establishes procedures for personal
      investing and restricts certain transactions. Employees subject to the Code
      of Ethics may invest in securities for their personal investment accounts,
      including securities that may be purchased or held by a Fund.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="20a"></a>Voting Rights</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Voting
rights are identical for the holders of shares of each Fund&#146;s common stock.
Holders of each Fund&#146;s common stock are entitled to one vote for each share
held and will vote with the holders of any outstanding shares of the Fund&#146;s
AMPS or other preferred stock on each matter submitted to a vote of holders of
common stock, except as set forth below.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Voting
rights of the holders of each Fund&#146;s AMPS are identical. Except as otherwise
indicated below, and except as otherwise required by applicable law, holders of
shares of a Fund&#146;s AMPS will be entitled to one vote per share on each matter
submitted to a vote of a Fund&#146;s stockholders and will vote together with the
holders of shares of a Fund&#146;s common stock as a single class.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
shares of each Fund&#146;s common stock, AMPS and any other preferred stock do not
have cumulative voting rights, which means that the holders of more than 50% of
the shares of a Fund&#146;s common stock, AMPS and any other preferred stock voting
for the election of Directors can elect all of the Directors standing for
election by such holders, and, in such event, the holders of the remaining
shares of a Fund&#146;s common stock, AMPS and any other preferred stock will not be
able to elect any of such Directors.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the election of a Fund&#146;s Directors, holders of shares of a
Fund&#146;s AMPS, voting separately as a class, shall be entitled at all times to
elect two of that Fund&#146;s Directors, and the remaining Directors will be elected
by holders of shares of that Fund&#146;s common stock and shares of that Fund&#146;s AMPS
and any other preferred stock, voting together as a single class. In addition,
if at any time dividends on outstanding shares of a Fund&#146;s AMPS shall be unpaid
in an amount equal to at least two full years&#146; dividends thereon or if at any
time holders of any shares of a Fund&#146;s preferred stock are entitled, together
with the holders of shares of that Fund&#146;s AMPS, to elect a majority of the
Directors of that Fund under the Investment Company Act, then the number of
Directors constituting the Board of Directors automatically shall be increased
by the smallest number that, when added to the two Directors elected
exclusively by the holders of shares of AMPS and any other preferred stock as
described above, would constitute a majority of the Board of Directors as so
increased by such smallest number, and at a special meeting of stockholders
which will be called and held as soon as practicable, and at all subsequent
meetings at which Directors are to be elected, the holders of shares of that
Fund&#146;s AMPS and any other preferred stock, voting separately as a class, will
be entitled to elect the smallest number of additional Directors that, together
with the two Directors which such holders in any event will be entitled to
elect, constitutes a majority of the total number of Directors of the Fund as
so increased. The terms of office of the persons who are Directors at the time
of that election will continue. If a Fund thereafter shall pay, or declare and
set apart for payment in full, all dividends payable on all outstanding shares
of AMPS and any other preferred stock for all past dividend periods, the
additional voting rights of the holders of shares of AMPS and any other
preferred stock as described above shall cease, and the terms of office of all
of the additional Directors elected by the holders of shares of AMPS and any
other preferred stock (but not of the Directors with respect to whose election
the holders of shares of common stock were entitled to vote or the two
Directors the holders of shares of AMPS and any other preferred stock have the
right to elect in any event) will terminate automatically.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
affirmative vote of the holders of a majority of the outstanding shares of a
Fund&#146;s AMPS, voting as a separate class, will be required to (i) authorize,
create or issue any class or series of stock ranking prior to any series of
preferred stock with respect to payment of dividends or the distribution of
assets on liquidation, (ii) amend, alter or repeal the provisions of the
Charter, whether by merger, consolidation or otherwise, so as to adversely
affect any of the contract rights expressly set forth in the Charter of holders
of preferred stock, (iii) approve any plan of reorganization adversely
affecting such AMPS or (iv) take any action to change a Fund&#146;s investment
policies requiring a vote of stockholders under Section 13(a) of the Investment
Company Act.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
36</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2><B><a name="21"></a>Stockholder Inquiries</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholder
inquiries with respect to any Fund may be addressed to such Fund by telephone
at 1-609-282-2800 or at the address set forth on the cover page of this Proxy
Statement and Prospectus.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="21a"></a>Dividends and Distributions</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Funds&#146; current policies with respect to dividends and distributions relating to
shares of their common stock are identical. Each Fund intends to distribute
substantially all its net investment income monthly to holders of a Fund&#146;s
common stock. As long as any preferred stock is outstanding, monthly
distributions to holders of a Fund&#146;s common stock normally consist of all or a
portion of its net investment income remaining after the payment of dividends
(and any Additional Distribution) on the Fund&#146;s AMPS. All net realized long
term or short term capital gains, if any, are distributed pro rata at least
annually to holders of shares of a Fund&#146;s common stock and AMPS. While any
shares of a Fund&#146;s AMPS are outstanding, that Fund may not declare any cash
dividend or other distribution on its common stock, unless at the time of such
declaration (1) all accumulated dividends on its AMPS, including any Additional
Distribution, have been paid, and (2) the net asset value of its portfolio
(determined after deducting the amount of such dividend or other distribution)
is at least 200% of the liquidation value of the outstanding shares of AMPS
(expected to equal the original purchase price of the outstanding shares of
preferred stock plus any accumulated and unpaid dividends thereon and any
accumulated but unpaid Additional Distribution). If a Fund&#146;s ability to make
distributions on its common stock is limited, such limitation could under
certain circumstances impair the ability of the Fund to maintain its
qualification for taxation as a regulated investment company, which would have
adverse tax consequences for holders of common stock and AMPS. See &#147;Comparison
of the Funds&#151;Tax Rules Applicable to the Funds and Their Stockholders.&#148;</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Similarly,
the Funds&#146; current policies with respect to dividends and distributions on
shares of their AMPS are identical. The holders of shares of a Fund&#146;s AMPS are
entitled to receive, when, as and if declared by the Fund&#146;s Board of Directors,
out of funds legally available therefor, cumulative cash dividends on their
shares. Dividends on a Fund&#146;s shares of AMPS so declared and payable shall be
paid (i) in preference to and in priority over any dividends so declared and
payable on that Fund&#146;s common stock, and (ii) to the extent permitted under the
Internal Revenue Code of 1986, as amended (the &#147;Code&#148;) and to the extent
available, out of net tax-exempt income earned on the Fund&#146;s investments.
Dividends for each Fund&#146;s AMPS are paid through The Depository Trust Company
(&#147;DTC&#148;) (or a successor securities depository) on each dividend payment date.
DTC&#146;s normal procedures now provide for it to distribute dividends in same-day
funds to agent members, who in turn are expected to distribute such dividends
to the person for whom they are acting as agent in accordance with the
instructions of such person. Prior to each dividend payment date, the relevant
Fund is required to deposit with the Auction Agent sufficient funds for the
payment of such declared dividends. Neither of the Funds intends to establish
any reserves for the payment of dividends, and no interest will be payable in
respect of any dividend payment or payment on the shares of a Fund&#146;s AMPS which
may be in arrears.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid by
      each Fund, to the extent paid from tax-exempt income earned on Municipal
      Bonds, are exempt from Federal income tax, subject to the possible application
      of a Federal alternative minimum tax. However, each Fund is required to
      allocate net capital gains and other income subject to regular Federal income
      tax, if any, proportionately between shares of its common stock and shares
      of its AMPS in accordance with the current position of the IRS described
      herein. See &#147;Comparison of the Funds&#151;Tax Rules Applicable to the
      Funds and Their Stockholders.&#148; Each Fund notifies the Auction Agent
      of the amount of any net capital gains or other taxable income to be included
      in any dividend on shares of AMPS prior to the auction establishing the
      applicable rate for such dividend. The Auction Agent in turn notifies each
      broker-dealer whenever it receives any such notice from a Fund, and each
      broker-dealer then notifies its customers who are holders of the Fund&#146;s
      AMPS. Each Fund also may include such income in a dividend on shares of
      its AMPS without giving advance notice thereof if it increases the dividend
      by an additional amount to offset the tax effect thereof. The amount of
      taxable income allocable to shares of a Fund&#146;s AMPS will depend upon
      the amount of such income realized by the Fund and other factors, but generally
      is not expected to be significant.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For information concerning
      the manner in which dividends and distributions to holders of each Fund&#146;s
      common stock may be reinvested automatically in shares of a Fund&#146;s
      common stock, see &#147;&#151;Automatic Dividend Reinvestment Plan.&#148;
      Dividends and distributions will be subject to the tax treatment discussed
      below, whether they are reinvested in shares of a Fund or received in cash.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
37</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a
Fund retroactively allocates any net capital gains or other income subject to
regular Federal income tax to shares of its AMPS without having given advance
notice thereof as described above, which only may happen when such allocation
is made as a result of the redemption of all or a portion of the outstanding
shares of its AMPS or the liquidation of the Fund, such Fund will make certain
payments to holders of shares of its AMPS to which such allocation was made to
offset substantially the tax effect thereof. In no other instances will a Fund
be required to make payments to holders of shares of its AMPS to offset the tax
effect of any reallocation of net capital gains or other taxable income.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="22"></a>Automatic Dividend Reinvestment Plan</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to each Fund&#146;s
      Automatic Dividend Reinvestment Plan (each, a &#147;Plan&#148;), unless
      a holder of a Fund&#146;s common stock is ineligible or elects otherwise,
      all dividends and distributions are automatically reinvested by either BONY,
      as agent for MuniYield stockholders in administering the Plan, or Financial
      Data Services, Inc. (&#147;FDS&#148;), as agent for stockholders of Municipal
      Strategy in administering the Plan (each, a &#147;Plan Agent&#148;), in
      additional shares of the applicable Fund&#146;s common stock. Certain provisions
      of each Plan are different because only MuniYield shares are exchange-listed
      while Municipal Strategy shares are continuously offered by Municipal Strategy.
      After the Reorganization, the Combined Fund will use the MuniYield Plan
      and BONY will be the Plan Agent. Stockholders whose shares are held in the
      name of a broker or nominee should contact such broker or nominee to confirm
      that they are eligible to participate in a Fund&#146;s dividend reinvestment
      plan. Holders of a Fund&#146;s common stock who are ineligible or elect
      not to participate in a Plan receive all distributions in cash paid by check
      mailed directly to the stockholder of record (or, if the shares are held
      in street or other nominee name, then to such nominee) by BONY or FDS, as
      applicable, as dividend paying agent. Such stockholders may elect not to
      participate in a Plan and to receive all distributions of dividends and
      capital gains in cash by sending written instructions to BONY for MuniYield
      or by sending written notification or calling (1-800-MER-FUND) to FDS for Municipal Strategy, at the addresses
      set forth below. Participation in each Plan is completely voluntary and
      may be terminated or resumed at any time without penalty by written notice
      if received by the applicable Plan Agent not less than ten days prior to
      any dividend record date; otherwise, such termination or resumption will
      be effective with respect to any subsequently declared dividend or capital
      gains distribution.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
applicable Plan Agent maintains all stockholders&#146; accounts in a Plan and
furnishes written confirmation of all transactions in the account, including
information needed by stockholders for tax records. Shares in the account of
each Plan participant are held by the applicable Plan Agent in non-certificated
form in the name of the participant, and each stockholder&#146;s proxy includes
those shares purchased or received pursuant to a Plan. The applicable Plan
Agent will forward all proxy solicitation materials to participants and vote
proxies for shares held pursuant to a Plan in accordance with the instructions
of the participants.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the
case of stockholders such as banks, brokers or nominees that hold shares for
others who are the beneficial owners, the applicable Plan Agent will administer
a Plan on the basis of the number of shares certified from time to time by the
record stockholders as representing the total amount registered in the record
stockholder&#146;s name and held for the account of beneficial owners who are to
participate in that Plan.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
automatic reinvestment of dividends and distributions does not relieve
participants of any Federal, state or local income tax that may be payable (or
required to be withheld) on such dividends. See &#147;Comparison of the Funds&#151;Tax
Rules Applicable to the Funds and Their Stockholders.&#148;</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are no brokerage charges with respect to shares issued directly by either Fund
as a result of dividends or capital gains distributions payable either in
shares or in cash. However, each participant in the MuniYield Plan pays a pro
rata share of brokerage commissions incurred with respect to any open-market
purchases by the Plan Agent in connection with the reinvestment of dividends as
described below.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund reserves the right to amend or terminate its Plan. There is no direct
service charge to participants in a Plan; however, each Fund reserves the right
to amend its Plan to include a service charge payable by the participants.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>MuniYield</I></FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the MuniYield Plan, whenever MuniYield declares an ordinary income dividend or
a capital gain dividend (collectively referred to as &#147;dividends&#148;) payable
either in shares or in cash, non-participants in its Plan receive cash, and
participants in the Plan receive the equivalent in shares of the Fund&#146;s common
stock. The shares</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
38</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>are acquired by the Plan Agent for the
participant&#146;s account, depending upon the circumstances described below, either
(i) through receipt of additional unissued but authorized shares of MuniYield
Common Stock from MuniYield (&#147;newly issued shares&#148;) or (ii) by purchase of
outstanding shares of MuniYield Common Stock on the open market (&#147;open-market
purchases&#148;), on the NYSE or elsewhere. If on the payment date for the dividend,
the net asset value per share of MuniYield Common Stock is equal to or less
than the market price per share of MuniYield Common Stock plus estimated
brokerage commissions (such condition being referred to herein as &#147;market
premium&#148;), the Plan Agent invests the dividend amount in newly issued shares on
behalf of the participant. The number of newly issued shares of MuniYield
Common Stock to be credited to the participant&#146;s account is determined by
dividing the dollar amount of the dividend by the net asset value per share on
the date the shares are issued, provided that the maximum discount from the
then current market price per share on the date of issuance may not exceed 5%.
If on the dividend payment date, the net asset value per share is greater than
the market value (such condition being referred to herein as &#147;market
discount&#148;), the Plan Agent invests the dividend amount in shares acquired on
behalf of the participant in open-market purchases.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a
      market discount on the dividend payment date, the Plan Agent has until the
      last business day before the next date on which the shares trade on an &#147;ex-dividend&#148;
      basis or in no event more than 30 days after the dividend payment date (the
      &#147;last purchase date&#148;) to invest the dividend amount in shares
      acquired in open-market purchases. MuniYield intends to pay monthly income
      dividends. Therefore, the period during which open-market purchases can
      be made exists only from the payment date of the dividend through the date
      before the next &#147;ex-dividend&#148; date, which typically is approximately
      ten days. If, before the Plan Agent has completed its open-market purchases,
      the market price of a share of MuniYield Common Stock exceeds the net asset
      value per share, the average per share purchase price paid by the Plan Agent
      may exceed the net asset value of MuniYield shares, resulting in the acquisition
      of fewer shares than if the dividend had been paid in newly issued shares
      on the dividend payment date. Because of the foregoing difficulty with respect
      to open market purchases, MuniYield&#146;s Plan provides that if the Plan
      Agent is unable to invest the full dividend amount in open market purchases
      during the purchase period or if the market discount shifts to a market
      premium during the purchase period, the Plan Agent ceases making open-market
      purchases and invests the uninvested portion of the dividend amount in newly-issued
      shares at the close of business on the last purchase date.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders participating
      in the Plan may receive benefits not available to stockholders not participating
      in the Plan. If the market price (plus commissions) of shares of MuniYield
      Common Stock is higher than the net asset value of such shares, participants
      in the Plan receive shares of MuniYield Common Stock at less than they otherwise
      could purchase them and have shares with a cash value greater than the value
      of any cash distribution they would have received on their shares. If the
      market price plus commissions is lower than the net asset value of such
      shares, participants receive distributions of shares with a net asset value
      greater than the value of any cash distribution they would have received
      on their shares. However, there may be insufficient shares available in
      the market to make distributions of shares at prices below the net asset
      value. Also, since MuniYield normally does not redeem its shares, the price
      on resale may be more or less than the net asset value. See &#147;Comparison
      of the Funds&#151;Tax Rules Applicable to the Funds and Their Stockholders&#148;
      for a discussion of the tax consequences of the Plans.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Municipal
Strategy</I></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Municipal
      Strategy Plan, Municipal Strategy always issues newly issued shares at net
      asset value. No CDSC is imposed upon redemption of shares issued as a result
      of the automatic reinvestment of dividends or capital gains distributions.
      Prior to the Reorganization, Municipal Strategy stockholders should direct
      all correspondence to the Plan Agent for Municipal Strategy as follows:
      Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
      Florida 32246-6484. After the Reorganization, Municipal Strategy common
      stockholders will own shares of MuniYield and will be subject to the MuniYield
      Plan.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
the Reorganization, a holder of shares of Municipal Strategy who has elected to
receive dividends in cash will continue to receive dividends in cash; all other
holders will have their dividends automatically reinvested in shares of the
Combined Fund. However, if a stockholder owns shares in Municipal Strategy and
in MuniYield, after the Reorganization, the stockholder&#146;s election with respect
to the dividends of MuniYield will control unless the stockholder specifically
elects a different option at that time. Following the Reorganization, all
correspondence should be directed to the Plan Agent for MuniYield as follows:
The Bank of New York, 101 Barclay Street, New York, New York 10286.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
39</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2><B><a name="23"></a>Mutual Fund Investment Option</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder
of MuniYield Common Stock, who purchased his or her shares through Merrill
Lynch in the initial public offering of MuniYield Common Stock, has the right
to reinvest the net proceeds from a sale of such shares in Class A shares of
certain eligible Merrill Lynch-sponsored open-end funds at their net asset
value, without the imposition of an initial sales charge, if certain conditions
are satisfied. A holder of Municipal Strategy Common Stock has an investment
option consisting of the right to reinvest the net proceeds from a sale of
shares of Municipal Strategy Common Stock in a tender offer by Municipal
Strategy in Class D shares of certain eligible Merrill Lynch-sponsored open-end
funds at their net asset value, without the imposition of a sales charge, if
certain conditions are met. If the Reorganization is consummated, a holder of
Municipal Strategy Common Stock will have the same investment option as a
holder of MuniYield Common Stock who purchased his or her shares through
Merrill Lynch in the initial public offering of MuniYield Common Stock as
described above.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="23a"></a>Liquidation Rights of Holders of AMPS</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon any
liquidation, dissolution or winding up of either Fund, whether voluntary or
involuntary, the holders of shares of that Fund&#146;s AMPS will be entitled to
receive, out of the assets of the Fund available for distribution to
stockholders, before any distribution or payment is made upon any shares of
that Fund&#146;s common stock or any other capital stock of the Fund ranking junior
in right of payment upon liquidation to AMPS, $25,000 per share together with
the amount of any dividends accumulated but unpaid (whether or not earned or
declared) thereon to the date of distribution, and after such payment the
holders of AMPS will be entitled to no other payments except for any additional
dividends. If the assets of a Fund shall be insufficient to make the full
liquidation payment on the AMPS and liquidation payments on any other
outstanding class or series of preferred stock of the Fund ranking on a parity
with the AMPS as to payment upon liquidation, then such assets will be
distributed among the holders of shares of AMPS and the holders of shares of
such other class or series ratably in proportion to the respective preferential
amounts to which they are entitled. After payment of the full amount of the
liquidation distribution to which they are entitled, the holders of shares of a
Fund&#146;s AMPS will not be entitled to any further participation in any
distribution of assets by that Fund except for any additional dividends. A
consolidation, merger or share exchange of a Fund with or into any other entity
or entities or a sale, whether for cash, shares of stock, securities or
properties, of all or substantially all or any part of the assets of that Fund
shall not be deemed or construed to be a liquidation, dissolution or winding up
of that Fund for this purpose.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="23b"></a>Tax Rules Applicable to the Funds and
      Their Stockholders</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax
consequences of investing in shares of common stock or AMPS of each Fund are
substantially similar. The Funds have elected and qualified since inception for
the special tax treatment afforded RICs under the Code. As a result, in any
taxable year in which they distribute an amount equal to at least 90% of
taxable net income and 90% of tax-exempt net income (see below), the Funds (but
not their stockholders) are not subject to Federal income tax to the extent
that they distribute their net investment income and net realized capital
gains. In all taxable years through the taxable year of the Reorganization,
each Fund has distributed substantially all of its income. MuniYield intends to
continue to distribute substantially all of its income following the
Reorganization.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund is qualified to pay &#147;exempt-interest dividends&#148; as defined in Section
852(b)(5) of the Code. Under such section, if, at the close of each quarter of
its taxable year, at least 50% of the value of a Fund&#146;s total assets consists
of obligations exempt from Federal income tax (&#147;tax-exempt obligations&#148;) under
Section 103(a) of the Code (relating generally to obligations of a state or
local governmental unit), that Fund is qualified to pay exempt-interest
dividends to its stockholders. Exempt-interest dividends are dividends or any
part thereof paid by a Fund which are attributable to interest on tax-exempt
obligations and designated by a Fund as exempt-interest dividends in a written
notice mailed to stockholders within 60 days after the close of its taxable
year. To the extent that the dividends distributed to a Fund&#146;s stockholders are
derived from interest income exempt from Federal income tax under Code Section
103(a) and are properly designated as exempt-interest dividends, they are
excludable from a stockholder&#146;s gross income for Federal income tax purposes.
Exempt-interest dividends are included, however, in determining the portion, if
any, of a person&#146;s social security benefits and railroad retirement benefits
subject to Federal income taxes. A tax adviser should be consulted with respect
to whether exempt-interest dividends retain the exclusion under Code Section
103(a) if a stockholder would be treated as a &#147;substantial user&#148; or &#147;related
person&#148; under Code Section 147(a) with respect to property financed with the
proceeds from an issue of IDBs or PABs, if any, held by a Fund.</font></td></tr></table>

<p>&nbsp;
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40</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The IRS, in a revenue ruling,
      held that certain AMPS would be treated as stock for Federal income tax
      purposes. The terms of the currently outstanding AMPS of each Fund, as well
      as the MuniYield Series F AMPS to be issued by MuniYield, are substantially
      similar, but not identical, to the AMPS discussed in the revenue ruling.
      In the opinion of Sidley Austin Brown &amp; Wood <font size="1">LLP</font>,
      counsel to the Funds, the shares of each Fund&#146;s currently outstanding
      AMPS, as well as the MuniYield Series F AMPS to be issued by MuniYield,
      constitute stock, and distributions with respect to shares of such AMPS
      (other than distributions in redemption of shares of AMPS subject to Section
      302(b) of the Code) will constitute dividends to the extent of current and
      accumulated earnings and profits as calculated for Federal income tax purposes.
      Nevertheless, the IRS could take a contrary position, asserting, for example,
      that the shares of AMPS constitute debt. If this position were upheld, the
      discussion of the treatment of distributions below would not apply to holders
      of shares of AMPS. Instead, distributions by each Fund to holders of shares
      of its AMPS would constitute interest, whether or not they exceeded the
      earnings and profits of the Fund, would be included in full in the income
      of the recipient and taxed as ordinary income. Counsel believes that such
      a position, if asserted by the IRS, would be unlikely to prevail.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the
extent that a Fund&#146;s distributions are derived from interest on its taxable
investments or from an excess of net short-term capital gains over net
long-term capital losses (&#147;ordinary income dividends&#148;), such distributions are
considered taxable ordinary income for Federal income tax purposes.
Distributions, if any, from an excess of net long-term capital gains over net
short-term capital losses derived from the sale of securities or from certain
transactions in futures or options (&#147;capital gain dividends&#148;) are taxable as
long-term capital gains for Federal income tax purposes, regardless of the
length of time the stockholder has owned Fund shares. Certain categories of
capital gains are taxable at different rates for Federal income tax purposes.
Generally not later than 60 days after the close of its taxable year, a Fund
provides its stockholders with a written notice designating the amounts of any
exempt-interest dividends and capital gain dividends, as well as any amount of
capital gain dividends in the different categories of capital gain referred to
above. Distributions by a Fund, whether from exempt-interest income, ordinary
income or capital gains, are not eligible for the dividends received deduction
for corporations under the Code.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A loss
realized on a sale or exchange of shares of a Fund is disallowed if other Fund
shares are acquired (whether under the Automatic Dividend Reinvestment Plan or
otherwise) within a 61-day period beginning 30 days before and ending 30 days
after the date that the shares are disposed of. In such a case, the basis of
the shares acquired will be adjusted to reflect the disallowed loss.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All or a
portion of a Fund&#146;s gain from the sale or redemption of tax-exempt obligations
purchased at a market discount will be treated as ordinary income rather than
capital gain. This rule may increase the amount of ordinary income dividends
received by stockholders. Any loss upon the sale or exchange of Fund shares
held for six months or less is treated as long-term capital loss to the extent
of exempt-interest dividends received by the stockholder. In addition, such
loss is disallowed to the extent of any capital gain dividends received by the
stockholder. Distributions in excess of a Fund&#146;s earnings and profits first
will reduce the adjusted tax basis of a holder&#146;s shares and, after such
adjusted tax basis is reduced to zero, will constitute capital gains to such
holder (assuming the shares are held as a capital asset). If a Fund pays a
dividend in January which was declared in the previous October, November or
December to stockholders of record on a specified date in one of such months,
then such dividend is treated for tax purposes as paid by the Fund and received
by its stockholders on December 31 of the year in which such dividend was
declared.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The IRS
has taken the position in a revenue ruling that if a RIC has two or more
classes of shares it may designate distributions made to each class in any year
as consisting of no more than such class&#146; proportionate share of particular
types of income, including exempt-interest dividends and capital gain
dividends. A class&#146;s proportionate share of a particular type of income is
determined according to the percentage of total dividends paid by the RIC
during such year that was paid to such class. Consequently, when common stock
and one or more series of AMPS are outstanding, each Fund designates
distributions made to the classes as consisting of particular types of income
in accordance with each class&#146;s proportionate share of such income. After the
Reorganization, MuniYield will, likewise, so designate distributions with
respect to its common stock and its AMPS, Series A, B, C, D, E and F. Each Fund
may notify the Auction Agent of the amount of any net capital gains and other
taxable income to be included in any dividend on shares of its AMPS prior to
the auction establishing the applicable rate for such dividend. Except for the
portion of any dividend that a Fund informs the Auction Agent will be treated
as capital gains or other taxable income, the dividends paid on the shares of
AMPS constitute exempt-interest dividends. Alternatively, each Fund may include
such income in a dividend on shares of its AMPS without giving advance notice
thereof if it increases the dividend by an additional amount to offset the tax
effect thereof. The</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
41</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>amount of net capital gains and
ordinary income allocable to shares of a Fund&#146;s AMPS (the &#147;taxable
distribution&#148;) depends upon the amount of such gains and income realized by
that Fund and the total dividends paid on shares of its common stock and shares
of its AMPS during a taxable year, but the taxable distribution generally is
not significant.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of Sidley Austin
      Brown &amp; Wood <font size="1">LLP</font>, counsel to both Funds, under
      current law the manner in which each Fund allocates, and MuniYield will
      allocate, items of tax-exempt income, net capital gains, and other taxable
      income, if any, among shares of common stock and outstanding AMPS (including,
      for MuniYield, its Series A, Series B, Series C, Series D and Series E AMPS
      and, after the Reorganization, the newly issued Series F AMPS) will be respected
      for Federal income tax purposes. However, the tax treatment of additional
      dividends may affect a Fund&#146;s calculation of each class&#146; allocable
      share of capital gains and other taxable income. In addition, there is currently
      no direct guidance from the IRS or other sources specifically addressing
      whether a Fund&#146;s method for allocating tax-exempt income, net capital
      gains and other taxable income among shares of common stock and the outstanding
      series of AMPS will be respected for Federal income tax purposes, and it
      is possible that the IRS could disagree with counsel&#146;s opinion and
      attempt to reallocate a Fund&#146;s net capital gains or other taxable income.
      In the event of a reallocation, some of the dividends identified by a Fund
      as exempt-interest dividends to holders of shares of its AMPS could be recharacterized
      as additional capital gains or other taxable income. In the event of such
      recharacterization, a Fund is not required to make payments to the affected
      stockholders to offset the tax effect of such reallocation. In addition,
      a reallocation could cause a Fund to be liable for income tax and excise
      tax on all reallocated taxable income. Sidley Austin Brown &amp; Wood <font size="1">LLP</font>
      has advised each Fund that, in its opinion, if the IRS were to challenge
      in court its allocations of income and gain, the IRS would be unlikely to
      prevail. The opinion of Sidley Austin Brown &amp; Wood <font size="1">LLP</font>,
      however, represents only its best legal judgment and is not binding on the
      IRS or the courts.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code
requires a RIC to pay a nondeductible 4% excise tax to the extent it does not
distribute during each calendar year 98% of its ordinary income, determined on
a calendar year basis, and 98% of its capital gains, determined in general, on
an October 31 year-end, plus certain undistributed amounts from previous years.
The required distributions, however, are based only on the taxable income of a
RIC. The excise tax, therefore, generally does not apply to the tax-exempt
income of RICs, such as the Funds, that pay exempt-interest dividends.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code
subjects interest received on certain otherwise tax-exempt securities to a
Federal alternative minimum tax. The alternative minimum tax applies to
interest received on &#147;activity bonds&#148; issued after August 7, 1986. As set forth
above, &#147;private activity bonds&#148; are bonds which, although tax-exempt, are used
for purposes other than those generally performed by governmental units and
which benefit non-governmental entities (<i>e.g.</i>, bonds used for industrial
development or housing purposes). Income received on such bonds is classified
as an item of &#147;tax preference&#148; which could subject investors in such bonds,
including stockholders of the Funds, to an increased Federal alternative
minimum tax. Each Fund purchases such &#147;private activity bonds&#148; and reports to
stockholders within 60 days after calendar year-end the portion of its
dividends declared during the year which constitutes an item of tax preference
for alternative minimum tax purposes. The Code further provides that
corporations are subject to a Federal alternative minimum tax based, in part,
on certain differences between taxable income as adjusted for other tax
preferences and the corporation&#146;s &#147;adjusted current earnings&#148; which more
closely reflect a corporation&#146;s economic income. Because an exempt-interest
dividend paid by a Fund is included in adjusted current earnings, a corporate
stockholder may be required to pay a Federal alternative minimum tax on
exempt-interest dividends paid by such Fund.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may invest in high yield securities or junk bonds. Furthermore, the Funds
may also invest in instruments the return on which includes nontraditional
features such as indexed principal or interest payments (&#147;nontraditional
instruments&#148;). These investments may be subject to special tax rules under
which a Fund may be required to accrue and distribute income before amounts due
under the obligations are paid. In addition, it is possible that all or a
portion of the interest payments on such junk bonds and/or nontraditional
instruments could be recharacterized as taxable ordinary income.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at
any time when shares of AMPS are outstanding a Fund does not meet the asset
coverage requirements of the Investment Company Act, that Fund will be required
to suspend distributions to holders of its common stock until the asset
coverage is restored. See &#147;Dividends and Distributions.&#148; This may prevent a
Fund from distributing at least 90% of its net investment income and may,
therefore, jeopardize that Fund&#146;s qualification for taxation as a RIC. If a
Fund were to fail to qualify as a RIC, some or all of the distributions paid by
that Fund would be fully taxable to stockholders for Federal income tax
purposes. Upon any failure to meet the asset</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
42</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>coverage requirements of the
Investment Company Act, a Fund, in its sole discretion, may redeem shares of
AMPS in order to maintain or restore the requisite asset coverage and avoid the
adverse consequences to that Fund and its stockholders of failing to qualify as
a RIC. No assurance can be given, however, that any such action would achieve
such objectives.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As noted
above, a Fund must distribute annually at least 90% of its net taxable and
tax-exempt interest income. A distribution will only be counted for this
purpose if it qualifies for the dividends paid deduction under the Code. Some
types of preferred stock that the Funds have issued and that MuniYield
contemplates issuing may raise a question as to whether distributions on such
preferred stock are &#147;preferential&#148; under the Code and, therefore, not eligible
for the dividends paid deduction. Counsel has advised the Funds that the
outstanding preferred stock and the preferred stock to be issued by MuniYield
will not result in the payment of a preferential dividend. If a Fund ultimately
relies solely on a legal opinion when it issues such preferred stock, no
assurance can be given that the IRS would agree that dividends on the preferred
stock are not preferential. If the IRS successfully disallowed the dividends
paid deduction for dividends on the preferred stock, the Funds could be
disqualified as RICs. In this case, dividends paid by the Funds on the common
stock and the AMPS would not be exempt from Federal income taxes. Additionally,
the Funds would be subject to a Federal alternative minimum tax.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
certain circumstances when a Fund is required to allocate taxable income to the
AMPS, it will pay Additional Distributions to holders of shares of AMPS. The
Federal income tax consequences of Additional Distributions under existing law
are uncertain. The Funds treat and MuniYield intends to continue to treat a
holder as receiving a dividend distribution in the amount of any Additional
Distribution only as and when such Additional Distribution is paid. An
Additional Distribution generally is designated by a Fund as an exempt-interest
dividend except as otherwise required by applicable law. However, the IRS may
assert that all or part of an Additional Distribution is a taxable dividend
either in the taxable year for which the allocation of taxable income is made
or in the taxable year in which the Additional Distribution is paid.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
value of shares acquired pursuant to a Fund&#146;s dividend reinvestment plan is
generally excluded from gross income to the extent that the cash amount
reinvested would be excluded from gross income. If, at a time when a Fund&#146;s
shares are trading at a premium over net asset value, MuniYield issues shares
pursuant to the dividend reinvestment plan that have a greater fair market
value than the amount of cash reinvested, it is possible that all or a portion
of such discount (which may not exceed 5% of the fair market value of such
Fund&#146;s shares) could be viewed as a taxable distribution. If the discount is
viewed as a taxable distribution, it is also possible that the taxable
character of this discount would be allocable to all of the stockholders,
including stockholders who do not participate in a Fund&#146;s dividend reinvestment
plan. Thus, stockholders who do not participate in the dividend reinvestment
plan of a Fund, as well as dividend reinvestment plan participants, might be
required to report as ordinary income a portion of their distributions equal to
the allocable share of the discount.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
certain provisions of the Code, some stockholders may be subject to a
withholding tax on certain ordinary income dividends and on capital gain
dividends and redemption payments (&#147;backup withholding&#148;). Generally,
stockholders subject to backup withholding will be those for whom no taxpayer
identification number is on file with a Fund or who, to that Fund&#146;s knowledge,
have furnished an incorrect number. When establishing an account, an investor
must certify under penalty of perjury that such number is correct and that such
stockholder is not otherwise subject to backup withholding.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ordinary
income dividends paid to stockholders who are nonresident aliens or foreign
entities are subject to a 30% United States withholding tax under existing
provisions of the Code applicable to foreign individuals and entities unless a
reduced rate of withholding or a withholding exemption is provided under
applicable treaty law. Nonresident stockholders are urged to consult their own
tax advisers concerning the applicability of the United States withholding tax.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Code
provides that every stockholder required to file a tax return must include for
information purposes on such return the amount of exempt-interest dividends
received from all sources (including the Funds) during the taxable year.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="24"></a>Tax Treatment of Options and Futures
      Transactions</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Fund may purchase or sell municipal bond index financial futures contracts and
interest rate financial futures contracts on U.S. Government securities. Each
Fund may also purchase and write call and put options on such financial futures
contracts. In general, unless an election is available to a Fund or an
exception applies, such </font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
43</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>options and financial futures
contracts that are &#147;Section 1256 contracts&#148; will be &#147;marked to market&#148; for
Federal income tax purposes at the end of each taxable year (<i>i.e.</i>, each such
option or financial futures contract will be treated as sold for its fair
market value on the last day of the taxable year), and any gain or loss
attributable to Section 1256 contracts will be 60% long-term and 40% short-term
capital gain or loss. Application of these rules to Section 1256 contracts held
by a Fund may alter the timing and character of distributions to stockholders.
The mark-to-market rules outlined above, however, will not apply to certain
transactions entered into by a Fund solely to reduce the risk of changes in
price or interest rates with respect to its investments.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Code
Section 1092, which applies to certain &#147;straddles,&#148; may affect the taxation of
a Fund&#146;s sales of securities and transactions in financial futures contracts
and related options. Under Section 1092, a Fund may be required to postpone
recognition for tax purposes of losses incurred in certain sales of securities
and certain closing transactions in financial futures contracts or the related
options.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing is a general and abbreviated summary of the applicable provisions of
the Code and Treasury Regulations presently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and the
Treasury Regulations promulgated thereunder. The Code and the Treasury
Regulations, are subject to change by legislative, judicial or administrative
action either prospectively or retroactively.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders
are urged to consult their tax advisers regarding specific questions as to
Federal, foreign, state or local tax consequences of an investment in a Fund.</font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="25"></a>AGREEMENT AND PLAN OF REORGANIZATION</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="25a"></a>General</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Agreement and Plan (attached hereto as Appendix II), MuniYield will acquire
substantially all of the assets, and will assume substantially all of the
liabilities, of Municipal Strategy in return solely for shares of MuniYield
Common Stock and MuniYield Series F AMPS to be issued by MuniYield. The number
of full shares of MuniYield Common Stock issued to Municipal Strategy will have
an aggregate net asset value equal to the aggregate net asset value of the
outstanding shares of Municipal Strategy Common Stock, and the number of shares
of MuniYield Series F AMPS issued to Municipal Strategy will have an aggregate
liquidation preference and value equal to the aggregate liquidation preference
and value of the outstanding shares of Municipal Strategy Series A AMPS. Upon
receipt by Municipal Strategy of such shares, Municipal Strategy will (i)
distribute the shares of MuniYield Common Stock to the holders of Municipal
Strategy Common Stock (plus cash in lieu of fractional shares) in return for
their shares of Municipal Strategy Common Stock, and (ii) distribute the shares
of MuniYield Series F AMPS to the holders of Municipal Strategy Series A AMPS
in return for their shares of Municipal Strategy Series A AMPS. MuniYield will
file Articles Supplementary establishing the powers, rights and preferences of
the MuniYield Series F AMPS with the State Department of Assessments and
Taxation of Maryland (the &#147;Maryland Department&#148;) prior to the closing of the
Reorganization. As soon as practicable after the date that the Reorganization
takes place (the &#147;Closing Date&#148;), Municipal Strategy will file Articles of
Dissolution with the Maryland Department to effect the formal dissolution of
such Fund, and will dissolve and deregister as an investment company under the
Investment Company Act.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal Strategy
      will distribute the shares of MuniYield Common Stock (plus cash in lieu
      of fractional shares) and the shares of MuniYield Series F AMPS received
      by it pro rata to its holders of record of common stock and AMPS, as applicable,
      in return for such stockholders&#146; shares in Municipal Strategy. Such
      distribution will be accomplished by opening new accounts on the books of
      MuniYield in the names of the common and preferred stockholders of Municipal
      Strategy and transferring to those stockholder accounts the MuniYield Common
      Stock or MuniYield Series F AMPS previously credited on those books to the
      accounts of Municipal Strategy. Each newly-opened account on the books of
      MuniYield for the previous holders of Municipal Strategy Common Stock would
      represent the respective pro rata number of shares of MuniYield Common Stock
      (rounded down, in the case of fractional shares, to the next largest number
      of whole shares) due such holder of common stock. No fractional shares of
      MuniYield Common Stock will be issued. In lieu thereof, MuniYield&#146;s
      Transfer Agent will aggregate all fractional shares of MuniYield Common
      Stock and sell the resulting whole shares on the NYSE for the account of
      all holders of fractional interests, and each such holder will be entitled
      to the pro rata share of the proceeds from such sale upon surrender of the
      stock certificates representing shares of Municipal Strategy Common Stock.
      Similarly, each newly-opened account on the books of MuniYield for the previous
      holders of Municipal Strategy AMPS would represent the respective pro rata
      number of shares of MuniYield Series F AMPS due such holder of AMPS. See
      &#147;Surrender and Exchange of Stock Certificates&#148; for a &lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
44</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>description of the procedures to be
followed by the stockholders of Municipal Strategy to obtain their MuniYield
Common Stock (and cash in lieu of fractional shares, if any). Because AMPS are
held in &#147;street name&#148; by DTC, all transfers with respect to AMPS are
accomplished by book entry.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;Accordingly, as a
      result of the Reorganization, every holder of Municipal Strategy Common
      Stock would own shares of MuniYield Common Stock that (except for cash payments
      received in lieu of fractional shares) would have an aggregate net asset
      value immediately after the Closing Date equal to the aggregate net asset
      value of that stockholder&#146;s Municipal Strategy Common Stock immediately
      prior to the Closing Date. Since the MuniYield Common Stock would be issued
      at net asset value and the shares of Municipal Strategy Common Stock would
      be valued at net asset value for the purposes of the exchange, the interests
      of common stockholders of neither Fund will be diluted as a result of the
      Reorganization. Similarly, since the MuniYield Series F AMPS would be issued
      at a liquidation preference and value per share equal to the liquidation
      preference and value per share of the AMPS of Municipal Strategy, the interests
      of the AMPS stockholders of neither Fund will be diluted as a result of
      the Reorganization. However, as a result of the Reorganization, stockholders
      of both Funds likely will hold a reduced percentage of ownership in the
      Combined Fund than he or she held in MuniYield or Municipal Strategy.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="26"></a>Procedure</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
separate meetings of the Boards of Directors of Municipal Strategy and
MuniYield, each Board, including all of the Directors who are not &#147;interested
persons&#148; of the applicable Fund, unanimously approved the Agreement and Plan.
The Board of Directors of Municipal Strategy, including all of the Directors
who are not &#147;interested persons&#148; also approved the submission of such Agreement
and Plan to the Municipal Strategy stockholders for approval.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors of MuniYield approved the filing of Articles Supplementary
establishing the powers, rights and preferences of the MuniYield Series F AMPS
in order that they may be distributed to holders of AMPS of Municipal Strategy
as part of the Reorganization.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a
result of such Board approvals, Municipal Strategy has filed this proxy
statement with the Commission soliciting a vote of the Municipal Strategy
stockholders to approve the Reorganization. The costs of such solicitation will
be deducted from the assets of Municipal Strategy as of the Valuation Time as
defined below. A special meeting of Municipal Strategy stockholders will be
held on October 24, 2001. If the stockholders of Municipal Strategy approve the
Reorganization, the Reorganization will take place as soon as practicable after
such approval, provided that the Funds have obtained prior to that time an
opinion of counsel concerning the tax consequences of the Reorganization as set
forth in the Agreement and Plan.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
Board of Directors of Municipal Strategy recommends that the stockholders of
Municipal Strategy approve the Agreement and Plan.</B></FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="26a"></a>Terms of the Agreement and Plan of Reorganization</B></font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The
following is a summary of the significant terms of the Agreement and Plan. This
summary is qualified in its entirety by reference to the Agreement and Plan,
attached hereto as Appendix II.</I></FONT></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Valuation
of Assets and Liabilities.</I> The respective assets of each Fund will be valued on
the business day prior to the Closing Date (the &#147;Valuation Date&#148;). The
valuation procedures are the same for each Fund: the net asset value per share
of the common stock of each Fund will be determined as of the close of business
on the NYSE (generally, 4:00 p.m., Eastern time) on the Valuation Date (the
&#147;Valuation Time&#148;). For the purpose of determining the net asset value of a
share of common stock of each Fund, the value of the securities held by the
issuing Fund plus any cash or other assets (including interest accrued but not
yet received) minus (i) all liabilities (including accrued expenses) and (ii)
the aggregate liquidation value of the outstanding shares of AMPS of the
issuing Fund, is divided by the total number of shares of common stock of the
issuing Fund outstanding at such time. Daily expenses, including the fees
payable to FAM, will accrue on the Valuation Date.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Municipal Bonds in which each Fund invests are traded primarily in the
over-the-counter markets. In determining net asset value on the Valuation Date,
each Fund will use the valuations of portfolio securities furnished by a
pricing service approved by the Boards of Directors of the Funds. The pricing
service typically values portfolio securities at the bid price or the yield
equivalent when quotations are readily available. Municipal Bonds for which
quotations are not readily available will be valued at fair market value on a
consistent basis as </font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
45</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>determined by the pricing service
using a matrix system to determine valuations. The Boards of Directors of the
Funds have determined in good faith that the use of a pricing service is a fair
method of determining the valuation of portfolio securities. Positions in
financial futures contracts will be valued on the Valuation Date at closing
prices for such contracts established by the exchange on which they are traded,
or if market quotations are not readily available, will be valued at fair value
on a consistent basis using methods determined in good faith by each Board of
Directors.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Distribution
of MuniYield Common Stock and MuniYield Series F AMPS.</I> On the Closing Date,
MuniYield will issue to Municipal Strategy a number of full shares of MuniYield
Common Stock the aggregate net asset value of which will equal the aggregate
net asset value of shares of Municipal Strategy Common Stock on the Valuation
Date. Each holder of Municipal Strategy Common Stock will receive the number of
full shares of MuniYield Common Stock (plus cash in lieu of fractional shares)
corresponding to his or her proportionate interest in the respective aggregate
net asset value of the Municipal Strategy Common Stock.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the
Closing Date, MuniYield also will issue to Municipal Strategy a number of
shares of MuniYield Series F AMPS, the aggregate liquidation preference and
value of which will equal the aggregate liquidation preference and value of
Municipal Strategy Series A AMPS on the Valuation Date. Each holder of
Municipal Strategy Series A AMPS will receive the number of shares of MuniYield
Series F AMPS corresponding to his or her proportionate interest in the
aggregate liquidation preference and value of the Municipal Strategy Series A
AMPS. No sales charge or fee of any kind will be charged to stockholders of
Municipal Strategy in connection with their receipt of MuniYield Common Stock
or MuniYield Series F AMPS in the Reorganization. No CDSC will apply to shares
of MuniYield Common Stock issued to Municipal Strategy in the Reorganization,
nor will any CDSC be due on the shares of Municipal Strategy Common Stock in
connection with the Reorganization. It is anticipated that the auction for
MuniYield Series F AMPS will be held on Wednesday. The auction procedures for
all of the AMPS are substantially similar. As a result of the Reorganization,
the last dividend period for the AMPS of Municipal Strategy prior to the
Closing Date will be shorter than the dividend period for such AMPS determined
as set forth in the applicable Articles Supplementary.</font></td></tr></table>

<font size=2>&lt;R&gt;</font><br>
<table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expenses</I>. The expenses
      of the Reorganization that are directly attributable to Municipal Strategy
      and the conduct of its business will be deducted from the assets of Municipal
      Strategy as of the Valuation Time. These expenses are expected to include
      transfer agent fees, the expenses incurred in preparing, printing and mailing
      the proxy materials to be used in connection with the Meeting, the expenses
      related to the solicitation of proxies to be voted at the Meeting and a
      portion of the expenses incurred in printing the registration statement
      on Form N-14 of which this Proxy Statement and Prospectus is a part (the
      &#147;N-14 Registration Statement&#148;). FAM has agreed to bear the expenses
      of the Reorganization that are directly attributable to MuniYield and the
      conduct of its business. The expenses attributable to MuniYield include
      fees, if any, of the rating agencies with respect to the MuniYield Series
      F AMPS, the costs of printing stock certificates, transfer agent fees, and
      a portion of the expenses incurred in printing the N-14 Registration Statement.
      Certain other expenses of the Reorganization, including expenses in connection
      with obtaining an opinion of counsel as to certain tax matters, the preparation
      of the Agreement and Plan, legal fees, audit fees and any listing or registration
      fees, will be borne equally by Municipal Strategy and by FAM, which has
      agreed to bear such expenses on behalf of MuniYield.</FONT></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of July 31, 2001, the expenses
      of the Reorganization attributable to Municipal Strategy are estimated to
      be approximately $125,800 and the expenses of the Reorganization attributable
      to MuniYield are estimated to be approximately $95,400.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Required
Approvals.</I> Under the Charter of Municipal Strategy (including Articles
Supplementary establishing the powers, rights and preferences of the Municipal
Strategy Series A AMPS) and relevant Maryland law, stockholder approval of the
Agreement and Plan requires the affirmative vote of stockholders of Municipal
Strategy representing more than 50% of the outstanding shares of Municipal
Strategy Common Stock and Municipal Strategy Series A AMPS, voting together as
a single class, and more than 50% of the outstanding shares of Municipal
Strategy Series A AMPS, voting separately as a class.</FONT></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Deregistration
and Dissolution.</I> Following the transfer of the assets and liabilities of
Municipal Strategy and the distribution of shares of MuniYield Common Stock and
MuniYield Series F AMPS to Municipal Strategy stockholders, in accordance with
the foregoing, Municipal Strategy will terminate its registration under the
Investment Company Act and its incorporation under Maryland law and will
withdraw its authority to do business in any state where it is required to do
so.</FONT></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
46</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendments
and Conditions.</I> The Agreement and Plan may be amended at any time prior to the
Closing Date with respect to any of the terms therein. The obligations of each
Fund pursuant to the Agreement and Plan are subject to various conditions,
including the N-14 Registration Statement being declared effective by the
Commission, approval by the stockholders of Municipal Strategy as described
above, an opinion of counsel being received with respect to certain tax
matters, an opinion of counsel being received as to securities matters and the
continuing accuracy of various representations and warranties of the Funds
being confirmed by the respective parties.</FONT></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Postponement,
Termination.</I> Under the Agreement and Plan, the Board of Directors of either
Fund may cause the Reorganization to be postponed or abandoned under certain
circumstances should such Board determine that it is in the best interests of
the stockholders of its respective Fund to do so. The Agreement and Plan may be
terminated, and the Reorganization abandoned at any time (whether before or
after adoption thereof by the stockholders of either Fund) prior to the Closing
Date, or the Closing Date may be postponed: (i) by mutual consent of the Boards
of Directors of the Funds and (ii) by the Board of Directors of either Fund if
any condition to that Fund&#146;s obligations set forth in the Agreement and Plan
has not been fulfilled or waived by such Board.</FONT></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="27"></a>Potential Benefits to Stockholders as
      a Result of the Reorganization</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In approving the Reorganization,
      the Board of Directors of Municipal Strategy identified certain potential
      benefits for Municipal Strategy common stockholders that are likely to result
      from the Reorganization, including, among other things, that (i) Municipal
      Strategy common stockholders will be invested in a substantially larger
      non-diversified, leveraged, closed-end fund with an investment objective
      and investment policies substantially similar to Municipal Strategy&#146;s
      investment objective and policies, (ii) Municipal Strategy common stockholders
      will experience lower expenses per share, economies of scale and greater
      flexibility in portfolio management, (iii) the Combined Fund will not pay
      the administrative fee currently paid by Municipal Strategy, (iv) Municipal
      Strategy common stockholders will no longer be subject to the expenses associated
      with Municipal Strategy&#146;s required yearly prospectus updates, (v) Municipal
      Strategy common stockholders will no longer be subject to the expenses of
      conducting quarterly tender offers, (vi) Municipal Strategy common stockholders
      will no longer be subject to a CDSC that currently applies upon the sale
      of shares held for less than three years, and (vii) Municipal Strategy common
      stockholders will be able to sell their shares on each day that the NYSE
      is open for trading, although any such sales will be made at the then current
      market price, which may be at a premium above or a discount from the Combined
      Fund&#146;s net asset value and may be subject to brokerage commissions
      or other charges. While Municipal Strategy stockholders will no longer be
      able to tender their shares to the Fund at net asset value (less any applicable
      CDSC) on a quarterly basis, the Directors believe the potential benefits
      of the Reorganization make it in the best interests of Municipal Strategy
      and its stockholders.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors of Municipal
      Strategy considered, among other things, that Municipal Strategy common
      stockholders should experience an additional benefit because certain fixed
      costs, such as the costs of printing stockholder reports, legal expenses,
      audit fees, mailing costs and other expenses will be spread across a larger
      asset base, resulting in an expense ratio for the Combined Fund that is
      lower than Municipal Strategy&#146;s current expense ratio. Due to the larger
      asset base, the Combined Fund may also experience economies of scale and
      greater flexibility in portfolio management.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
the pro forma total operating expense ratio of the Combined Fund is not
expected to be significantly lower than MuniYield&#146;s current operating expense
ratio, MuniYield common stockholders will not be adversely affected by the
Reorganization since FAM has agreed to bear all Reorganization expenses
attributable to MuniYield and MuniYield may otherwise benefit from an increase
in the Combined Fund&#146;s level of net assets.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is
not anticipated that the Reorganization will directly benefit the holders of
shares of any series of AMPS of either Fund. However, the Reorganization will
not adversely affect the holders of shares of any series of AMPS of either
Fund. The expenses of the Reorganization will not be borne by the holders of
shares of AMPS of either Fund.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Boards considered the possible risks and costs of combining the Funds, and
examined the relative credit strength, maturity characteristics, mix of type
and purpose, and yield of the Funds&#146; portfolios of Municipal Bonds and the
costs involved in a transaction such as the Reorganization. The Boards noted
the many similarities between the Funds, including their substantially similar
investment objectives and investment policies, their use
</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
47</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;of substantially the same management personnel and
      their similar portfolios of Municipal Bonds. The Boards also considered
      the relative tax positions of the portfolios of the Funds. As of May 31,
      2001, each Fund had net realized capital losses that, subject to certain
      limitations, can be shared by the stockholders of the Combined Fund. Please
      see &#147;Pro Forma Combined Statement of Assets, Liabilities and Capital.&#148;
      As a result of the Reorganization and subject to certain limitations, the
      stockholders of each Fund may benefit from the ability of the Combined Fund
      to use the net realized capital losses of the Funds to offset future net
      realized capital gains of the Combined Fund, if any. Based on these factors,
      among others, the Board of Directors of Municipal Strategy concluded that
      the Reorganization will potentially benefit the stockholders of Municipal
      Strategy in that it (i) presents no significant risks that would outweigh
      the benefits discussed above, (ii) involves minimal costs (including relatively
      minor legal, accounting and administrative costs) and (iii) does not adversely
      affect the stockholders of Municipal Strategy Series A AMPS. The Board of
      Directors of MuniYield concluded that, although the pro forma total operating
      expense ratio of the Combined Fund is not expected to be significantly lower
      than MuniYield&#146;s current operating expense ratio, (i) MuniYield common
      stockholders will not be adversely affected by the Reorganization since
      (a) FAM has agreed to bear all Reorganization expenses attributable to MuniYield,
      and (b) MuniYield may otherwise benefit from an increase in the Combined
      Fund&#146;s level of net assets, and (ii) the Reorganization does not adversely
      affect the stockholders of MuniYield AMPS.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the
past, FAM has voluntarily waived a portion of its advisory fee and/or
reimbursed certain other expenses with respect to Municipal Strategy. FAM has
not waived fees or reimbursed expenses with respect to MuniYield and it is not
anticipated that FAM will waive its advisory fee and/or reimburse expenses with
respect to the Combined Fund on an ongoing basis. Total annualized operating
expense ratios for MuniYield, Municipal Strategy (excluding advisory fee
waivers and/or expense reimbursements) and the Combined Fund based on their
respective average net assets (excluding assets attributable to AMPS) for the
six month period ended April 30, 2001 are summarized below.</font></td></tr></table>



<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">
      <P><b><font size="1">Average Net Assets<br>
        (Excluding Assets <br>
        Attributable to AMPS) <br>
        for the Six Month <br>
        Period ended <br>
        April 30, 2001 </font></b>
      <hr noshade size="1">
      <b><font size="1"> </font></b> </TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD colspan="2" align="center">
      <P><b><font size="1">Total Annualized Operating <br>
        Expense Ratio </font></b>
      <hr noshade size="1">
      <b><font size="1"> </font></b> </TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>
      <P><font size="2">MuniYield</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center">
      <P><font size="2">$507,503,509</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right">
      <P><font size="2">1.00</font>
    </TD>
    <TD align="left"><font size="2">%</font></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>
      <P><font size="2">Municipal Strategy</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center">
      <P><font size="2">$&nbsp; 81,220,051</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right">
      <P><font size="2">2.05</font>
    </TD>
    <TD align="left"><font size="2">%*</font></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>
      <P><font size="2">Combined Fund**</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center">
      <P><font size="2">$588,723,560</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right">
      <P><font size="2">0.99</font>
    </TD>
    <TD align="left"><font size="2">%</font></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>





<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Including
fee waivers and/or expense reimbursements applicable to Municipal Strategy, the
total annualized operating expense ratio for Municipal Strategy would have been
1.90%.</font></td></tr></table>

<table width=600>
  <tr>
    <td width=3% align=right valign=top><font size="1">** </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Assumes that the Reorganization had taken place
      on April 30, 2001. </font></td>
  </tr>
</table>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
annualized operating expense ratios for MuniYield, Municipal Strategy
(excluding advisory fee waivers and/or expense reimbursements) and the Combined
Fund based on their respective average net assets (including assets
attributable to AMPS) for the six month period ended April 30, 2001 are
summarized below.</font></td></tr></table>



<br>
<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600>
  <TR valign="bottom">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD align="center">
      <P><b><font size="1">Average Net Assets<br>
        (Including Assets <br>
        Attributable to AMPS) <br>
        for the Six Month <br>
        Period ended <br>
        April 30, 2001 </font></b>
      <hr noshade size="1">
      <b><font size="1"> </font></b> </TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD colspan="2" align="center">
      <P><b><font size="1">Total Annualized Operating <br>
        Expense Ratio </font></b>
      <hr noshade size="1">
      <b><font size="1"> </font></b> </TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>
      <P><font size="2">MuniYield</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center">
      <P><font size="2">$757,503,509</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right">
      <P><font size="2">0.67</font>
    </TD>
    <TD align="left"><font size="2">%</font></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>
      <P><font size="2">Municipal Strategy</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center">
      <P><font size="2">$124,220,051</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right">
      <P><font size="2">1.34</font>
    </TD>
    <TD align="left"><font size="2">%*</font></TD>
    <TD>&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>
      <P><font size="2">Combined Fund**</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="center">
      <P><font size="2">$881,723,560</font>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right">
      <P><font size="2">0.66</font>
    </TD>
    <TD align="left"><font size="2">%</font></TD>
    <TD>&nbsp;</TD>
  </TR>
</TABLE>



<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Including
fee waivers and/or expense reimbursements applicable to Municipal Strategy, the
total annualized operating expense ratio for Municipal Strategy would have been
1.24%.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">**
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Assumes
that the Reorganization had taken place on April 30, 2001.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield may otherwise
      benefit from an increase in its level of net assets. The Combined Fund would
      have had net assets of approximately $896 million assuming that the Reorganization
      had taken place on July 31, 2001. A larger asset base should provide benefits
      in portfolio management. After the Reorganization, the Combined Fund should
      be able to purchase larger amounts of Municipal Bonds at more favorable
      prices than either Fund separately and, with this greater purchasing power,
      request improvements in the terms of the Municipal Bonds (<i>e.g.</i>, added indenture
      provisions covering call protection, sinking funds and audits for the benefit
      of large holders) prior to purchase.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
48</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
approving the Reorganization, the Board of Directors of each Fund determined
that the Reorganization is in the best interests of the stockholders of that
Fund because the Reorganization presents no significant risks or costs
(including legal, accounting and administrative costs) that would outweigh the
potential benefits discussed above and because, with respect to net asset
value, the interests of existing stockholders of that Fund would not be diluted
as a result of the Reorganization.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="28"></a>Surrender and Exchange of Stock Certificates</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
the Closing Date, each holder of an outstanding certificate or certificates
formerly representing shares of Municipal Strategy Common Stock will be
entitled to receive, upon surrender of their certificate or certificates, a
certificate or certificates representing the number of shares of MuniYield
Common Stock distributable with respect to such holder&#146;s shares of Municipal
Strategy Common Stock, together with cash in lieu of any fractional shares of
common stock. Promptly after the Closing Date, the transfer agent for MuniYield
Common Stock will mail to each holder of certificates formerly representing
shares of Municipal Strategy Common Stock a letter of transmittal for use in
surrendering their certificates for certificates representing shares of
MuniYield Common Stock and cash in lieu of any fractional shares of common
stock.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares
of AMPS are held in &#147;street name&#148; by DTC, and all transfers will be
accomplished by book entry. Surrender of physical certificates for AMPS is not
required.</font></td></tr></table>


<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=590>
  <TR valign="bottom">
    <TD WIDTH="33%"> <FONT SIZE=2>
      <P><b><font size="1">If Prior To The Reorganization You Held:</font></b>
      </FONT>
      <hr noshade size="1" width="97%" align="left">
    </TD>
    <TD WIDTH="21%"> <FONT SIZE=2>
      <P><b></b>
      </FONT></TD>
    <TD WIDTH="46%" align="center"><font size=2><b><font size="1">After The Reorganization,
      You Will Hold:</font></b></font>
      <hr noshade size="1" width="65%">
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="33%"> <FONT SIZE=2>
      <P><font size="2">Municipal Strategy Common Stock</font>
      </FONT></TD>
    <TD WIDTH="21%">&nbsp;</TD>
    <TD WIDTH="46%" align="center"> <FONT SIZE=2>
      <P><font size="2">MuniYield Common Stock</font>
      </FONT></TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="33%"> <FONT SIZE=2>
      <P><font size="2">Municipal Strategy Series A AMPS</font>
      </FONT></TD>
    <TD WIDTH="21%">&nbsp;</TD>
    <TD WIDTH="46%" align="center"> <FONT SIZE=2>
      <P><font size="2">MuniYield Series F AMPS</font>
      </FONT></TD>
  </TR>
</TABLE>




<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
do not send in any stock certificates at this time. Upon consummation of the
Reorganization, Municipal Strategy common stockholders will be furnished with
instructions for exchanging their stock certificates for MuniYield stock
certificates and, if applicable, cash in lieu of fractional shares of MuniYield
Common Stock.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From and
after the Closing Date, certificates formerly representing shares of Municipal
Strategy Common Stock will be deemed for all purposes to evidence ownership of
the number of full shares of MuniYield Common Stock distributable with respect
to the shares of Municipal Strategy held before the Reorganization as described
above and as shown in the table above, provided that, until such stock
certificates have been so surrendered, no dividends payable to the holders of
record of Municipal Strategy Common Stock as of any date subsequent to the
Closing Date will be paid to the holders of such outstanding stock
certificates. Dividends payable to holders of record of shares of MuniYield
Common Stock, as of any date after the Closing Date and prior to the exchange
of certificates by any stockholder of Municipal Strategy, will be paid to such
stockholder, without interest, at the time such stockholder surrenders the
stock certificates for exchange.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From and
after the Closing Date, there will be no transfers on the stock transfer books
of Municipal Strategy. If, after the Closing Date, certificates representing
shares of Municipal Strategy Common Stock are presented to MuniYield, they will
be canceled and exchanged for certificates representing MuniYield Common Stock,
and cash in lieu of fractional shares of common stock, if any, distributable
with respect to such common stock in the Reorganization.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="28a"></a>Tax Consequences of the Reorganization</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Summary</I>.
      MuniYield and Municipal Strategy will receive an opnion of counsel with
      respect to the Reorganization to the effect that, among other things, neither
      MuniYield nor Municipal Strategy will recognize a gain or loss on the transaction
      and Municipal Strategy stockholders will not recognize gain or loss on the
      transaction (except to the extent Municipal Strategy stockholders receive
      cash in lieu of fractional shares).</FONT></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy has significant net operating losses and other losses. The Combined
Fund may be able to use these losses to offset future income of the Combined
Fund. However, the Code may apply some restrictions as to the timing and use of
these losses, which could reduce their benefit to the Combined Fund.</font></td></tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General</I>. The Reorganization
      has been structured with the intention that it qualify for Federal income
      tax purposes as a tax-free reorganization under Section 368(a)(1)(C) of
      the Code. Each Fund has elected and qualified since inception for the special
      tax treatment afforded RICs under the Code, and MuniYield intends to continue
      to so qualify after the Reorganization. The Reorganization is conditioned
      upon the receipt of an opinion </FONT> <font size="2">&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
49</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 55, page: 55" -->






<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;of counsel that for Federal income tax purposes
      (i) the transfer of substantially all of its assets by Municipal Strategy
      to MuniYield in exchange for MuniYield Common Stock and MuniYield Series
      F AMPS, as described above, will constitute a reorganization within the
      meaning of Section 368(a)(1)(C) of the Code, and Municipal Strategy and
      MuniYield each will be deemed a &#147;party&#148; to a reorganization within
      the meaning of Section 368(b) of the Code; (ii) in accordance with Section
      361(a) of the Code, no gain or loss will be recognized to Municipal Strategy
      as a result of the Reorganization or on the distribution of MuniYield Common
      Stock and MuniYield Series F AMPS to the respective stockholders of Municipal
      Strategy under Section 361(c)(1) of the Code; (iii) under Section 1032 of
      the Code, no gain or loss will be recognized to MuniYield as a result of
      the Reorganization; (iv) in accordance with Section 354(a)(1) of the Code,
      no gain or loss will be recognized to the stockholders of Municipal Strategy
      on their respective receipt of MuniYield Common Stock and MuniYield Series
      F AMPS in exchange for their corresponding shares of Municipal Strategy
      Common Stock or AMPS (except to the extent that common stockholders receive
      cash representing an interest in fractional shares of MuniYield Common Stock
      in the Reorganization); (v) in accordance with Section 362(b) of the Code,
      the tax basis of the assets of Municipal Strategy in the hands of MuniYield
      will be the same as the tax basis of such assets in the hands of Municipal
      Strategy immediately prior to the consummation of the Reorganization; (vi)
      in accordance with Section 358 of the Code, immediately after the Reorganization,
      the tax basis of the MuniYield Common Stock and MuniYield Series F AMPS
      received by the stockholders of Municipal Strategy in the Reorganization
      will be equal to the tax basis of the Municipal Strategy Common Stock or
      AMPS surrendered in exchange; (vii) in accordance with Section 1223 of the
      Code, a stockholder&#146;s holding period for the MuniYield Common Stock
      and MuniYield Series F AMPS will be determined by including the period for
      which such stockholder held the Municipal Strategy Common Stock or AMPS
      exchanged therefor, provided, that such shares were held as a capital asset;
      (viii) in accordance with Section 1223 of the Code, MuniYield&#146;s holding
      period with respect to the assets of Municipal Strategy transferred will
      include the period for which such assets were held by Municipal Strategy;
      (ix) the payment of cash to common stockholders of Municipal Strategy in
      lieu of fractional shares of MuniYield Common Stock will be treated as though
      the fractional shares were distributed as part of the Reorganization and
      then redeemed by MuniYield, with the result that such stockholders will
      have short- or long-term capital gain or loss to the extent that the cash
      distribution differs from the stockholder&#146;s basis allocable to the
      MuniYield fractional shares; and (x) the taxable year of Municipal Strategy
      will end on the effective date of the Reorganization, and pursuant to Section
      381(a) of the Code and regulations thereunder, MuniYield will succeed to
      and take into account, subject to limitation, certain tax attributes of
      Municipal Strategy, such as earnings and profits, capital loss carryovers
      and method of accounting.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As noted in the discussion
      under &#147;Comparison of the Funds&#151;Tax Rules Applicable to the Funds
      and Their Stockholders,&#148; a Fund must distribute annually at least 90%
      of its net taxable and tax-exempt income. A distribution will only be counted
      for this purpose if it qualifies for the dividends paid deduction under
      the Code. In the opinion of Sidley Austin Brown &amp; Wood <font size="1">LLP</font>,
      the issuance of MuniYield Series F AMPS pursuant to the Agreement and Plan
      in addition to the already existing MuniYield Series A, Series B, Series
      C, Series D and Series E AMPS will not cause distributions on any series
      of MuniYield AMPS to be treated as preferential dividends ineligible for
      the dividends paid deduction. It is possible, however, that the IRS may
      assert that, because there are several series of AMPS, distributions on
      such shares are preferential under the Code and therefore not eligible for
      the dividends paid deduction. If the IRS successfully disallowed the dividends
      paid deduction for dividends on the AMPS, MuniYield could lose the special
      tax treatment afforded RICs and dividends on the shares of MuniYield Common
      Stock and MuniYield AMPS would not be exempt from Federal income tax. Additionally,
      MuniYield would be subject to a Federal alternative minimum tax.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Section 381(a) of the Code, MuniYield will succeed to and take into account
certain tax attributes of Municipal Strategy, including, but not limited to,
earnings and profits, any net operating loss carryovers, any capital loss
carryovers and method of accounting. The Code, however, contains special
limitations with regard to the use of net operating losses, capital losses and
other similar items in the context of certain reorganizations, including
tax-free reorganizations pursuant to Section 368(a)(1)(C) of the Code, which
could reduce the benefit of these attributes to MuniYield.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders
should consult their tax advisers regarding the effect of the Reorganization in
light of their individual circumstances. As the foregoing relates only to
Federal income tax consequences, stockholders also should consult their tax
advisers as to the foreign, state and local tax consequences of the
Reorganization.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Regulated
Investment Company Status.</I> The Funds have elected and qualified since inception
for taxation as RICs under Sections 851-855 of the Code, and after the
Reorganization MuniYield intends to continue to so qualify.</FONT></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
50</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<!-- MARKER LABEL="sheet: 56, page: 56" -->





<p><table width=600><tr>
    <td><font size=2><B><a name="29"></a>Capitalization</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth as of April 30, 2001 (i) the capitalization of
MuniYield, (ii) the capitalization of Municipal Strategy, and (iii) the
capitalization of the Combined Fund as adjusted to give effect to the
Reorganization.</font></td></tr></table>

<p><table width=600><tr><td  align=center><font size=2><B>Capitalization of
MuniYield, Municipal Strategy, <BR>and the Combined Fund
as of April 30, 2001 <BR>(unaudited)</B></font></td></tr></table>





<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr valign="bottom">
    <td width="202">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="63" align="center"> <font size=1> <b>MuniYield</b></font>
      <hr noshade size="1" width="95%">
      <font size=1> </font></td>
    <td width="42" align="center"> <font size=1> </font></td>
    <td width="60" align="center"> <font size=1><b>Municipal</b> <br>
      <b>Strategy</b> </font>
      <hr noshade size="1" width="95%">
    </td>
    <td width="25"> <font size=2><b></b> </font></td>
    <td width="64" align="center"><font size=1><b>Pro Forma</b> <br>
      <b>Adjustment</b> </font>
      <hr noshade size="1" width="95%">
    </td>
    <td width="26">&nbsp;</td>
    <td colspan="2" align="center"><font size=2><b></b></font><font size=2><b><font size="1">Combined</font><br>
      <font size="1">Fund</font> <br>
      <font size="1">as adjusted(a)</font></b></font>
      <hr noshade size="1" width="95%">
    </td>
    <td align="center" width="25">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=1> <b><font size="2">Net Assets:</font></b> </font></td>
    <td width="21">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="42">&nbsp;</td>
    <td width="60">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="64">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="7">&nbsp;</td>
    <td width="63">&nbsp;</td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;Net Assets Attributable to </font></td>
    <td width="21">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="42">&nbsp;</td>
    <td width="60">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="64">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="7">&nbsp;</td>
    <td width="63">&nbsp;</td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Common Stock </font></td>
    <td width="21" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> 495,408,940 </font></td>
    <td width="42" align="right"><font size=2>$</font></td>
    <td width="60" align="right"> <font size=2> &nbsp;78,478,891 </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> $(6,833,262 </font></td>
    <td width="26"> <font size=2> ) </font></td>
    <td width="7" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> 567,054,569 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;Net Assets Attributable to AMPS
      </font></td>
    <td width="21" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> 250,000,000 </font></td>
    <td width="42" align="right"><font size=2>$</font></td>
    <td width="60" align="right"> <font size=2> &nbsp;43,000,000 </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> 293,000,000 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> <b>Shares Outstanding: </b></font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;Common Stock </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 38,482,330 </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> 8,871,713 </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> (2,705,008 </font></td>
    <td width="26"> <font size=2> ) </font></td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 44,649,035 </font></td>
    <td width="25" align="left"> <font size=2> (b) </font></td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;AMPS </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Series A </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> 1,720 </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> (1,720 </font></td>
    <td width="26"> <font size=2> ) </font></td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;1,800 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Series B </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> &#151; </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> &#151; </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Series C </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> &#151; </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> &#151; </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Series D </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> &#151; </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> &#151; </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,800 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Series E </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 2,800 </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> &#151; </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> &#151; </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 2,800 </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Series F </font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> &#151; </font></td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right"> <font size=2> &#151; </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> 1,720 </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right"> <font size=2> 1,720 </font></td>
    <td width="25" align="left"> <font size=2> (b) </font></td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> <b>Net Asset Value Per Share: </b></font></td>
    <td width="21" align="right">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="42" align="right">&nbsp;</td>
    <td width="60" align="right">&nbsp;</td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right">&nbsp;</td>
    <td width="63" align="right">&nbsp;</td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;Common Stock </font></td>
    <td width="21" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.87
      </font></td>
    <td width="42" align="right"><font size=2>$</font></td>
    <td width="60" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.85
      </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> &#151; </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.70
      </font></td>
    <td width="25" align="left"> <font size=2> (c) </font></td>
  </tr>
  <tr valign="bottom">
    <td width="202"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;AMPS </font></td>
    <td width="21" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;25,000
      </font></td>
    <td width="42" align="right"><font size=2>$</font></td>
    <td width="60" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;25,000 </font></td>
    <td width="25">&nbsp;</td>
    <td width="64" align="right"> <font size=2> &#151; </font></td>
    <td width="26">&nbsp;</td>
    <td width="7" align="right"><font size=2>$</font></td>
    <td width="63" align="right"> <font size=2> &nbsp;&nbsp;&nbsp;&nbsp;25,000
      </font></td>
    <td width="25" align="left">&nbsp;</td>
  </tr>
</table>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(a)
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">&lt;R&gt;The adjusted balances are presented
      as if the Reorganization had been consummated on April 30, 2001 and are
      for informational purposes only. Assumes distribution of undistributed net
      investment income and accrual of estimated Reorganization expenses of approximately
      $125,800 attributable to Municipal Strategy. FAM has agreed to bear the
      expenses of the Reorganization attributable to MuniYield. No assurance can
      be given about how many shares of MuniYield Common Stock will be received
      by holders of common stock of Municipal Strategy on the Closing Date, and
      the foregoing should not be relied upon to reflect the number of shares
      of MuniYield Common Stock that actually will be received on or after such
      date.</font></td>
  </tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(b)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Assumes
the issuance of 6,166,705 shares of MuniYield Common Stock and 1,720 shares of
Series F AMPS, in return for the net assets of Municipal Strategy. The
estimated number of shares issued was based on the net asset value of the
Funds, net of distributions, on April 30, 2001.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(c)
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Net Asset Value per share of common stock net
      of Reorganization-related expenses of $125,800 attributable to Municipal
      Strategy and distribution of undistributed net investment income of $6,673,054
      for MuniYield and $34,408 for Municipal Strategy.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="29a"></a>INFORMATION CONCERNING
      THE MEETING</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="29b"></a>Date, Time and Place of Meeting</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Meeting will be held on October 24, 2001 at the offices of Fund Asset
Management, L.P., 800 Scudders Mill Road, Plainsboro, New Jersey at 9:30 a.m.,
Eastern time.</font></td></tr></table>


<p><table width=600><tr>
    <td><font size=2><B><a name="29c"></a>Solicitation, Revocation and Use of
      Proxies</B></font></td>
  </tr></table>


<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
stockholder executing and returning a proxy has the power to revoke it at any
time prior to its exercise by executing a superseding proxy or by submitting a
notice of revocation to the Secretary of Municipal Strategy or by voting at the
Meeting. Although mere attendance at the Meeting will not revoke a proxy, a
stockholder present at the Meeting may withdraw his or her proxy and vote in
person.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
shares represented by properly executed proxies, unless such proxies previously
have been superseded or revoked, will be voted at the Meeting in accordance
with the directions on the proxies; if no direction is indicated on a properly
executed proxy, such shares will be voted &#147;FOR&#148; the approval of the Agreement
and Plan.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is
not anticipated that any other matters will be brought before the Meeting. If,
however, any other business is properly brought before the Meeting, proxies
will be voted in accordance with the judgment of the persons designated on such
proxies.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="29d"></a>Record Date and Outstanding Shares</B></font></td>
  </tr></table>

<font size="2">&lt;R&gt;</font><br>
<table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only the
stockholders of record of shares of Municipal Strategy Common Stock and
Municipal Strategy Series A AMPS at the close of business on the Record Date
are entitled to vote at the Meeting or any adjournment &lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
51</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p>
<font size="2">&lt;R&gt;</font><br>
<table width=600><tr>
    <td><font size=2>thereof. At the close of business on
the Record Date, there were 7,919,993 shares of Municipal Strategy Common Stock
outstanding and 1,720 shares of Municipal Strategy Series A AMPS outstanding.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="30"></a>Security Ownership of Certain Beneficial
      Owners and Management</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the knowledge of
      the Funds, as of the Record Date, no person or entity owned beneficially or
      of record 5% or more of the shares of common stock or AMPS of either Fund.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of
the Record Date, the Directors and officers of MuniYield as a group (11
persons) owned an aggregate of less than 1% of the outstanding shares of
MuniYield Common Stock and owned no MuniYield AMPS.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the Record Date, Mr. Forbes, a Director
of Municipal Strategy, owned 276 shares of Municipal Strategy Common Stock. As of
the Record Date, the Directors and officers of Municipal Strategy as a group
(13 persons) owned an aggregate of less than 1% of the outstanding shares of
Municipal Strategy Common Stock and owned no Municipal Strategy AMPS.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the
Record Date, Mr. Glenn, a Director and an officer of each Fund, and the other
Directors and officers of each Fund owned an aggregate of less than 1% of the
outstanding shares of common stock of ML &amp; Co.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="30a"></a>Voting Rights and Required Vote</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of this Proxy Statement and Prospectus, each share of Municipal
Strategy Common Stock and Municipal Strategy Series A AMPS is entitled to one
vote. Approval of the Agreement and Plan requires the approval of the
affirmative vote of stockholders representing (i) a majority of the outstanding
shares of Municipal Strategy Common Stock and Municipal Strategy Series A AMPS,
voting together as a single class, and (ii) a majority of the outstanding
shares of Municipal Strategy Series A AMPS, voting separately as a class.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the
      Meeting, a quorum consists of a majority of the outstanding shares of Municipal
      Strategy&#146;s Common Stock and a majority of the outstanding shares of
      Municipal Strategy&#146;s Series A AMPS. If, by the time scheduled for the
      Meeting, a quorum of the applicable Municipal Strategy stockholders is not
      present, or if a quorum is present but sufficient votes to take action upon
      the Agreement and Plan are not received from the stockholders of Municipal
      Strategy, the persons named as proxies may propose one or more adjournments
      of the Meeting to permit further solicitation of proxies from stockholders.
      Any such adjournment will require the affirmative vote of a majority of
      the shares of Municipal Strategy present in person or by proxy and entitled
      to vote at the session of the Meeting to be adjourned. The persons named
      as proxies will vote in favor of any such adjournment if they determine
      that adjournment and additional solicitation are reasonable and in the interests
      of Municipal Strategy&#146;s stockholders. Notice of any such adjournment
      is not required to be sent to stockholders.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2><B><a name="30b"></a>Appraisal Rights</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Maryland law, since Municipal Strategy Common Stock and Municipal Strategy
Series A AMPS are not publicly traded, Municipal Strategy stockholders will be
entitled to appraisal rights upon the consummation of the Reorganization.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Maryland law,
      a holder of Municipal Strategy Common Stock or Municipal Strategy Series
      A AMPS desiring to receive payment of the fair value of his or her stock
      (an &#147;objecting stockholder&#148;) (i) must file with Municipal Strategy
      a written objection to the Reorganization at or before the Meeting, (ii)
      must not vote in favor of the Reorganization (although a vote against the
      Reorganization is not required), and (iii) must make written demand on MuniYield
      for payment of his or her stock, stating the number and class of shares
      for which such stockholder demands payment, within 20 days after the Maryland
      Department accepts for filing the Articles of Transfer with respect to the
      Reorganization (MuniYield is required promptly to give written notice to
      all objecting stockholders of the date that the Articles of Transfer are
      accepted for record). A vote against the Reorganization will not be sufficient
      to satisfy the requirement of a written demand described in clause (iii).
      An objecting stockholder who fails to adhere to this procedure will be bound
      by the terms of the Reorganization. An objecting stockholder ceases to have
      any rights of a stockholder except the right to receive fair value for his
      or her shares and has no right to receive any dividends or distribution
      payable to such holders on a record date after the close of business on
      the date on which fair value is to be determined, which, for these purposes,
      will be the Meeting date. A demand for payment of fair market value may
      not be withdrawn, except upon the consent of MuniYield. Within 50 days after
      the Articles of Transfer have been accepted for filing, an objecting stockholder
      who has not received payment for his or her shares may petition the Circuit
      Court for Baltimore City located in Maryland for an appraisal to determine
      the fair value of the stock.&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
52</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="31"></a>ADDITIONAL INFORMATION</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
expenses of preparation, printing and mailing of the enclosed form of proxy,
the accompanying Notice and this Proxy Statement and Prospectus that are
directly attributable to Municipal Strategy will be borne by Municipal Strategy.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy likewise will reimburse banks, brokers and others for their reasonable
expenses in forwarding proxy solicitation materials to the beneficial owners of
shares of Municipal Strategy Common Stock and Municipal Strategy Series A AMPS
and certain persons that Municipal Strategy may employ for their reasonable
expenses in assisting in the solicitation of proxies from such beneficial
owners of shares of capital stock of Municipal Strategy.</font></td></tr></table>

<font size=2>&lt;R&gt;</font><br>
<table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order
to obtain the necessary quorum at the Meeting, supplementary solicitation may
be made by mail, telephone, telegraph or personal interview by officers of
Municipal Strategy. Municipal Strategy has retained Georgeson Shareholder,
17 State Street, New York, New York 10004 to aid in the
solicitation of proxies, at a cost to be borne by Municipal Strategy of
approximately $3,000, plus aggregate out-of-pocket expenses of
approximately $2,600.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealer firms,
      including Merrill Lynch, holding Municipal Strategy shares in &#147;street
      name&#148; for the benefit of their customers and clients will request the
      instructions of such customers and clients on how to vote their shares on
      each proposal before the Meeting. With respect to shares of Municipal Strategy
      Common Stock, broker-dealer firms, including Merrill Lynch, will not be
      permitted to grant voting authority without instructions with respect to
      the approval of the Agreement and Plan. Shares of Municipal Strategy Series
      A AMPS held in &#147;street name,&#148; however, may be voted by broker-dealer
      firms without instructions from the broker-dealer&#146;s customers and clients
      under certain conditions with respect to the approval of the Agreement and
      Plan and will be counted for purposes of establishing a quorum of Municipal
      Strategy stockholders if no instructions are received one business day before
      the Meeting or, if adjourned, one business day before the day to which the
      Meeting is adjourned. These conditions include, among others, that (i) at
      least 30% of the outstanding Municipal Strategy Series A AMPS have voted
      on the Agreement and Plan, (ii) less than 10% of the outstanding Municipal
      Strategy Series A AMPS outstanding have voted against the Agreement and
      Plan, and (iii) holders of Municipal Strategy Common Stock have voted to
      approve the Agreement and Plan. In such instances, the broker-dealer firm
      will vote such uninstructed shares of Municipal Strategy Series A AMPS in
      the same proportion as the votes cast by all holders of Municipal Strategy
      Series A AMPS who voted on the Agreement and Plan. Municipal Strategy will
      include shares held of record by broker-dealers as to which such authority
      has been granted in its tabulation of the total number of shares present
      for purposes of determining whether the necessary quorum of stockholders
      of Municipal Strategy exists. Proxies that are returned to Municipal Strategy
      but that are marked &#147;abstain&#148; or on which a broker-dealer has
      declined to vote on any proposal (&#147;broker non-votes&#148;) will be
      counted as present for the purposes of determining a quorum. Abstentions
      and broker non-votes will not be counted as votes cast. Abstentions and
      broker non-votes will have the same effect as a vote against the Agreement
      and Plan. &lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Proxy Statement and Prospectus does not contain all of the information set
forth in the N-14 Registration Statement and the exhibits relating thereto that
MuniYield has filed with the Commission under the Securities Act of 1933, as
amended, and the Investment Company Act, to which reference is hereby made.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Funds are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and the Investment Company Act and in accordance
therewith are required to file reports and other information with the
Commission. Reports, proxy statements, registration statements and other
information filed by MuniYield and Municipal Strategy can be inspected and
copied at the public reference facilities of the Commission in Washington D.C.
and at the New York Regional Office of the Commission at Seven World Trade
Center, New York, New York, 10048. Copies of such materials also can be
obtained by mail from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, Washington D.C.
20549, at prescribed rates. The Commission maintains a web site
(http:/www.sec.gov) that contains a prospectus relating to MuniYield Common
Stock, dated November 21, 1991, a prospectus relating to MuniYield AMPS dated
December 18, 1991, a prospectus relating to Municipal Strategy Common Stock,
dated February 27, 2001, a prospectus relating to Municipal Strategy AMPS,
dated February 27, 2001, and a statement of additional information relating to
Municipal Strategy AMPS, dated February 27, 2001 and other information
regarding the Funds. Reports, proxy materials and other information concerning
MuniYield may also be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005.</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
53</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="32"></a>CUSTODIAN</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BONY
acts as the custodian for cash and securities of MuniYield and Municipal
Strategy and will serve as custodian for the Combined Fund after the
Reorganization. The principal business address of BONY in such capacity is 90
Washington Street, New York, New York 10286.</font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="32a"></a>TRANSFER AGENT, DIVIDEND
      DISBURSING AGENT AND REGISTRAR</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BONY serves as the
      transfer agent, dividend disbursing agent and registrar with respect to
      the MuniYield Common Stock and AMPS and the Municipal Strategy AMPS, pursuant
      to separate registrar, transfer agency and service agreements with MuniYield
      and Municipal Strategy. The principal business address of BONY in such capacity
      is 101 Barclay Street, New York, New York 10286. It is anticipated that
      BONY will continue to provide these services to the Combined Fund after
      the Reorganization.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FDS serves as the transfer
      agent, dividend disbursing agent and registrar with respect to the Municipal
      Strategy Common Stock, pursuant to a registrar, transfer agency and service
      agreement with Municipal Strategy. The principal business address of FDS
      in such capacity is 4800 Deer Lake Drive East, Jacksonville, Florida 32246-6484.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="32b"></a>ACCOUNTING SERVICES PROVIDER</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;State
Street provides certain accounting services for MuniYield and Municipal
Strategy and will provide the same services to the Combined Fund after the
Reorganization. The principal business address of State Street in such capacity
is 500 College Road East, Princeton, New Jersey 08540.</font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="32c"></a>LEGAL OPINIONS</B></font></td>
  </tr></table>


<br>
<table width=600>
  <tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain legal matters in connection
      with the Reorganization will be passed upon for the Funds by Sidley Austin
      Brown &amp; Wood <font size="1">LLP</font>, New York, New York. </font>
      <p>
    </td>
  </tr>
</table>
<p>
<table width=600><tr>
    <td  align=center><font size=2><B><a name="32d"></a>EXPERTS</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deloitte &amp; Touche
      <font size="1">LLP</font>, independent auditors, have audited the financial
      statements and financial highlights of MuniYield and Municipal Strategy
      as of October 31, 2000 as set forth in their reports which appear in this
      Proxy Statement and Prospectus. The financial statements and financial highlights
      of the Funds are included in reliance upon their reports, given on their
      authority as experts in accounting and auditing.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deloitte &amp; Touche <font size="1">LLP</font>
      will serve as the independent auditors for the Combined Fund after the Reorganization.
      The principal business address of Deloitte &amp; Touche <font size="1">LLP</font>
      is Two World Financial Center, New York, New York 10281-1008.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="32e"></a>LEGAL PROCEEDINGS</B></font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 21, 1996, a putative
      class action titled <i>Jack Green, et al. v. Fund Asset Management, L.P.,
      et al</i>. was filed in the United States District Court for the District
      of Massachusetts. Among the named defendants in the action are seven of
      the leveraged closed-end municipal bond funds (including MuniYield) for
      which FAM serves as the investment adviser. In addition to the named defendants,
      plaintiffs also purport to assert claims against a defendant class consisting
      of all other publicly traded, closed-end investment companies for which
      FAM serves as investment adviser and which, among other things, have issued
      AMPS. The named plaintiffs, who claim to be investors in the seven named
      funds, purport to bring the action on behalf of a class consisting of all
      holders of the common stock of the subject funds.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiffs
claim, among other things, that the registration statements, annual reports and
other documents filed by the funds with the Commission were misleading because
such documents allegedly failed to disclose that proceeds arising from the
issuance of AMPS would be included in a fund&#146;s net assets for the purposes of
calculating the investment advisory fee payable to FAM. In addition, plaintiffs
allege that a conflict of interest existed because it would always be in the
defendants&#146; interest to keep the funds fully leveraged to maximize the advisory
fees and collateral compensation notwithstanding adverse market conditions.
Plaintiffs also allege an additional conflict of interest arising from the
receipt by such affiliates of underwriting discounts, or other revenues in
connection with the sale of the AMPS by the funds. The complaint also attempted
to assert claims under Sections 8(e), 34(b), 36(a) and
36(b) of the Investment Company Act and the common law. Plaintiffs seek</font></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
54</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;













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<p><table width=600><tr><td><font size=2>&lt;R&gt;unspecified monetary damages as well as injunctive relief. On August 27, 1996, defendants moved to transfer the action to the
United States District Court for the District of New Jersey. By order
dated June 10, 1997, the District Court Judge granted defendants&#146; motion. Plaintiff objected
to the District Court Judge&#146;s order and moved for reconsideration. By order dated July 16, 1997, the District
Court Judge ordered the case transferred to the District of New Jersey.&lt;/R&gt;</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
September 17, 1997, defendants moved to dismiss plaintiffs&#146; complaint on the
ground that plaintiffs had failed to state a claim upon which relief could be
granted. On February 23, 1998, the District Court granted defendants&#146; motion in
substantial part and dismissed plaintiffs&#146; claims under Sections 8(e), 34(b)
and 36(a) of the Investment Company Act with prejudice, but declined to dismiss
plaintiffs&#146; claims under section 36(b) and state law.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February 4, 1999, defendants moved to dismiss plaintiffs&#146; state law claims for
breach of fiduciary duty and deceit on the ground that they are preempted by
Section 36(b) of the Investment Company Act. On June 14, 1999, the District
Court granted defendants&#146; motion and dismissed plaintiffs&#146; state law claims. At
the same time, the District Court granted plaintiffs permission to immediately
file an interlocutory appeal to the United States Court of Appeals for the
Third Circuit. On March 16, 2001, the Third Circuit reversed the District
Court&#146;s decision and reinstated plaintiffs&#146; state law claims.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February 5, 2001, while plaintiffs&#146; appeal before the Third Circuit was still
pending, defendants moved in the District Court for summary judgment as to
plaintiffs&#146; remaining federal claim under Section 36(b). On March 16, 2001,
plaintiffs cross-moved for partial summary judgment on liability. On June 5,
2001, the District Court granted defendants&#146; motion for summary judgment,
denied plaintiffs&#146; motion for partial summary judgment, and dismissed the case
in its entirety. In doing so, the Court refused to exercise supplemental
jurisdiction over plaintiffs&#146; remaining (and recently reinstated) state law
claims.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiffs
have filed a Notice of Appeal seeking review of the District Court&#146;s decision
before the U.S. Court of Appeals for the Third Circuit. Defendants believe that
the plaintiffs&#146; allegations are without merit and intend to continue to defend
the action vigorously.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAM has
agreed to indemnify the named defendant funds (including MuniYield) for any
liabilities or expenses that they may incur in connection with this litigation.</font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B><a name="33"></a>STOCKHOLDER PROPOSALS</B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
stockholder proposal intended to be presented at any subsequent meeting of
stockholders of Municipal Strategy must be received by Municipal Strategy in a
reasonable time before Municipal Strategy begins to print and mail the proxy
solicitation materials to be used in connection with such meeting in order to
be considered in Municipal Strategy&#146;s proxy statement and form of proxy
relating to the meeting. Any stockholder who desires to present any proposal at
any subsequent meeting of stockholders of Municipal Strategy, without including
such proposal in Municipal Strategy&#146;s proxy statement relating to the meeting
also must send their written proposal to Municipal Strategy within a reasonable
time before the Board of Directors&#146; solicitation relating to such meeting is to
be made. Written proposals should be sent to the Secretary of Municipal
Strategy at the offices of Municipal Strategy.</font></td></tr></table>

<p>
<table width=600>
  <tr>
    <td width="321"><font size="2"></font></td>
    <td width="267" align="left">
      <p><font size="2">By Order of the Board of Directors,</font></p>
      <p><font size="2">A<font size="1">LICE</font> A. P<font size="1">ELLEGRINO
        </font><br>
        <i>Secretary</i></font></p>
    </td>
  </tr>
</table>
<p><table width=600><tr><td><font size=2>Plainsboro, New Jersey <BR>
      &lt;R&gt;Dated: September 14, 2001&lt;/R&gt;</font></td>
  </tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
55</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;









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<p><table width=600><tr><td  align=center><font size=2><B>INDEX TO FINANCIAL
STATEMENTS</B></font></td></tr></table>


<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">

    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="84%" ALIGN="LEFT">&nbsp;</TD>
    <TD WIDTH="9%" ALIGN="LEFT">&nbsp;</TD>
    <TD WIDTH="5%" ALIGN="center"><b><font size="1">Page</font></b>
      <hr noshade>
    </TD>
    <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD WIDTH="84%" ALIGN="LEFT"><font size="2">Audited Financial Statements for MuniYield Fund, Inc. <br>
      &nbsp;&nbsp;&nbsp;
      for the Year Ended October 31, 2000</font></TD>
    <TD WIDTH="9%" ALIGN="LEFT"><font size="2"></font></TD>
    <TD WIDTH="5%" ALIGN="right"><font size="2">F-2</font></TD>
    <TD WIDTH="2%" ALIGN="LEFT"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" height="20" width="84%"><font size="2">&nbsp;&nbsp;&nbsp;</font></TD>
    <TD ALIGN="LEFT" height="20" width="9%"><font size="2"></font></TD>
    <TD ALIGN="right" height="20" width="5%">&nbsp;</TD>
    <TD ALIGN="LEFT" height="20" width="2%"><font size="2"></font></TD>
  </TR>

  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" width="84%"><font size="2">Unaudited Financial Statements for MuniYield Fund, Inc.&nbsp;&nbsp;&nbsp;<br>
      &nbsp;&nbsp;&nbsp;
      for the Six Months Ended April 30, 2001</font></TD>
    <TD ALIGN="LEFT" width="9%"><font size="2"></font></TD>
    <TD ALIGN="right" width="5%"><font size="2">F-15</font></TD>
    <TD ALIGN="LEFT" width="2%"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" width="84%">&nbsp;</TD>
    <TD ALIGN="LEFT" width="9%"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" width="84%"><font size="2">Audited Financial Statements for Merrill Lynch Municipal Strategy Fund, Inc.<br>
      &nbsp;&nbsp;&nbsp;
      for the Year Ended October 31, 2000</font></TD>
    <TD ALIGN="LEFT" width="9%"><font size="2"></font></TD>
    <TD ALIGN="right" width="5%"><font size="2">F-27</font></TD>
    <TD ALIGN="LEFT" width="2%"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" width="84%">&nbsp;</TD>
    <TD ALIGN="LEFT" width="9%"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" width="84%"><font size="2">Unaudited Financial Statements for Merrill Lynch Municipal Strategy Fund, Inc.<br>
      &nbsp;&nbsp;&nbsp;
      for the Six Months Ended April 30, 2001</font></TD>
    <TD ALIGN="LEFT" width="9%"><font size="2"></font></TD>
    <TD ALIGN="right" width="5%"><font size="2">F-37</font></TD>
    <TD ALIGN="LEFT" width="2%"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="84%">&nbsp;</TD>
    <TD ALIGN="LEFT" width="9%">&nbsp;</TD>
    <TD ALIGN="right" width="5%">&nbsp;</TD>
    <TD ALIGN="LEFT" width="2%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">

    <TD ALIGN="LEFT" width="84%"><font size="2">&lt;R&gt;Pro Forma Unaudited Financial
      Statements for the Combined Fund&lt;/R&gt;</font></TD>
    <TD ALIGN="LEFT" width="9%"><font size="2"></font></TD>
    <TD ALIGN="right" width="5%"><font size="2">F-47</font></TD>
    <TD ALIGN="LEFT" width="2%"><font size="2"></font></TD>
  </TR>
</TABLE>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">F-1
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 2, page: 2" -->



<p><table width=600><tr><td  align=center><font size=2><B>Audited Financial
Statements for MuniYield Fund, Inc. <BR>for the Year Ended October 31, 2000</B></font></td></tr></table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">F-2
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;


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<!-- MARKER LABEL="sheet: 3, page: 3" -->


<pre>

MuniYield Fund, Inc.,                                           October 31, 2000


INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders,
MuniYield Fund, Inc.:

We have audited the accompanying statement of assets,
liabilities and capital, including the schedule of investments, of
MuniYield Fund, Inc. as of October 31, 2000, the related statement
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at October 31, 2000 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield Fund, Inc. as of October 31, 2000, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of
America.


Deloitte & Touche LLP
Princeton, New Jersey
December 7, 2000



                                 F-3





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<!-- MARKER LABEL="sheet: 4, page: 4" -->



MuniYield Fund, Inc.,                                           October 31, 2000

SCHEDULE OF INVESTMENTS                                                                             (in Thousands)

                 S&P      Moody's  Face
STATE          Ratings   Ratings  Amount  Issue                                                                 Value

Alaska--0.7%     NR*     NR*   $  5,050   Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
                                          (Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024            $  5,056

Arizona--2.6%    AAA     Aaa      1,460   Arizona State Wastewater Management Authority, Wastewater
                                          Treatment Financial Assistance Revenue Bonds, Series A,
                                          5.60% due 7/01/2006 (b)(c)                                             1,558
                                          Phoenix, Arizona, IDA, Airport Facility Revenue Refunding
                                          Bonds (America West Airlines Inc. Project), AMT:
                 NR*     B1       8,000      6.25% due 6/01/2019                                                 7,152
                 NR*     B1       5,300      6.30% due 4/01/2023                                                 4,719
                                          Pima County, Arizona, IDA, Industrial Revenue Refunding
                                          Bonds (Tucson Electric Power Company Project):
                 B+      Ba3      4,600      Series B, 6% due 9/01/2029                                          4,169
                 B+      Ba3      2,500      Series C, 6% due 9/01/2029                                          2,266

Colorado--2.9%   NR*     Aaa      4,680   Broomfield, Colorado, COP (Open Space Park and Recreational
                                          Facilities), 5.75% due 12/01/2015 (c)                                  4,891
                                          Denver, Colorado, City and County Airport Revenue Bonds,
                                          AMT, Series D:
                 A       Aaa        700      7.75% due 11/15/2001 (b)                                              737
                 A       A2       8,000      7.75% due 11/15/2013                                                9,542
                 NR*     NR*      5,000   Denver, Colorado, Urban Renewal Authority, Tax Increment
                                          Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016                    5,318
                 NR*     NR*        690   Mountain Village Metropolitan District, Colorado, San Miguel
                                          County, GO, Refunding, 7.95% due 12/01/2003                              716
                 NR*     NR*        240   San Miguel County, Colorado (Mountain Village Metropolitan
                                          District), GO, Refunding, 7.95% due 12/01/2003 (b)                       258

Connecticut      BB+     Ba1     35,000   Connecticut State Development Authority, PCR, Refunding
- --4.4%                                    (Connecticut Light and Power Company), Series A, 5.85%
                                          due 9/01/2028                                                         32,811

Florida--1.5%    NR*     NR*     12,000   Hillsborough County, Florida, IDA, Exempt Facilities Revenue
                                          Bonds (National Gypsum), AMT, Series A, 7.125% due 4/01/2030          11,200

Georgia--2.1%    AAA     Aaa     12,140   Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A,
                                          5.875% due 1/01/2016 (h)                                              12,788
                 A1      VMIG1++  3,300   Burke County, Georgia, Development Authority, PCR, Refunding
                                          (Georgia Power Company Plant--Vogtle Project), VRDN, 3rd Series,
                                          4.60% due 9/01/2025 (a)                                                3,300

Idaho--0.4%      AA      NR*      2,655   Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds,
                                          AMT, Senior Series C-2, 7.15% due 7/01/2023                            2,715

Illinois--4.8%   AAA     Aaa     10,000   Chicago, Illinois, GO, Series A, 6.75% due 1/01/2035 (h)              11,167
                 NR*     Aaa      2,655   Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,
                                          Series B, 7.625% due 9/01/2027 (f)(g)(l)                               2,970
                 BBB+    Baa1     2,750   Illinois Development Finance Authority, PCR, Refunding
                                          (Illinois Power Company Project), Series A, 7.375% due 7/01/2021       2,945
                 NR*     NR*      2,500   Illinois Educational Facilities Authority, Revenue
                                          Refunding Bonds (Chicago Osteopathic Health System),
                                          7.25% due 11/15/2019 (b)                                               2,970

PORTFOLIO ABBREVIATIONS


To simplify the listings of MuniYield Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list at right.

AMT        Alternative Minimum Tax
             (subject to)
COP        Certificates of Participation
EDA        Economic Development Authority
GO         General Obligation Bonds
HDA        Housing Development Authority
HFA        Housing Finance Agency
IDA        Industrial Development Authority
IDR        Industrial Development Revenue Bonds
INFLOS     Inverse Floating Rate Municipal Bonds
PCR        Pollution Control Revenue Bonds
RITR       Residual Interest Trust Receipts
S/F        Single-Family
VRDN       Variable Rate Demand Notes


                                 F-4





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MuniYield Fund, Inc.,                                           October 31, 2000

SCHEDULE OF INVESTMENTS (continued)                                                                 (in Thousands)

                 S&P      Moody's  Face
STATE          Ratings   Ratings  Amount  Issue                                                                 Value

Illinois         A1      VMIG1++ $6,300   Illinois Health Facilities Authority, Revenue Refunding
(concluded)                               Bonds (Resurrection Health), VRDN, Series A, 4.65% due
                                          5/01/2029 (a)(i)                                                    $  6,300
                 AAA     Aaa      8,000   Metropolitan Pier and Exposition Authority, Illinois,
                                          Hospitality Facilities Revenue Bonds (McCormick Place
                                          Convention Center), 7% due 7/01/2026 (m)                               9,467

Indiana--0.4%    BBB     Baa1     3,500   East Chicago, Indiana, Solid Waste Disposal Revenue Bonds
                                          (USG Corporation Project), AMT, 6.375% due 8/01/2029                   3,093

Kentucky--0.5%   NR*     NR*      4,000   Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
                                          (TJ International Project), AMT, 7% due 6/01/2024                      4,085

Louisiana--6.9%  NR*     A3      20,000   Lake Charles, Louisiana, Harbor and Terminal District, Port
                                          Facilities Revenue Refunding Bonds (Trunkline Long Company Project),
                                          7.75% due 8/15/2022                                                   21,375
                 AAA     Aaa     11,100   Louisiana State, GO, Series A, 6% due 5/15/2014 (e)                   11,649
                 BB-     NR*     20,000   Port New Orleans, Louisiana, IDR, Refunding (Continental
                                          Grain Company Project), 6.50% due 1/01/2017                           18,850

Maryland--1.0%   NR*     NR*      7,050   Maryland State Energy Financing Administration, Limited
                                          Obligation Revenue Bonds (Cogeneration--AES Warrior Run),
                                          AMT, 7.40% due 9/01/2019                                               7,141

Massachusetts    AAA     Aa1     10,000   Massachusetts Bay, Massachusetts, Transportation
- --5.7%                                    Authority, Revenue Refunding Bonds (Special Assessment),
                                          Series A, 5.25% due 7/01/2030                                          9,482
                 BBB+    A3       2,500   Massachusetts State Development Finance Agency, Revenue
                                          Refunding Bonds (Boston University), Series P, 5.45% due 5/15/2059     2,297
                 A       NR*     11,030   Massachusetts State Health and Educational Facilities Authority
                                          Revenue Bonds (Schepens Eye Research Project), Series A,
                                          6.50% due 7/01/2028                                                   11,511
                 AAA     Aaa     10,700   Massachusetts State Turnpike Authority, Metropolitan
                                          Highway System Revenue Refunding Bonds, Senior-Series A,
                                          5.125% due 1/01/2023 (e)                                              10,045
                                          Tantasqua, Massachusetts, Regional School District, GO (i):
                 NR*     Aaa      2,575      5% due 8/15/2017                                                    2,476
                 NR*     Aaa      2,575      5% due 8/15/2018                                                    2,458
                 NR*     Aaa      2,575      5% due 8/15/2019                                                    2,445
                 NR*     Aaa      2,315      5% due 8/15/2020                                                    2,187

Michigan--0.9%   AAA     Aaa      2,500   Holly, Michigan, Area School District, GO, Refunding,
                                          4.75% due 5/01/2025 (h)                                                2,179
                 AAA     Aaa      3,100   Michigan State Hospital Finance Authority, Revenue Refunding
                                          Bonds, INFLOS, 7.956% due 2/15/2022 (i)(k)                             3,259
                 A1      VMIG1++  1,400   Royal Oak, Michigan, Hospital Finance Authority, Hospital
                                          Revenue Bonds (William Beaumont Hospital), VRDN, Series J,
                                          4.60% due 1/01/2003 (a)                                                1,400

Minnesota--0.9%  AAA     Aaa      4,980   Minneapolis and Saint Paul, Minnesota, Metropolitan Airports
                                          Commission, Airport Revenue Bonds, Series A, 5.125% due
                                          1/01/2025 (h)                                                          4,694
                 AA+     Aa1      2,465   Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT,
                                          Series A, 7.05% due 7/01/2022                                          2,500

Mississippi      A       A3      18,000   Lowndes County, Mississippi, Solid Waste Disposal and PCR,
- --3.4%                                    Refunding (Weyerhaeuser Company Project), Series A, 6.80%
                                          due 4/01/2022                                                         20,057
                 BBB-    Ba1      5,650   Mississippi Business Finance Corporation, Mississippi,
                                          PCR, Refunding (System Energy Resources Inc. Project),
                                          5.90% due 5/01/2022                                                    5,236

Missouri--0.6%   AAA     NR*      4,050   Missouri State Housing Development Commission, S/F
                                          Mortgage Revenue Bonds, Homeownership, AMT,
                                          Series B, 7.55% due 9/01/2027 (f)(g)                                   4,288


                                 F-5





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MuniYield Fund, Inc.,                                           October 31, 2000

SCHEDULE OF INVESTMENTS (continued)                                                                 (in Thousands)

                 S&P      Moody's  Face
STATE          Ratings   Ratings  Amount  Issue                                                                 Value

Nevada--0.6%     BBB     NR*   $  5,000   Clark County, Nevada, IDR, Refunding (Nevada Power
                                          Company Project), Series C, 5.50% due 10/01/2030                    $  4,179

New Jersey       BBB-    NR*        650   New Jersey EDA, First Mortgage Revenue Bonds,
- --4.7%                                    (Fellowship Village), Series C, 5.50% due
                                          1/01/2028                                                                504
                 NR*     NR*      1,500   New Jersey EDA, Retirement Community Revenue Bonds
                                          (Seabrook Village Inc.), Series A, 8.25% due 11/15/2030                1,452
                                          New Jersey EDA, Special Facility Revenue Bonds
                                          (Continental Airlines Inc. Project), AMT:
                 BB      Ba2     13,000      6.25% due 9/15/2019                                                12,179
                 BB      Ba2      9,400      5.50% due 4/01/2028                                                 7,661
                 BB      Ba2      7,180      6.25% due 9/15/2029                                                 6,573
                 AAA     Aaa      4,450   New Jersey EDA, Water Facilities Revenue Bonds
                                          (New Jersey American Water Company Inc. Project), AMT,
                                          6.50% due 4/01/2022 (h)                                                4,596
                 BBB-    Baa3     3,000   New Jersey Health Care Facilities Financing Authority,
                                          Revenue Refunding Bonds (Saint Elizabeth Hospital Obligation
                                          Group), 6% due 7/01/2027                                               2,594

New Mexico--0.1%                          Farmington, New Mexico, PCR, Refunding (Arizona Public
                                          Service Company), VRDN (a):
                 A1+     P1         200      Series A, 4.60% due 5/01/2024                                         200
                 A1+     P1         500      Series B, 4.60% due 9/01/2024                                         500

New York--24.4%  AAA     Aaa      2,675   Dutchess County, New York, Resource Recovery Agency Revenue
                                          Bonds (Solid Waste System), Series A, 5.25% due 1/01/2011 (e)          2,740
                                          Long Island Power Authority, New York, Electric System
                                          Revenue Bonds, VRDN (a):
                 A1+     VMIG1++    200      Sub-Series 5, 4.60% due 5/01/2033                                     200
                 A1+     VMIG1++  5,500      Sub-Series 6, 4.55% due 5/01/2033                                   5,500
                 NR*     Aaa      5,595   Metropolitan Transportation Authority, New York, Commuter
                                          Facilities Revenue Bonds, RITR, Series 9, 6.10% due
                                          7/01/2006 (b)(h)(k)                                                    6,637
                 NR*     A        5,500   New York City, New York, City IDA, Special Facilities
                                          Revenue Bonds, RITR, AMT, Series RI-5, 7.045% due 1/01/2024 (k)        5,720
                 AAA     Aaa     10,000   New York City, New York, City Municipal Water Finance
                                          Authority, Water and Sewer System Revenue Bonds, Series B,
                                          5.75% due 6/15/2026 (e)                                               10,081
                 A1+     VMIG1++  2,200   New York City, New York, City Municipal Water Finance
                                          Authority, Water and Sewer System Revenue Refunding Bonds,
                                          VRDN, Series G, 4.55% due 6/15/2024 (a)(h)                             2,200
                                          New York City, New York, City Transitional Finance
                                          Authority Revenue Bonds, Future Tax Secured, Series B:
                 AA+     Aa2      6,805      6.25% due 11/15/2017                                                7,357
                 AA+     Aa2      6,405      6.25% due 11/15/2018                                                6,915
                 AA+     Aa2      9,000      4.75% due 11/01/2023                                                7,870
                 AA+     Aa2     10,000      4.75% due 11/15/2023                                                8,743
                                          New York City, New York, GO, Refunding:
                 AAA     Aaa     10,000      Series A, 6.375% due 5/15/2014 (h)                                 11,063
                 AAA     Aaa     10,000      Series A, 6.375% due 5/15/2015 (h)                                 11,015
                 A       A2       1,555      Series B, 7.75% due 2/01/2002 (b)                                   1,641
                 A       A2       1,150      Series B, 7.75% due 2/01/2002 (b)                                   1,214
                 A       Aaa        385   New York City, New York, GO, Series C, Sub-Series C-1,
                                          7.50% due 8/01/2002 (b)                                                  411
                 AAA     Aaa     10,000   New York City, New York, GO, Series H, 5% due 3/15/2029 (h)            9,086
                 AAA     Aaa      5,000   New York State Dormitory Authority Revenue Bonds
                                          (Mental Health Services Facilities Improvement), Series B,
                                          5.125% due 8/15/2021 (e)                                               4,716
                 AAA     Aaa      2,545   New York State Dormitory Authority, Revenue Refunding Bonds
                                          (Hamilton College), 4.75% due 7/01/2017 (e)                            2,323
                                          New York State Dormitory Authority, State University
                                          Educational Facilities Revenue Refunding Bonds, Series 1989 (e):
                 AAA     NR*      7,500      6% due 5/15/2015                                                    8,045
                 AAA     NR*      3,750      6% due 5/15/2016                                                    4,002


                                 F-6





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MuniYield Fund, Inc.,                                           October 31, 2000

SCHEDULE OF INVESTMENTS (continued)                                                                 (in Thousands)

                 S&P      Moody's  Face
STATE          Ratings   Ratings  Amount  Issue                                                                 Value

New York         NR*     Aa1   $ 17,575   New York State Environmental Facilities Corporation, PCR,
(concluded)                               Refunding, RITR, Class R, Series 9, 6.992% due 6/15/2014 (k)        $ 18,977
                 AAA     Aaa     10,000   Port Authority of New York and New Jersey, Consolidated
                                          Revenue Bonds, 116th Series, 4.25% due 10/01/2026 (h)                  8,004
                 AAA     Aaa     38,300   Port Authority of New York and New Jersey, Special Obligation
                                          Revenue Bonds (JFK International Air Terminal Project),
                                          AMT, Series 6, 5.75% due 12/01/2025 (e)                               38,675

North Carolina   BBB     Baa3     4,750   North Carolina Eastern Municipal Power Agency, Power
- --0.8%                                    System Revenue Bonds, Series D, 6.75% due 1/01/2026                    4,915
                 AA      Aa2      1,000   North Carolina HFA, Home Ownership Revenue Bonds, AMT,
                                          Series 8-A, 6.20% due 7/01/2016                                        1,034

Ohio--3.6%       NR*     Aa1      2,470   Dublin, Ohio, GO, Refunding and Improvement, Series A,
                                          4.625% due 12/01/2018                                                  2,202
                 NR*     Baa3     5,500   Franklin County, Ohio, Hospital Revenue Bonds (Doctors of
                                          Ohio Health Corp.), Series A, 5.60% due 12/01/2028                     3,597
                 NR*     NR*      2,175   Lucas County, Ohio, Health Care Facility Revenue Refunding
                                          and Improvement Bonds (Sunset Retirement Communities),
                                          Series A, 6.625% due 8/15/2030                                         2,139
                 BBB     Baa1    24,000   Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation
                                          Project), AMT, 5.60% due  8/01/2032                                   18,982

Oklahoma--0.5%   AAA     NR*      3,250   Holdenville, Oklahoma, Industrial Authority, Correctional
                                          Facility Revenue Bonds, 6.70% due 7/01/2006 (b)(j)                     3,584

Oregon--1.7%     AAA     Aaa     14,000   Oregon Health Sciences University Revenue Refunding Bonds,
                                          Series A, 5.16%** due 7/01/2021 (e)                                    4,400
                                          Oregon State Department of Administrative Services,
                                          COP, Series A (c):
                 AAA     Aaa      4,405      6% due 5/01/2015                                                    4,713
                 AAA     Aaa      3,500      6% due 5/01/2016                                                    3,724

Pennsylvania     A       NR*      1,775   Berks County, Pennsylvania, Municipal Authority,
- --8.9%                                    College Revenue Refunding Bonds (Alvernia College Project),
                                          6% due 11/15/2018                                                      1,812
                 AAA     Aaa      5,000   Lehigh County, Pennsylvania, IDA, PCR, Refunding
                                          (Pennsylvania Power and Light Company Project),
                                          Series B, 6.40% due 9/01/2029 (e)                                      5,222
                 AAA     Aaa      9,675   Pennsylvania Convention Center Revenue Refunding Bonds,
                                          Series A, 6.70% due 9/01/2014 (e)                                     10,469
                                          Pennsylvania Economic Development Financing Authority,
                                          Exempt Facilities Revenue Bonds (National Gypsum Company), AMT:
                 NR*     NR*     17,100      Series A, 6.25% due 11/01/2027                                     14,299
                 NR*     NR*      2,000      Series B, 6.125% due 11/01/2027                                     1,644
                 AA+     Aa2      5,145   Pennsylvania HFA, S/F Mortgage Refunding Bonds, AMT,
                                          Series 42, 6.85% due 4/01/2025                                         5,368
                 AAA     Aaa     16,270   Pennsylvania State Higher Educational Facilities Authority,
                                          Health Services Revenue Refunding Bonds (Allegheny
                                          Delaware Valley Obligation), Series C, 5.875% due
                                          11/15/2016 (e)                                                        16,577
                                          Philadelphia, Pennsylvania, Authority for IDR, Refunding,
                                          Commercial Development:
                 NR*     NR*      3,650      (Days Inn), Series B, 6.50% due 10/01/2027                          3,520
                 NR*     NR*      3,000      (Doubletree), Series A, 6.50% due 10/01/2027                        2,893
                                          Philadelphia, Pennsylvania, Hospitals and Higher Education
                                          Facilities Authority, Hospital Revenue Bonds (Children's
                                          Hospital of Philadelphia Project), VRDN (a):
                 A1+     VMIG1++  1,240      4.60% due 3/01/2027                                                 1,240
                 A1+     VMIG1++  4,000      Series A, 4.60% due 3/01/2027                                       4,000

Rhode Island                              Woonsocket, Rhode Island, GO (h):
- --0.3%           NR*     Aaa      1,225      6% due 10/01/2017                                                   1,302
                 NR*     Aaa      1,195      6% due 10/01/2018                                                   1,265

South Carolina   BBB+    Baa1     2,500   Richland County, South Carolina, PCR, Refunding (Union Camp
- --0.3%                                    Corporation Project), Series C, 6.55% due 11/01/2020                   2,517


                                 F-7





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MuniYield Fund, Inc.,                                           October 31, 2000

SCHEDULE OF INVESTMENTS (continued)                                                                 (in Thousands)

                 S&P      Moody's  Face
STATE          Ratings   Ratings  Amount  Issue                                                                 Value

South Dakota     BBB+    Baa3  $    900   South Dakota State Health and Educational Facilities
- --0.1%                                    Authority, Revenue Refunding Bonds (Prairie Lakes),
                                          7.25% due 4/01/2022                                                 $    912

Tennessee--1.3%                           Elizabethton, Tennessee, Health and Educational Facilties
                                          Board, Hospital Revenue Refunding and Improvement Bonds,
                                          First Mortgage, Series B (e):
                 AAA     Aaa      2,005      6% due 7/01/2011                                                    2,154
                 AAA     Aaa      2,125      6% due 7/01/2012                                                    2,280
                 AAA     Aaa      2,255      6.25% due 7/01/2013                                                 2,466
                 NR*     NR*      3,000   Hardeman County, Tennessee, Correctional Facilities Corporation
                                          Revenue Bonds, 7.75% due  8/01/2017                                    3,068

Texas--6.6%      BBB-    Baa1     7,700   Dallas-Fort Worth, Texas, International Airport Facility
                                          Improvement Corporation Revenue Bonds (American Airlines Inc.),
                                          AMT, 7.50% due 11/01/2000 (b)                                          7,854
                 AAA     Aaa      5,000   Grapevine-Colleyville, Texas, Independent School District, GO,
                                          Refunding, 5% due 8/15/2029                                            4,481
                                          Gregg County, Texas, Health Facilities Development
                                          Corporation, Hospital Revenue Bonds (Good Shepherd
                                          Medical Center Project):
                 AA      NR*      3,000      6.875% due 10/01/2020                                               3,257
                 AA      NR*      2,000      6.375% due 10/01/2025                                               2,058
                 AA-     Aa3      5,000   Guadalupe-Blanco River Authority, Texas, Sewage and
                                          Solid Waste Disposal Facility Revenue Bonds (E. I. du Pont
                                          de Nemours and Company Project), AMT, 6.40% due 4/01/2026              5,188
                                          Harris County, Texas, Health Facilities Development Corporation,
                                          Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN (a):
                 A1+     NR*      1,100      4.60% due 12/01/2025                                                1,100
                 A1+     NR*        500      4.60% due 12/01/2026                                                  500
                                          Houston, Texas, Airport System, Special Facilities Revenue
                                          Bonds (Continental Airlines Terminal Improvement), AMT:
                 BB      Ba1      5,000      Series B, 6.125% due 7/15/2027                                      4,414
                 BB      Ba1      9,700      Series C, 6.125% due 7/15/2027                                      8,563
                                          Lower Colorado River Authority, Texas, PCR (Samsung Austin
                                          Semiconductor), AMT:
                 BBB-    Baa3     6,500      6.375% due 4/01/2027                                                6,247
                 BBB-    Baa3     4,000      6.95% due 4/01/2030                                                 4,077
                                          San Antonio, Texas, Water Revenue Refunding Bonds:
                 AA-     Aa3      1,000      5.875% due 5/15/2016                                                1,043
                 AA-     Aa3      1,000      5.875% due 5/15/2017                                                1,038

Utah--0.3%       AAA     Aaa      1,545   Utah State Board of Regents Revenue Refunding Bonds (University
                                          of Utah Research Facilities), Series A, 5.50% due 4/01/2018 (e)        1,546
                 AAA     NR*        535   Utah State, HFA, S/F Mortgage Revenue Bonds, AMT,
                                          Senior-Series E-2, 7.15% due 7/01/2024 (d)                               546

Virginia--1.6%   NR*     NR*      8,650   Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
                                          (Port Facility-Zeigler Coal), 6.90% due 5/02/2022 (n)                  2,076
                 NR*     NR*      1,000   Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds,
                                          Exempt-Facility, AMT, Series A, 7.55% due 1/01/2019                    1,017
                                          Pocahontas Parkway Association, Virginia, Toll Road Revenue
                                          Bonds, Senior Series B:
                 BBB-    Baa3     9,100      5.90%** due 8/15/2019                                               2,414
                 BBB-    Baa3    12,840      7.35%** due 8/15/2029                                               1,657
                 AA+     Aa1      5,125   Virginia State, HDA, Commonwealth Mortgage Revenue Bonds,
                                          Series A, 7.10% due 1/01/2025                                          5,280

West Virginia    NR*     NR*      3,000   Upshur County, West Virginia, Solid Waste Disposal
- --0.4%                                    Revenue Bonds (TJ International Project), AMT,
                                          7% due 7/15/2025                                                       3,062

Wisconsin--0.3%  AA      NR*      2,560   Wisconsin State Health and Educational Facilties Authority
                                          Revenue Bonds (Howard Young Medical Center Inc. Project),
                                          5.125% due 8/15/2028                                                   2,198


                                 F-8





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MuniYield Fund, Inc.,                                           October 31, 2000

SCHEDULE OF INVESTMENTS (concluded)                                                                 (in Thousands)

                 S&P      Moody's  Face
STATE          Ratings   Ratings  Amount  Issue                                                                 Value

Puerto           NR*     Aaa   $ 12,500   Puerto Rico Commonwealth, Highway and Transportation
Rico--2.2%                                Authority, Transportation Revenue Bonds, Trust Receipts,
                                          Class R, Series B, 7.57% due 7/01/2035 (e)(k)                       $ 13,511
                 NR*     Aaa      2,500   Puerto Rico Electric Power Authority, Power Revenue Bonds,
                                          Trust Receipts, Class R, Series 16 HH, 7.346% due 7/01/2013 (k)        2,817

                 Total Investments (Cost--$740,323)--98.4%                                                     739,537

                 Other Assets Less Liabilities--1.6%                                                            11,824
                                                                                                              --------
                 Net Assets--100.0%                                                                           $751,361
                                                                                                              ========


(a)  The interest rate is subject to change periodically based upon
     prevailing market rates. The interest rate shown is the rate in
     effect at October 31, 2000.
(b)  Prerefunded.
(c)  AMBAC Insured.
(d)  FHA Insured.
(e)  MBIA Insured.
(f)  FNMA Collateralized.
(g)  GNMA Collateralized.
(h)  FGIC Insured.
(i)  FSA Insured.
(j)  Connie Lee Insured.
(k)  The interest rate is subject to change periodically and inversely
     based upon prevailing market rates. The interest rate shown is
     the rate in effect at October 31, 2000.
(l) FHLMC Collateralized.
(m) Escrowed to maturity.
(n)  Non-income producing security.
  *  Not Rated.
 **  Represents a zero coupon bond; the interest rate shown is the
     effective yield at the time of purchase by the Fund.
 ++  Highest short-term rating by Moody's Investors Service, Inc.
     Ratings of issues shown have not been audited by Deloitte &
     Touche LLP.

See Notes to Financial Statements.


                                 F-9





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MuniYield Fund, Inc.,                                           October 31, 2000

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL

                    As of October 31, 2000

Assets:             Investments, at value (identified cost--$740,323,387)                                   $739,537,102
                    Receivables:
                      Interest                                                             $ 12,727,541
                      Securities sold                                                           430,724       13,158,265
                                                                                           ------------
                    Prepaid expenses and other assets                                                             87,775
                                                                                                            ------------
                    Total assets                                                                             752,783,142
                                                                                                            ------------

Liabilities:        Payables:
                      Dividends to shareholders                                                 760,012
                      Investment adviser                                                        308,284        1,068,296
                                                                                           ------------
                    Accrued expenses and other liabilities                                                       353,779
                                                                                                            ------------
                    Total liabilities                                                                          1,422,075
                                                                                                            ------------

Net Assets:         Net assets                                                                              $751,361,067
                                                                                                            ============

Capital:            Capital Stock (200,000,000 shares authorized):
                      Preferred Stock, par value $.05 per share (10,000
                      shares of AMPS* issued and outstanding at $25,000
                      per share liquidation preference)                                                     $250,000,000
                      Common Stock, par value $.10 per share (38,317,103
                      shares issued and outstanding)                                       $  3,831,710
                    Paid-in capital in excess of par                                        538,873,283
                    Undistributed investment income--net                                      8,118,528
                    Accumulated realized capital losses on investments--net                (37,655,470)
                    Accumulated distributions in excess of realized
                    capital gains on investments--net                                      (11,020,699)
                    Unrealized depreciation on investments--net                               (786,285)
                                                                                           ------------
                    Total--Equivalent to $13.08 net asset value per
                      share of Common Stock (market price--$12.625)                                          501,361,067
                                                                                                            ------------
                    Total capital                                                                           $751,361,067
                                                                                                            ============

                    *Auction Market Preferred Stock.

                    See Notes to Financial Statements.

STATEMENT OF OPERATIONS

                    For the Year Ended October 31, 2000

Investment          Interest and amortization of premium and discount earned                                $ 46,717,999
Income:

Expenses:           Investment advisory fees                                               $  3,743,649
                    Commission fees                                                             632,528
                    Transfer agent fees                                                         128,681
                    Accounting services                                                         115,121
                    Professional fees                                                            90,310
                    Directors' fees and expenses                                                 52,397
                    Custodian fees                                                               51,831
                    Listing fees                                                                 35,756
                    Printing and shareholder reports                                             32,881
                    Pricing fees                                                                 21,710
                    Other                                                                        53,993
                                                                                           ------------
                    Total expenses                                                                             4,958,857
                                                                                                            ------------
                    Investment income--net                                                                    41,759,142
                                                                                                            ------------

Realized &          Realized loss on investments--net                                                       (37,655,470)
Unrealized          Change in unrealized depreciation on investments--net                                     34,881,965
Gain (Loss) on                                                                                              ------------
Investments--Net:   Net Increase in Net Assets Resulting from Operations                                    $ 38,985,637
                                                                                                            ============

                    See Notes to Financial Statements.


                                 F-10





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MuniYield Fund, Inc.,                                           October 31, 2000

STATEMENTS OF CHANGES IN NET ASSETS

                                                                                               For the Year Ended
                                                                                                    October 31,
                    Increase (Decrease) in Net Assets:                                         2000             1999

Operations:         Investment income--net                                                 $ 41,759,142     $ 42,576,230
                    Realized loss on investments--net                                      (37,655,470)        (545,814)
                    Change in unrealized appreciation/depreciation
                    on investments--net                                                      34,881,965     (89,396,899)
                                                                                           ------------     ------------
                    Net increase (decrease) in net assets
                    resulting from operations                                                38,985,637     (47,366,483)
                                                                                           ------------     ------------
Dividends &         Investment income--net:
Distributions to      Common Stock                                                         (33,320,553)     (36,119,916)
Shareholders:         Preferred Stock                                                      (10,334,350)      (6,368,964)
                    Realized gain on investments--net:
                      Common Stock                                                                   --     (14,409,079)
                      Preferred Stock                                                                --      (1,619,668)
                    In excess of realized gain on investments--net:
                      Common Stock                                                                   --      (9,906,186)
                      Preferred Stock                                                                --      (1,113,516)
                                                                                           ------------     ------------
                    Net decrease in net assets resulting from
                    dividends and distributions to shareholders                            (43,654,903)     (69,537,329)
                                                                                           ------------     ------------

Capital Stock       Value of shares issued to Common Stock
Transactions:       shareholders in reinvestment of dividends
                      and distributions                                                              --       11,711,691
                                                                                           ------------     ------------

Net Assets:         Total decrease in net assets                                            (4,669,266)    (105,192,121)
                    Beginning of year                                                       756,030,333      861,222,454
                                                                                           ------------     ------------
                    End of year*                                                           $751,361,067     $756,030,333
                                                                                           ============     ============

                    *Undistributed investment income--net                                  $  8,118,528     $ 10,014,289
                                                                                           ============     ============


                    See Notes to Financial Statements.


                                 F-11





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MuniYield Fund, Inc.,                                           October 31, 2000

FINANCIAL HIGHLIGHTS

The following per share data and ratios have been derived
from information provided in the financial statements.

                                                                              For the Year Ended October 31,
                    Increase (Decrease) in Net Asset Value:          2000        1999       1998       1997         1996

Per Share           Net asset value, beginning of year          $   13.21   $   16.27  $   16.09  $   15.68    $   15.47
Operating                                                       ---------   ---------  ---------  ---------    ---------
Performance:        Investment income--net                           1.09        1.12       1.19       1.24         1.26
                    Realized and unrealized gain (loss) on
                    investments--net                                (.08)      (2.34)        .49        .65          .23
                                                                ---------   ---------  ---------  ---------    ---------
                    Total from investment operations                 1.01      (1.22)       1.68       1.89         1.49
                                                                ---------   ---------  ---------  ---------    ---------
                    Less dividends and distributions to
                    Common Stock shareholders:
                      Investment income--net                        (.87)       (.95)      (.97)     (1.00)       (1.04)
                      Realized gain on investments--net                --       (.38)      (.26)      (.22)           --
                      In excess of realized gain on
                      investments--net                                 --       (.27)         --      (.01)           --
                                                                ---------   ---------  ---------  ---------    ---------
                    Total dividends and distributions to
                    Common Stock shareholders                       (.87)      (1.60)     (1.23)     (1.23)       (1.04)
                                                                ---------   ---------  ---------  ---------    ---------
                    Effect of Preferred Stock activity:
                      Dividends and distributions to
                      Preferred Stock shareholders:
                        Investment income--net                      (.27)       (.17)      (.18)      (.20)        (.24)
                        Realized gain on investments--net              --       (.04)      (.09)      (.05)           --
                        In excess of realized gain on
                        investments--net                               --       (.03)         --     --++++           --
                                                                ---------   ---------  ---------  ---------    ---------
                    Total effect of Preferred Stock activity        (.27)       (.24)      (.27)      (.25)        (.24)
                                                                ---------   ---------  ---------  ---------    ---------
                    Net asset value, end of year                $   13.08   $   13.21  $   16.27  $   16.09    $   15.68
                                                                =========   =========  =========  =========    =========
                    Market price per share, end of year         $  12.625   $  12.875  $  16.875  $  15.875    $  14.875
                                                                =========   =========  =========  =========    =========

Total Investment    Based on market price per share                 5.26%    (15.35%)     14.74%     15.56%       10.88%
Return:*                                                        =========   =========  =========  =========    =========
                    Based on net asset value per share              6.28%     (9.92%)      9.15%     11.11%        8.61%
                                                                =========   =========  =========  =========    =========

Ratios Based on     Total expenses**                                 .99%        .93%       .89%       .91%         .92%
Average Net                                                     =========   =========  =========  =========    =========
Assets of           Total investment income--net**                  8.35%       7.42%      7.43%      7.81%        8.06%
Common Stock:                                                   =========   =========  =========  =========    =========
                    Amount of dividends to
                    Preferred Stock shareholders                    2.07%       1.11%      1.10%      1.28%        1.57%
                                                                =========   =========  =========  =========    =========
                    Investment income--net, to
                    Common Stock shareholders                       6.28%       6.31%      6.33%      6.53%        6.49%
                                                                =========   =========  =========  =========    =========

Ratios Based on     Total expenses                                   .66%        .65%       .63%       .64%         .64%
Total Average Net                                               =========   =========  =========  =========    =========
Assets:**++         Total investment income--net                    5.56%       5.17%      5.26%      5.48%        5.64%
                                                                =========   =========  =========  =========    =========

Ratios Based on     Dividends to Preferred Stock shareholders       4.12%       2.55%      2.66%      3.02%        3.63%
Average Net                                                     =========   =========  =========  =========    =========
Assets of
Preferred Stock:

Supplemental        Net assets, net of Preferred Stock,
Data:               end of year (in thousands)                   $501,361    $506,030   $611,222   $596,320     $581,124
                                                                =========   =========  =========  =========    =========
                    Preferred Stock outstanding, end of year
                    (in thousands)                               $250,000    $250,000   $250,000   $250,000     $250,000
                                                                =========   =========  =========  =========    =========
                    Portfolio turnover                            103.44%      78.42%     91.63%    111.45%       96.74%
                                                                =========   =========  =========  =========    =========

Leverage:           Asset coverage per $1,000                    $  3,005    $  3,024   $  3,445   $  3,385     $  3,324
                                                                =========   =========  =========  =========    =========

Dividends           Series A--Investment income--net             $  1,052   $     588  $     694  $     747    $     894
Per Share on                                                    =========   =========  =========  =========    =========
Preferred Stock     Series B--Investment income--net             $  1,009   $     595  $     687  $     751    $     897
Outstanding:                                                    =========   =========  =========  =========    =========
                    Series C--Investment income--net             $  1,032   $     687  $     643  $     763    $     998
                                                                =========   =========  =========  =========    =========
                    Series D--Investment income--net             $  1,035   $     694  $     637  $     762    $     888
                                                                =========   =========  =========  =========    =========
                    Series E--Investment income--net             $  1,038   $     627  $     656  $     752    $     875
                                                                =========   =========  =========  =========    =========

   * Total investment returns based on market value, which can be
     significantly greater or lesser than the net asset value, may
     result in substantially different returns. Total investment
     returns exclude the effects of sales charges.
  ** Do not reflect the effect of dividends to Preferred Stock
     shareholders.
  ++ Includes Common and Preferred Stock average net assets.
++++ Amount is less than $.01 per share.

See Notes to Financial Statements.


                                 F-12





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MuniYield Fund, Inc.,                                           October 31, 2000

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies:

MuniYield Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management
investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the
United States of America, which may require the use of management
accruals and estimates. The Fund determines and makes available for
publication the net asset value of its Common Stock on a weekly
basis. The Fund's Common Stock is listed on the New York Stock
Exchange under the symbol MYD. The following is a summary of
significant accounting policies followed by the Fund.

(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing price as of the close of such
exchanges. Options written or purchased are valued at the last sale
price in the case of exchange-traded options. In the case of options
traded in the over-counter-market, valuation is the last asked price
(options written) or the last bid price (options purchased).
Securities with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund,
including valuations furnished by a pricing service retained by the
Fund, which may utilize a matrix system for valuations. The pro-
cedures of the pricing service and its valuations are reviewed by
the officers of the fund under the general supervision of the Board
of Directors.

(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.

* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.

* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected
as an asset and an equivalent liability. The amount of the liability
is subsequently marked to market to reflect the current market value
of the option written.

When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.

(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.

(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.


2. Investment Advisory Agreement and Transactions
with Affiliates:

The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.


                                 F-13





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MuniYield Fund, Inc.,                                           October 31, 2000

NOTES TO FINANCIAL STATEMENTS (concluded)

FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.

Accounting services are provided to the Fund by FAM at cost.

Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.


3. Investments:

Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 2000 were $747,038,221 and
$762,952,578, respectively.

Net realized losses for the year ended October 31, 2000 and net
unrealized losses as of October 31, 2000 were as follows:

                                     Realized     Unrealized
                                      Losses        Losses

Long-term investments           $(36,233,144)  $   (786,285)
Financial futures contracts       (1,422,326)             --
                                 ------------   ------------
Total                           $(37,655,470)  $   (786,285)
                                 ============   ============

As of October 31, 2000, net unrealized depreciation for Federal
income tax purposes aggregated $786,285 of which $20,839,622 related
to appreciated securities and $21,625,907 related to depreciated
securities. The aggregate cost of investments at October 31, 2000
for Federal income tax purposes was $740,323,387.


4. Capital Stock Transactions:

The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of the holders of Common Stock.

Common Stock

Shares issued and outstanding during the year ended October 31, 2000
remained constant and during the year ended October 31, 1999,
increased by 742,979 as a result of dividend reinvestment.

Preferred Stock

Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.05 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yields in effect at October
31, 2000 were as follows: Series A, 4.20%; Series B, 4.20%; Series
C, 4.16%, Series D, 4.20%; and Series E, 4.13%.

Shares issued and outstanding during the years ended October 31,
2000 and October 31, 1999 remained constant.

The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 2000, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $260,297 as commissions.


5. Capital Loss Carryforward:

At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $47,781,000, of which $6,930,000 expires in 2007 and
$40,851,000 expires in 2008. This amount will be available to offset
like amounts of any future taxable gains.


6. Subsequent Event:

On November 8, 2000, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.071400 per share, payable on November 29, 2000 to shareholders
of record as of November 20, 2000.


                                 F-14


</pre>


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<p><table width=600><tr><td  align=center><font size=2><B>Unaudited Financial
Statements for MuniYield Fund, Inc. <BR>for the Six Months Ended April 30, 2001</B></font></td></tr></table>




<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">F-15
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;




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<pre>

MuniYield Fund, Inc.,                                   April 30, 2001

SCHEDULE OF INVESTMENTS                                                                                     (in Thousands)

            S&P      Moody's   Face
STATE       Ratings  Ratings  Amount  Issue                                                                         Value

Alaska--0.7%   NR*    NR*   $ 5,050  Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Amerada Hess
                                     Pipeline Corporation), 6.10% due 2/01/2024                                  $  5,014

Arizona--1.7%  AAA    Aaa     1,460  Arizona State Wastewater Management Authority, Wastewater Treatment
                                     Financial Assistance Revenue Bonds, Series A, 5.60% due 7/01/2006 (b)(c)       1,593
                                     Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
                                     (America West Airlines Inc. Project), AMT:
               NR*    B3      8,000    6.25% due 6/01/2019                                                          6,800
               NR*    B3      5,300    6.30% due 4/01/2023                                                          4,465

California     AAA    NR*     4,000  California State, GO, Refunding, 5.75% due 12/01/2011 (e)                      4,366
- --0.6%

Colorado       NR*    Aaa     4,680  Broomfield, Colorado, COP (Open Space Park and Recreational
- --2.9%                               Facilities), 5.75% due 12/01/2015 (c)                                          4,948
                                     Denver, Colorado, City and County Airport Revenue Bonds, AMT,
                                     Series D:
               A      Aaa       700    7.75% due 11/15/2001 (b)                                                       731
               A      A2      8,000    7.75% due 11/15/2013                                                         9,656
               NR*    NR*     5,000  Denver, Colorado, Urban Renewal Authority, Tax Increment
                                     Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016                            5,291
                                     Mountain Village Metropolitan District, Colorado, San Miguel
                                     County, GO, Refunding:
               NR*    NR*       690    7.95% due 12/01/2003                                                           716
               NR*    NR*       240    7.95% due 12/01/2003 (b)                                                       259

Connecticut    BBB    Baa2   22,000  Connecticut State Development Authority, PCR, Refunding
- --3.5%                               (Connecticut Light and Power Company), Series A, 5.85% due
                                     9/01/2028                                                                     21,528
               AA     Aa2     4,000  Connecticut State, GO, Refunding, Series C, 5.375% due 12/15/2013              4,210

Florida        NR*    NR*    12,000  Hillsborough County, Florida, IDA, Exempt Facilities Revenue
- --2.9%                               Bonds (National Gypsum), AMT, Series A, 7.125% due 4/01/2030                   6,840
               AAA    Aaa    15,000  Pinellas County, Florida, Housing Authority, Housing Revenue Bonds
                                     (Affordable Housing Program), 4.60% due 12/01/2010 (i)                        15,011

Georgia--1.8%  AAA    Aaa    12,140  Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A, 5.875%
                                     due 1/01/2016 (h)                                                             13,002
               A1     VMIG1++   400  Monroe County, Georgia, Development Authority, PCR, Refunding
                                     (Georgia Power Company Plant--Scherer), VRDN, 4.40% due 9/01/2029 (a)            400

Idaho--0.3%    AA     NR*     2,450  Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT,
                                     Senior Series C-2, 7.15% due 7/01/2023                                         2,507

Illinois       AAA    Aaa    10,000  Chicago, Illinois, GO, Series A, 6.75% due 7/01/2010 (b)(h)                   11,757
- --6.2%         NR*    Aaa     2,465  Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series B,
                                     7.625% due 9/01/2027 (f)(g)(l)                                                 2,813
               BBB+   Baa1    2,750  Illinois Development Finance Authority, PCR, Refunding (Illinois
                                     Power Company Project), Series A, 7.375% due 7/01/2021                         2,988

PORTFOLIO ABBREVIATIONS

To simplify the listings of MuniYield Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list at right.

AMT          Alternative Minimum Tax
               (subject to)
COP          Certificates of Participation
DATES        Daily Adjustable Tax-Exempt
               Securities
DRIVERS      Derivative Inverse Tax-Exempt Receipts
EDA          Economic Development Authority
GO           General Obligation Bonds
HDA          Housing Development Authority
HFA          Housing Finance Agency
IDA          Industrial Development Authority
IDR          Industrial Development Revenue Bonds
INFLOS       Inverse Floating Rate Municipal Bonds
PCR          Pollution Control Revenue Bonds
RITR         Residual Interest Trust Receipts
S/F          Single-Family
VRDN         Variable Rate Demand Notes


                                 F-16





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MuniYield Fund, Inc.,                                   April 30, 2001

SCHEDULE OF INVESTMENTS (continued)                                                                         (in Thousands)

            S&P      Moody's   Face
STATE       Ratings  Ratings  Amount  Issue                                                                         Value

Illinois       NR*    NR*   $ 2,500  Illinois Educational Facilities Authority, Revenue Refunding Bonds
(concluded)                          (Chicago Osteopathic Health System), 7.25% due 11/15/2019 (b)               $  3,021
                                     Illinois State, GO, First Series (e):
               AAA    Aaa     7,000    5.75% due 12/01/2013                                                         7,495
               AAA    Aaa     7,500    5.75% due 12/01/2014                                                         7,971
               AAA    Aaa     8,000  Metropolitan Pier and Exposition Authority, Illinois, Hospitality
                                     Facilities Revenue Bonds (McCormick Place Convention Center), 7%
                                     due 7/01/2026 (m)                                                              9,839

Indiana        BB-    Ba2     3,500  East Chicago, Indiana, Solid Waste Disposal Revenue Bonds (USG
- --0.2%                               Corporation Project), AMT, 6.375% due 8/01/2029                                1,540

Kentucky       NR*    A3      4,000  Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ
- --0.6%                               International Project), AMT, 7% due 6/01/2024                                  4,165

Louisiana      NR*    A3     20,000  Lake Charles, Louisiana, Harbor and Terminal District, Port
- --7.0%                               Facilities Revenue Refunding Bonds (Trunkline Long Company
                                     Project), 7.75% due 8/15/2022                                                 21,298
               AAA    Aaa    11,100  Louisiana State, GO, Series A, 6% due 5/15/2014 (e)                           11,899
               BB-    NR*    20,000  Port New Orleans, Louisiana, IDR, Refunding (Continental
                                     Grain Company Project), 6.50% due 1/01/2017                                   18,752

Maryland       NR*    NR*     7,050  Maryland State Energy Financing Administration, Limited
- --1.0%                               Obligation Revenue Bonds (Cogeneration-AES Warrior Run), AMT,
                                     7.40% due 9/01/2019                                                            7,257

Massachusetts                        Massachusetts GO, Consolidated Loan:
- --4.5%         AA-    Aa2    14,035    Series B, 5.75% due 6/01/2012                                               15,146
               AA-    Aa2     4,000    Series C, 5.75% due 10/01/2011                                               4,384
               A      NR*    11,030  Massachusetts State Health and Educational Facilities Authority
                                     Revenue Bonds (Schepens Eye Research Project), Series A, 6.50%
                                     due 7/01/2028                                                                 11,390
               NR*    Aaa     2,575  Tantasqua, Massachusetts, Regional School District, GO, 5%
                                     due 8/15/2017 (i)                                                              2,552

Michigan       NR*    P1      4,400  Delta County, Michigan, Economic Development Corporation,
- --1.0%                               Environmental Improvement Revenue Refunding Bonds (Mead-Escanaba
                                     Paper), DATES, Series F, 4.40% due 12/01/2013 (a)                              4,400
               AAA    Aaa     3,100  Michigan State Hospital Finance Authority, Revenue Refunding Bonds,
                                     INFLOS, 8.311% due 2/15/2022 (i)(k)                                            3,294

Minnesota      AA+    Aa1     2,415  Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT, Series A,
- --0.3%                               7.05% due 7/01/2022                                                            2,448

Mississippi    A      A3     16,800  Lowndes County, Mississippi, Solid Waste Disposal and PCR, Refunding
- --4.1%                                (Weyerhaeuser Company Project), Series A, 6.80% due 4/01/2022                18,646
               AA     Aa3    11,380  Mississippi State, GO, Capital Improvement, 5.75% due 11/01/2014              12,152

Missouri                             Fenton, Missouri, Tax Increment Revenue Refunding and Improvement
- --1.2%                               Bonds (Gravois Bluffs):
               NR*    NR*     1,805    6.75% due 10/01/2015                                                         1,813
               NR*    NR*     2,800    7% due 10/01/2021                                                            2,830
               AAA    NR*     3,725  Missouri State Housing Development Commission, S/F Mortgage Revenue
                                     Bonds, Homeownership, AMT, Series B, 7.55% due 9/01/2027 (f)(g)                3,987

New Jersey--5.4%                       New Jersey EDA, Construction Revenue Bonds, GO (School Facilities),
                                       Series A (c):
               AAA    Aaa     5,000    5.50% due 6/15/2012                                                          5,375
               AAA    Aaa     5,000    5.50% due 6/15/2013                                                          5,366
                                     New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines
                                     Inc. Project), AMT:
               BB     Ba2     2,000    6.25% due 9/15/2019                                                          1,892
               BB     Ba2     8,400    5.50% due 4/01/2028                                                          7,028
               BB     Ba2     5,180    6.25% due 9/15/2029                                                          4,814


                                 F-17





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MuniYield Fund, Inc.,                                   April 30, 2001

SCHEDULE OF INVESTMENTS (continued)                                                                         (in Thousands)

            S&P      Moody's   Face
STATE       Ratings  Ratings  Amount  Issue                                                                         Value

New Jersey     BB     Ba2   $ 3,750    7% due 11/15/2030                                                         $  3,800
(concluded)    BB     Ba2     6,750    7.20% due 11/15/2030                                                         6,966
               AAA    Aaa     4,450  New Jersey EDA, Water Facilities Revenue Bonds (New Jersey American
                                     Water Company Inc. Project), AMT, 6.50% due 4/01/2022 (h)                      4,592
               BBB-   Baa3      390  New Jersey Health Care Facilities Financing Authority, Revenue
                                     Refunding Bonds (Saint Elizabeth Hospital Obligation Group), 6%
                                     due 7/01/2027 (e)                                                                323

New York       AAA    Aaa     1,865  Dutchess County, New York, Resource Recovery Agency Revenue
- --22.9%                              Bonds (Solid Waste System), Series A, 5.25% due 1/01/2011 (e)                  1,957
               A1+   VMIG1++  5,000  Long Island Power Authority, New York, Electric System Revenue
                                     Bonds, VRDN, Sub-Series 6, 3.80% due 5/01/2033 (a)                             5,000
               NR*    Aaa     5,595  Metropolitan Transportation Authority, New York, Commuter Facilities
                                     Revenue Bonds, RITR, Series 9, 7.77% due 7/01/2006 (b)(h)(k)                   6,948
               NR*    A       5,500  New York City, New York, City IDA, Special Facilities Revenue
                                     Bonds, RITR, AMT, Series RI-5, 7.295% due 1/01/2024 (k)                        5,879
               AAA    Aaa    10,000  New York City, New York, City Municipal Water Finance Authority,
                                     Water and Sewer System Revenue Bonds, Series B, 5.75% due
                                     6/15/2026 (e)                                                                 10,295
                                     New York City, New York, City Transitional Finance Authority
                                     Revenue Bonds:
               AA+    Aa2     9,000    Future Tax Secured, Series B, 4.75% due 11/01/2023                           8,167
               AA+    Aa2    10,000    Future Tax Secured, Series B, 4.75% due 11/15/2023                           9,069
               AA+    Aa2     2,000    Future Tax Secured, Series C, 4.75% due 5/01/2023                            1,824
               AAA    Aaa    11,765    Series C, 5% due 5/01/2029 (e)                                              11,106
                                     New York City, New York, GO:
               A      A2      4,700    Series B, 5.75% due 8/01/2014                                                5,003
               A      Aaa       385    Series C, Sub-Series C-1, 7.50% due 8/01/2002 (b)                              410
               AAA    Aaa    10,000  New York City, New York, GO, Refunding, Trust Receipts, Series R,
                                     8.272% due 5/15/2014 (h)(k)                                                   12,599
                                     New York State Dormitory Authority, Service Contract Revenue Bonds
                                     (School District Rescue), Series A:
               AA-    NR*     1,410    5.75% due 4/01/2010                                                          1,545
               AA-    NR*     1,145    5.75% due 4/01/2011                                                          1,256
                                     New York State Dormitory Authority, State University Educational
                                     Facilities Revenue Refunding Bonds, Series 1989 (e):
               AAA    NR*     7,500    6% due 5/15/2015                                                             8,203
               AAA    NR*     3,750    6% due 5/15/2016                                                             4,084
               AA+    Aa1    17,575  New York State Environmental Facilities Corporation, PCR, Refunding,
                                     RITR, Class R, Series 9, 7.198% due 6/15/2014 (k)                             19,389
               AA+    Aa1     5,260  New York State Environmental Facilities Corporation, PCR, Refunding,
                                     State Water Revolving Fund (New York City Municipal Water), 5.75%
                                     due 6/15/2012                                                                  5,767
               AAA    Aaa     9,000  Port Authority of New York and New Jersey, Consolidated Revenue
                                     Bonds, 116th Series, 4.25% due 10/01/2026 (h)                                  7,601
               AAA    NR*     4,360  Port Authority of New York and New Jersey Revenue Refunding Bonds,
                                     DRIVERS, AMT, Series 177, 7.67% due 10/15/2032 (e)(k)                          4,887
               AAA    Aaa    38,300  Port Authority of New York and New Jersey, Special Obligation
                                     Revenue Bonds (JFK International Air Terminal Project), AMT,
                                     Series 6, 5.75% due 12/01/2025 (e)                                            39,460

North          BBB    Baa3    4,750  North Carolina Eastern Municipal Power Agency, Power System
Carolina                             Revenue Bonds, Series D, 6.75% due 1/01/2026                                   4,980
- --0.8%         AA     Aa2     1,000  North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 8-A,
                                     6.20% due 7/01/2016                                                            1,049

Ohio--2.2%                           Cuyahoga County, Ohio, Mortgage Revenue Bonds (West Tech
                                     Apartments Project), AMT (g):
               NR*    Aaa     1,410    5.75% due 9/20/2020                                                          1,422
               NR*    Aaa     2,250    5.85% due 9/20/2030                                                          2,270
               NR*    Aa1     2,000  Dublin, Ohio, GO, Refunding and Improvement, Series A, 4.625%
                                     due 12/01/2018                                                                 1,833


                                 F-18





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MuniYield Fund, Inc.,                                   April 30, 2001

SCHEDULE OF INVESTMENTS (continued)                                                                         (in Thousands)

            S&P      Moody's   Face
STATE       Ratings  Ratings  Amount  Issue                                                                         Value

               NR*    NR*   $ 2,175  Lucas County, Ohio, Health Care Facility Revenue Refunding and
                                     Improvement Bonds (Sunset Retirement Communities), Series A, 6.625%
                                     due 8/15/2030                                                               $  2,205
               BBB    Ba2    19,000  Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation
                                     Project), AMT, 5.60% due 8/01/2032                                             8,360

Oklahoma       AAA    NR*     3,250  Holdenville, Oklahoma, Industrial Authority, Correctional
- --0.5%                               Facility Revenue Bonds, 6.70% due 7/01/2006 (b)(j)                             3,666

Oregon--2.7%   AAA    Aaa    14,000  Oregon Health Sciences University Revenue Refunding Bonds, Series A,
                                     5.16%** due 7/01/2021 (e)                                                      4,533
                                     Oregon State Department of Administrative Services, COP, Series A (c):
               AAA    Aaa     4,405    6% due 5/01/2015                                                             4,933
               AAA    Aaa     3,500    6% due 5/01/2016                                                             3,920
               AA     Aa2     7,000  Oregon State, GO, Refunding (Veterans Welfare), Series 80A, 5.70%
                                     due 10/01/2032                                                                 7,104

Pennsylvania   AAA    Aaa     5,000  Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania
- --8.8%                               Power and Light Company Project), Series B, 6.40% due 9/01/2029 (e)            5,278
               AAA    Aaa     9,675  Pennsylvania Convention Center Revenue Refunding Bonds, Series A,
                                     6.70% due 9/01/2014 (e)                                                       10,631
                                     Pennsylvania Economic Development Financing Authority, Exempt
                                     Facilities Revenue Bonds (National Gypsum Company), AMT:
               NR*    NR*    17,100    Series A, 6.25% due 11/01/2027                                               8,978
               NR*    NR*     2,000    Series B, 6.125% due 11/01/2027                                              1,030
               AA+    Aa2     5,135  Pennsylvania HFA, S/F Mortgage Refunding Bonds, AMT, Series 42,
                                     6.85% due 4/01/2025                                                            5,383
               AAA    Aaa    16,270  Pennsylvania State Higher Educational Facilities Authority,
                                     Health Services Revenue Refunding Bonds (Allegheny Delaware
                                     Valley Obligation), Series C, 5.875% due 11/15/2016 (e)                       16,865
                                     Philadelphia, Pennsylvania, IDR, Refunding, Authority for
                                     Commercial Development:
               NR*    NR*     3,650    (Days Inn), Series B, 6.50% due 10/01/2027                                   3,550
               NR*    NR*     3,000    (Doubletree), Series A, 6.50% due 10/01/2027                                 2,918
               AAA    Aaa    10,000  Washington County, Pennsylvania, Capital Funding Authority
                                     Revenue Bonds (Capital Projects and Equipment Program), 6.15%
                                     due 12/01/2029 (c)                                                            11,101

Rhode          AAA    Aaa       920  Cranston, Rhode Island, GO, Refunding, 5.25% due 7/01/2015 (e)                   936
Island--1.1%                         Rhode Island State Health and Educational Building Corporation,
                                     Higher Education Revenue Bonds (Roger Williams University):
               AA     NR*     2,750    5.375% due 11/15/2022                                                        2,663
               AA     NR*     2,250    5.50% due 11/15/2030                                                         2,189
                                     Woonsocket, Rhode Island, GO (h):
               NR*    Aaa     1,225    6% due 10/01/2017                                                            1,325
               NR*    Aaa     1,195    6% due 10/01/2018                                                            1,289

South          BBB+   Baa1    2,500  Richland County, South Carolina, PCR, Refunding (Union Camp
Carolina                             Corporation Project), Series C, 6.55% due 11/01/2020                           2,554
- --0.3%

South          BBB+   Baa3      900  South Dakota State Health and Educational Facilities Authority,
Dakota--0.1%                         Revenue Refunding Bonds (Prairie Lakes), 7.25% due 4/01/2022                     912

Tennessee                            Elizabethton, Tennessee, Health and Educational Facilties Board,
- --1.3%                               Hospital Revenue Refunding and Improvement Bonds, First Mortgage,
                                     Series B (e):
               AAA    Aaa     2,005    6% due 7/01/2011                                                             2,193
               AAA    Aaa     2,125    6% due 7/01/2012                                                             2,326
               AAA    Aaa     2,255    6.25% due 7/01/2013                                                          2,514
               NR*    NR*     3,000  Hardeman County, Tennessee, Correctional Facilities Corporation
                                     Revenue Bonds, 7.75% due 8/01/2017                                             2,979


                                 F-19





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MuniYield Fund, Inc.,                                   April 30, 2001

SCHEDULE OF INVESTMENTS (continued)                                                                         (in Thousands)

            S&P      Moody's   Face
STATE       Ratings  Ratings  Amount  Issue                                                                         Value

Texas--6.5%    AAA    Aaa   $ 3,515  Denton, Texas, Utility System Revenue Refunding and Improvement
                                     Bonds, 5.125% due 12/01/2018 (c)                                            $  3,414
                                     Gregg County, Texas, Health Facilities Development Corporation,
                                     Hospital Revenue Bonds (Good Shepherd Medical Center Project):
               AA     NR*     3,000    6.875% due 10/01/2020                                                        3,290
               AA     NR*     2,000    6.375% due 10/01/2025                                                        2,102
               AA-    Aa3     5,000  Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste
                                     Disposal Facility Revenue Bonds (E.I. du Pont de Nemours and
                                     Company Project), AMT, 6.40% due 4/01/2026                                     5,232
                                     Harris County, Texas, Health Facilities Development Corporation,
                                     Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN (a):
               A1+    NR*     6,800    4.35% due 12/01/2025                                                         6,800
               A1+    NR*     2,700    4.50% due 12/01/2026                                                         2,700
                                     Houston, Texas, Airport System, Special Facilities Revenue Bonds
                                     (Continental Airlines Terminal Improvement), AMT:
               BB     Ba1     4,500    Series B, 6.125% due 7/15/2027                                               4,022
               BB     Ba1     1,250    Series C, 6.125% due 7/15/2027                                               1,117
                                     Lower Colorado River Authority, Texas, PCR (Samsung Austin
                                     Semiconductor), AMT:
               BBB-   Baa3    6,200    6.375% due 4/01/2027                                                         6,080
               BBB-   Baa3    4,000    6.95% due 4/01/2030                                                          4,117
                                     San Antonio, Texas, Water Revenue Refunding Bonds:
               AA-    Aa3     1,000    5.875% due 5/15/2016                                                         1,055
               AA-    Aa3     1,000    5.875% due 5/15/2017                                                         1,050
               AAA    Aaa     7,020  Tyler, Texas, Waterworks and Sewer Revenue Bonds, 5.70% due
                                     9/01/2030 (h)                                                                  7,141

Utah--0.3%     AAA    Aaa     1,545  Utah State Board of Regents Revenue Refunding Bonds (University
                                     of Utah Research Facilities), Series A, 5.50% due 4/01/2018 (e)                1,570
               AAA    NR*       510  Utah State, HFA, S/F Mortgage Revenue Bonds, AMT, Senior-Series
                                     E-2, 7.15% due 7/01/2024 (d)                                                     521

Virginia       NR*    NR*     8,650  Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
- --1.9%                               (Port Facility--Zeigler Coal), 6.90% due 5/02/2022 (n)                         3,806
               NR*    NR*     1,000  Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds,
                                     Exempt-Facility, AMT, Series A, 7.55% due 1/01/2019                              941
                                     Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds,
                                     Senior Series B:
               BBB-   Baa3    9,100    5.90%** due 8/15/2019                                                        2,558
               BBB-   Baa3   12,840    7.35%** due 8/15/2029                                                        1,779
               AA+    Aa1     5,125  Virginia State, HDA, Commonwealth Mortgage Revenue Bonds,
                                     Series A, 7.10% due 1/01/2025                                                  5,267

West           NR*    A3      3,000  Upshur County, West Virginia, Solid Waste Disposal Revenue
Virginia                             Bonds (TJ International Project), AMT, 7% due 7/15/2025                        3,146
- --0.4%

Wisconsin      AAA    Aaa     3,585  Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (e)                   3,721
- --0.7%         AA     NR*     1,385  Wisconsin State Health and Educational Facilties Authority
                                     Revenue Bonds (Howard Young Medical Center Inc. Project), 5.125%
                                     due 8/15/2028                                                                  1,237


                                 F-20





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MuniYield Fund, Inc.,                                   April 30, 2001

SCHEDULE OF INVESTMENTS (concluded)                                                                         (in Thousands)

            S&P      Moody's   Face
STATE       Ratings  Ratings  Amount  Issue                                                                         Value

Puerto         AAA    Aaa   $12,500  Puerto Rico Commonwealth, Highway and Transportation Authority,
Rico--2.3%                           Transportation Revenue Bonds, Trust Receipts, Class R, Series B,
                                     7.372% due 7/01/2035 (e)(k)                                                 $ 14,252
               AAA    Aaa     2,500  Puerto Rico Electric Power Authority, Power Revenue Bonds, Trust
                                     Receipts, Class R, Series 16 HH, 7.122% due 7/01/2013 (k)                      2,899


               Total Investments (Cost--$742,398)--98.7%                                                          735,485

               Other Assets Less Liabilities--1.3%                                                                  9,924
                                                                                                                 --------
               Net Assets--100.0%                                                                                $745,409
                                                                                                                 ========



(a)  The interest rate is subject to change periodically based upon
     prevailing market rates. The interest rate shown is the rate in
     effect at April 30, 2001.
(b)  Prerefunded.
(c)  AMBAC Insured.
(d)  FHA Insured.
(e)  MBIA Insured.
(f)  FNMA Collateralized.
(g)  GNMA Collateralized.
(h)  FGIC Insured.
(i)  FSA Insured.
(j)  Connie Lee Insured.
(k)  The interest rate is subject to change periodically and inversely
     based upon prevailing market rates. The interest rate shown is
     the rate in effect at April 30, 2001.
(l)  FHLMC Collateralized.
(m)  Escrowed to maturity.
(n)  Non-income producing security.
  *  Not Rated.
 **  Represents a zero coupon bond; the interest rate shown reflects
     the effective yield at the time of purchase by the Fund.
 ++  Highest short-term rating by Moody's Investors Service, Inc.

See Notes to Financial Statements.


                                 F-21





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MuniYield Fund, Inc.,                                   April 30, 2001

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL

                    As of April 30, 2001

Assets:             Investments, at value (identified cost--$742,397,615)                                   $735,484,577
                    Cash                                                                                          36,465
                    Receivables:
                      Interest                                                             $ 13,291,362
                      Securities sold                                                           351,866       13,643,228
                                                                                           ------------
                    Prepaid expenses and other assets                                                             87,775
                                                                                                            ------------
                    Total assets                                                                             749,252,045
                                                                                                            ------------

Liabilities:        Payables:
                      Securities purchased                                                    3,441,463
                      Investment adviser                                                        301,380
                      Dividends to shareholders                                                  45,650        3,788,493
                                                                                           ------------
                    Accrued expenses and other liabilities                                                        54,612
                                                                                                            ------------
                    Total liabilities                                                                          3,843,105
                                                                                                            ------------

Net Assets:         Net assets                                                                              $745,408,940
                                                                                                            ============

Capital:            Capital Stock (200,000,000 shares authorized):
                      Preferred Stock, par value $.05 per share (10,000 shares of
                      AMPS* issued and outstanding at $25,000 per share liquidation
                      preference)                                                                           $250,000,000
                      Common Stock, par value $.10 per share (38,482,330 shares
                      issued and outstanding)                                              $  3,848,233
                    Paid-in capital in excess of par                                        541,046,599
                    Undistributed investment income--net                                      6,673,054
                    Accumulated realized capital losses on investments--net                (38,225,209)
                    Accumulated distributions in excess of realized capital gains
                    on investments--net                                                    (11,020,699)
                    Unrealized depreciation on investments--net                             (6,913,038)
                                                                                           ------------
                    Total--Equivalent to $12.87 net asset value per share of Common
                    Stock (market price--$13.45)                                                             495,408,940
                                                                                                            ------------
                    Total capital                                                                           $745,408,940
                                                                                                            ============

                   *Auction Market Preferred Stock.


                    See Notes to Financial Statements.

STATEMENT OF OPERATIONS

                    For the Six Months Ended April 30, 2001

Investment          Interest and amortization of premium and discount earned                                $ 22,320,219
Income:

Expenses:           Investment advisory fees                                               $  1,877,871
                    Commission fees                                                             307,837
                    Accounting services                                                         124,737
                    Professional fees                                                            41,167
                    Printing and shareholder reports                                             39,868
                    Transfer agent fees                                                          32,517
                    Custodian fees                                                               27,344
                    Directors' fees and expenses                                                 19,946
                    Listing fees                                                                 19,747
                    Pricing fees                                                                 10,949
                    Other                                                                        16,994
                                                                                           ------------
                    Total expenses                                                                             2,518,977
                                                                                                            ------------
                    Investment income--net                                                                    19,801,242
                                                                                                            ------------
Realized &          Realized loss on investments--net                                                          (569,739)
Unrealized          Change in unrealized depreciation on investments--net                                    (6,126,753)
Loss on                                                                                                     ------------
Investments         Net Increase in Net Assets Resulting from Operations                                    $ 13,104,750
- --Net:                                                                                                      ============
                    See Notes to Financial Statements.


                                 F-22





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MuniYield Fund, Inc.,                                   April 30, 2001

STATEMENTS OF CHANGES IN NET ASSETS

                                                                                           For the Six        For the
                                                                                           Months Ended      Year Ended
                                                                                            April 30,       October 31,
                    Increase (Decrease) in Net Assets:                                         2001             2000

Operations:         Investment income--net                                                 $ 19,801,242     $ 41,759,142
                    Realized loss on investments--net                                         (569,739)     (37,655,470)
                    Change in unrealized appreciation/depreciation on
                    investments--net                                                        (6,126,753)       34,881,965
                                                                                           ------------     ------------
                    Net increase in net assets resulting from operations                     13,104,750       38,985,637
                                                                                           ------------     ------------

Dividends to        Investment income--net:
Shareholders:         Common Stock                                                         (16,433,634)     (33,320,553)
                      Preferred Stock                                                       (4,813,082)     (10,334,350)
                                                                                           ------------     ------------
                    Net decrease in net assets resulting from dividends to
                    shareholders                                                           (21,246,716)     (43,654,903)
                                                                                           ------------     ------------

Capital Stock       Value of shares issued to Common Stock shareholders
Transactions:       in reinvestment of dividends                                              2,189,839               --
                                                                                           ------------     ------------

Net Assets:         Total decrease in net assets                                            (5,952,127)      (4,669,266)
                    Beginning of period                                                     751,361,067      756,030,333
                                                                                           ------------     ------------

                    End of period*                                                         $745,408,940     $751,361,067
                                                                                           ============     ============

                    *Undistributed investment income--net                                  $  6,673,054     $  8,118,528
                                                                                           ============     ============

                    See Notes to Financial Statements.


                                 F-23





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MuniYield Fund, Inc.,                                   April 30, 2001

FINANCIAL HIGHLIGHTS

The following per share data and ratios have been derived        For the Six
from information provided in the financial statements.           Months Ended
                                                                  April 30,        For the Year Ended October 31,
Increase (Decrease) in Net Asset Value:                              2001       2000       1999        1998       1997

Per Share           Net asset value, beginning of period           $  13.08   $  13.21   $  16.27   $  16.09    $  15.68
Operating                                                          --------   --------   --------   --------    --------
Performance:        Investment income--net                              .52       1.09       1.12       1.19        1.24
                    Realized and unrealized gain (loss) on
                    investments--net                                  (.17)      (.08)     (2.34)        .49         .65
                                                                   --------   --------   --------   --------    --------
                    Total from investment operations                    .35       1.01     (1.22)       1.68        1.89
                                                                   --------   --------   --------   --------    --------
                    Less dividends and distributions to
                    Common Stock shareholders:
                      Investment income--net                          (.43)      (.87)      (.95)      (.97)      (1.00)
                                                                   --------   --------   --------   --------    --------
                      Realized gain on investments--net                  --         --      (.38)      (.26)       (.22)
                      In excess of realized gain on
                      investments--net                                   --         --      (.27)         --       (.01)
                                                                   --------   --------   --------   --------    --------
                    Total dividends and distributions to
                    Common Stock shareholders                         (.43)      (.87)     (1.60)     (1.23)      (1.23)
                                                                   --------   --------   --------   --------    --------
                    Effect of Preferred Stock activity:
                      Dividends and distributions to Preferred
                      Stock shareholders:
                        Investment income--net                        (.13)      (.27)      (.17)      (.18)       (.20)
                        Realized gain on investments--net                --         --      (.04)      (.09)       (.05)
                      In excess of realized gain on
                      investments--net                                   --         --      (.03)         --      --++++
                                                                   --------   --------   --------   --------    --------
                    Total effect of Preferred Stock
                    activity                                          (.13)      (.27)      (.24)      (.27)       (.25)
                                                                   --------   --------   --------   --------    --------
                    Net asset value, end of period                 $  12.87   $  13.08   $  13.21   $  16.27    $  16.09
                                                                   ========   ========   ========   ========    ========
                    Market price per share, end of period          $  13.45   $ 12.625   $ 12.875   $ 16.875    $ 15.875
                                                                   ========   ========   ========   ========    ========

Total Investment    Based on market price per share               10.05%+++      5.26%   (15.35%)     14.74%      15.56%
Return:**                                                          ========   ========   ========   ========    ========
                    Based on net asset value per share             1.64%+++      6.28%    (9.92%)      9.15%      11.11%
                                                                   ========   ========   ========   ========    ========

Ratios Based on     Total expenses***                                1.00%*       .99%       .93%       .89%        .91%
Average Net                                                        ========   ========   ========   ========    ========
Assets of           Total investment income--net***                  7.87%*      8.35%      7.42%      7.43%       7.81%
Common Stock:                                                      ========   ========   ========   ========    ========
                    Amount of dividends to Preferred
                    Stock shareholders                               1.91%*      2.07%      1.11%      1.10%       1.28%
                                                                   ========   ========   ========   ========    ========
                    Investment income--net, to Common
                    Stock shareholders                               5.96%*      6.28%      6.31%      6.33%       6.53%
                                                                   ========   ========   ========   ========    ========

Ratios Based on     Total expenses                                    .67%*       .66%       .65%       .63%        .64%
Total Average Net                                                  ========   ========   ========   ========    ========
Assets:***++        Total investment income--net                     5.27%*      5.56%      5.17%      5.26%       5.48%
                                                                   ========   ========   ========   ========    ========

Ratios Based on     Dividends to Preferred Stock shareholders        3.88%*      4.12%      2.55%      2.66%       3.02%
Average Net                                                        ========   ========   ========   ========    ========
Assets of
Preferred
Stock:

Supplemental        Net assets, net of Preferred Stock, end
Data:               of period (in thousands)                       $495,409  $ 501,361   $506,030   $611,222    $596,320
                                                                   ========   ========   ========   ========    ========
                    Preferred Stock outstanding, end of
                    period (in thousands)                          $250,000   $250,000   $250,000   $250,000    $250,000
                                                                   ========   ========   ========   ========    ========
                    Portfolio turnover                               36.66%    103.44%     78.42%     91.63%     111.45%
                                                                   ========   ========   ========   ========    ========

Leverage:           Asset coverage per $1,000                      $  2,982   $  3,005   $  3,024   $  3,445    $  3,385
                                                                   ========   ========   ========   ========    ========

Dividends           Series A--Investment income--net               $    450   $  1,052   $    588   $    694    $    747
Per Share on                                                       ========   ========   ========   ========    ========
Preferred Stock     Series B--Investment income--net               $    542   $  1,009   $    595   $    687    $    751
Outstanding:                                                       ========   ========   ========   ========    ========
                    Series C--Investment income--net               $    466   $  1,032   $    687   $    643    $    763
                                                                   ========   ========   ========   ========    ========
                    Series D--Investment income--net               $    468   $  1,035   $    694   $    637    $    762
                                                                   ========   ========   ========   ========    ========
                    Series E--Investment income--net               $    481   $  1,038   $    627   $    656    $    752
                                                                   ========   ========   ========   ========    ========

   * Annualized.

  ** Total investment returns based on market value, which can be significantly
     greater or lesser than the net asset value, may result in substantially
     different returns. Total investment returns exclude the effects of sales
     charges.

 *** Do not reflect the effect of dividends to Preferred Stock shareholders.

  ++ Includes Common and Preferred Stock average net assets.

++++ Amount is less than $.01 per share.

 +++ Aggregate total investment return.

See Notes to Financial Statements.


                                      F-24





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MuniYield Fund, Inc.,                                   April 30, 2001

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies:

MuniYield Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management
investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the
United States of America, which may require the use of management
accruals and estimates. These unaudited financial statements reflect
all adjustments, which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented.
All such adjustments are of a normal, recurring nature.The Fund
determines and makes available for publication the net asset value
of its Common Stock on a weekly basis. The Fund's Common Stock is
listed on the New York Stock Exchange under the symbol MYD. The
following is a summary of significant accounting policies followed
by the Fund.

(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing price as of the close of such
exchanges. Options written or purchased are valued at the last sale
price in the case of exchange-traded options. In the case of options
traded in the over-counter-market, valuation is the last asked price
(options written) or the last bid price (options purchased).
Securities with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at their fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund,
including valuations furnished by a pricing service retained by the
Fund, which may utilize a matrix system for valuations. The
procedures of the pricing service and its valuations are reviewed by
the officers of the fund under the general supervision of the Board
of Directors.

(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.

* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.

* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.

When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.

(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income is recognized on the accrual basis. The Fund will adopt the
provisions to amortize all premiums and discounts on debt securities
effective November 1, 2001, as now required under the new AICPA
Audit and Accounting Guide for Investment Companies. The cumulative
effect of this accounting change will have no impact on the total
net assets of the Fund. The impact of this accounting change has not
been determined, but will result in an adjustment to the cost of
securities and a corresponding adjustment to net unrealized
appreciation/depreciation, based on debt securities held as of
October 31, 2001.

(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.

2. Investment Advisory Agreement and Transactions with
Affiliates:

The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.

FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a


                                      F-25





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MuniYield Fund, Inc., April 30, 2001

NOTES TO FINANCIAL STATEMENTS

monthly fee at an annual rate of .50% of the Fund's average weekly net
assets, including proceeds from the issuance of Preferred Stock.

Prior to January 1, 2001, FAM provided accounting services to the
Fund at its cost and the Fund reimbursed FAM for these services. FAM
continues to provide certain accounting services to the Fund. The
Fund reimburses FAM at its cost for such services. For the six
months ended April 30, 2001, the Fund reimbursed FAM an aggregate of
$54,031 for the above-described services. The Fund entered into an
agreement with State Street Bank and Trust Company ("State Street"),
effective January 1, 2001, pursuant to which State Street provides
certain accounting services to the Fund. The Fund pays a fee for
these services.

Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.


3. Investments:

Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 2001 were $272,292,509 and
$263,056,593, respectively.

Net realized gains (losses) for the six months ended April 30, 2001
and net unrealized losses as of April 30, 2001 were as follows:

                                     Realized     Unrealized
                                  Gains (Losses)    Losses

Long-term investments            $     83,349   $ (6,913,038)
Financial futures contracts          (653,088)            --
                                 ------------   ------------
Total                            $   (569,739)  $ (6,913,038)
                                 ============   ============


As of April 30, 2001, net unrealized depreciation for Federal income
tax purposes aggregated $6,913,038, of which $27,184,243 related to
appreciated securities and $34,097,281 related to depreciated
securities. The aggregate cost of investments at April 30, 2001 for
Federal income tax purposes was $742,397,615.

4. Capital Stock Transactions:

The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of the holders of Common Stock.

Common Stock

Shares issued and outstanding during the six months ended April 30,
2001 increased by 165,227 as a result of dividend reinvestment and
during the year ended October 31, 2000, remained constant.

Preferred Stock

Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.05 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yields in effect at April
30, 2001 were as follows: Series A, 3.60%; Series B, 3.40%; Series
C, 3.80%, Series D, 3.80%; and Series E, 3.40%.

Shares issued and outstanding during the six months ended April 30,
2001 and during the year ended October 31, 2000 remained constant.

The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 2001, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $139,830 as commissions.

5. Capital Loss Carryforward:

At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $47,781,000, of which $6,930,000 expires in 2007 and
$40,851,000 expires in 2008. This amount will be available to offset
like amounts of any future taxable gains.

6. Subsequent Event:

On May 8, 2001, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.071400 per share, payable on May 30, 2001 to shareholders of
record as of May 16, 2001.


                                 F-26


</pre>


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<p><table width=600><tr><td  align=center><font size=2><B>Audited Financial
Statements for Merrill Lynch Municipal Strategy Fund, Inc. <BR>for the Year Ended
October 31, 2000</B></font></td></tr></table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">F-27
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<pre>

Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders,
Merrill Lynch Municipal Strategy Fund, Inc.:

We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of Merrill Lynch
Municipal Strategy Fund, Inc. as of October 31, 2000, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the four-year
period then ended and the period November 3, 1995 (commencement of
operations) to October 31, 1996. These financial statements and the
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our
audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at October 31, 2000 by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Merrill Lynch Municipal Strategy Fund, Inc. as of October 31, 2000,
the results of its operations, the changes in its net assets, and
the financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the
United States of America.

Deloitte & Touche LLP
Princeton, New Jersey
December 5, 2000


                                 F-28



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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

SCHEDULE OF INVESTMENTS                                                                             (in Thousands)

                 S&P       Moody's    Face
STATE            Ratings   Ratings   Amount   Issue                                                          Value

Arizona--2.5%                                 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding
                                              Bonds (America West Airlines Inc. Project), AMT:
                   NR*      B1      $ 2,000      6.25% due 6/01/2019                                        $  1,788
                   NR*      B1        1,600      6.30% due 4/01/2023                                           1,425

California--8.2%   AAA      Aaa       8,000   California State University and Colleges, Student Union
                                              Revenue Bonds (Chico), Series B, 4.375% due 11/01/2028 (a)       6,642
                   AAA      Aaa       1,560   Centinela Valley, California, Union High School
                                              District, GO, Series A, 5.875% due 8/01/2024 (a)                 1,629
                                              Los Angeles County, California, Schools Regionalized
                                              Business Services, COP, Pooled Financing, Series A (c):
                   AAA      Aaa       1,430      5.90%** due 8/01/2019                                           505
                   AAA      Aaa       2,510      6%** due 8/01/2029                                              490
                   NR*      Aa3       1,250   Sacramento County, California, Sanitation District
                                              Financing Authority, Revenue Refunding Bonds, Trust Receipts,
                                              Class R, Series A, 7.829% due 12/01/2019 (e)                     1,368

Colorado--6.1%     NR*      Aaa       4,430   Broomfield, Colorado, Open Space Park and Recreational
                                              Facilities, COP, 5.75% due 12/01/2014 (c)                        4,655
                   AA       Aa2       1,500   Colorado HFA, Revenue Refunding Bonds (S/F Program),
                                              AMT, Series D-2, 6.90% due 4/01/2029                             1,653
                   NR*      NR*       1,500   Denver, Colorado, Urban Renewal Authority, Tax Increment
                                              Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016              1,595

Connecticut--2.5%  NR*      NR*         750   Connecticut State Development Authority, IDR
                                              (AFCO Cargo BDL-LLC Project), AMT, 7.35% due 4/01/2010             761
                   NR*      Aaa       2,175   Connecticut State Special Tax Obligation Revenue Bonds,
                                              RIB, Series 372, 7.59% due 12/01/2017 (b)(e)                     2,446

Florida--1.8%      A1+      VMIG1++     200   Martin County, Florida, PCR, Refunding (Florida Power &
                                              Light Company Project), VRDN, 4.65% due 7/15/2022 (g)              200
                   NR*      B1        2,260   Palm Bay, Florida, Lease Revenue Refunding Bonds
                                              (Florida Education and Research Foundation Project),
                                              Series A, 6.85% due 9/01/2013                                    2,098

Georgia--2.5%      AAA      Aa2       3,250   Georgia State, HFA, S/F Mortgage Revenue
                                              Refunding Bonds, Series A, Sub-Series A-1, 6.125%
                                              due 12/01/2015 (h)                                               3,298

Illinois--4.1%     NR*      NR*         910   Beardstown, Illinois, IDR (Jefferson Smurfit Corp.
                                              Project), 8% due 10/01/2016                                        949
                   AAA      Aaa       3,285   Illinois Development Finance Authority Revenue Bonds
                                              (Presbyterian Home Lake Project), Series B, 6.30%
                                              due 9/01/2022 (d)                                                3,421
                   NR*      Ba3       1,250   Illinois Health Facilities Authority Revenue Bonds
                                              (Holy Cross Hospital Project), 6.70% due 3/01/2014               1,064

Indiana--2.2%      BBB      Baa1      3,000   Indiana State Development Finance Authority,
                                              Environmental Revenue Refunding and Improvement Bonds
                                              (USX Corporation Project), 6.15% due 7/15/2022                   2,862

Louisiana--2.9%    BB-      NR*       4,000   Port New Orleans, Louisiana, IDR, Refunding
                                              (Continental Grain Company Project), 6.50%
                                              due 1/01/2017                                                    3,770

Portfolio Abbreviations

To simplify the listings of Merrill Lynch Municipal Strategy Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list below and at right.

AMT    Alternative Minimum Tax (subject to)
COP    Certificates of Participation
EDA    Economic Development Authority
GO     General Obligation Bonds
HFA    Housing Finance Agency
IDA    Industrial Development Authority
IDR    Industrial Development Revenue Bonds
PCR    Pollution Control Revenue Bonds
RIB    Residual Interest Bonds
RITR   Residual Interest Trust Receipts
S/F    Single-Family
VRDN   Variable Rate Demand Notes


                                 F-29





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

SCHEDULE OF INVESTMENTS (continued)                                                                  (in Thousands)

                 S&P       Moody's    Face
STATE            Ratings   Ratings   Amount   Issue                                                          Value

Maryland--2.3%     NR*      NR*     $ 3,000   Maryland State Energy Financing Administration,
                                              Limited Obligation Revenue Bonds (Cogeneration-AES
                                              Warrior Run), AMT, 7.40% due 9/01/2019                        $  3,039

Massachusetts      AAA      Aa1       1,600   Massachusetts Bay, Massachusetts, Transportation
- --6.4%                                        Authority, Revenue Refunding Bonds (Special Assessment),
                                              Series A, 5.25% due 7/01/2030                                    1,517
                   A        NR*       2,000   Massachusetts State Health and Educational Facilities
                                              Authority Revenue Bonds (Schepens Eye Research Project),
                                              Series A, 6.50% due 7/01/2028                                    2,087
                   AAA      Aaa       5,000   Massachusetts State Turnpike Authority, Metropolitan
                                              Highway System, Revenue Refunding Bonds, Senior-Series A,
                                              5.125% due 1/01/2023 (a)                                         4,694

Mississippi--2.2%  BBB-     Ba1       3,150   Mississippi Business Finance Corporation, Mississippi,
                                              PCR, Refunding (System Energy Resources Inc. Project),
                                              5.875% due 4/01/2022                                             2,890

New Jersey--0.3%   BBB-     Baa3        500   New Jersey Health Care Facilities Financing Authority,
                                              Revenue Refunding Bonds (St. Elizabeth Hospital
                                              Obligation Group), 6% due 7/01/2014                                459

New York--19.4%    NR*      Aaa       3,000   New York City, New York, City Municipal Water Finance
                                              Authority, Water and Sewer System Revenue Bonds, RITR,
                                              Series 11, 7.07% due 6/15/2026 (d)(e)                            3,090
                   AAA      Aaa       2,320   New York City, New York, City Municipal Water Finance
                                              Authority, Water and Sewer System Revenue Refunding Bonds,
                                              Series A, 5.125% due 6/15/2022 (c)                               2,180
                   AA+      Aa2       4,300   New York City, New York, City Transitional Finance
                                              Authority Revenue Bonds, Series A, 5.125% due 8/15/2021          4,056
                                              New York City, New York, GO, Refunding, Series G:
                   AAA      Aaa       2,090      5.75% due 2/01/2014 (a)                                       2,171
                   AAA      Aaa       2,000      5.75% due 2/01/2014 (b)                                       2,078
                   AAA      NR*       3,300   New York State Dormitory Authority, Revenue Refunding
                                              Bonds (City University--Third Generation Resources),
                                              Series 2, 5% due 7/01/2028 (d)                                   3,003
                                              New York State Thruway Authority, Highway and Bridge
                                              Trust Fund Revenue Bonds, Series A (d):
                   AAA      Aaa       2,850      6% due 4/01/2015                                              3,055
                   AAA      Aaa       2,625      6% due 4/01/2016                                              2,800
                   AAA      Aaa       2,850   Port Authority of New York and New Jersey, Special
                                              Obligation Revenue Bonds (JFK International Air Terminal
                                              Project), AMT, Series 6, 5.75% due 12/01/2025 (a)                2,878

North Carolina     AA       Aa2       1,795   North Carolina, HFA, S/F Revenue Bonds, Series II,
- --1.4%                                        6.20% due 3/01/2016 (h)                                          1,828

Ohio--1.5%         NR*      Baa3      3,000   Franklin County, Ohio, Hospital Revenue Bonds
                                              (Doctors of Ohio Health Corp.), Series A,
                                              5.60% due 12/01/2028                                             1,962

Oklahoma--2.7%     AAA      NR*       1,650   Holdenville, Oklahoma, Industrial Authority, Correctional
                                              Facility Revenue Bonds, 6.60% due 7/01/2006 (f)(i)               1,817
                   A1+      VMIG1++   1,700   Oklahoma State Industries Authority, Revenue Refunding
                                              Bonds (Integris Baptist), VRDN, Series B, 4.60% due
                                              8/15/2029 (a)(g)                                                 1,700

Pennsylvania       AAA      Aaa       4,200   Delaware River Port Authority of Pennsylvania and
- --6.5%                                        New Jersey Revenue Bonds, 5.75% due 1/01/2015 (d)                4,391
                                              Pennsylvania Economic Development Financing Authority,
                                              Exempt Facilities Revenue Bonds (National Gypsum
                                              Company), AMT:
                   NR*      NR*       1,750      Series A, 6.25% due 11/01/2027                                1,463
                   NR*      NR*       2,000      Series B, 6.125% due 11/01/2027                               1,644
                   NR*      NR*       1,000   Philadelphia, Pennsylvania, Authority for IDR, Refunding,
                                              Commercial Development (Doubletree), Series A, 6.50%
                                              due 10/01/2027                                                     964
South Carolina     AAA      Aaa       1,000   Fairfield County, South Carolina, PCR (South Carolina
- --0.8%                                        Electric and Gas), 6.50% due 9/01/2014 (a)                       1,056


                                 F-30





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

SCHEDULE OF INVESTMENTS (continued)                                                                  (in Thousands)

                 S&P       Moody's    Face
STATE            Ratings   Ratings   Amount   Issue                                                          Value

Tennessee--1.3%    NR*      NR*     $ 1,610   Hardeman County, Tennessee, Correctional Facilities
                                              Corporation Revenue Bonds, 7.75% due 8/01/2017                $  1,646

Texas--3.8%        AAA      Aaa       3,000   Grapevine-Colleyville, Texas, Independent School
                                              District, GO, Refunding, 5% due 8/15/2029                        2,689
                                              Harris County, Texas, Health Facilities Development
                                              Corporation, Hospital Revenue Refunding Bonds
                                              (Methodist Hospital), VRDN (g):
                   A1+      NR*         100      4.60% due 12/01/2025                                            100
                   A1+      NR*         100      4.60% due 12/01/2026                                            100
                   BBB-     Baa3      2,000   Lower Colorado River Authority, Texas, PCR (Samsung
                                              Austin Semiconductor), AMT, 6.95% due 4/01/2030                  2,038

Utah--0.0%         NR*      NR*       1,000   Tooele County, Utah, PCR, Refunding (Laidlaw Environmental),
                                              AMT, Series A, 7.55% due 7/01/2027 (j)                              38

Virginia--6.2%     AAA      Aaa       5,000   Fairfax County, Virginia, EDA, Resource Recovery Revenue
                                              Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011 (c)          5,447
                   NR*      NR*       1,750   Peninsula Ports Authority, Virginia, Revenue Refunding
                                              Bonds (Port Facility-Zeigler Coal), 6.90% due 5/02/2022 (j)        420
                                              Pocahontas Parkway Association, Virginia, Toll Road
                                              Revenue Bonds:
                   NR*      Ba1       6,200      First Tier, Sub-Series C, 6.25%** due 8/15/2031                 607
                   BBB-     Baa3     11,960      Senior Series B, 5.95%** due 8/15/2029                        1,543

Washington--1.0%   AAA      Aaa       1,500   Grant County, Washington, Public Utility District
                                              No. 002, Electric Revenue Bonds, Series G, 4.75%
                                              due 1/01/2017 (a)                                                1,368

Wisconsin--2.9%    NR*      Aaa       3,675   Milwaukee County, Wisconsin, Airport Revenue Bonds,
                                              AMT, Series A, 6% due 12/01/2019 (b)                             3,784

Wyoming--2.5%      NR*      P1          700   Uinta County, Wyoming, PCR, Refunding (Chevron USA Inc.
                                              Project), VRDN, 4.55% due 8/15/2020 (g)                            700
                   AA       NR*       2,500   Wyoming Student Loan Corporation, Student Loan
                                              Revenue Refunding Bonds, Series A, 6.20% due 6/01/2024           2,607

Puerto Rico        NR*      Aaa       2,500   Puerto Rico Commonwealth, Highway and Transportation
- --4.6%                                        Authority, Transportation Revenue Bonds, Trust Receipts,
                                              Class R, Series B, 7.57% due 7/01/2035 (a)(e)                    2,702
                   AAA      Aaa       2,000   Puerto Rico Electric Power Authority, Power Revenue
                                              Refunding Bonds, Series EE, 4.75% due 7/01/2024 (a)              1,809
                   AAA      Aaa       1,530   Puerto Rico Public Buildings Authority Revenue Bonds
                                              (Government Facilities), Series B, 5% due 7/01/2027 (c)          1,438

                   Total Investments (Cost--$132,774)--98.6%                                                 128,477

                   Other Assets Less Liabilities--1.4%                                                         1,817
                                                                                                            --------
                   Net Assets--100.0%                                                                       $130,294
                                                                                                            ========

(a)  MBIA Insured.
(b)  FGIC Insured.
(c)  AMBAC Insured.
(d)  FSA Insured.
(e)  The interest rate is subject to change periodically and inversely
     based upon prevailing market rates. The interest rate shown is
     the rate in effect at October 31, 2000.
(f)  Connie Lee Insured.
(g)  The interest rate is subject to change periodically based upon
     prevailing market rates. The interest rate shown is the rate in
     effect at October 31, 2000.
(h)  FHA Insured.
(i)  Prerefunded.
(j)  Non-income producing security.
  *  Not Rated.
 **  Represents a zero coupon bond; the interest rate shown is the
     effective yield at the time of purchase by the Fund.
 ++  Highest short-term rating by Moody's Investors Service, Inc.
     Ratings of issues shown have not been audited by Deloitte &
     Touche LLP.

See Notes to Financial Statements.


                                 F-31





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL

                    As of October 31, 2000

Assets:             Investments, at value (identified cost--$132,774,079)                                   $128,477,014
                    Cash                                                                                         119,565
                    Receivables:
                      Interest                                                             $  2,001,369
                      Capital shares sold                                                       126,212        2,127,581
                                                                                           ------------
                    Deferred organization expenses                                                                   341
                    Prepaid registration fees and other assets                                                    37,442
                                                                                                            ------------
                    Total assets                                                                             130,761,943
                                                                                                            ------------
Liabilities:        Payables:
                      Dividends to shareholders                                                 163,418
                      Investment advisory fees                                                   46,730
                      Administration fees                                                        29,206          239,354
                                                                                           ------------
                    Accrued expenses and other liabilities                                                       228,591
                                                                                                            ------------
                    Total liabilities                                                                            467,945
                                                                                                            ------------

Net Assets:         Net assets                                                                              $130,293,998
                                                                                                            ============

Capital:            Capital Stock (200,000,000 shares authorized):
                      Preferred Stock, par value $.10 per share (2,480 shares of
                      AMPS* issued and 1,796 shares outstanding at $25,000 per
                      share liquidation preference)                                                         $ 44,900,000
                      Common Stock, par value $.10 per share (9,755,788 shares
                      issued and outstanding)                                              $    975,579
                    Paid-in capital in excess of par                                        101,119,137
                    Undistributed investment income--net                                            642
                    Accumulated realized capital losses on investments--net                 (8,998,265)
                    Accumulated distributions in excess of realized capital
                    gains on investments--net                                               (3,406,030)
                    Unrealized depreciation on investments--net                             (4,297,065)
                                                                                           ------------
                    Total--Equivalent to $8.75 net asset value per
                    share of Common Stock                                                                     85,393,998
                                                                                                            ------------
                    Total capital                                                                           $130,293,998
                                                                                                            ============

                    *Auction Market Preferred Stock.

                     See Notes to Financial Statements.

STATEMENT OF OPERATIONS

                    For the Year Ended October 31, 2000

Investment          Interest and amortization of premium and discount earned                                $  9,185,175
Income:

Expenses:           Investment advisory fees                                               $    746,301
                    Administrative fees                                                         373,150
                    Commission fees                                                             147,134
                    Professional fees                                                           131,037
                    Transfer agent fees                                                         120,507
                    Printing and shareholder reports                                             91,453
                    Accounting services                                                          86,990
                    Amortization of organization expenses                                        62,304
                    Directors' fees and expenses                                                 31,324
                    Custodian fees                                                               13,403
                    Registration fees                                                            13,001
                    Pricing fees                                                                  8,091
                    Other                                                                        45,816
                                                                                           ------------
                    Total expenses before reimbursement                                       1,870,511
                    Reimbursement of expenses                                                 (149,260)
                                                                                           ------------
                    Total expenses after reimbursement                                                         1,721,251
                                                                                                            ------------
                    Investment income--net                                                                     7,463,924
                                                                                                            ------------

Realized &          Realized loss on investments--net                                                        (7,857,686)
Unrealized          Change in unrealized depreciation on investments--net                                      6,239,229
Gain (Loss) on                                                                                              ------------
Investments--Net:   Net Increase in Net Assets Resulting from Operations                                    $  5,845,467
                                                                                                            ============

                    See Notes to Financial Statements.


                                 F-32





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

STATEMENTS OF CHANGES IN NET ASSETS
                                                                                                 For the Year
                                                                                                 Ended October 31,
                    Increase (Decrease) in Net Assets:                                          2000            1999

Operations:         Investment income--net                                                 $  7,463,924     $  7,955,477
                    Realized loss on investments--net                                       (7,857,686)      (3,963,881)
                    Change in unrealized appreciation/depreciation
                    on investments--net                                                       6,239,229     (16,190,234)
                                                                                           ------------     ------------
                    Net increase (decrease) in net assets resulting
                    from operations                                                           5,845,467     (12,198,638)
                                                                                           ------------     ------------
Dividends &         Investment income--net:
Distributions to      Common Stock                                                          (5,136,655)      (6,440,369)
Shareholders:         Preferred Stock                                                       (2,346,958)      (1,494,777)
                    In excess of realized gain on investments--net:
                      Common Stock                                                                   --      (2,910,041)
                      Preferred Stock                                                                --        (495,989)
                                                                                           ------------     ------------
                    Net decrease in net assets resulting from dividends
                    and distributions to shareholders                                       (7,483,613)     (11,341,176)
                                                                                           ------------     ------------

Capital Stock       Net increase (decrease) in Preferred Stock transactions                (13,100,000)       10,000,000
Transactions:       Net increase (decrease) in Common Stock transactions                   (15,141,666)       10,374,468
                                                                                           ------------     ------------
                    Net increase (decrease)in net assets derived from
                    capital stock transactions                                             (28,241,666)       20,374,468
                                                                                           ------------     ------------

Net Assets:         Total decrease in net assets                                           (29,879,812)      (3,165,346)
                    Beginning of year                                                       160,173,810      163,339,156
                                                                                           ------------     ------------
                    End of year*                                                           $130,293,998     $160,173,810
                                                                                           ============     ============

                    *Undistributed investment income--net                                  $        642     $     20,331
                                                                                           ============     ============

                    See Notes to Financial Statements.


                                 F-33





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

FINANCIAL HIGHLIGHTS

                                                                                                                For the
                                                                                                                  Period
The following per share data and ratios have been derived                                                       Nov. 3,
from information provided in the financial statements.                                                        1995++ to
                                                                         For the Year Ended October 31,         Oct. 31,
Increase (Decrease) in Net Asset Value:                            2000       1999       1998        1997        1996

Per Share           Net asset value, beginning of period         $   8.89   $  10.96   $  10.87    $  10.17     $  10.00
Operating                                                        --------   --------   --------    --------     --------
Performance:        Investment income--net                            .72        .71        .73         .75          .68
                    Realized and unrealized gain (loss)
                    on investments--net                             (.14)     (1.75)        .35         .70          .21
                                                                 --------   --------   --------    --------     --------
                    Total from investment operations                  .58     (1.04)       1.08        1.45          .89
                                                                 --------   --------   --------    --------     --------
                    Less dividends and distributions to
                    Common Stock shareholders:
                      Investment income--net                        (.49)      (.58)      (.60)       (.59)        (.59)
                      Realized gain on investments--net                --         --      (.19)          --           --
                      In excess of realized gain on
                      investments--net                                 --      (.27)         --          --           --
                                                                 --------   --------   --------    --------     --------
                    Total dividends and distributions to
                    Common Stock shareholders                       (.49)      (.85)      (.79)       (.59)        (.59)
                                                                 --------   --------   --------    --------     --------
                    Effect of Preferred Stock activity:++++
                      Dividends and distributions to
                      Preferred Stock shareholders:
                          Investment income--net                    (.23)      (.13)      (.13)       (.16)        (.09)
                          Realized gain on investments--net            --         --      (.07)          --           --
                          In excess of realized gain on
                          investments--net                             --      (.05)         --          --           --
                      Capital charge resulting from issuance
                      of Preferred Stock                               --         --         --          --        (.04)
                                                                 --------   --------   --------    --------     --------
                    Total effect of Preferred Stock activity        (.23)      (.18)      (.20)       (.16)        (.13)
                                                                 --------   --------   --------    --------     --------
                    Net asset value, end of period               $   8.75   $   8.89   $  10.96    $  10.87     $  10.17
                                                                 ========   ========   ========    ========     ========

Total Investment    Based on net asset value per share              4.09%   (11.94%)      8.28%      13.08%     7.81%+++
Return:**                                                        ========   ========   ========    ========     ========

Ratios Based on     Total expenses, net of reimbursement***         1.88%      1.75%      1.61%       1.37%        .68%*
Average Net                                                      ========   ========   ========    ========     ========
Assets of           Total expenses***                               2.04%      1.90%      1.80%       1.83%       1.60%*
Common Stock:                                                    ========   ========   ========    ========     ========
                    Total investment income--net***                 8.14%      6.98%      6.65%       7.14%       6.86%*
                                                                 ========   ========   ========    ========     ========
                    Amount of dividends to Preferred
                    Stock shareholders                              2.56%      1.31%      1.21%       1.53%        .94%*
                                                                 ========   ========   ========    ========     ========
                    Investment income--net, to
                    Common Stock shareholders                       5.58%      5.67%      5.44%       5.61%       5.92%*
                                                                 ========   ========   ========    ========     ========

Ratios Based on     Total expenses, net of reimbursement            1.15%      1.17%      1.12%        .96%        .53%*
Total Average                                                    ========   ========   ========    ========     ========
Net                 Total expenses                                  1.25%      1.27%      1.25%       1.28%       1.26%*
Assets:***++++++                                                 ========   ========   ========    ========     ========
                    Total investment income--net                    4.99%      4.66%      4.61%       5.01%       5.40%*
                                                                 ========   ========   ========    ========     ========

Ratios Based on     Dividends to Preferred Stock Shareholders       4.05%      2.63%      2.75%       3.58%       3.49%*
Average Net                                                      ========   ========   ========    ========     ========
Assets of
Preferred Stock:

Supplemental        Net assets, net of Preferred Stock,
Data:               end of period (in thousands)                 $ 85,394   $102,174   $115,339    $101,463     $ 83,573
                                                                 ========   ========   ========    ========     ========
                    Preferred Stock outstanding,
                    end of period (in thousands)                 $ 44,900   $ 58,000   $ 48,000    $ 48,000     $ 38,000
                                                                 ========   ========   ========    ========     ========
                    Portfolio turnover                            115.52%    158.57%    141.53%     144.34%      234.41%
                                                                 ========   ========   ========    ========     ========

Leverage:           Asset coverage per $1,000                    $  2,902   $  2,762   $  3,403    $  3,114     $  3,199
                                                                 ========   ========   ========    ========     ========

Dividends Per       Investment income--net                       $  1,015   $    644    $   533    $    897     $    564
Share On                                                         ========   ========   ========    ========     ========
Preferred Stock
Outstanding:

     * Annualized.
    ** Total investment returns exclude the effects of the contingent
       deferred sales charge, if any. The Fund is a continuously
       offered, closed-end fund, the shares of which are offered at
       net asset value. Therefore, no separate market exists. The
       Fund's Investment Adviser voluntarily waived a portion of its
       management fee. Without such waiver, the Fund's performance
       would have been lower.
   *** Do not reflect the effect of dividends to Preferred Stock
       shareholders.
    ++ Commencement of operations.
  ++++ The Fund's Preferred Stock was initially issued on March 11,
       1996.
++++++ Includes Common and Preferred Stock average net assets.
   +++ Aggregate total investment return.

See Notes to Financial Statements.


                                 F-34





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies:

Merrill Lynch Municipal Strategy Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a
continuously offered, non-diversified, closed-end management
investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the
United States of America, which may require the use of management
accruals and estimates. The following is a summary of significant
accounting policies followed by the Fund.

(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests are traded primarily in the
over-the-counter markets and are valued at the last available bid
price in the over-the-counter market or on the basis of yield
equivalents as obtained from one or more dealers that make markets
in the securities. Financial futures contracts and options thereon,
which are traded on exchanges, are valued at their settlement prices
as of the close of such exchanges. Options written or purchased are
valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-counter-market,
valuation is the last asked price (options written) or the last bid
price (options purchased). Short-term investments with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.

(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.

* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.

* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.

When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.

(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.

(e) Deferred organization and prepaid registration fees--Deferred
organization expenses are amortized on a straight-line basis over a
period not exceeding five years. Prepaid registration fees are
charged to expense as the related shares are issued.

(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions.


                                 F-35





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Merrill Lynch Strategy Fund, Inc.                               October 31, 2000

NOTES TO FINANCIAL STATEMENTS

2. Investment Advisory Agreement and Transactions
with Affiliates:

The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.

FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average daily net assets, including proceeds from the
issuance of Preferred Stock. For the year ended October 31, 2000,
FAM earned fees of $746,301, of which $149,260 was waived.

The Fund also has entered into an Administrative Services Agreement
with FAM whereby FAM will receive a fee equal to an annual rate of
 .25% of the Fund's average daily net assets, in return for the
performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the
Fund.

For the year ended October 31, 2000, FAM Distributors Inc. ("FAMD"),
which is a wholly-owned subsidiary of Merrill Lynch Group, Inc.,
earned early withdrawal charges of $115,842 relating to the tender
of the Fund's shares.

Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.

Accounting services are provided to the Fund by FAM.

Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, FDS, FAMD, and/or ML & Co.

3. Investments:

Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 2000 were $159,580,282 and
$181,935,000, respectively.

Net realized losses for the year ended October 31, 2000 and net
unrealized losses as of October 31, 2000, were as follows:

                                     Realized     Unrealized
                                     Losses         Losses

Long-term investments            $ (7,857,686) $  (4,297,065)
                                 ------------  -------------
Total                            $ (7,857,686) $  (4,297,065)
                                 ============  =============

As of October 31, 2000, net unrealized depreciation for Federal
income tax purposes aggregated $4,311,900, of which $2,270,143
related to appreciated securities and $6,582,043 related to
depreciated securities. The aggregate cost of investments at October
31, 2000 for Federal income tax purposes was $132,788,914.


4. Capital Stock Transactions:

The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of the holders of Common Stock.

Transactions in Common Stock were as follows:

For the Year Ended                                  Dollar
October 31, 2000                      Shares        Amount

Shares sold                           630,905  $   5,502,348
Shares issued to shareholders
in reinvestment of dividends          179,287      1,561,399
                                 ------------  -------------
Total issued                          810,192      7,063,747
Shares tendered                   (2,553,660)   (22,205,413)
                                 ------------  -------------
Net decrease                      (1,743,468) $ (15,141,666)
                                 ============  =============


For the Year Ended                                  Dollar
October 31, 1999                      Shares        Amount

Shares sold                         2,518,676 $  26,054,342
Shares issued to shareholders
in reinvestment of dividends
and distributions                     295,128      3,036,851
                                 ------------  -------------
Total issued                        2,813,804     29,091,193
Shares tendered                   (1,838,103)   (18,716,725)
                                 ------------  -------------
Net increase                          975,701 $  10,374,468
                                 ============  =============

Preferred Stock

Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.10 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yield in effect at October
31, 2000 was 3.50%.

In connection with the offering of AMPS, the Board of Directors
reclassified 40,000 shares of unissued capital stock as AMPS. AMPS
shares outstanding during the year ended October 31, 2000 decreased
by 524 as a result of shares retired and during the year ended
October 31, 1999 increased by 400 as a result of shares sold.

The Fund pays commissions to certain broker dealers at the end of
each auction at an annual rate ranging from .25% to 1.00%,
calculated on the proceeds of each auction. For the year ended
October 31, 2000, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $127,823 as commissions.

5. Capital Loss Carryforward:

At October 31, 2000, the Fund had a net capital loss carry-forward
of approximately $12,294,000, of which $4,320,000 expires in 2007
and $7,974,000 expires in 2008. This amount will be available to
offset like amounts of any future taxable gains.


                                 F-36

</pre>





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<p><table width=600><tr><td  align=center><font size=2><B>Unaudited Financial
Statements for Merrill Lynch Municipal Strategy Fund, Inc. <BR>for the Six Months
Ended April 30, 2001</B></font></td></tr></table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">F-37
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<pre>



Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

SCHEDULE OF INVESTMENTS                                                                            (in Thousands)

                S&P        Moody's   Face
STATE           Ratings    Ratings   Amount   Issue                                                           Value

Alabama--0.3%                                 Columbia, Alabama, IDB, PCR, Refunding
                                              (Alabama Power Company Project), VRDN (g):
                  A1       VMIG1++   $   300      Series A, 4.50% due 5/01/2022                               $    300
                  A1       VMIG1++       100      Series E, 4.45% due 10/01/2022                                   100

Arizona--2.5%                                 Phoenix, Arizona, IDA, Airport Facility
                                              Revenue Refunding Bonds (America West Airlines
                                              Inc. Project), AMT:
                  NR*      B3          2,000      6.25% due 6/01/2019                                            1,700
                  NR*      B3          1,600      6.30% due 4/01/2023                                            1,348

California--5.4%  AAA      Aaa         3,000  California State University and Colleges, Student
                                              Union Revenue Bonds (Chico), Series B,
                                              4.375% due 11/01/2028 (a)                                          2,493
                  AAA      Aaa         1,560  Centinela Valley, California, Union High School
                                              District, GO, Series A, 5.875% due 8/01/2024 (a)                   1,645
                                              Los Angeles County, California, Schools Regionalized
                                              Business Services, COP, Pooled
                                              Financing, Series A (c):
                  AAA      Aaa         1,430      5.90%** due 8/01/2019                                            518
                  AAA      Aaa         2,510      6%** due 8/01/2029                                               498
                  AA       Aa3         1,250  Sacramento County, California, Sanitation District
                                              Financing Authority, Revenue Refunding Bonds, Trust Receipts,
                                              Class R, Series A, 7.597% due 12/01/2019 (e)                       1,389

Colorado--6.6%    NR*      Aaa         4,430  Broomfield, Colorado, Open Space Park and Recreational
                                              Facilities, COP, 5.75% due 12/01/2014 (c)                          4,715
                  AA       Aa2         1,500  Colorado HFA, Revenue Refunding Bonds (S/F Program),
                                              AMT, Series D-2, 6.90% due 4/01/2029                               1,668
                  NR*      NR*         1,500  Denver, Colorado, Urban Renewal Authority, Tax Increment
                                              Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016                1,587

Connecticut--     NR*      NR*           725  Connecticut State Development Authority, IDR (AFCO Cargo
2.7%                                          BDL-LLC Project), AMT, 7.35% due 4/01/2010                           733
                  NR*      Aaa         2,175  Connecticut State Special Tax Obligation Revenue Bonds,
                                              RIB, Series 372, 7.78% due 12/01/2017 (b)(e)                       2,526

Florida--8.2%                                 Florida State Turnpike Authority, Turnpike Revenue Bonds
                                              (Department of Transportation), Series B:
                  AA-      Aa3         1,755      5.25% due 7/01/2021                                            1,744
                  AA-      Aa3         1,850      5.25% due 7/01/2022                                            1,836
                  A1+      VMIG1++       200  Martin County, Florida, PCR, Refunding (Florida Power &
                                              Light Company Project), VRDN, 4.55% due 7/15/2022 (g)                200
                  NR*      B1          2,260  Palm Bay, Florida, Lease Revenue Refunding Bonds (Florida
                                              Education and Research Foundation Project), Series A,
                                              6.85% due 9/01/2013                                                2,019
                  AAA      Aaa         4,200  Pinellas County, Florida, Housing Authority, Housing
                                              Revenue Bonds (Affordable Housing Program), 4.60% due
                                              12/01/2010 (d)                                                     4,203

Georgia--2.7%     AAA      Aa2         3,250  Georgia State, HFA, S/F Mortgage Revenue Refunding
                                              Bonds, Series A, Sub-Series A-1, 6.125%
                                              due 12/01/2015 (h)                                                 3,328

Portfolio Abbreviations

To simplify the listings of Merrill Lynch Municipal Strategy Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list below and at right.

ACES SM    Adjustable Convertible Extendible Securities
AMT        Alternative Minimum Tax (subject to)
COP        Certificates of Participation
EDA        Economic Development Authority
GO         General Obligation Bonds
HFA        Housing Finance Agency
IDA        Industrial Development Authority
IDB        Industrial Development Board
IDR        Industrial Development Revenue Bonds
M/F        Multi-Family
PCR        Pollution Control Revenue Bonds
RIB        Residual Interest Bonds
RITR       Residual Interest Trust Receipts
S/F        Single-Family
VRDN       Variable Rate Demand Notes


                                 F-38





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Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

SCHEDULE OF INVESTMENTS (continued)                                                                (in Thousands)

                S&P        Moody's   Face
STATE           Ratings    Ratings   Amount   Issue                                                           Value

Illinois--4.5%    NR*      NR*       $   910  Beardstown, Illinois, IDR (Jefferson Smurfit Corp.
                                              Project), 8% due 10/01/2016                                     $    936
                  AAA      Aaa         3,285  Illinois Development Finance Authority Revenue Bonds
                                              (Presbyterian Home Lake Project), Series B, 6.30% due
                                              9/01/2022 (d)                                                      3,466
                  NR*      Ba3         1,250  Illinois Health Facilities Authority Revenue Bonds
                                              (Holy Cross Hospital Project), 6.70% due 3/01/2014                 1,044

Indiana--0.8%     A1+      VMIG1++     1,000  Princeton, Indiana, PCR, Refunding (PSI Energy Incorporated
                                              Project), VRDN, 4.35% due 4/01/2022 (g)                            1,000

Louisiana--3.3%   NR*      VMIG1++       200  Louisiana State Offshore Terminal Authority, Deepwater
                                              Port Revenue Refunding Bonds (First Stage A-Loop Inc.),
                                              ACES, 4.50% due 9/01/2006 (g)                                        200
                  BB-      NR*         4,000  Port New Orleans, Louisiana, IDR, Refunding (Continental
                                              Grain Company Project), 6.50% due 1/01/2017                        3,750

Maryland--2.5%    NR*      NR*         3,000  Maryland State Energy Financing Administration,
                                              Limited Obligation Revenue Bonds (Cogeneration-AES
                                              Warrior Run), AMT, 7.40% due 9/01/2019                             3,088

Massachusetts--   A        NR*         2,000  Massachusetts State Health and Educational
1.7%                                          Facilities Authority Revenue Bonds (Schepens
                                              Eye Research Project), Series A, 6.50% due 7/01/2028               2,065

Minnesota--0.8%   NR*      Aa3         1,000  Minneapolis, Minnesota, M/F Housing Revenue Bonds
                                              (Gaar Scott Loft Project), AMT, 5.95% due 5/01/2030                1,010

Mississippi--3.8% BBB-     Ba1         3,150  Mississippi Business Finance Corporation, Mississippi,
                                              PCR, Refunding (System Energy Resources Inc. Project),
                                              5.875% due 4/01/2022                                               2,853
                  NR*      P1          1,800  Perry County, Mississippi, PCR, Refunding (Leaf River
                                              Forest Project), VRDN, 4.50% due 3/01/2002 (g)                     1,800

New York--20.1%   NR*      Aaa         3,000  New York City, New York, City Municipal Water Finance
                                              Authority, Water and Sewer System Revenue Bonds, RITR,
                                              Series 11, 7.32% due 6/15/2026 (d)(e)                              3,216
                  AA+      Aa2         5,000  New York City, New York, City Transitional Finance
                                              Authority Revenue Bonds, Future Tax
                                              Secured, Series B, 4.75% due 11/01/2023                            4,537
                                              New York City, New York, GO, Refunding, Series G:
                  AAA      Aaa         2,090      5.75% due 2/01/2014 (a)                                        2,199
                  AAA      Aaa         2,000      5.75% due 2/01/2014 (b)                                        2,105
                  AAA      Aaa         3,240  New York State Dormitory Authority, Revenue Refunding
                                              Bonds (Mental Health Services Facilities Improvement),
                                              Series D, 5.25% due 8/15/2011 (a)                                  3,392
                                              New York State Thruway Authority, Highway and Bridge
                                              Trust Fund Revenue Bonds, Series A (d):
                  AAA      Aaa         2,850      6% due 4/01/2015                                               3,114
                  AAA      Aaa         2,625      6% due 4/01/2016                                               2,857
                  AAA      Aaa         2,850  Port Authority of New York and New Jersey, Special Obligation
                                              Revenue Bonds (JFK International Air Terminal Project),
                                              AMT, Series 6, 5.75% due 12/01/2025 (a)                            2,936

North             AA       Aa2         1,795  North Carolina HFA, S/F Revenue Bonds, Series II, 6.20%
Carolina--1.6%                                due 3/01/2016 (h)                                                  1,878

Ohio--1.9%                                    Bowling Green State University, Ohio, General Receipt
                                              Revenue Bonds (b):
                  AAA      Aaa         1,125      5.75% due 6/01/2013                                            1,211
                  AAA      Aaa         1,040      5.75% due 6/01/2014                                            1,111

Oklahoma--1.5%    AAA      NR*         1,650  Holdenville, Oklahoma, Industrial Authority,
                                              Correctional Facility Revenue Bonds, 6.6% due
                                              7/01/2006 (f)(i)                                                   1,859

Pennsylvania--    AAA      Aaa         4,200  Delaware River Port Authority of Pennsylvania and
6.1%                                          New Jersey Revenue Bonds, 5.75% due 1/01/2015 (d)                  4,474


                                 F-39





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Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

SCHEDULE OF INVESTMENTS (continued)                                                                (in Thousands)

                S&P        Moody's   Face
STATE           Ratings    Ratings   Amount   Issue                                                           Value

Pennsylvania                                  Pennsylvania Economic Development Financing Authority, Exempt
(concluded)                                   Facilities Revenue Bonds (National Gypsum Company), AMT:
                  NR*      NR*       $ 1,750      Series A, 6.25% due 11/01/2027                              $    919
                  NR*      NR*         2,000      Series B, 6.125% due 11/01/2027                                1,030
                  NR*      NR*         1,000  Philadelphia, Pennsylvania, Authority for IDR, Refunding,
                                              Commercial Development (Doubletree), Series A, 6.50%
                                              due 10/01/2027                                                       973

South             AAA      Aaa         1,000  Fairfield County, South Carolina, PCR (South Carolina
Carolina--0.9%                                Electric and Gas), 6.50% due 9/01/2014 (a)                         1,060

Tennessee--1.3%   NR*      NR*         1,610  Hardeman County, Tennessee, Correctional Facilities
                                              Corporation Revenue Bonds, 7.75% due 8/01/2017                     1,599

Texas--2.5%       AAA      Aaa         1,000  Denton, Texas, Utility System Revenue Refunding and
                                              Improvement Bonds, 5.125% due 12/01/2017 (c)                         978
                  BBB-     Baa3        2,000  Lower Colorado River Authority, Texas, PCR (Samsung
                                              Austin Semiconductor), AMT, 6.95% due 4/01/2030                    2,058

Utah--0.0%        NR*      NR*         1,000  Tooele County, Utah, PCR, Refunding (Laidlaw Environmental),
                                              AMT, Series A, 7.55% due 7/01/2027 (j)                                28

Virginia--7.1%    AAA      Aaa         5,000  Fairfax County, Virginia, EDA, Resource Recovery Revenue
                                              Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011 (c)            5,557
                  NR*      NR*         1,750  Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
                                              (Port Facility-Zeigler Coal), 6.90% due 5/02/2022 (j)                770
                                              Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds:
                  NR*      Ba1         6,200      First Tier, Sub-Series C, 6.25%** due 8/15/2031                  636
                  BBB-     Baa3       11,960      Senior Series B, 5.95%** due 8/15/2029                         1,657

Washington--2.8%  AAA      Aaa         2,000  Clark County, Washington, Sewer Revenue Refunding Bonds,
                                              Series B, 5.25% due 12/01/2015 (c)                                 2,053
                  AAA      Aaa         1,500  Grant County, Washington, Public Utility District
                                              No. 002, Electric Revenue Bonds, Series G,
                                              4.75% due 1/01/2017 (a)                                            1,385

Wisconsin--3.2%   NR*      Aaa         3,675  Milwaukee County, Wisconsin, Airport Revenue Bonds, AMT,
                                              Series A, 6% due 12/01/2019 (b)                                    3,849

Wyoming--2.1%     AA       NR*         2,500  Wyoming Student Loan Corporation, Student Loan Revenue
                                              Refunding Bonds, Series A, 6.20% due 6/01/2024                     2,594

Puerto Rico--     AAA      Aaa         2,500  Puerto Rico Commonwealth, Highway and Transportation
2.4%                                          Authority, Transportation Revenue Bonds, Trust Receipts,
                                              Class R, Series B, 7.372% due 7/01/2035 (a)(e)                     2,850

                  Total Investments (Cost--$124,022)--99.3%                                                    120,647

                  Other Assets Less Liabilities--0.7%                                                              832
                                                                                                              --------
                  Net Assets--100.0%                                                                          $121,479
                                                                                                              ========

(a)  MBIA Insured.
(b)  FGIC Insured.
(c)  AMBAC Insured.
(d)  FSA Insured.
(e)  The interest rate is subject to change periodically and inversely
     based upon prevailing market rates. The interest rate shown is
     the rate in effect at April 30, 2001.
(f)  Connie Lee Insured.
(g)  The interest rate is subject to change periodically based upon
     prevailing market rates. The interest rate shown is the rate in
     effect at April 30, 2001.
(h)  FHA Insured.
(i)  Prerefunded.
(j)  Non-income producing security.
  *  Not Rated.
 **  Represents a zero coupon bond; the interest rate shown reflects
     the effective yield at the time of purchase by the Fund.
 ++  Highest short-term rating by Moody's Investors Service, Inc.

See Notes to Financial Statements.


                                 F-40





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Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL

                    As of April 30, 2001

Assets:             Investments, at value (identified cost--$124,022,285)                                   $120,646,530
                    Cash                                                                                          23,957
                    Interest receivable                                                                        2,023,863
                    Deferred organization expenses                                                                   174
                    Prepaid registration fees and other assets                                                    37,610
                                                                                                            ------------
                    Total assets                                                                             122,732,134
                                                                                                            ------------

Liabilities:        Payables:
                      Securities purchased                                                 $    985,299
                      Dividends to shareholders                                                 118,957
                      Investment advisory fees                                                   39,029
                      Administration fees                                                        24,393        1,167,678
                                                                                           ------------
                    Accrued expenses and other liabilities                                                        85,565
                                                                                                            ------------
                    Total liabilities                                                                          1,253,243
                                                                                                            ------------

Net Assets:         Net assets                                                                              $121,478,891
                                                                                                            ============

Capital:            Capital Stock (200,000,000 shares authorized):
                      Preferred Stock, par value $.10 per share (1,720 shares of
                      Series A AMPS* issued and outstanding
                      at $25,000 per share liquidation preference)                                          $ 43,000,000
                      Common Stock, par value $.10 per share (8,871,713
                      shares issued and outstanding)                                       $    887,171
                    Paid-in capital in excess of par                                         93,476,958
                    Undistributed investment income--net                                         34,408
                    Accumulated realized capital losses on investments--net                 (9,137,861)
                    Accumulated distributions in excess of realized
                    capital gains on investments--net                                       (3,406,030)
                    Unrealized depreciation on investments--net                             (3,375,755)
                                                                                           ------------
                    Total--Equivalent to $8.85 net asset value per
                    share of Common Stock                                                                     78,478,891
                                                                                                            ------------
                    Total capital                                                                           $121,478,891
                                                                                                            ============

*    Auction Market Preferred Stock.

See Notes to Financial Statements.

STATEMENT OF OPERATIONS

                    For the Six Months Ended April 30, 2001

Investment          Interest and amortization of premium and discount earned                                $  3,577,635
Income:

Expenses:           Investment advisory fees                                               $    307,998
                    Administrative fees                                                         153,999
                    Professional fees                                                            89,206
                    Commission fees                                                              72,014
                    Transfer agent fees                                                          68,207
                    Printing and shareholder reports                                             33,953
                    Registration fees                                                            24,210
                    Accounting services                                                          19,318
                    Directors' fees and expenses                                                 18,366
                    Custodian fees                                                                7,075
                    Pricing fees                                                                  4,151
                    Amortization of organization expenses                                           167
                    Other                                                                        26,765
                                                                                           ------------
                    Total expenses before reimbursement                                         825,429
                    Reimbursement of expenses                                                  (61,600)
                                                                                           ------------
                    Total expenses after reimbursement                                                           763,829
                                                                                                            ------------
                    Investment income--net                                                                     2,813,806
                                                                                                            ------------

Realized &          Realized loss on investments--net                                                          (104,019)
Unrealized          Change in unrealized depreciation on investments--net                                        921,310
Gain (Loss) on                                                                                              ------------
Investments--Net:   Net Increase in Net Assets Resulting from Operations                                    $  3,631,097
                                                                                                            ============

                    See Notes to Financial Statements.


                                 F-41





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Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

STATEMENTS OF CHANGES IN NET ASSETS

                                                                                            For the Six       For the
                                                                                           Months Ended      Year Ended
                                                                                              April 30,      October 31,
                    Increase (Decrease) in Net Assets:                                          2001             2000

Operations:         Investment income--net                                                 $  2,813,806     $  7,463,924
                    Realized loss on investments--net                                         (104,019)      (7,857,686)
                    Change in unrealized appreciation/depreciation on investments--net          921,310        6,239,229
                                                                                           ------------     ------------
                    Net increase in net assets resulting from operations                      3,631,097        5,845,467
                                                                                           ------------     ------------

Dividends &         Investment income--net:
Distributions to      Common Stock                                                          (2,038,726)      (5,136,655)
Shareholders:         Preferred Stock                                                         (741,314)      (2,346,958)
                    Realized gain on investments--net:
                      Common Stock                                                             (24,431)               --
                      Preferred Stock                                                          (11,146)               --
                                                                                           ------------     ------------
                    Net decrease in net assets resulting from dividends
                    and distributions to shareholders                                       (2,815,617)      (7,483,613)
                                                                                           ------------     ------------

Capital Stock       Net decrease in Preferred Stock transactions                            (1,900,000)     (13,100,000)
Transactions:       Net decrease in Common Stock transactions                               (7,730,587)     (15,141,666)
                                                                                           ------------     ------------
                    Net decreasein net assets derived from capital stock transactions       (9,630,587)     (28,241,666)
                                                                                           ------------     ------------

Net Assets:         Total decrease in net assets                                            (8,815,107)     (29,879,812)
                    Beginning of period                                                     130,293,998      160,173,810
                                                                                           ------------     ------------
                    End of period*                                                         $121,478,891     $130,293,998
                                                                                           ============     ============

                    *Undistributed investment income--net                                  $     34,408     $        642
                                                                                           ============     ============


                    See Notes to Financial Statements.


                                 F-42





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Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

FINANCIAL HIGHLIGHTS

                                                                      For the
The following per share data and ratios have been derived            Six Months
from information provided in the financial statements.                 Ended               For the Year Ended
                                                                      April 30,               October 31,
Increase (Decrease) in Net Asset Value:                                 2001        2000     1999       1998      1997

Per Share           Net asset value, beginning of period              $   8.75   $   8.89  $  10.96  $  10.87   $  10.17
Operating                                                             --------   --------  --------  --------   --------
Performance:        Investment income--net                                 .31        .72       .71       .73        .75
                    Realized and unrealized gain (loss) on
                    investments--net                                       .10      (.14)    (1.75)       .35        .70
                                                                      --------   --------  --------  --------   --------
                    Total from investment operations                       .41        .58    (1.04)      1.08       1.45
                                                                      --------   --------  --------  --------   --------
                    Less dividends and distributions to
                    Common Stock shareholders:
                      Investment income--net                             (.23)      (.49)     (.58)     (.60)      (.59)
                      Realized gain on investments--net                   --++         --        --     (.19)         --
                      In excess of realized gain on
                      investments--net                                      --         --     (.27)        --         --
                                                                      --------   --------  --------  --------   --------
                    Total dividends and distributions to
                    Common Stock shareholders                            (.23)      (.49)     (.85)     (.79)      (.59)
                                                                      --------   --------  --------  --------   --------
                    Effect of Preferred Stock activity:
                      Dividends and distributions to
                      Preferred Stock shareholders:
                          Investment income--net                         (.08)      (.23)     (.13)     (.13)      (.16)
                          Realized gain on investments--net               --++         --        --     (.07)         --
                          In excess of realized gain
                          on investments--net                               --         --     (.05)        --         --
                                                                      --------   --------  --------  --------   --------
                    Total effect of Preferred Stock activity             (.08)      (.23)     (.18)     (.20)      (.16)
                                                                      --------   --------  --------  --------   --------
                    Net asset value, end of period                    $   8.85   $   8.75  $   8.89  $  10.96   $  10.87
                                                                      ========   ========  ========  ========   ========

Total Investment    Based on net asset value per share                3.73%+++      4.09%  (11.94%)     8.28%     13.08%
Return:**                                                             ========   ========  ========  ========   ========

Ratios Based on     Total expenses, net of reimbursement***             1.90%*      1.88%     1.75%     1.61%      1.37%
Average Net                                                           ========   ========  ========  ========   ========
Assets of           Total expenses***                                   2.05%*      2.04%     1.90%     1.80%      1.83%
Common Stock:                                                         ========   ========  ========  ========   ========
                    Total investment income--net***                     6.99%*      8.14%     6.98%     6.65%      7.14%
                                                                      ========   ========  ========  ========   ========
                    Amount of dividends to Preferred Stock
                    shareholders                                        1.84%*      2.56%     1.31%     1.21%      1.53%
                                                                      ========   ========  ========  ========   ========
                    Investment income--net, to Common Stock
                    shareholders                                        5.15%*      5.58%     5.67%     5.44%      5.61%
                                                                      ========   ========  ========  ========   ========

Ratios Based on     Total expenses, net of reimbursement                1.24%*      1.15%     1.17%     1.12%       .96%
Total Average                                                         ========   ========  ========  ========   ========
Net Assets:***++++  Total expenses                                      1.34%*      1.25%     1.27%     1.25%      1.28%
                                                                      ========   ========  ========  ========   ========
                    Total investment income--net                        4.57%*      4.99%     4.66%     4.61%      5.01%
                                                                      ========   ========  ========  ========   ========

Ratios Based on     Dividends to Preferred Stock Shareholders           3.47%*      4.05%     2.63%     2.75%      3.58%
Average Net                                                           ========   ========  ========  ========   ========
Assets of
Preferred Stock:

Supplemental        Net assets, net of Preferred Stock,
Data:               end of period (in thousands)                      $ 78,479   $ 85,394  $102,174  $115,339   $101,463
                                                                      ========   ========  ========  ========   ========
                    Preferred Stock outstanding,
                    end of period (in thousands)                      $ 43,000   $ 44,900  $ 58,000  $ 48,000   $ 48,000
                                                                      ========   ========  ========  ========   ========
                    Portfolio turnover                                  20.49%    115.52%   158.57%   141.53%    144.34%
                                                                      ========   ========  ========  ========   ========
Leverage:           Asset coverage per $1,000                         $  2,825   $  2,902  $  2,762  $  3,403   $  3,114
                                                                      ========   ========  ========  ========   ========

Dividends Per       Investment income--net                            $    431   $  1,015  $    644   $   533   $    897
Share On                                                              ========   ========  ========  ========   ========
Preferred Stock
Outstanding:

   * Annualized.
  ** Total investment returns exclude the effects of the contingent
     deferred sales charge, if any. The Fund is a continuously
     offered, closed-end fund, the shares of which are offered at net
     asset value. Therefore, no separate market exists. The Fund's
     Investment Adviser voluntarily waived a portion of its management
     fee. Without such waiver, the Fund's performance would have been
     lower.
 *** Do not reflect the effect of dividends to Preferred Stock
     shareholders.
  ++ Amount is less than $.01 per share.
++++ Includes Common and Preferred Stock average net assets.
 +++ Aggregate total investment return.

     See Notes to Financial Statements.


                                 F-43





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<!-- MARKER LABEL="sheet: 44, page: 44" -->



Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies:

Merrill Lynch Municipal Strategy Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940 as a
continuously offered, non-diversified, closed-end management
investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the
United States of America, which may require the use of management
accruals and estimates. These unaudited financial statements reflect
all adjustments, which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented.
All such adjustments are of a normal, recurring nature. The
following is a summary of significant accounting policies followed
by the Fund.

(a) Valuation of investments--Municipal bonds and other portfolio
securities in which the Fund invests are traded primarily in the
over-the-counter markets and are valued at the last available bid
price in the over-the-counter market or on the basis of yield
equivalents as obtained from one or more dealers that make markets
in the securities. Financial futures contracts and options thereon,
which are traded on exchanges, are valued at their settlement prices
as of the close of such exchanges. Options written or purchased are
valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-counter-market,
valuation is the last asked price (options written) or the last bid
price (options purchased). Short-term investments with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.

(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.

* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.

* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.

When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.

(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income is recognized on the accrual basis. The Fund will adopt the
provisions to amortize all premiums and discounts on debt securities
effective November 1, 2001, as now required under the new AICPA
Audit and Accounting Guide for Investment Companies. The cumulative
effect of this accounting change will have no impact on the total
net assets of the Fund. The impact of this accounting change has not
been determined, but will result in an adjustment to the cost of
securities and a corresponding adjustment to net unrealized
appreciation/depreciation, based on debt securities held as of
October 31, 2001.

(e) Deferred organization and prepaid registration fees--Deferred
organization expenses are amortized on a


                                 F-44





<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 45, page: 45" -->



Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

NOTES TO FINANCIAL STATEMENTS (continued)

straight-line basis over a period not exceeding five years. Prepaid
registration fees are charged to expense as the related shares are
issued.

(f) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates. Distributions in excess
of realized capital gains are due primarily to differing tax
treatments for futures transactions.

2. Investment Advisory Agreement and Transactions with
Affiliates:

The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.

FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average daily net assets, including proceeds from the
issuance of Preferred Stock. For the six months ended April 30,
2001, FAM earned fees of $307,998, of which $61,600 was waived.

The Fund also has entered into an Administrative Services Agreement
with FAM whereby FAM will receive a fee equal to an annual rate of
 .25% of the Fund's average daily net assets, in return for the
performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the
Fund.

For the six months ended April 30, 2001, FAM Distributors Inc.
("FAMD"), which is a wholly-owned subsidiary of Merrill Lynch Group,
Inc., earned early withdrawal charges of $32,525 relating to the
tender of the Fund's shares.

Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.

Prior to January 1, 2001, FAM provided accounting services to the
Fund at its cost and the Fund reimbursed FAM for these services. FAM
continues to provide certain accounting services to the Fund. The
Fund reimburses FAM at its cost for such services. For the six
months ended April 30, 2001, the Fund reimbursed FAM an aggregate of
$8,000 for the above-described services. The Fund entered into an
agreement with State Street Bank and Trust Company ("State Street"),
effective January 1, 2001, pursuant to which State Street provides
certain accounting services to the Fund. The Fund pays a fee for
these services.

Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, FDS, FAMD, and/or ML & Co.

3. Investments:

Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 2001 were $24,326,774 and
$33,878,549, respectively.

Net realized losses for the six months ended April 30, 2001 and net
unrealized losses as of April 30, 2001, were as follows:

                                     Realized     Unrealized
                                     Losses         Losses

Long-term investments             $   (56,523)  $ (3,375,755)
Financial futures contracts           (47,496)            --
                                  -----------   ------------
Total                             $  (104,019)  $ (3,375,755)
                                  ===========   ============

As of April 30, 2001, net unrealized depreciation for Federal income
tax purposes aggregated $3,375,755, of which $3,105,564 related to
appreciated securities and $6,481,319 related to depreciated
securities. The aggregate cost of investments at April 30, 2001 for
Federal income tax purposes was $124,022,285.

4. Capital Stock Transactions:

The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of the holders of Common Stock.

Transactions in Common Stock were as follows:


For the Six Months Ended                            Dollar
April 30, 2001                        Shares        Amount

Shares sold                           171,952   $  1,552,383
Shares issued to shareholders
in reinvestment of dividends
and distributions                      63,090        569,354
                                 ------------   ------------
Total issued                          235,042      2,121,737
Shares tendered                   (1,119,117)    (9,852,324)
                                 ------------   ------------
Net decrease                        (884,075)  $ (7,730,587)
                                 ============   ============


For the Year Ended                                  Dollar
October 31, 2000                      Shares        Amount

Shares sold                           630,905  $   5,502,348
Shares issued to shareholders
in reinvestment of dividends          179,287      1,561,399
                                 ------------   ------------
Total issued                          810,192      7,063,747
Shares tendered                   (2,553,660)   (22,205,413)
                                 ------------   ------------
Net decrease                      (1,743,468) $ (15,141,666)
                                 ============   ============


                                 F-45





<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 46, page: 46" -->



Merrill Lynch Municipal Strategy Fund, Inc.,                      April 30, 2001

NOTES TO FINANCIAL STATEMENTS (concluded)

Preferred Stock

Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.10 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yield in effect at April
30, 2001 was 3.50%.

In connection with the offering of AMPS, the Board of Directors
reclassified 40,000 shares of unissued capital stock as AMPS. AMPS
shares outstanding during the six months ended April 30, 2001 and
during the year ended October 31, 2000 decreased by 76 and 524
shares, respectively, as a result of shares retired.

The Fund pays commissions to certain broker dealers at the end of
each auction at an annual rate ranging from .25% to 1.00%,
calculated on the proceeds of each auction. For the six months ended
April 30, 2001, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $42,498 as commissions.

5. Capital Loss Carryforward:

At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $12,294,000, of which $4,320,000 expires in 2007 and
$7,974,000 expires in 2008. This amount will be available to offset
like amounts of any future taxable gains.


                                 F-46


</pre>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 1, page: 1" -->






<p><table width=600><tr>
    <td  align=center><font size=3>&lt;R&gt;Pro Forma Unaudited Financial Statements
      for<br>
      the Combined Fund&lt;/R&gt;</font></td>
  </tr></table>


<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-47</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 2, page: 2" -->


<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited)</B></font></td>
  </tr></table>
<br>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=600>
  <TR align="center" valign="bottom">
    <TD WIDTH="600" colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD WIDTH="94" align="left">&nbsp;</TD>
    <TD WIDTH="11">&nbsp;</TD>
    <TD WIDTH="40">&nbsp;</TD>
    <TD WIDTH="10">&nbsp;</TD>
    <TD WIDTH="45">&nbsp;</TD>
    <TD WIDTH="10">&nbsp;</TD>
    <TD WIDTH="41">&nbsp;</TD>
    <TD WIDTH="11">&nbsp;</TD>
    <TD WIDTH="144">&nbsp;</TD>
    <TD WIDTH="10">&nbsp;</TD>
    <TD WIDTH="185" colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR align="center" valign="bottom">
    <TD WIDTH="94" align="left"><b><font size="1">State</font></b></TD>
    <TD WIDTH="11"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD WIDTH="40"><b><font size="1">S&amp;P<br>
      Ratings </font></b></TD>
    <TD WIDTH="10"><b><font size="1">&nbsp;</font></b></TD>
    <TD WIDTH="45"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></TD>
    <TD WIDTH="10"><b><font size="1">&nbsp;</font></b></TD>
    <TD WIDTH="41"><b><font size="1">Face<br>
      Amount </font></b></TD>
    <TD WIDTH="11"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD WIDTH="144"><b></b></TD>
    <TD WIDTH="10"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></TD>
    <TD WIDTH="50"><b><font size="1">MuniYield<br>
      Fund </font></b></TD>
    <TD WIDTH="10"><b><font size="1">&nbsp;&nbsp;</font></b></TD>
    <TD WIDTH="49"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></TD>
    <TD WIDTH="10"><b><font size="1">&nbsp;</font></b></TD>
    <TD colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94"> <font size="1"><b>Alabama &#151;
      0.0%</b></font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40">&nbsp; </TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"><font size="1">Columbia, Alabama, IDB, PCR, Refunding
      (Alabama Power Company Project), VRDN(a):</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="46">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">A1</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">VMIG1&#134;</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;300</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">&nbsp;&nbsp;&nbsp;Series A, 4.50%
      due 5/01/2022</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;300</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;300</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">A1</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">VMIG1&#134;</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">100</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">&nbsp;&nbsp;&nbsp;Series E, 4.45%
      due 10/01/2022</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1">100</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">100</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="2" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94"> <font size="1"><b>Alaska &#151;
      1.0%</b></font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1"> 5,050</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Valdez, Alaska, Marine Terminal
      Revenue Refunding Bonds (Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1">5,014</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">5,014</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="2" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94"> <font size="1"><b>Arizona &#151;
      1.9%</b></font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AAA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">1,460</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Arizona State Wastwater Management
      Authority, Wastewater Treatment Financial Assistance Revenue Bonds, Series
      A, 5.60% due 7/01/2006(b)(c)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1">1,593</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">1,593</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40">&nbsp; </TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"><font size="1">Phoenix, Arizona, IDA, Airport
      Facility Revenue Refunding Bonds (America West Airlines Inc. Project), AMT:</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">B3</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">10,000</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1"> &nbsp;&nbsp;&nbsp;6.25% due
      6/01/2019</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1">6,800</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1">1,700</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">8,500</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">B3</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">6,900</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1"> &nbsp;&nbsp;&nbsp;6.30% due
      4/01/2023</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1">4,465</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1">1,348</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">5,813</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="2" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">
      <p><font size="1"><b>California &#151; 1.3%</b> </font></p>
    </TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AAA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1"> 4,000</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">California State, GO, Refunding,
      5.75% due 12/01/2011(e)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1">4,366</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">4,366</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AAA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">3,000</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">California State University and
      Colleges, Student Union Revenue Bonds (Chico), Series B, 4.375% due 11/01/2028(e)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1">2,493</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">2,493</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AAA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">1,560</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Centinela Valley, California,
      Union High School District, GO, Series A, 5.875% due 8/01/2024(e)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1">1,645</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">1,645</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40">&nbsp; </TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"><font size="1">Los Angeles County, California,
      Schools Regionalized Business Services, COP, Pooled Financing, Series A(c):</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AAA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">1,430</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1"> &nbsp;&nbsp;&nbsp;5.90%** due
      8/01/2019</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1">518</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">518</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AAA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">2,510</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1"> &nbsp;&nbsp;&nbsp;6%** due 8/01/2029</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1">498</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">498</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aa3</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">1,250</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Sacramento County, California,
      Sanitation District Financing Authority Revenue Refunding Bonds, Trust Receipts,
      Class R, Series A, 7.597% due 12/01/2019(k)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1">1,389</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">1,389</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="2" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94"> <font size="1"><b>Colorado &#151;
      3.4%</b></font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">9,110</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Broomfield, Colorado, COP (Open
      Space Park and Recreational Facilities), 5.75% due 12/01/2015(c)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1">4,948</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1">4,715</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">9,663</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">AA</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aa2</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">1,500</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Colorado HFA Revenue Refunding
      Bonds (S/F Program), AMT, Series D-2, 6.90% due 4/01/2029</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1">1,668</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">1,668</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40">&nbsp; </TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"><font size="1">Denver, Colorado, City and County
      Airport Revenue Bonds, AMT, Series D:</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">A</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">Aaa</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">700</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1"> &nbsp;&nbsp;&nbsp;7.75% due
      11/15/2001(b)</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1">731</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">731</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">A</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">A2</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">8,000</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1"> &nbsp;&nbsp;&nbsp;7.75% due
      11/15/2013</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="50"> <font size="1">9,656</font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="49"> <font size="1"> &#151; </font></TD>
    <TD VALIGN="TOP" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="TOP" align="right" width="46"> <font size="1">9,656</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="94">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="40"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" align="left" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="left" WIDTH="45"> <font size="1">NR*</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="TOP" align="right" WIDTH="41"> <font size="1">$6,500</font></TD>
    <TD VALIGN="TOP" WIDTH="11">&nbsp;</TD>
    <TD VALIGN="TOP" WIDTH="144"> <font size="1">Denver, Colorado, Urban Renewal
      Authority, Tax Increment Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016</font></TD>
    <TD VALIGN="TOP" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="50"> <font size="1">5,291</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <TD VALIGN="bottom" align="right" WIDTH="49"> <font size="1">$1,587</font></TD>
    <TD VALIGN="bottom" align="right" WIDTH="10">&nbsp;</TD>
    <td valign="bottom" align="right" width="46"> <font size="1">&nbsp;6,878</font></td>
    <TD VALIGN="TOP" align="left" WIDTH="19">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16">
      <hr size="1" noshade>
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" align="left" WIDTH="600" colspan="16"><font size=2>&lt;/R&gt;</font></TD>
  </TR>
</table>




<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-48</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;





<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 3, page: 3" -->




<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="50">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="35">&nbsp;</td>
    <td width="15">&nbsp;</td>
    <td width="140">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left"><b><font size="1">State</font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="41"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td width="50"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td width="35"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="15"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="140"><b></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="50"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="51"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="14"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Colorado &#151;
      3.4%</b></font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">NR*</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;690</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Mountain Village Metropolitan
      District, Colorado, San Miguel County, GO, Refunding, 7.95% due 12/01/2003</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;716</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;716</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">NR*</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">240</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">San Miguel County, Colorado (Mountain
      Village Metropolitan District), GO, Refunding, 7.95% due 12/01/2003(b)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">259</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">259</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Connecticut &#151;
      3.4%</b></font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">NR*</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">725</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Connecticut State Development
      Authority, IDR (AFCO Cargo BDL-LLC Project), AMT, 7.35% due 4/01/2010</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">733</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">733</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">BBB</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Baa2</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">22,000</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Connecticut State Development
      Authority, PCR, Refunding (Connecticut Light and Power Company), Series
      A, 5.85% due 9/01/2028</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">21,528</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">21,528</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">4,000</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Connecticut State, GO, Refunding,
      Series C, 5.375% due 12/15/2013</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">4,210</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">4,210</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,175</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Connecticut State Special Tax
      Obligation Revenue Bonds, RIB, Series 372, 7.78% due 12/01/2017(h)(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">2,526</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">2,526</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Florida &#151;
      3.7%</b></font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41">&nbsp; </td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50">&nbsp;</td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"><font size="1">Florida State Turnpike Authority,
      Turnpike Revenue Bonds (Department of Transportation), Series B:</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">AA-</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">1,755</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1"> &nbsp;&nbsp;&nbsp;5.25% due
      7/01/2021</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">1,744</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">1,744</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">AA-</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">1,850</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1"> &nbsp;&nbsp;&nbsp;5.25% due
      7/01/2022</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">1,836</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">1,836</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">NR*</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 12,000</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Hillsborough County, Florida,
      IDA, Exempt Facilities Revenue Bonds (National Gypsum), AMT, Series A, 7.125%
      due 4/01/2030</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">6,840</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">6,840</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">A1+</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">VMIG1&#134;</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 200</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Martin County, Florida, PCR,
      Refunding (Florida Power &amp; Light Company Project), VRDN, 4.55% due 7/15/2022(a)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">200</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">200</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">B1</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,260</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Palm Bay, Florida, Lease Revenue
      Refunding Bonds (Florida Education and Research Foundation Project), Series
      A, 6.85% due 9/01/2013</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">2,019</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">2,019</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">19,200</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Pinellas County, Florida, Housing
      Authority, Housing Revenue Bonds (Affordable Housing Program), 4.60% due
      12/01/2010(i)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">15,011</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">4,203</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">19,214</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Georgia &#151;
      1.9%</b></font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">12,140</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Atlanta, Georgia, Airport Revenue
      Refunding Bonds, Series A, 5.875% due 1/01/2016(h)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">13,002</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">13,002</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="41"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="50"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">3,250</font></td>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="140"> <font size="1">Georgia State HFA, S/F Mortgage
      Revenue Refunding Bonds, Series A, Sub-Series A-1, 6.125% due 12/01/2015(d)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">3,328</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">3,328</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-49</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 4, page: 4" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="50">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td width="35">&nbsp;</td>
    <td width="15">&nbsp;</td>
    <td width="140">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left"><b><font size="1">State</font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="41"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td width="50"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td width="35"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="15"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="140"><b></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="50"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="51"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="14"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92"> <b><font size="1">Georgia &#151;
      1.9%</font></b></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">A1</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">VMIG1&#134;</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;400</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Monroe County, Georgia, Development
      Authority, PCR, Refunding (Georgia Power Company Plant-Scherer), VRDN, 4.40%
      due 9/01/2029(a)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;400</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;400</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92"> <font size="1"><b>Idaho &#151; 0.0%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">NR*</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 2,450</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Idaho Housing Agency, S/F Mortgage
      Revenue Refunding Bonds, AMT, Senior Series C-2, 7.15% due 7/01/2023</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">2,507</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">2,507</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92"> <font size="1"><b>Illinois &#151;
      5.9%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">NR*</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 910</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Beardstown, Illinois, IDR (Jefferson
      Smurfit Corp. Project), 8% due 10/01/2016</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">936</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">936</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">10,000</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Chicago, Illinois, GO, Series
      A, 6.75% due 7/01/2010(b)(h)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">11,757</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">11,757</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,465</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Chicago, Illinois, S/F Mortgage
      Revenue Bonds, AMT, Series B, 7.625% due 9/01/2027(f)(g)(l)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">2,813</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">2,813</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">BBB+</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Baa1</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,750</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Illinois Development Finance
      Authority, PCR, Refunding (Illinois Power Company Project), Series A, 7.375%
      due 7/01/2021</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">2,988</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">2,988</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">3,285</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Illinois Development Finance
      Authority Revenue Bonds (Presbyterian Home Lake Project), Series B, 6.30%
      due 9/01/2022(i)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">3,466</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">3,466</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">NR*</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,500</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Illinois Educational Facilities
      Authority Revenue Refunding Bonds (Chicago OsteopathicHealth System), 7.25%
      due 11/15/2019(b)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,021</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">3,021</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Ba3</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">1,250</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Illinois Health Facilities Authority
      Revenue Bonds (Holy Cross Hospital Project), 6.70% due 3/01/2014</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">1,044</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">1,044</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43">&nbsp; </td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49">&nbsp;</td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"><font size="1">Illinois State, GO, First Series(e):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="15">&nbsp;</td>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
    <td valign="TOP" align="right" width="41">&nbsp;</td>
    <td valign="TOP" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">7,000</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      12/01/2013</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1">7,495</font></td>
    <td valign="TOP" align="right" width="15">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">7,495</font></td>
    <td valign="TOP" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">7,500</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      12/01/2014</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1">7,971</font></td>
    <td valign="TOP" align="right" width="15">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">7,971</font></td>
    <td valign="TOP" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">8,000</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Metropolitan Pier and Exposition
      Authority, Illinois, Hospitality Facilities Revenue Bonds (McCormick Place
      Convention Center), 7% due 7/01/2026(m)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">9,839</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">9,839</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92"> <font size="1"><b>Indiana &#151;
      0.0%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">BB-</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">Ba2</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">3,500</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">East Chicago, Indiana, Solid
      Waste Disposal Revenue Bonds (USG Corporation Project), AMT, 6.375% due
      8/01/2029</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">1,540</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">1,540</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">A1+</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">VMIG1&#134;</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 1,000</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Princeton, Indiana, PCR, Refunding
      (PSI Energy Incorporated Project), VRDN, 4.35% due 4/01/2022(a)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">1,000</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">1,000</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="92"> <font size="1"><b>Kentucky &#151;
      1.0%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="43"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="49"> <font size="1">A3</font></td>
    <td valign="TOP" width="6">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">4,000</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" width="142"> <font size="1">Perry County, Kentucky, Solid
      Waste Disposal Revenue Bonds (TJ International Project), AMT, 7% due 6/01/2024</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">4,165</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
    <td valign="bottom" align="right" width="41"> <font size="1">4,165</font></td>
    <td valign="bottom" align="right" width="24">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-50</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 5, page: 5" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="39">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="46">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="39">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="151">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left"><b><font size="1">State</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="39"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="9"><b><font size="1">&nbsp;</font></b></td>
    <td width="46"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="9"><b><font size="1">&nbsp;</font></b></td>
    <td width="39"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="12"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="151"><b></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="49"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="51"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Louisiana &#151;
      6.5%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">A3</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">$20,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Lake Charles, Louisiana, Harbor
      and Terminal District, Port Facilities Revenue Refunding Bonds (Trunkline
      Long Company Project), 7.75% due 8/15/2022</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21,298</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21,298</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">VMIG1&#134;</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1"> 200</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Louisiana State Offshore Terminal
      Authority, Deepwater Port Revenue Refunding Bonds (First Stage A-Loop Inc.),
      ACES, 4.50% due 9/01/2006(a)</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">200</font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">200</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">11,100</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Louisiana State, GO, Series A,
      6% due 5/15/2014(e)</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">11,899</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">11,899</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">BB-</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1"> 24,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Port New Orleans, Louisiana,
      IDR, Refunding (Continental Grain Company Project), 6.50% due 1/01/2017</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">18,752</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">3,750</font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">22,502</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Maryland &#151;
      1.2%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1"> 10,050</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Maryland State Energy Financing
      Administration, Limited Obligation Revenue Bonds (Cogeneration- AES Warrior
      Run), AMT, 7.40% due 9/01/2019</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">7,257</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">3,088</font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">10,345</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Massachusetts
      &#151; 4.1%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">AA-</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">4,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Massachusetts State, Consolidated
      Loan, GO, Series C, 5.75% due 10/01/2011</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">4,384</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">4,384</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"><font size="1"> AA-</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"><font size="1"> Aa2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"><font size="1"> 14,035</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"><font size="1"> Massachusetts State, GO, Consolidated
      Loan, Series B, 5.75% due 6/01/2012</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"><font size="1"> 15,146</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">&#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"><font size="1"> 15,146</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">A</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1"> 13,030</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Massachusetts State Health and
      Educational Facilities Authority Revenue Bonds (Schepens Eye Research Project),
      Series A, 6.50% due 7/01/2028</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">11,390</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">2,065</font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">13,455</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">2,575</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Tantasqua, Massachusetts, Regional
      School District, GO, 5% due 8/15/2017(i)</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">2,552</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">2,552</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Michigan &#151;
      1.0%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">P1</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">4,400</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Delta County, Michigan, Economic
      Development Corporation, Environmental Improvement Revenue Refunding Bonds
      (Mead- Escanaba Paper), DATES, Series F, 4.40% due 12/01/2013(a)</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">4,400</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">4,400</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">3,100</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Michigan State Hospital Finance
      Authority Revenue Refunding Bonds, INFLOS, 8.311% due 2/15/2022(i)(k)</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">3,294</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">3,294</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Minnesota &#151;
      0.0%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">1,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Minneapolis, Minnesota, M/F Housing
      Revenue Bonds (Gaar Scott Loft Project), AMT, 5.95% due 5/01/2030</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" width="10" align="right">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">1,010</font></td>
    <td valign="bottom" width="5" align="right">&nbsp;</td>
    <td valign="bottom" width="54" align="right"> <font size="1">1,010</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">Aa1</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">2,415</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Minnesota State, HFA, S/F Mortgage
      Revenue Bonds, AMT, Series A, 7.05% due 7/01/2022</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">2,448</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">2,448</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="95"> <font size="1"><b>Mississippi &#151;
      4.1%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="39"> <font size="1">A</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="46"> <font size="1">A3</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="39"> <font size="1">16,800</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="151"> <font size="1">Lowndes County, Mississippi,
      Solid Waste Disposal and PCR, Refunding (Weyerhaeuser Company Project),
      Series A, 6.80% due 4/01/2022</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">18,646</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="5">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">18,646</font></td>
    <td valign="bottom" align="right" width="15">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-51</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 6, page: 6" -->


<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="39">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="46">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="39">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="151">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left"><b><font size="1">State</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="39"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="9"><b><font size="1">&nbsp;</font></b></td>
    <td width="46"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="9"><b><font size="1">&nbsp;</font></b></td>
    <td width="39"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="12"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="151"><b></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="49"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="51"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91"> <font size="1"><b>Mississippi &#151;
      4.1%</b></font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba1</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;3,150</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Mississippi Business Finance
      Corporation, Mississippi, PCR, Refunding (System Energy Resources Inc. Project),
      5.875% due 4/01/2022</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,853</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,853</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">11,380</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Mississippi State, GO, Capital
      Improvement, 5.75% due 11/01/2014</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">12,152</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">12,152</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">P1</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">1,800</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Perry County, Mississippi, PCR,
      Refunding (Leaf River Forest Project), VRDN, 4.50% due 3/01/2002(a)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">1,800</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">1,800</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91"> <font size="1"><b>Missouri &#151;
      1.0%</b></font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"><font size="1">Fenton, Missouri, Tax Increment
      Revenue Refunding and Improvement Bonds (Gravois Bluffs):</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 1,805</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;6.75% due
      10/01/2015</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">1,813</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">1,813</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 2,800</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;7% due 10/01/2021</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">2,830</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">2,830</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 3,725</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Missouri State Housing Development
      Commission, S/F Mortgage Revenue Bonds, Homeownership, AMT, Series B, 7.55%
      due 9/01/2027(f)(g)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">3,987</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">3,987</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91"> <font size="1"><b>New Jersey &#151;
      4.6%</b></font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"><font size="1">New Jersey EDA, Construction Revenue
      Bonds, GO (School Facilities), Series A(c):</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">5,000</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;5.50% due
      6/15/2012</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">5,375</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">5,375</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">5,000</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;5.50% due
      6/15/2013</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">5,366</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">5,366</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"><font size="1">New Jersey EDA, Special Facility
      Revenue Bonds (Continental Airlines Inc. Project), AMT:</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,000</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;6.25% due
      9/15/2019</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">1,892</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">1,892</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">8,400</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;5.50% due
      4/01/2028</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">7,028</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">7,028</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">5,180</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;6.25% due
      9/15/2029</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">4,814</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">4,814</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">3,750</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;7% due 11/15/2030</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">3,800</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">3,800</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">6,750</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1"> &nbsp;&nbsp;&nbsp;7.20% due
      11/15/2030</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="TOP" align="right" width="45"> <font size="1">6,966</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">6,966</font></td>
    <td valign="TOP" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">4,450</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">New Jersey EDA, Water Facilities
      Revenue Bonds (New Jersey American Water Company Inc. Project), AMT, 6.50%
      due 4/01/2022(h)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">4,592</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">4,592</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">390</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">New Jersey Health Care Facilities
      Financing Authority Revenue Refunding Bonds (Saint Elizabeth Hospital Obligation
      Group), 6% due 7/01/2027(e)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">323</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">323</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91"> <font size="1"><b>New York &#151;
      22.5%</b></font></td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">1,865</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Dutchess County, New York, Resource
      Recovery Agency Revenue Bonds (Solid Waste System), Series A, 5.25% due
      1/01/2011(e)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">1,957</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">1,957</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">A1+</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">VMIG1&#134;</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 5,000</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Long Island Power Authority,
      New York, Electric System Revenue Bonds, VRDN, Sub-Series 6, 3.80% due 5/01/2033(a)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">5,000</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">5,000</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="91">&nbsp;</td>
    <td valign="TOP" align="left" width="8">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">5,595</font></td>
    <td valign="TOP" width="10">&nbsp;</td>
    <td valign="TOP" width="159"> <font size="1">Metropolitan Transportation Authority,
      New York, Commuter Facilities Revenue Bonds, RITR, Series 9, 7.77% due 7/01/2006(b)(h)(k)</font></td>
    <td valign="TOP" width="11">&nbsp;</td>
    <td valign="bottom" align="right" width="45"> <font size="1">6,948</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">6,948</font></td>
    <td valign="bottom" align="right" width="16">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-52</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 7, page: 7" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="39">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="46">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="39">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="151">&nbsp;</td>
    <td width="10">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="95" align="left"><b><font size="1">State</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="39"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="9"><b><font size="1">&nbsp;</font></b></td>
    <td width="46"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="9"><b><font size="1">&nbsp;</font></b></td>
    <td width="39"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="12"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="151"><b></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="49"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="51"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90"> <font size="1"><b>New York &#151;
      22.5%</b></font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">A</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;5,500</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1">New York City, New York, City
      IDA, Special Facilities Revenue Bonds, RITR, AMT, Series RI-5, 7.295% due
      1/01/2024(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      5,879</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,879</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">10,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1">New York City, New York, City
      Municipal Water Finance Authority, Water and Sewer System Revenue Bonds,
      Series B, 5.75% due 6/15/2026(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">10,295</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">10,295</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">3,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1">New York City, New York, City
      Municipal Water Finance Authority, Water and Sewer System Revenue Bonds,
      RITR, Series 11, 7.32% due 6/15/2026(i)(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,216</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">3,216</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"><font size="1">New York City, New York, City
      Transitional Finance Authority Revenue Bonds:</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49">&nbsp;</td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53">&nbsp;</td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57">&nbsp;</td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">14,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;Future Tax
      Secured, Series B, <br>
      &nbsp;&nbsp;&nbsp; 4.75% due 11/01/2023</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">8,167</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">4,537</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">12,704</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">10,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;Future Tax
      Secured, Series B, <br>
      &nbsp;&nbsp;&nbsp; 4.75% due 11/15/2023</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">9,069</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">9,069</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;Future Tax
      Secured, Series C, <br>
      &nbsp;&nbsp;&nbsp; 4.75% due 5/01/2023</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">1,824</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">1,824</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">11,765</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;Series C,
      5% due 5/01/2029(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">11,106</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">11,106</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"><font size="1">New York City, New York, GO:</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">A</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">A2</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">4,700</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;Series B,
      5.75% due 8/01/2014</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">5,003</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">5,003</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">A</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">385</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;Series C,
      Sub-Series C-1, <br>
      &nbsp;&nbsp;&nbsp; 7.50% due 8/01/2002(b)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">410</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">410</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"><font size="1">New York City, New York, GO, Refunding,
      Series G:</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,090</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      2/01/2014(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1">2,199</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">2,199</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">2,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      2/01/2014(h)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1">2,105</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">2,105</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">10,000</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1">New York City, New York, GO,
      Refunding, Trust Receipts, Series R, 8.272% due 5/15/2014(h)(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">12,599</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">12,599</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">3,240</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1">New York State Dormitory Authority
      Revenue Refunding Bonds (Mental Health Services Facilities Improvement),
      Series D, 5.25% due 8/15/2011(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,392</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">3,392</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"><font size="1">New York State Dormitory Authority,
      Service Contract Revenue Bonds (School District Rescue), Series A:</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 1,410</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      4/01/2010</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">1,545</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">1,545</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 1,145</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      4/01/2011</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">1,256</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">1,256</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51">&nbsp; </td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35">&nbsp;</td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"><font size="1">New York State Dormitory Authority,
      State University Educational Facilities Revenue Refunding Bonds, Series
      1989(e):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 7,500</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 5/15/2015</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">8,203</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">8,203</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">NR*</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1"> 3,750</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 5/15/2016</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="49"> <font size="1">4,084</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="57"> <font size="1">4,084</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="90">&nbsp;</td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="51"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="10">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">Aa1</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="35"> <font size="1">17,575</font></td>
    <td valign="TOP" width="14">&nbsp;</td>
    <td valign="TOP" width="144"> <font size="1">New York State Environmental
      Facilities Corporation, PCR, Refunding, RITR, Class R, Series 9, 7.198%
      due 6/15/2014(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">19,389</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="57"> <font size="1">19,389</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-53</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 8, page: 8" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="36">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="40">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="156">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left"><b><font size="1">State&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="36"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="40"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="38"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="156"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></td>
    <td width="8"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="53"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="55"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110"> <font size="1"><b>New York &#151;
      22.5%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aa1</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,260</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">New York State Environmental
      Facilities Corporation, PCR, Refunding, State Water Revolving Fund (New
      York City Municipal Water), 5.75% due 6/15/2012</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      5,767</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,767</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36">&nbsp; </td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40">&nbsp;</td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"><font size="1">New York State Thruway Authority,
      Highway and Bridge Trust Fund Revenue Bonds, Series A(i):</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">2,850</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 4/01/2015</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">3,114</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">3,114</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">2,625</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 4/01/2016</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">2,857</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">2,857</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">9,000</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">Port Authority of New York and
      New Jersey, Consolidated Revenue Bonds, 116th Series, 4.25% due 10/01/2026(h)</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">7,601</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">&#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">7,601</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">NR*</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1"> 4,360</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">Port Authority of New York and
      New Jersey Revenue Refunding Bonds, DRIVERS, AMT, Series 177, 7.67% due
      10/15/2032(e)</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">4,887</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">4,887</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">41,150</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">Port Authority of New York and
      New Jersey, Special Obligation Revenue Bonds (JFK International Air Terminal
      Project), AMT, Series 6, 5.75% due 12/01/2025(e)</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">39,460</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">2,936</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">42,396</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110"> <font size="1"><b>North Carolina
      &#151; 1.0%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">BBB</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">4,750</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">North Carolina Eastern Municipal
      Power Agency, Power System Revenue Bonds, Series D, 6.75% due 1/01/2026</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">4,980</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">4,980</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">1,000</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">North Carolina HFA, Home Ownership
      Revenue Bonds, AMT, Series 8-A, 6.20% due 7/01/2016</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">1,049</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">1,049</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">1,795</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">North Carolina, HFA, S/F Revenue
      Bonds, Series II, 6.20% due 3/01/2016(d)</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">1,878</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">1,878</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110"> <font size="1"><b>Ohio &#151; 2.1%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36">&nbsp; </td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40">&nbsp;</td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"><font size="1">Bowling Green State University,
      Ohio, General Receipt Revenue Bonds(h):</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">1,125</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      6/01/2013</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">1,211</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">1,211</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">1,040</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      6/01/2014</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">1,111</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">1,111</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36">&nbsp; </td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40">&nbsp;</td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38">&nbsp;</td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"><font size="1">Cuyahoga County, Ohio, Mortgage
      Revenue Bonds (West Tech Apartments Project), AMT(g):</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53">&nbsp;</td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">1,410</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1"> &nbsp;&nbsp;&nbsp;5.75% due
      9/20/2020</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1">1,422</font></td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">1,422</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">2,250</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1"> &nbsp;&nbsp;&nbsp;5.85% due
      9/20/2030</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="53"> <font size="1">2,270</font></td>
    <td valign="TOP" align="right" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="46"> <font size="1">2,270</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">Aa1</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">2,000</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">Dublin, Ohio, GO, Refunding and
      Improvement, Series A, 4.625% due 12/01/2018</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">1,833</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">1,833</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">NR*</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1"> 2,175</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">Lucas County, Ohio, Health Care
      Facility Revenue Refunding and Improvemt Bonds (Sunset Retirement Communities),
      Series A, 6.625% due 8/15/2030</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">2,205</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">2,205</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="110">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">BBB</font></td>
    <td valign="TOP" align="left" width="5">&nbsp;</td>
    <td valign="TOP" align="left" width="40"> <font size="1">B2</font></td>
    <td valign="TOP" width="5">&nbsp;</td>
    <td valign="TOP" align="right" width="38"> <font size="1">19,000</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" width="156"> <font size="1">Ohio State Solid Waste Disposal
      Revenue Bonds (USG Corporation Project), AMT, 5.60% due 8/01/2032</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">8,360</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="46"> <font size="1">8,360</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size="2">&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-54</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 9, page: 9" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="36">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="40">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="156">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left"><b><font size="1">State&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="36"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="40"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="38"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="156"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></td>
    <td width="8"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="53"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="55"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Oklahoma &#151;
      1.0%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1">Holdenville, Oklahoma, Industrial
      Authority, Correctional Facility Revenue Bonds(b)(j):</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">$&nbsp;&nbsp;&nbsp;1,650
      </font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1"> &nbsp;&nbsp;&nbsp;6.60% due
      7/01/2006</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,859
      </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,859
      </font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1"> 3,250 </font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1"> &nbsp;&nbsp;&nbsp;6.70% due
      7/01/2006</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48"> <font size="1">3,666</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">3,666</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Oregon &#151;
      2.4%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">14,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Oregon Health Sciences University
      Revenue Refunding Bonds, Series A, 5.16%** due 7/01/2021(e)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">4,533</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">4,533</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1">Oregon State Department of Administrative
      Services, COP, Series A(c):</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">4,405</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 5/01/2015</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48"> <font size="1">4,933</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">4,933</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">3,500</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 5/01/2016</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48"> <font size="1">3,920</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">3,920</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">$7,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Oregon State, GO, Refunding (Veterans
      Welfare), Series 80A, 5.70% due 10/01/2032</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">7,104</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">&#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">7,104</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Pennsylvania
      &#151; 8.5%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">4,200</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Delaware River Port Authority
      of Pennsylvania and New Jersey Revenue Bonds, 5.75% due 1/01/2015(i)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">4,474</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">4,474</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"><font size="1"> AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"><font size="1"> Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"><font size="1"> 5,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1"> Lehigh County, Pennsylvania,
      IDA, PCR, Refunding (Pennsylvania Power and Light Company Project), Series
      B, 6.40% due 9/01/2029(e)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"><font size="1"> 5,278</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">&#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"><font size="1"> 5,278</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">9,675</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Pennsylvania Convention Center
      Revenue Refunding Bonds, Series A, 6.70% due 9/01/2014(e)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">10,631</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">10,631</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1">Pennsylvania Economic Development
      Financing Authority, Exempt Facilities Revenue Bonds (National Gypsum Company),
      AMT:</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1"> 18,850</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1"> &nbsp;&nbsp;&nbsp;Series A,
      6.25% due 11/01/2027</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48"> <font size="1">8,978</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">919</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">9,897</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1"> 4,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1"> &nbsp;&nbsp;&nbsp;Series B,
      6.125% due 11/01/2027</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48"> <font size="1">1,030</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43"> <font size="1">1,030</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55"> <font size="1">2,060</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aa2</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">5,135</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Pennsylvania HFA, S/F Mortgage
      Refunding Bonds, AMT, Series 42, 6.85% due 4/01/2025</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">5,383</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">5,383</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">16,270</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Pennsylvania State Higher Educational
      Facilities Authority, Health Services Revenue Refunding Bonds (Allegheny
      Delaware Valley Obligation), Series C, 5.875% due 11/15/2016(e)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">16,865</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">16,865</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1">Philadelphia, Pennsylvania, Authority
      for IDR, Refunding, Commercial Development: </font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="48">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="43">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="55">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1"> 3,650</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1">&nbsp;&nbsp;&nbsp;(Days Inn),
      Series B, <br>
      &nbsp;&nbsp;&nbsp; 6.50% due 10/01/2027</font> </td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">3,550</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"><font size="1">3,550</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1"> 4,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"><font size="1">&nbsp;&nbsp;&nbsp;(Doubletree),
      Series A, <br>
      &nbsp;&nbsp;&nbsp; 6.50% due 10/01/2027</font> </td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">2,918</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1">973</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"><font size="1">3,891</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">10,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Washington County, Pennsylvania,
      Capital Funding Authority Revenue Bonds (Capital Projects and Equipment
      Program), 6.15% due 12/01/2029(c)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">11,101</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">11,101</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Rhode Island
      &#151; 1.0%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="41"> <font size="1">920</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="152"> <font size="1">Cranston, Rhode Island, GO, Refunding,
      5.25% due 7/01/2015(e)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="48"> <font size="1">936</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="43"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="55"> <font size="1">936</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="608" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-55</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 10, page: 10" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="36">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="40">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="156">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left"><b><font size="1">State&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="36"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="40"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="38"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="156"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></td>
    <td width="8"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="53"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="55"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108"> <font size="1"><b>Rhode Island
      &#151; 1.0%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"><font size="1">Rhode Island State Health and
      Educational Building Corporation, Higher Education Revenue Bonds (Roger
      Williams University):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,750</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;5.375% due
      11/15/2022</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,663</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,663</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 2,250</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;5.50% due
      11/15/2030</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,189</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">2,189</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"><font size="1">Woonsocket, Rhode Island, GO(h):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,225</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 10/01/2017</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">1,325</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">1,325</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,195</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 10/01/2018</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">1,289</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">1,289</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108"> <font size="1"><b>South Carolina
      &#151; 1.0%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,000</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1">Fairfield County, South Carolina,
      PCR (South Carolina Electric and Gas), 6.50% due 9/01/2014(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">1,060</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">1,060</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB+</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Baa1</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">2,500</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1">Richland County, South Carolina,
      PCR, Refunding (Union Camp Corporation Project), Series C, 6.55% due 11/01/2020</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">2,554</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">2,554</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108"> <font size="1"><b>South Dakota
      &#151; 0.0%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB+</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">900</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1">South Dakota State Health and
      Educational Facilities Authority Revenue Refunding Bonds (Prairie Lakes),
      7.25% due 4/01/2022</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">912</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">&#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">912</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108"> <font size="1"><b>Tennessee &#151;
      1.4%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"><font size="1">Elizabethton, Tennessee, Health
      and Educational Facilties Board, Hospital Revenue Refunding and Improvement
      Bonds, First Mortgage, Series B(e):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">2,005</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 7/01/2011</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,193</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">2,193</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">2,125</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6% due 7/01/2012</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,326</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">2,326</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">2,255</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6.25% due
      7/01/2013</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,514</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">2,514</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 4,610</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1">Hardeman County, Tennessee, Correctional
      Facilities Corporation Revenue Bonds, 7.75% due 8/01/2017</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">2,979</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">1,599</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">4,578</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108"> <font size="1"><b>Texas &#151;
      5.9%</b></font></td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"><font size="1">Denton, Texas, Utility System
      Revenue Refunding and Improvement Bonds(c):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,000</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;5.125% due
      12/01/2017</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">978</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">978</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">3,515</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;5.125% due
      12/01/2018</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">3,414</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">3,414</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"><font size="1">Gregg County, Texas, Health Facilities
      Development Corporation, Hospital Revenue Bonds (Good Shepherd Medical Center
      Project):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51">&nbsp;</td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 3,000</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6.875% due
      10/01/2020</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">3,290</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">3,290</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 2,000</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;6.375% due
      10/01/2025</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,102</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">2,102</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA-</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">5,000</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1">Guadalupe-Blanco River Authority,
      Texas, Sewage and Solid Waste Disposal Facility Revenue Bonds (E. I. du
      Pont de Nemours and Company Project), AMT, 6.40% due 4/01/2026</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">5,232</font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51"> <font size="1">5,232</font></td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp;</td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"><font size="1">Harris County, Texas, Health Facilities
      Development Corporation, Hospital Revenue Refunding Bonds (Methodist Hospital),
      VRDN(a):</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="42">&nbsp;</td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="50">&nbsp;</td>
    <td valign="bottom" align="right" width="10">&nbsp;</td>
    <td valign="bottom" align="right" width="51">&nbsp;</td>
    <td valign="bottom" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">A1+</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 6,800</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;4.35% due
      12/01/2025</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">6,800</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">6,800</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="108">&nbsp;</td>
    <td valign="TOP" align="left" width="6">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">A1+</font></td>
    <td valign="TOP" align="left" width="4">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" width="4">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 2,700</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" width="180"> <font size="1"> &nbsp;&nbsp;&nbsp;4.50% due
      12/01/2026</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,700</font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="10">&nbsp;</td>
    <td valign="TOP" align="right" width="51"> <font size="1">2,700</font></td>
    <td valign="TOP" align="right" width="13">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-56</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 11, page: 11" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (continued)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="36">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="40">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="156">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left"><b><font size="1">State&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="36"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="40"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="38"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="156"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></td>
    <td width="8"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="53"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="55"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96"> <font size="1"><b>Texas &#151; 5.9%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"><font size="1">Houston, Texas, Airport System,
      Special Facilities Revenue Bonds (Continental Airlines Terminal Improvement),
      AMT:</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba1</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,500</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;Series B,
      6.125% due 7/15/2027</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,022</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
      </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,022</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BB</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba1</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,250</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;Series C,
      6.125% due 7/15/2027</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">1,117</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">1,117</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"><font size="1">Lower Colorado River Authority,
      Texas, PCR (Samsung Austin Semiconductor), AMT:</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">6,200</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;6.375% due
      4/01/2027</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">6,080</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">6,080</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">6,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;6.95% due
      4/01/2030</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">4,117</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1">2,058</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">6,175</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"><font size="1">San Antonio, Texas, Water Revenue
      Refunding Bonds:</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;5.875% due
      5/15/2016</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">1,055</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">1,055</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;5.875% due
      5/15/2017</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">1,050</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">1,050</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">7,020</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Tyler, Texas, Waterworks and
      Sewer Revenue Bonds, 5.70% due 9/01/2030(h)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">7,141</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">7,141</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96"> <font size="1"><b>Utah &#151; 0.0%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,545</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Utah State Board of Regents Revenue
      Refunding Bonds (University of Utah Research Facilities), Series A, 5.50%
      due 4/01/2018(e)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">1,570</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1">&#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">1,570</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 510</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Utah State, HFA, S/F Mortgage
      Revenue Bonds, AMT, Senior-Series E-2, 7.15% due 7/01/2024(d)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">521</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">521</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 1,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Tooele County, Utah, PCR, Refunding
      (Laidlaw Environmental), AMT, Series A, 7.55% due 7/01/2027(n)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1">28</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">28</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96"> <font size="1"><b>Virginia &#151;
      2.7%</b></font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">5,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Fairfax County, Virginia, EDA,
      Resource Recovery Revenue Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011(c)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1">5,557</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">5,557</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 10,400</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Peninsula Ports Authority, Virginia,
      Revenue Refunding Bonds (Port Facility-Zeigler Coal), 6.90% due 5/02/2022(n)</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">3,806</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1">770</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">4,576</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">NR*</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 1,000</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Pittsylvania County, Virginia,
      IDA Revenue Refunding Bonds, Exempt-Facility, AMT, Series A, 7.55% due 1/01/2019</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">941</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">941</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"><font size="1">Pocahontas Parkway Association,
      Virginia, Toll Road Revenue Bonds:</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42">&nbsp;</td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44">&nbsp;</td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50">&nbsp;</td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Ba1</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">6,200</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;First Tier,
      Sub-Series C, <br>
      &nbsp;&nbsp;&nbsp; 6.25%** due 8/15/2031</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1">636</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">636</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">11,960</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;Senior Series
      B, <br>
      &nbsp;&nbsp;&nbsp; 5.95%** due 8/15/2029</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1">1,657</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">1,657</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34">&nbsp; </td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"><font size="1">Pocahontas Parkway Association,
      Virginia, Toll Road Revenue Bonds, Senior Series B:</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44">&nbsp;</td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50">&nbsp;</td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">9,100</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;5.90%** due
      8/15/2019</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">2,558</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">2,558</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">BBB-</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Baa3</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">12,840</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1"> &nbsp;&nbsp;&nbsp;7.35%** due
      8/15/2029</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="42"> <font size="1">1,779</font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="TOP" align="right" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="50"> <font size="1">1,779</font></td>
    <td valign="TOP" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="96">&nbsp;</td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="34"> <font size="1">AA+</font></td>
    <td valign="TOP" align="left" width="12">&nbsp;</td>
    <td valign="TOP" align="left" width="38"> <font size="1">Aa1</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">5,125</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="TOP" width="161"> <font size="1">Virginia State HDA, Commonwealth
      Mortgage Revenue Bonds, Series A, 7.10% due 1/01/2025</font></td>
    <td valign="TOP" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="42"> <font size="1">5,267</font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="44"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="12">&nbsp;</td>
    <td valign="bottom" align="right" width="50"> <font size="1">5,267</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16"><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>
<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-57</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;





<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 12, page: 12" -->

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<B>COMBINED SCHEDULE OF INVESTMENTS
      FOR<br>
      MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001 (Unaudited) (concluded)</B></font></td>
  </tr></table>
<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="center" valign="bottom">
    <td colspan="16"><font size="1"><b>(in Thousands)</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left">&nbsp;</td>
    <td width="6">&nbsp;</td>
    <td width="36">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="40">&nbsp;</td>
    <td width="5">&nbsp;</td>
    <td width="38">&nbsp;</td>
    <td width="9">&nbsp;</td>
    <td width="156">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td colspan="6"><font size="1"><b>Value</b></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr align="center" valign="bottom">
    <td width="110" align="left"><b><font size="1">State&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="6"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="36"><b><font size="1">S&amp;P<br>
      Ratings </font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="40"><b><font size="1">Moody&#146;s<br>
      Ratings</font></b></td>
    <td width="5"><b><font size="1">&nbsp;</font></b></td>
    <td width="38"><b><font size="1">Face<br>
      Amount </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="156"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></td>
    <td width="8"><b><font size="1">&nbsp;&nbsp;&nbsp;</font></b></td>
    <td width="53"><b><font size="1">MuniYield<br>
      Fund </font></b></td>
    <td width="9"><b><font size="1">&nbsp;&nbsp;</font></b></td>
    <td width="55"><b><font size="1">Municipal <br>
      Strategy<br>
      Fund </font></b></td>
    <td width="10"><b><font size="1">&nbsp;</font></b></td>
    <td colspan="2"><b><font size="1">Pro Forma for<br>
      Combined<br>
      Fund </font></b><b></b></td>
  </tr>
  <tr>
    <td valign="TOP" align="left" colspan="16">
      <hr size="1" noshade>
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Washington &#151;
      0.0%</b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,000</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Clark County, Washington, Sewer
      Revenue Refunding Bonds, Series B, 5.25% due 12/01/2015(c)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,053</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,053</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">1,500</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Grant County, Washington, Public
      Utility District No. 002, Electric Revenue Bonds, Series G, 4.75% due 1/01/2017(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">1,385</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">1,385</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>West Virginia
      &#151; 0.0%</b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">A3</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">3,000</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Upshur County, West Virginia,
      Solid Waste Disposal Revenue Bonds (TJ International Project), AMT, 7% due
      7/15/2025</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">3,146</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,146</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Wisconsin &#151;
      1.0%</b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">NR*</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">3,675</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Milwaukee County, Wisconsin,
      Airport Revenue Bonds, AMT, Series A, 6% due 12/01/2019(h)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">3,849</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,849</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">3,585</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Wisconsin State, GO, AMT, Series
      B, 6.20% due 11/01/2026(e)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">3,721</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,721</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">NR*</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 1,385</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Wisconsin State Health and Educational
      Facilties Authority Revenue Bonds (Howard Young Medical Center Inc. Project),
      5.125% due 8/15/2028</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">1,237</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">&nbsp;1,237</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Wyoming &#151;
      0.0%</b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">NR*</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1"> 2,500</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Wyoming Student Loan Corporation,
      Student Loan Revenue Refunding Bonds, Series A, 6.20% due 6/01/2024</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">2,594</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">2,594</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="2" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104"> <font size="1"><b>Puerto Rico &#151;
      2.3%</b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">15,000</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Puerto Rico Commonwealth, Highway
      and Transportation Authority, Transportation Revenue Bonds, Trust Receipts,
      Class R, Series B, 7.372% due 7/01/2035(e)(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">14,252</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">2,850</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">17,102</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35"> <font size="1">AAA</font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36"> <font size="1">Aaa</font></td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37"> <font size="1">2,500</font></td>
    <td valign="TOP" width="7">&nbsp;</td>
    <td valign="TOP" width="158"> <font size="1">Puerto Rico Electric Power Authority,
      Power Revenue Bonds, Trust Receipts, Class R, Series 16 HH, 7.122% due 7/01/2013(k)</font></td>
    <td valign="TOP" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">2,899</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1"> &#151; </font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">2,899</font></td>
    <td valign="bottom" align="right" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="600" colspan="16">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" align="left" width="7">&nbsp;</td>
    <td valign="bottom" align="left" width="158"> <font size="1"><b>Total Investments
      <br>
      &nbsp;&nbsp;&nbsp; (Cost &#151; $866,420) &#151; 98.8% </b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">735,485</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">120,647</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">856,132</font></td>
    <td valign="bottom" width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" align="left" width="7">&nbsp;</td>
    <td valign="bottom" align="left" width="158"> <font size="1"><b>Other Assets
      <br>
      &nbsp;&nbsp;&nbsp; Less Liabilities &#151; 1.2% </b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">9,924</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">832</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">3,923</font></td>
    <td valign="bottom" width="14"><font size="1">&#134;&#134;</font></td>
  </tr>
  <tr valign="top">
    <td align="left" width="104">&nbsp;</td>
    <td align="left" width="9">&nbsp;</td>
    <td align="left" width="35">&nbsp;</td>
    <td align="left" width="9">&nbsp;</td>
    <td align="left" width="36">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td align="right" width="37">&nbsp;</td>
    <td align="left" width="7">&nbsp;</td>
    <td align="left" width="158">&nbsp;</td>
    <td align="left" width="9">&nbsp;</td>
    <td align="right" width="54">
      <hr size="1" noshade width="90%" align="right">
    </td>
    <td align="right" width="9">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade width="90%" align="right">
    </td>
    <td align="right" width="9">&nbsp;</td>
    <td align="right" width="53">
      <hr size="1" noshade width="90%" align="right">
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" align="left" width="104">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="35">&nbsp;</td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="TOP" align="left" width="36">&nbsp;</td>
    <td valign="TOP" width="8">&nbsp;</td>
    <td valign="TOP" align="right" width="37">&nbsp;</td>
    <td valign="TOP" align="left" width="7">&nbsp;</td>
    <td valign="bottom" align="left" width="158"> <font size="1"><b>Net Assets
      &#151; 100.0%</b></font></td>
    <td valign="TOP" align="left" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="54"> <font size="1">$745,409</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="49"> <font size="1">$121,479</font></td>
    <td valign="bottom" align="right" width="9">&nbsp;</td>
    <td valign="bottom" align="right" width="53"> <font size="1">$860,055</font></td>
    <td valign="bottom" width="14"><font size="1">&#134;&#134;</font></td>
  </tr>
  <tr valign="top">
    <td align="left" width="104">&nbsp;</td>
    <td align="left" width="9">&nbsp;</td>
    <td align="left" width="35">&nbsp;</td>
    <td align="left" width="9">&nbsp;</td>
    <td align="left" width="36">&nbsp;</td>
    <td width="8">&nbsp;</td>
    <td align="right" width="37">&nbsp;</td>
    <td align="left" width="7">&nbsp;</td>
    <td align="left" width="158">&nbsp;</td>
    <td align="left" width="9">&nbsp;</td>
    <td align="right" width="54">
      <hr size="2" noshade width="90%" align="right">
    </td>
    <td align="right" width="9">&nbsp;</td>
    <td align="right" width="49">
      <hr size="2" noshade width="90%" align="right">
    </td>
    <td align="right" width="9">&nbsp;</td>
    <td align="right" width="53">
      <hr size="2" noshade width="90%" align="right">
    </td>
    <td width="14">&nbsp;</td>
  </tr>
</table>





<table width=600>
  <tr>
    <td valign=top colspan="3">
      <hr noshade size="1" width="10%" align="left">
    </td>
  </tr>
  <tr>
    <td width=3% valign=top><font size="1">(a) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">The interest rate is subject to change periodically
      based upon prevailing market rates. The interest rate shown is the rate
      in effect at April 30, 2001.</font></td>
  </tr>
</table>

<table width=600><tr><td width=3% valign=top><font size="1">(b)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Prerefunded.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(c)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">AMBAC
Insured.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(d)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">FHA
Insured.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(e)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">MBIA
Insured.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(f)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">FNMA
Collateralized.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(g)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">GNMA
Collateralized.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(h)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">FGIC
Insured.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(i)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">FSA
Insured.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(j)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Connie
Lee Insured.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(k)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
interest rate is subject to change periodically and inversely based upon
prevailing market rates. The interest rate shown is the rate in effect at April
30, 2001.</font></td></tr></table>

<p>
<table width=600>
  <tr>
    <td align=right><font size=2><I><font size="1">(footnotes continued on next
      page)</font></I></font></td>
  </tr>
  <tr align="left">
    <td><font size=2>&lt;/R&gt;</font></td>
  </tr>
</table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-58</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<p><table width=600><tr>
    <td><font size=2><font size="1">&lt;R&gt;</font><I><font size="1">(footnotes
      continued from previous page)</font></I></font></td>
  </tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(l)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">FHLMC
Collateralized.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(m)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Escrowed
to maturity.</font></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">(n)
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Non-income
producing security.</font></td></tr></table>

<table width=600><tr>
    <td width=3% valign=top align="right"><font size="1">* </font></td>
    <td width=2%><font size="1"></font></td><td width=95%><font size="1">Not
Rated.</font></td></tr></table>

<table width=600><tr>
    <td width=3% valign=top align="right"><font size="1">** </font></td>
    <td width=2%><font size="1"></font></td><td width=95%><font size="1">Represents
a zero coupon bond; the interest rate shown reflects the effective yield at the
time of purchase by the Fund.</font></td></tr></table>

<table width=600><tr>
    <td width=3% valign=top align="right"><font size="1">&#134; </font></td>
    <td width=2%><font size="1"></font></td><td width=95%><font size="1">Highest
short-term rating by Moody's Investors Service, Inc.</font></td></tr></table>

<table width=600><tr>
    <td width=3% valign=top align="right"><font size="1">&#134;&#134; </font></td>
    <td width=2%><font size="1"></font></td><td width=95%><font size="1">Amounts
reflect Pro Forma adjustment to the Statement of Assets, Liabilities and
Capital.</font></td></tr></table>

<table width=600><tr><td><font size=2>See Notes to Financial Statements</font></td></tr></table>

<p><table width=600><tr><td><font size=2><B>Portfolio Abbreviations</B></font></td></tr></table>


<table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
simplify the listings of the Funds portfolio holdings in the Schedule of
Investments, we have abbreviated the names of many of the securities according
to the list below.</font></td></tr></table>

<table width=600><tr>
    <td width=5% valign=top><font size="1"><b>ACES<sup>SM</sup></b> </font></td>
    <td width=5%><font size="1"></font></td>
    <td width=90%><font size="1">Adjustable Convertible Extendible Securities</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>AMT</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Alternative Minimum Tax (subject to)</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>COP</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Certificates of Participation</font></td>
  </tr></table>

<table width=600><tr>
    <td width=6% valign=top><font size="1"><b>DATES</b> </font></td>
    <td width=4%><font size="1"></font></td>
    <td width=90%><font size="1">Daily Adjustable Tax-Exempt Securities</font></td>
  </tr></table>

<table width=600><tr>
    <td width=8% valign=top><font size="1"><b>DRIVERS</b> </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=90%><font size="1">Derivative Inverse Tax-Exempt Receipts</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>EDA</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Economic Development Authority</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>GO</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">General Obligation Bonds</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>HDA</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Housing Development Authority</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>HFA</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Housing Finance Agency</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>IDA</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Industrial Development Authority</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>IDB</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Industrial Development Bonds</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>IDR</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Industrial Development Revenue Bonds</font></td>
  </tr></table>

<table width=600><tr>
    <td width=7% valign=top><font size="1"><b>INFLOS</b> </font></td>
    <td width=3%><font size="1"></font></td>
    <td width=90%><font size="1">Inverse Floating Rate Municipal Bonds</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>M/F</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Multi-Family</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>PCR</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Pollution Control Revenue Bonds</font></td>
  </tr></table>

<table width=600><tr>
    <td width=4% valign=top><font size="1"><b>RIB</b> </font></td>
    <td width=6%><font size="1"></font></td>
    <td width=90%><font size="1">Residual Interest Bonds</font></td>
  </tr></table>

<table width=600><tr>
    <td width=5% valign=top><font size="1"><b>RITR</b> </font></td>
    <td width=5%><font size="1"></font></td>
    <td width=90%><font size="1">Residual Interest Trust Receipts</font></td>
  </tr></table>

<table width=600><tr>
    <td width=3% valign=top><font size="1"><b>S/F</b> </font></td>
    <td width=7%><font size="1"></font></td>
    <td width=90%><font size="1">Single-Family</font></td>
  </tr></table>

<table width=600>
  <tr>
    <td width=5% valign=top><font size="1"><b>VRDN</b> </font></td>
    <td width=5%><font size="1"></font></td>
    <td width=90%><font size="1">Variable Rate Demand Notes</font></td>
  </tr>
  <tr>
    <td width=5% valign=top><font size=2>&lt;/R&gt;</font></td>
    <td width=5%>&nbsp;</td>
    <td width=90%>&nbsp;</td>
  </tr>
</table>


<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-59</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<p><table width=600><tr>
    <td  align=center><font size=2><B>&lt;R&gt; PRO FORMA COMBINED STATEMENT OF
      ASSETS, LIABILITIES AND CAPITAL<br>
      FOR MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      As of April 30, 2001<br>
      (Unaudited)</B></font></td>
  </tr></table>
<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited Pro
      Forma Combined Statement of Assets, Liabilities and Capital has been derived
      from the Statement of Assets, Liabilities and Capital of MuniYield Fund,
      Inc. (&#147;MuniYield&#148;) and the Statement of Assets, Liabilities and
      Capital of Merrill Lynch Municipal Strategy Fund, Inc. (&#147;Municipal
      Strategy&#148;), each at April 30, 2001 and such information has been adjusted
      to give effect to the Reorganization as if the Reorganization had occurred
      on April 30, 2001. The Pro Forma Combined Statement of Assets, Liabilities
      and Capital is presented for informational purposes only and does not purport
      to be indicative of the financial condition that actually would have resulted
      if the Reorganization had been consummated on April 30, 2001. This Pro Forma
      Combined Statement of Assets, Liabilities and Capital should be read in
      conjunction with the Funds&#146; financial statements and related notes
      thereto which are included in this Proxy Statement and Prospectus.</font></td>
  </tr></table>

<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr valign="bottom" align="left">
    <td width="216" align="center">&nbsp;</td>
    <td width="34" align="center">&nbsp;</td>
    <td align="center" colspan="2"><font size=1><b>MuniYield <br>
      Fund </b></font>
      <hr size="1">
    </td>
    <td width="18" align="center">&nbsp;</td>
    <td align="center" colspan="2"><font size=1><b>Municipal <br>
      Strategy <br>
      Fund </b></font>
      <hr size="1">
    </td>
    <td width="14" align="center">&nbsp;</td>
    <td align="center" colspan="2"><font size=1><b>Adjustments </b></font>
      <hr size="1">
    </td>
    <td width="18" align="center">&nbsp;</td>
    <td align="center" colspan="2"><font size=1><b>Pro Forma<br>
      for <br>
      Combined <br>
      Fund </b></font>
      <hr size="1">
    </td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1"><b>Assets:</b></font></td>
    <td width="34"> <font size="1">&nbsp;&nbsp;&nbsp;</font></td>
    <td width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="18"> <font size="1">&nbsp;&nbsp;&nbsp;</font></td>
    <td width="55">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14"> <font size="1">&nbsp;&nbsp;&nbsp;</font></td>
    <td width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width="56">&nbsp;</td>
    <td width="21"> <font size="1">&nbsp;&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Investments, at value*</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$735,484,577</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">$120,646,530</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$856,131,107</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Cash</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">36,465</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">23,957</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">60,422</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1"><b>Receivables:</b></font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;Interest</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">13,291,362</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">2,023,863</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">15,315,225</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;Securities sold</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">351,866</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">&#151;</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">351,866</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Deferred organization expenses</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">&#151;</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">174</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">174</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Prepaid expenses and other assets</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">87,775</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">37,610</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">125,385</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216" height="22"> <font size="1">Total assets</font></td>
    <td width="34" height="22">&nbsp;</td>
    <td align="right" width="56" height="22"> <font size="1">749,252,045</font></td>
    <td width="21" height="22">&nbsp;</td>
    <td width="18" height="22">&nbsp;</td>
    <td align="right" width="55" height="22"> <font size="1">122,732,134</font></td>
    <td width="21" height="22">&nbsp;</td>
    <td width="14" height="22">&nbsp;</td>
    <td align="right" width="50" height="22">&nbsp;</td>
    <td width="20" height="22">&nbsp;</td>
    <td width="18" height="22">&nbsp;</td>
    <td align="right" width="56" height="22"> <font size="1">871,984,179</font></td>
    <td width="21" height="22">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1"><b>Liabilities:</b></font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1"><b>Payables:</b></font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;Securities purchased</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">3,441,463</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">985,299</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">4,426,762</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;Investment adviser</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">301,380</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">39,029</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">340,409</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;Dividends to shareholders</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">45,650</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">118,957</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"> <font size="1">$6,707,462</font></td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">6,872,069</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;Administration fees</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">&#151;</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">24,393</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">24,393</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Accrued expenses and other liabilities</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">54,612</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">85,565</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"> <font size="1">125,800</font></td>
    <td width="20"> <font size="1">(1)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">265,977</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Total liabilities</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">3,843,105</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">1,253,243</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"> <font size="1">6,833,262</font></td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">11,929,610</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Net Assets</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$745,408,940</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">$121,478,891</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"><font size="1"> $(6,833,262</font></td>
    <td width="20"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$860,054,569</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">
      <hr size="2" noshade>
    </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1"><b>Capital:</b></font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Capital Stock (200,000,000 <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares authorized)</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">&nbsp;</td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred
      Stock***, shares of AMPS** <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; issued and outstanding&#134;
      at $25,000 per<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; share liquidation
      preference</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$250,000,000</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">$&nbsp;43,000,000</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$293,000,000</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common
      Stock, par value $.10 per share <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; issued and outstanding&#134;&#134;</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">3,848,233</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">887,171</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"><font size="1"> $&nbsp;(270,501</font></td>
    <td width="20"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">4,464,903</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Paid-in capital in excess of par</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">541,046,599</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">93,476,958</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"> <font size="1">144,701</font></td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">634,668,258</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Undistributed investment income &#151; net</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">6,673,054</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">34,408</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"> <font size="1">(6,707,462</font></td>
    <td width="20"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">&#151;</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Accumulated realized capital losses on <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; investments &#151; net</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">(38,225,209</font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">(9,137,861</font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp; </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">(47,363,070</font></td>
    <td width="21"><font size="1">)</font></td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"><font size="1">Accumulated distributions in excess of <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; realized capital gains on investments &#151;
      net</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"><font size="1">(11,020,699</font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="18"><font size="1"></font></td>
    <td align="right" width="55"><font size="1">(3,406,030</font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="14"><font size="1"></font></td>
    <td align="right" width="50"><font size="1"></font></td>
    <td width="20"><font size="1"></font></td>
    <td width="18"><font size="1"></font></td>
    <td align="right" width="56"><font size="1">(14,426,729</font></td>
    <td width="21"><font size="1">)</font></td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"><font size="1">Unrealized depreciation on investments &#151;
      net</font></td>
    <td width="34"><font size="1"></font></td>
    <td align="right" width="56"><font size="1">(6,913,038</font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="18"><font size="1"></font></td>
    <td align="right" width="55"><font size="1">(3,375,755</font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="14"><font size="1"></font></td>
    <td align="right" width="50"><font size="1"></font></td>
    <td width="20"><font size="1"></font></td>
    <td width="18"><font size="1"></font></td>
    <td align="right" width="56"><font size="1">(10,288,793</font></td>
    <td width="21"><font size="1">)</font></td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Total capital</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$745,408,940</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">$121,478,891</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"> <font size="1">$(6,833,262</font></td>
    <td width="20"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$860,054,569</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">
      <hr size="2" noshade>
    </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">Net asset value per Common Share</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.87</font></td>
    <td width="21"><font size="1"></font></td>
    <td width="18"><font size="1"></font></td>
    <td align="right" width="55"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.85</font></td>
    <td width="21"><font size="1"></font></td>
    <td width="14"><font size="1"></font></td>
    <td align="right" width="50"><font size="1"></font></td>
    <td width="20"><font size="1"></font></td>
    <td width="18"><font size="1"></font></td>
    <td align="right" width="56"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.70</font></td>
    <td width="21"><font size="1"></font></td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216">&nbsp;</td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">
      <hr size="2" noshade>
    </td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;
      Identified Cost</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$742,397,615</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">$124,022,285</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">$866,419,900</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#134;
      &nbsp;&nbsp;&nbsp;&nbsp;Shares issued and outstanding</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">10,000</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1">1,720</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">11,720</font></td>
    <td width="21">&nbsp;</td>
  </tr>
  <tr valign="bottom" align="left">
    <td width="216"> <font size="1">&nbsp;&nbsp;&nbsp;&nbsp;&#134;&#134; &nbsp;&nbsp;&nbsp;&nbsp;Shares
      issued and outstanding</font></td>
    <td width="34">&nbsp;</td>
    <td align="right" width="56"> <font size="1">38,482,330</font></td>
    <td width="21">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="55"> <font size="1"> 8,871,713</font></td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="50"><font size="1">(2,705,008</font></td>
    <td width="20"><font size="1">) </font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="56"> <font size="1">44,649,035</font></td>
    <td width="21">&nbsp;</td>
  </tr>
</table>
<table width=600>
  <tr>
    <td width=3% valign=top align="right"><font size="1">**</font></td>
    <td width=2%>&nbsp;</td>
    <td width=95%><font size="1">Auction Market Preferred Stock</font></td>
  </tr>
  <tr>
    <td width=3% valign=top align="right"><font size="1">*** </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Shares of MuniYield AMPS Series A, B, C, D and
      E have a par value of $.05; shares of Municipal Strategy AMPS Series A have
      a par value of $.10.</font></td>
  </tr>
</table>


<br>
<table width=600>
  <tr>
    <td width=100% valign=top colspan="3">
      <hr noshade size="1" width="10%" align="left">
    </td>
  </tr>
  <tr>
    <td width=3% valign=top><font size="1">(1) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Reflects the charge for estimated Reorganization
      expenses of $125,800 attributable to Municipal Strategy. The estimated Reorganization
      expenses of $95,400 attributable to MuniYield will be paid by Fund Asset
      Management, L.P. (&#147;FAM&#148;).</font></td>
  </tr>
</table>

<table width=600><tr>
    <td><font size=2>See Notes to Financial Statements.&lt;/R&gt;</font></td>
  </tr></table>



<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
 F-60&nbsp;&nbsp;&nbsp;</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 2, page: 2" -->







<p><table width=600><tr>
    <td  align=center><font size=2><B>&lt;R&gt;PRO FORMA COMBINED STATEMENT OF
      OPERATIONS<br>
      FOR MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      For the Six Months Ended April 30, 2001<br>
      (Unaudited) </B></font></td>
  </tr></table>
<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited Pro
      Forma Combined Statement of Operations has been derived from the Statement
      of Operations of the respective Funds as of April 30, 2001 and such information
      has been adjusted to give effect to the Reorganization as if the Reorganization
      had occurred at the beginning of the period. The Pro Forma Combined Statement
      of Operations is presented for informational purposes only and does not
      purport to be indicative of the results of operations that actually would
      have resulted if the Reorganization had been consummated at the beginning
      of the period nor which may result from future operations. This Pro Forma
      Combined Statement of Operations should be read in conjunction with the
      Funds&#146; financial statements and related notes thereto which are included
      in this Proxy Statement and Prospectus.</font></td>
  </tr></table>


<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="center" width="49"><font size="1"><b>MuniYield<br>
      Fund </b></font>
      <hr size="1" noshade>
    </td>
    <td width="21" align="center">&nbsp;</td>
    <td width="19" align="center">&nbsp;</td>
    <td align="center" width="45"><font size=1><b>Municipal<br>
      Strategy <br>
      Fund </b></font>
      <hr size="1" noshade>
    </td>
    <td width="16" align="center">&nbsp;</td>
    <td width="18" align="center">&nbsp;</td>
    <td align="center" width="60"><font size=1><b>Adjustments </b></font>
      <hr size="1" noshade>
    </td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11" align="center">&nbsp;</td>
    <td align="center" width="50"><font size=1><b>Pro Forma <br>
      for <br>
      Combined <br>
      Fund(2) </b></font>
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"><font size=1><font size="1"><b>Investment Income:</b></font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">&nbsp;</td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">&nbsp;</td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Interest and amortization of
      premium <br>
      &nbsp;&nbsp;&nbsp; and discount earned</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">$22,320,219</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">$3,577,635</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"><font size=1></font></td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">$25,897,854</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="1" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">&nbsp;</td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1"><b>Expenses:</b></font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">&nbsp;</td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">&nbsp;</td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Investment advisory fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">1,877,871</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">307,998</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</font></font></td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">2,185,869</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Commission fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">307,837</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">72,014</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">379,851</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Administrative fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">153,999</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(153,999</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Accounting services</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">124,737</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">19,318</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(11,455</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">132,600</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Professional fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">41,167</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">89,206</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(89,206</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">41,167</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Transfer agent fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">32,517</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">68,207</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(62,482</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">38,242</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Printing and shareholder reports</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">39,868</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">33,953</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(44,371</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">29,450</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Trustees fees and expenses</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">19,946</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">18,366</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(18,366</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">19,946</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Custodian fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">27,344</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">7,075</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(3,485</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">30,934</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Registration fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">24,210</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(24,210</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Listing fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">19,747</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="26" align="left"> <font size=1> <font size="1"> </font></font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">19,747</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Pricing fees</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">10,949</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">4,151</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(3,600</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">11,500</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Amortization of organization
      expenses</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">167</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(167</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">&#151;</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Other</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">16,994</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">26,765</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(25,389</font></font></td>
    <td width="26" align="left"><font size="1">)(1)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">18,370</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="1" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">
      <hr size="1" noshade>
    </td>
    <td width="26" align="left">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Total expenses before reimbursement</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">2,518,977</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">825,429</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(436,730</font></font></td>
    <td width="26"><font size="1">)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">2,907,676</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Reimbursement of expenses</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">0</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">(61,600</font></font></td>
    <td width="16"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">61,600</font></font></td>
    <td width="26"><font size="1">(3)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">0</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="1" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">
      <hr size="1" noshade>
    </td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Total expenses after reimbursement</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">2,518,977</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">763,829</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">(375,130</font></font></td>
    <td width="26"><font size="1">)</font></td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">2,907,676</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="1" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">
      <hr size="1" noshade>
    </td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Investment income &#151; net</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">19,801,242</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">2,813,806</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">375,130</font></font></td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">22,990,178</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="1" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">
      <hr size="1" noshade>
    </td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1"><b>Realized &amp; Unrealized
      Gain (Loss) on <br>
      &nbsp;&nbsp;&nbsp; Investments &#151; Net</b></font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">&nbsp;</td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">&nbsp;</td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">&nbsp;</td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Realized loss on investments
      &#151; net</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">(569,739</font></font></td>
    <td width="21"><font size="1">)</font></td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">(104,019</font></font></td>
    <td width="16"><font size="1">)</font></td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"><font size=1><font size="1">&#151;</font></font></td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">(673,758</font></font></td>
    <td width="14"><font size="1">)</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1">Change in unrealized appreciation/depreciation
      <br>
      &nbsp;&nbsp;&nbsp; on investments &#151; net</font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">(6,126,753</font></font></td>
    <td width="21"> <font size=1> <font size="1">)</font></font></td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">921,310</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"><font size=1><font size="1">&#151;</font></font></td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">(5,205,443</font></font></td>
    <td width="14"><font size="1">)</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="1" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">
      <hr size="1" noshade>
    </td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230"> <font size=1> <font size="1"><b>Net Increase in Net Assets
      Resulting <br>
      &nbsp;&nbsp;&nbsp; from Operations</b></font></font></td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49"> <font size=1> <font size="1">$13,104,750</font></font></td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45"> <font size=1> <font size="1">$3,631,097</font></font></td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60"> <font size=1> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;375,130</font></font></td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50"> <font size=1> <font size="1">$17,110,977</font></font></td>
    <td width="14">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="230">&nbsp;</td>
    <td width="41">&nbsp;</td>
    <td align="right" width="49">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="19">&nbsp;</td>
    <td align="right" width="45">
      <hr size="2" noshade>
    </td>
    <td width="16">&nbsp;</td>
    <td width="18">&nbsp;</td>
    <td align="right" width="60">
      <hr size="2" noshade>
    </td>
    <td width="26">&nbsp;</td>
    <td width="11">&nbsp;</td>
    <td align="right" width="50">
      <hr size="2" noshade>
    </td>
    <td width="14">&nbsp;</td>
  </tr>
</table>
<table width=600>
  <tr>
    <td valign=top colspan="3">
      <hr noshade size="1" width="10%" align="left">
    </td>
  </tr>
  <tr>
    <td width=3% valign=top><font size="1">(1) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Reflects anticipated savings as a result of the
      Reorganization through fewer audits and consolidation of printing, accounting
      and other services and excludes non-recurring organization expenses attributable
      to Municipal Strategy.</font></td>
  </tr>
</table>

<table width=600><tr>
    <td width=3% valign=top><font size="1">(2) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">This Pro Forma Combined Statement of Operations
      excludes non-recurring estimated Reorganization expenses of $125,800 attributable
      to Municipal Strategy. The estimated Reorganization expenses of $95,400
      attributable to MuniYield will be paid by FAM.</font></td>
  </tr></table>

<table width=600><tr>
    <td width=3% valign=top><font size="1">(3) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Since commencement of operations of Municipal
      Strategy to the present, FAM has waived a portion of the advisory fee and/or
      reimbursed certain other expenses. The fee waiver and/or expense reimbursement
      is voluntary and may be reduced or discontinued by FAM at any time without
      notice to stockholders. It is not anticipated that FAM will waive any portion
      of its advisory fee or reimburse expenses with respect to the Combined Fund
      after the Reorganization.</font></td>
  </tr></table>

<table width=600><tr>
    <td><font size=2>See Notes to Financial Statements.&lt;/R&gt;</font></td>
  </tr></table>


<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-61</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 3, page: 3" -->




<p><table width=600><tr>
    <td  align=center><font size=2><B>&lt;R&gt;PRO FORMA COMBINED STATEMENT OF
      OPERATIONS<br>
      FOR MUNIYIELD FUND, INC. AND<br>
      MERRILL LYNCH MUNICIPAL STRATEGY FUND, INC.<br>
      For the Year Ended October 31, 2000<br>
      (Unaudited) </B></font></td>
  </tr></table>
<p>
<p>
<p>
<p>
<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited Pro
      Forma Combined Statement of Operations has been derived from the Statements
      of Operations of the respective Funds for the year ended October 31, 2000
      and such information has been adjusted to give effect to the Reorganization
      as if the Reorganization had occurred at the beginning of the fiscal year.
      The Pro Forma Combined Statement of Operations is presented for informational
      purposes only and does not purport to be indicative of the results of operations
      that actually would have resulted if the Reorganization had been consummated
      at the beginning of the fiscal year nor which may result from future operations.
      The Pro Forma Combined Statement of Operations should be read in conjunction
      with the Funds&#146; financial statements and related notes thereto which
      are included in this Proxy Statement and Prospectus.</font></td>
  </tr></table>


<br>
<table cellspacing=0 border=0 cellpadding=0 width=600>
  <tr align="left" valign="bottom">
    <td width="223">&nbsp;</td>
    <td width="37">&nbsp;</td>
    <td align="center" width="57"><font size="1"><b>MuniYield <br>
      Fund </b></font>
      <hr size="1" noshade>
    </td>
    <td width="17" align="center">&nbsp;</td>
    <td width="17" align="center">&nbsp;</td>
    <td align="center" width="51"><font size=1><b>Municipal <br>
      Strategy <br>
      Fund </b></font>
      <hr size="1" noshade>
    </td>
    <td width="14" align="center">&nbsp;</td>
    <td width="12" align="center">&nbsp;</td>
    <td align="center" width="66"><font size=1><b>Adjustments </b></font>
      <hr size="1" noshade>
    </td>
    <td width="21" align="center">&nbsp;</td>
    <td width="14" align="center">&nbsp;</td>
    <td align="center" width="54"><font size=1><b>Pro Forma<br>
      for <br>
      Combined <br>
      Fund(2) </b></font>
      <hr size="1" noshade>
    </td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"><font size=1><font size="1"><b>Investment Income:</b></font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54">&nbsp;</td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Interest and amortization of
      premium <br>
      &nbsp;&nbsp;&nbsp; and discount earned</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">$ 46,717,999</font></td>
    <td align="right" width="17">&nbsp;</td>
    <td align="right" width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">$ 9,185,175</font></td>
    <td align="right" width="14">&nbsp;</td>
    <td align="right" width="12">&nbsp;</td>
    <td align="right" width="66">&nbsp;</td>
    <td align="right" width="21">&nbsp;</td>
    <td align="right" width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">$ 55,903,174</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223">&nbsp;</td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57">
      <hr size="1" noshade>
    </td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54">
      <hr size="1" noshade>
    </td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1"><b>Expenses:</b></font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66">&nbsp;</td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54">&nbsp;</td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Investment advisory fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">3,743,649</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">746,301</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">&#151;</font></td>
    <td align="left" width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">4,489,950</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Commission fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">632,528</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">147,134</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">&#151;</font></td>
    <td align="left" width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">779,662</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Administrative fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">&#151;</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">373,150</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(373,150</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">&#151;</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Accounting services</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">115,121</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">86,990</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(1,485</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">200,626</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Professional fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">90,310</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">131,037</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(131,037</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">90,310</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Transfer agent fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">128,681</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">120,507</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(73,588</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">175,600</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Printing and shareholder reports</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">32,881</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">91,453</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(79,334</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">45,000</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Trustees fees and expenses</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">52,397</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">31,324</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(31,324</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">52,397</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Custodian fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">51,831</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">13,403</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(4,558</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">60,676</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Registration fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">&#151;</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">13,001</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(13,001</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">&#151;</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Listing fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">35,756</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">&#151;</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">&#151;</font></td>
    <td align="left" width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">35,756</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Pricing fees</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">21,710</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">8,091</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(7,801</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">22,000</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Amortization of organization
      expenses</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">&#151;</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">62,304</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(62,304</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">&#151;</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Other</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">53,993</font></td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51"> <font size="1">45,816</font></td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66"> <font size="1">(39,809</font></td>
    <td align="left" width="21"> <font size="1">)(1)</font></td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54"> <font size="1">60,000</font></td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223">&nbsp;</td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57">
      <hr size="1" noshade>
    </td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51">
      <hr size="1" noshade>
    </td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66">
      <hr size="1" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54">
      <hr size="1" noshade>
    </td>
    <td width="17">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Total expenses before reimbursement</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">4,958,857</font></td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">1,870,511</font></td>
    <td width="14" align="left">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">(817,391</font></td>
    <td width="21" align="left"> <font size="1">)</font></td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">6,011,977</font></td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Reimbursement of expenses</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">&#151;</font></td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">(149,260</font></td>
    <td width="14" align="left"> <font size="1">)</font></td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">149,260</font></td>
    <td width="21" align="left"> <font size="1">(3)</font></td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">0</font></td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Total expenses after reimbursement</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">4,958,857</font></td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">1,721,251</font></td>
    <td width="14" align="left">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">(668,131</font></td>
    <td width="21" align="left"> <font size="1">)</font></td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">6,011,977</font></td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Investment income &#151; net</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">41,759,142</font></td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">7,463,924</font></td>
    <td width="14" align="left">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">668,131</font></td>
    <td width="21" align="left">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">49,891,197</font></td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1"><b>Realized &amp; Unrealized
      Gain (Loss) on <br>
      &nbsp;&nbsp;&nbsp; Investments &#151; Net</b></font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57">&nbsp;</td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right">&nbsp;</td>
    <td width="14" align="left">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right">&nbsp;</td>
    <td width="21" align="left">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right">&nbsp;</td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Realized loss on investments
      &#151; net</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">(37,655,470</font></td>
    <td width="17" align="left"> <font size="1">)</font></td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">(7,857,686</font></td>
    <td width="14" align="left"> <font size="1">)</font></td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">&#151;</font></td>
    <td width="21" align="left">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">(45,513,156</font></td>
    <td width="17" align="left"> <font size="1">)</font></td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1">Change in unrealized appreciation
      <br>
      &nbsp;&nbsp;&nbsp; on investments &#151; net</font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">34,881,965</font></td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">6,239,229</font></td>
    <td width="14" align="left">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">&#151;</font></td>
    <td width="21" align="left">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">41,121,194</font></td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223"> <font size=1> <font size="1"><b>Net Increase in Net Assets
      Resulting <br>
      &nbsp;&nbsp;&nbsp; from Operations</b></font></font></td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57"> <font size="1">$ 38,985,637</font></td>
    <td width="17" align="left">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td width="51" align="right"> <font size="1">$ 5,845,467</font></td>
    <td width="14" align="left">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td width="66" align="right"> <font size="1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      668,131</font></td>
    <td width="21" align="left">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td width="54" align="right"> <font size="1">$ 45,499,235</font></td>
    <td width="17" align="left">&nbsp;</td>
  </tr>
  <tr align="left" valign="bottom">
    <td width="223">&nbsp;</td>
    <td width="37">&nbsp;</td>
    <td align="right" width="57">
      <hr size="2" noshade>
    </td>
    <td width="17">&nbsp;</td>
    <td width="17">&nbsp;</td>
    <td align="right" width="51">
      <hr size="2" noshade>
    </td>
    <td width="14">&nbsp;</td>
    <td width="12">&nbsp;</td>
    <td align="right" width="66">
      <hr size="2" noshade>
    </td>
    <td width="21">&nbsp;</td>
    <td width="14">&nbsp;</td>
    <td align="right" width="54">
      <hr size="2" noshade>
    </td>
    <td width="17">&nbsp;</td>
  </tr>
</table>
<table width=600>
  <tr>
    <td valign=top colspan="3">
      <hr noshade size="1" width="10%" align="left">
    </td>
  </tr>
  <tr>
    <td width=3% valign=top><font size="1">(1) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Reflects anticipated savings as a result of the
      Reorganization through fewer audits and consolidation of printing, accounting
      and other services and excludes non-recurring organization expenses attributable
      to Municipal Strategy.</font></td>
  </tr>
</table>

<table width=600><tr>
    <td width=3% valign=top><font size="1">(2) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">This Pro Forma Combined Statement of Operations
      excludes non-recurring estimated Reorganization expenses of $125,800 attributable
      to Municipal Strategy. The estimated Reorganization expenses of $95,400
      attributable to MuniYield will be paid by FAM.</font></td>
  </tr></table>

<table width=600><tr>
    <td width=3% valign=top><font size="1">(3) </font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">Since commencement of operations of Municipal
      Strategy to the present, FAM has waived a portion of the advisory fee and/or
      reimbursed certain other expenses. The fee waiver and/or expense reimbursement
      is voluntary and may be reduced or discontinued by FAM at any time without
      notice to stockholders. It is not anticipated that FAM will waive any portion
      of its advisory fee or reimburse expenses with respect to the Combined Fund
      after the Reorganization.</font></td>
  </tr></table>

<table width=600><tr>
    <td><font size=2>See Notes to Financial Statements.&lt;/R&gt;</font></td>
  </tr></table>


<br>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-62</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<p><table width=600><tr>
    <td  align=center><font size=2><B>&lt;R&gt;MUNIYIELD FUND, INC.<br>
      NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS </B></font></td>
  </tr></table>
<p>
<p><table width=600><tr><td><font size=2><B>1. Significant Accounting Policies:</B></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield Fund, Inc. (the &#147;Fund,&#148;
      which term as used herein shall refer to MuniYield Fund, Inc. after giving
      effect to the Reorganization with Merrill Lynch Municipal Strategy Fund,
      Inc. (&#147;Municipal Strategy&#148;) is registered under the Investment
      Company Act of 1940 as a non-diversified, closed-end management investment
      company. The Fund&#146;s financial statements are prepared in conformity
      with accounting principles generally accepted in the United States of America,
      which may require the use of management accruals and estimates. These unaudited
      financial statements reflect all adjustments, which are, in the opinion
      of management, necessary to a fair statement of the results for the interim
      period presented. All such adjustments are of a normal, recurring nature.The
      Fund determines and makes available for publication the net asset value
      of its Common Stock on a weekly basis. The Fund&#146;s Common Stock is listed
      on the New York Stock Exchange under the symbol MYD. The following is a
      summary of significant accounting policies followed by the Fund.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <i>Valuation of investments</i>
      &#151; Municipal bonds are traded primarily in the over-the-counter markets
      and are valued at the most recent bid price or yield equivalent as obtained
      by the Fund&#146;s pricing service from dealers that make markets in such
      securities. Financial futures contracts and options thereon, which are traded
      on exchanges, are valued at their closing price as of the close of such
      exchanges. Options written or purchased are valued at the last sale price
      in the case of exchange-traded options. In the case of options traded in
      the over-the-counter-market, valuation is the last asked price (options
      written) or the last bid price (options purchased). Securities with remaining
      maturities of sixty days or less are valued at amortized cost, which approximates
      market value. Securities and assets for which market quotations are not
      readily available are valued at their fair value as determined in good faith
      by or under the direction of the Board of Directors of the Fund, including
      valuations furnished by a pricing service retained by the Fund, which may
      utilize a matrix system for valuations. The procedures of the pricing service
      and its valuations are reviewed by the officers of the Fund under the general
      supervision of the Board of Directors.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <i>Derivative financial
      instruments</i> &#151; The Fund may engage in various portfolio investment
      strategies to increase or decrease the level of risk to which the Fund is
      exposed more quickly and efficiently than transactions in other types of
      instruments. Losses may arise due to changes in the value of the contract
      or if the counterparty does not perform under the contract.</font></td>
  </tr></table>

<br>
<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2><i>Financial futures contracts</i> &#151; The Fund
      may purchase or sell financial futures contracts and options on such futures
      contracts for the purpose of hedging the market risk on existing securities
      or the intended purchase of securities. Futures contracts are contracts
      for delayed delivery of securities at a specific future date and at a specific
      price or yield. Upon entering into a contract, the Fund deposits and maintains
      as collateral such initial margin as required by the exchange on which the
      transaction is effected. Pursuant to the contract, the Fund agrees to receive
      from or pay to the broker an amount of cash equal to the daily fluctuation
      in value of the contract. Such receipts or payments are known as variation
      margin and are recorded by the Fund as unrealized gains or losses. When
      the contract is closed, the Fund records a realized gain or loss equal to
      the difference between the value of the contract at the time it was opened
      and the value at the time it was closed</font></td>
  </tr></table>

<br>
<table width=600>
  <tr>
    <td width=3%></td>
    <td width=1% valign=top><font size=3>&#149;</font></td>
    <td width=3%></td>
    <td width=93%><font size=2><i> Options </i>&#151; The Fund is authorized to
      write covered call options and purchase put options. When the Fund writes
      an option, an amount equal to the premium received by the Fund is reflected
      as an asset and an equivalent liability. The amount of the liability is
      subsequently marked to market to reflect the current market value of the
      option written.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When a
security is purchased or sold through an exercise of an option, the related
premium paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the security
sold. When an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the closing
transaction exceeds the premium paid or received).</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Written
and purchased options are non-income producing investments.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <i>Income taxes</i> &#151;
      It is the Fund&#146;s policy to comply with the requirements of the Internal
      Revenue Code applicable to regulated investment companies and to distribute
      substantially all of its taxable income to its shareholders. Therefore,
      no Federal income tax provision is required.&lt;/R&gt;</font></td>
  </tr></table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td>
    <td width=480 align=center><font size="2"> F-63</font></td>
    <td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 5, page: 5" -->



<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(d) <i>Security transactions
      and investment income</i> &#151; Security transactions are recorded on the
      dates the transactions are entered into (the trade dates). Realized gains
      and losses on security transactions are determined on the identified cost
      basis. Interest income is recognized on the accrual basis. The Fund will
      adopt the provisions to amortize all premiums and discounts on debt securities
      effective November 1, 2001, as now required under the new AICPA Audit and
      Accounting Guide for Investment Companies. The cumulative effect of this
      accounting change will have no impact on the total net assets of the Fund.
      The impact of this accounting change has not been determined, but will result
      in an adjustment to the cost of securities and a corresponding adjustment
      to net unrealized appreciation/depreciation, based on debt securities held
      as of October 31, 2001.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <i>Deferred organization
      and prepaid registration fees</i> &#151; Deferred organization expenses
      are amortized on a straight-line basis over a period not exceeding five
      years. Prepaid registration fees are charged to expense as the related shares
      are issued.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <i>Dividends and distributions</i>
      &#151; Dividends from net investment income are declared and paid monthly.
      Distributions of capital gains are recorded on the ex-dividend dates. Distributions
      in excess of realized capital gains are due primarily to differing tax treatments
      for futures transactions.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2><B>2. Investment Advisory Agreement
and Transactions with Affiliates:</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Fund
has entered into an Investment Advisory Agreement with Fund Asset Management,
L.P. (&#147;FAM&#148;). The general partner of FAM is Princeton Services, Inc. (&#147;PSI&#148;),
an indirect wholly-owned subsidiary of Merrill Lynch &amp; Co., Inc. (&#147;ML &amp; Co.&#148;),
which is the limited partner.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FAM is
responsible for the management of the Fund&#146;s portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee
at an annual rate of .50% of the Fund&#146;s average weekly net assets, including
proceeds from the issuance of Preferred Stock.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the
six months ended April 30, 2001, FAM Distributors Inc. (&#147;FAMD&#148;), which is a
wholly-owned subsidiary of Merrill Lynch Group, Inc., earned early withdrawal
charges of $32,525 relating to the tender of Municipal Strategy shares.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to January 1, 2001, FAM
      provided accounting services to the Fund at its cost and the Fund reimbursed
      FAM for these services. FAM continues to provide certain accounting services
      to the Fund. The Fund reimburses FAM at its cost for such services. For
      the fiscal year ended October 31, 2000 and the six month period ended April
      30, 2001, the Fund reimbursed FAM an aggregate of $115,121 and $54,031,
      respectively, for the above described services. For the fiscal year ended
      October 31, 2001 and the six month period ended April 30, 2001, Municipal
      Strategy reimbursed FAM an aggregate of $86,990 and $8,000, respectively,
      for the above described services. The Fund entered into an agreement with
      State Street Bank and Trust Company (&#147;State Street&#148;), effective
      January 1, 2001, pursuant to which State Street provides certain accounting
      services to the Fund. For the six month period ended April 30, 2001, MuniYield
      paid State Street $70,706 and Municipal Strategy paid State Street $11,318
      for these services.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain officers and/or directors
      of the Fund are officers and/or directors of FAM, PSI, and/or ML &amp; Co.&lt;/R&gt;</font></td>
  </tr></table>


<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
F-64</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;









<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 1, page: 1" -->




<p><table width=600><tr>
    <td align=right><font size=2><B><a name="I1"></a>APPENDIX I</B></font></td>
  </tr></table>

<p><table width=600><tr><td  align=center><font size=2><B>INFORMATION
PERTAINING TO EACH FUND</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2><B>General Information Pertaining to
Each Fund</B></font></td></tr></table>


<br>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" WIDTH="255"> <b> <font size="1">Fund </font></b>
      <hr align="left" width="10%" size="1" noshade>
    </TD>
    <TD ALIGN="LEFT" WIDTH="1">&nbsp;</TD>
    <TD ALIGN="left" WIDTH="142"> <b><font size="1">&nbsp;&nbsp;&nbsp;&nbsp;Defined
      Term <br>
      &nbsp;Used in Appendix I </font></b>
      <hr align="left" width="70%" size="1" noshade>
    </TD>
    <TD ALIGN="center" WIDTH="1">&nbsp;</TD>
    <TD ALIGN="center" WIDTH="50"><font size="1"><b>Fiscal <br>
      Year End</b> </font>
      <hr size="1" noshade width="90%">
    </TD>
    <TD ALIGN="center" WIDTH="1">&nbsp;</TD>
    <TD ALIGN="center" WIDTH="79"> <b><font size="1">State of <br>
      Incorporation </font></b>
      <hr size="1" noshade width="80%">
    </TD>
    <TD ALIGN="center" WIDTH="1">&nbsp;</TD>
    <TD ALIGN="center" WIDTH="62"><font size="1"><b>Meeting <br>
      Time</b> </font>
      <hr size="1" noshade width="70%">
    </TD>
    <TD ALIGN="center" WIDTH="9">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" WIDTH="255"><font size="2">MuniYield Fund, Inc. </font></TD>
    <TD ALIGN="LEFT" WIDTH="1"><font size="2"></font></TD>
    <TD ALIGN="LEFT" WIDTH="142"><font size="2">MuniYield </font></TD>
    <TD ALIGN="LEFT" WIDTH="1"><font size="2"></font></TD>
    <TD ALIGN="center" WIDTH="50"><font size="2">10/31 </font></TD>
    <TD ALIGN="center" WIDTH="1"><font size="2"></font></TD>
    <TD ALIGN="center" WIDTH="79"><font size="2">Maryland </font></TD>
    <TD ALIGN="center" WIDTH="1"><font size="2"></font></TD>
    <TD ALIGN="center" WIDTH="62"><font size="2">N/A </font></TD>
    <TD ALIGN="LEFT" WIDTH="9"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="255"><font size="2">Merrill Lynch Municipal Strategy
      <br>
      &nbsp;&nbsp; Fund, Inc. </font></TD>
    <TD ALIGN="LEFT" width="1"><font size="2"></font></TD>
    <TD ALIGN="LEFT" width="142"><font size="2">Municipal Strategy </font></TD>
    <TD ALIGN="LEFT" width="1"><font size="2"></font></TD>
    <TD ALIGN="center" width="50"><font size="2">10/31 </font></TD>
    <TD ALIGN="center" width="1"><font size="2"></font></TD>
    <TD ALIGN="center" width="79"><font size="2">Maryland </font></TD>
    <TD ALIGN="center" width="1"><font size="2"></font></TD>
    <TD ALIGN="center" width="62"><font size="2">9:30 a.m. </font></TD>
    <TD ALIGN="LEFT" width="9"><font size="2"></font></TD>
  </TR>
</TABLE>
<font size="2"><br>
&lt;R&gt;</font>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="61%" ALIGN="LEFT">&nbsp;</TD>
    <TD ALIGN="center" colspan="2"> <b><font size="1">Shares of Capital Stock
      Outstanding <br>
      as of the Record Date </font></b>
      <hr size="1" noshade width="90%">
    </TD>
    <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="61%" ALIGN="LEFT"> <b><font size="1">Fund </font></b>
      <hr align="left" width="8%" size="1" noshade>
    </TD>
    <TD WIDTH="16%" ALIGN="center"><b><font size="1">Common Stock </font></b>
      <hr size="1" noshade width="75%">
      <b><font size="1"> </font></b></TD>
    <TD WIDTH="21%" ALIGN="center"><b><font size="1">AMPS </font></b>
      <hr size="1" noshade width="22%">
    </TD>
    <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="61%" ALIGN="LEFT"><font size="2">MuniYield </font></TD>
    <TD WIDTH="16%" ALIGN="center"><font size="2">38,598,832</font></TD>
    <TD WIDTH="21%" ALIGN="center"><font size="2">10,000 </font></TD>
    <TD WIDTH="2%" ALIGN="LEFT"><font size="2"></font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Municipal Strategy </font></TD>
    <TD ALIGN="center" width="16%"><font size="2">&nbsp;&nbsp;7,919,993</font></TD>
    <TD ALIGN="center" width="21%"><font size="2">&nbsp;&nbsp;1,720 </font></TD>
    <TD ALIGN="LEFT" width="2%"><font size="2"></font></TD>
  </TR>
</TABLE>

<font size="2">&lt;/R&gt;</font>
<p><table width=600><tr><td><font size=2><B>Information Pertaining to Directors
of MuniYield</B></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;Set forth in the table
      below is information regarding meetings of the Board of Directors and Audit
      Committee held and the aggregate fees and expenses paid by MuniYield to
      non-interested Directors during the most recently completed fiscal year.&lt;/R&gt;</font></td>
  </tr></table>


<br>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH></TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="17%" ALIGN="LEFT">&nbsp;</TD>
    <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
    <TD ALIGN="center" colspan="5"><font size="1"><b>Board of Directors</b></font>
      <hr size="1" noshade>
    </TD>
    <TD WIDTH="3%" ALIGN="center">&nbsp;</TD>
    <TD ALIGN="center" colspan="3"> <b><font size="1">Audit Committee</font></b>
      <hr size="1" noshade>
    </TD>
    <TD WIDTH="3%" ALIGN="center">&nbsp;</TD>
    <TD WIDTH="11%" ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM" align="center">
    <TD WIDTH="17%" ALIGN="left"><b><font size="1">Fund </font></b>
      <hr align="left" width="22%" size="1" noshade>
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="9%"><b><font size="1"># Meetings <br>
      Held* </font></b>
      <hr size="1" noshade width="90%">
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="10%"><b><font size="1">Annual Fee <br>
      ($)** </font></b>
      <hr size="1" noshade width="90%">
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="10%"><b><font size="1">Per Meeting <br>
      Fee ($)*** </font></b>
      <hr size="1" noshade width="90%">
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="8%"><b><font size="1"># Meetings <br>
      Held* </font></b>
      <hr size="1" noshade width="90%">
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="10%"><b><font size="1">Per Meeting <br>
      Fee ($)*** </font></b>
      <hr size="1" noshade width="90%">
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="11%"><font size="1"><b><br>
      Aggregate <br>
      Fees and <br>
      Expenses ($)</b> </font>
      <hr size="1" noshade width="90%">
    </TD>
  </TR>
  <TR VALIGN="BOTTOM" align="center">
    <TD WIDTH="17%" align="left"><font size="2">MuniYield </font></TD>
    <TD WIDTH="3%"><font size="2"></font></TD>
    <TD WIDTH="9%"><font size="2">4 </font></TD>
    <TD WIDTH="3%"><font size="2"></font></TD>
    <TD WIDTH="10%"><font size="2">227 </font></TD>
    <TD WIDTH="3%"><font size="2"></font></TD>
    <TD WIDTH="10%"><font size="2">1,491 </font></TD>
    <TD WIDTH="3%"><font size="2"></font></TD>
    <TD WIDTH="8%"><font size="2">4 </font></TD>
    <TD WIDTH="3%"><font size="2"></font></TD>
    <TD WIDTH="10%"><font size="2">114 </font></TD>
    <TD WIDTH="3%"><font size="2"></font></TD>
    <TD WIDTH="11%"><font size="2">52,397 </font></TD>
  </TR>
</TABLE>

<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Includes
meetings held via teleconferencing equipment.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">**
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">&lt;R&gt;Each non-interested Director receives
      an aggregate annual retainer of $100,000 for his or her services to all
      registered investment companies advised by Fund Asset Management, L.P. (&#147;FAM&#148;)
      and its affiliate, Merrill Lynch Investment Managers, L.P. (&#147;MLIM&#148;) (&#147;Affiliate-Advised
      Funds&#148;). The portion of the annual retainer allocated to each Affiliate-Advised
      Fund is determined quarterly based on the relative net assets of each fund.&lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">***
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
fee is payable for each meeting attended in person. A fee is not paid for
telephonic meetings. The annual per meeting fees paid to each non-interested
Director aggregate $60,000 for all Affiliate-Advised Funds for which the
Director serves and are allocated equally among those funds.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set
forth in the table below is information regarding compensation paid by
MuniYield to the non-interested Directors during the most recently completed
fiscal year.</font></td></tr></table>

<br>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH COLSPAN="2"></TH>
    <TH></TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="18%" ALIGN="LEFT"><font size="1"><b>Fund</b></font>
      <hr size="1" align="left" noshade width="24%">
    </TD>
    <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"> <b><font size="1">Bodurtha</font></b>
      <hr size="1" noshade width="63%">
    </TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom">&nbsp;</TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"> <b><font size="1">London</font></b>
      <hr size="1" noshade width="60%">
    </TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom">&nbsp;</TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"> <b><font size="1">May</font></b>
      <hr size="1" noshade width="60%">
    </TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom">&nbsp;</TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"> <b><font size="1">Perold</font></b>
      <hr size="1" noshade width="60%">
    </TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom">&nbsp;</TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"> <b><font size="1">Ramo</font></b>
      <hr size="1" noshade width="60%">
    </TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="18%" ALIGN="LEFT"><font size="2">MuniYield*</font></TD>
    <TD WIDTH="5%" ALIGN="LEFT"><font size="2"></font></TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"><font size="2">$7,142</font></TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom"><font size="2"></font></TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"><font size="2">$7,142</font></TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom"><font size="2"></font></TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"><font size="2">$7,142</font></TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom"><font size="2"></font></TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"><font size="2">$7,142</font></TD>
    <TD WIDTH="5%" ALIGN="center" valign="bottom"><font size="2"></font></TD>
    <TD WIDTH="11%" ALIGN="center" valign="bottom"><font size="2">$13,779</font></TD>
  </TR>
</TABLE>

<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">No
pension or retirement benefits are accrued as part of the expenses of MuniYield.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;Set forth in the table
      below is information regarding the aggregate compensation paid by all of
      the Affiliate-Advised Funds, including MuniYield, to the non-interested
      Directors for the year ended December 31, 2000.&lt;/R&gt;</font></td>
  </tr></table>


<br>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
    <TH width="64%"></TH>
    <TH width="36%"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="64%" ALIGN="LEFT"><b><font size="1">Name of MuniYield Director </font></b>
      <hr size="1" noshade align="left" width="32%">
      <b><font size="1"> </font></b></TD>
    <TD WIDTH="36%" ALIGN="center"> <b><font size="1">Aggregate Compensation from
      Affiliate-Advised <br>
      Funds Paid to Directors($)* </font></b>
      <hr size="1" noshade width="98%">
    </TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="64%" ALIGN="LEFT"><font size="2">James H. Bodurtha </font></TD>
    <TD WIDTH="36%" ALIGN="center"><font size="2">$132,250 </font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="64%"><font size="2">Herbert I. London </font></TD>
    <TD ALIGN="center" width="36%"><font size="2">$132,250 </font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="64%"><font size="2">Joseph L. May </font></TD>
    <TD ALIGN="center" width="36%"><font size="2">$132,250 </font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="64%"><font size="2">Andre F. Perold </font></TD>
    <TD ALIGN="center" width="36%"><font size="2">$132,250 </font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="64%"><font size="2">Roberta Cooper Ramo </font></TD>
    <TD ALIGN="center" width="36%"><font size="2">$169,000 </font></TD>
  </TR>
</TABLE>

<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
Directors serve on the boards of Affiliate-Advised Funds as follows: Mr.
Bodurtha (30 registered investment companies consisting of 42 portfolios); Mr.
London (30 registered investment companies consisting of 42 portfolios); Mr.
May (30 registered investment companies consisting of 42 portfolios); Mr.
Perold (30 registered investment companies consisting of 42 portfolios); and
Ms. Ramo (30 registered investment companies consisting of 42 portfolios).</font></td></tr></table>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
I-1</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 2, page: 2" -->




<p><table width=600><tr><td><font size=2><B>Information Pertaining to Directors
of Municipal Strategy</B></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;Set forth in the table
      below is information regarding meetings of the Board of Directors and the
      Nominating and Oversight Committee (the &#147;Audit Committee&#148;) held and the
      aggregate fees and expenses paid by Municipal Strategy to non-interested
      Directors during the most recently completed fiscal year.</font></td>
  </tr></table>


<br>
<table cellpadding="0" cellspacing="0" border="0" width="600">
  <tr valign="BOTTOM">
    <th colspan="2"></th>
    <th colspan="2"></th>
    <th colspan="2"></th>
    <th colspan="2"></th>
    <th colspan="2"></th>
    <th colspan="2"></th>
    <th></th>
  </tr>
  <tr valign="BOTTOM">
    <td width="17%" align="LEFT">&nbsp;</td>
    <td width="3%" align="LEFT">&nbsp;</td>
    <td align="center" colspan="5"><font size="1"><b>Board of Directors</b></font>
      <hr size="1" noshade>
    </td>
    <td width="3%" align="center">&nbsp;</td>
    <td align="center" colspan="3"> <b><font size="1">Audit Committee</font></b>
      <hr size="1" noshade>
    </td>
    <td width="3%" align="center">&nbsp;</td>
    <td width="11%" align="center">&nbsp;</td>
  </tr>
  <tr valign="BOTTOM" align="center">
    <td width="17%" align="left"><b><font size="1">Fund </font></b>
      <hr align="left" width="22%" size="1" noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="9%"><b><font size="1"># Meetings <br>
      Held* </font></b>
      <hr size="1" noshade width="90%">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="10%"><b><font size="1">Annual Fee <br>
      ($)** </font></b>
      <hr size="1" noshade width="90%">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="10%"><b><font size="1">Per <br>
      Meeting <br>
      Fee ($)&#134; </font></b>
      <hr size="1" noshade width="90%">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="8%"><b><font size="1"># Meetings <br>
      Held* </font></b>
      <hr size="1" noshade width="90%">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="10%"><b><font size="1">Per <br>
      Meeting <br>
      Fee ($)***&#134; </font></b>
      <hr size="1" noshade width="90%">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="11%"><font size="1"><b><br>
      Aggregate <br>
      Fees and <br>
      Expenses</b> </font>
      <hr size="1" noshade width="90%">
    </td>
  </tr>
  <tr valign="BOTTOM" align="center">
    <td width="17%"><font size="2">Municipal Strategy </font></td>
    <td width="3%"><font size="2"></font></td>
    <td width="9%"><font size="2">4 </font></td>
    <td width="3%"><font size="2"></font></td>
    <td width="10%"><font size="2">4,400 </font></td>
    <td width="3%"><font size="2"></font></td>
    <td width="10%"><font size="2">200 </font></td>
    <td width="3%"><font size="2"></font></td>
    <td width="8%"><font size="2">4 </font></td>
    <td width="3%"><font size="2"></font></td>
    <td width="10%"><font size="2">200 </font></td>
    <td width="3%"><font size="2"></font></td>
    <td width="11%"><font size="2">$31,324 </font></td>
  </tr>
  <tr valign="BOTTOM" align="center">
    <td width="17%" align="left">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="10%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="10%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="8%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="10%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="11%">&nbsp;</td>
  </tr>
</table>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Includes
meetings held via teleconferencing equipment.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">**
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">The
Annual Fee is the combined fee for the Board of Directors and the Audit Committee.&lt;/R&gt;</font></td>
  </tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">***
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
Co-Chairmen of the Audit Committee each receive an additional annual fee of
$1,000.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">&#134;
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
fee is payable for each meeting attended in person. A fee is not paid for
telephonic meetings.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set
forth in the table below is information regarding compensation paid by
Municipal Strategy to the non-interested Directors during the most recently
completed fiscal year.</font></td></tr></table>



<br>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
    <TH align="left"><font size="1">&lt;R&gt;</font></TH>
    <TH>&nbsp;</TH>
    <TH>&nbsp;</TH>
    <TH>&nbsp;</TH>
    <TH>&nbsp;</TH>
    <TH>&nbsp;</TH>
    <TH>&nbsp;</TH>
    <TH>&nbsp;</TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TH align="left"><b><font size="1">Fund</font></b>
      <hr size="1" noshade width="12%" align="left">
    </TH>
    <TH><b><font size="1">Forbes&#134;&#134;</font></b>
      <hr size="1" noshade width="70%">
    </TH>
    <TH><b><font size="1">Montgomery</font></b>
      <hr size="1" noshade width="95%">
    </TH>
    <TH><b><font size="1">Reilly&#134;&#134;</font></b>
      <hr size="1" noshade width="70%">
    </TH>
    <TH><b><font size="1">Ryan</font></b>
      <hr size="1" noshade width="70%">
    </TH>
    <TH><b><font size="1">Suddarth&#134;</font></b>
      <hr size="1" noshade width="78%">
    </TH>
    <TH><b><font size="1">West</font></b>
      <hr size="1" noshade width="70%">
    </TH>
    <TH><b><font size="1">Zinbarg&#134;</font></b>
      <hr size="1" noshade width="70%">
    </TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="28%" ALIGN="left"><font size="2">Municipal Strategy*</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$5,900</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$5,400</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$5,900</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$5,400</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$1,275</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$5,400</font></TD>
    <TD WIDTH="7%" ALIGN="center"><font size="2">$1,275</font></TD>
  </TR>
</TABLE>

<table width=600>
  <tr>
    <td>
      <hr size=1 noshade align=left  width=75>
    </td>
  </tr>
  <tr>
    <td><font size="1">&lt;/R&gt;</font></td>
  </tr>
</table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">No
pension or retirement benefits are accrued as part of the expenses of Municipal
Strategy.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">&#134;
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Mr.
Suddarth and Mr. Zinbarg were elected Directors of the Fund on July 10, 2000.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">&#134;&#134;
</font></td><td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">&lt;R&gt;Effective July 2000, Mr. Forbes and
      Mr. Reilly are Co-Chairmen of the Audit Committee, each receiving $500
      annually for serving in such position.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set
forth in the table below is information regarding the aggregate compensation
paid by all Affiliate-Advised Funds, including Municipal Strategy, to the
non-interested Directors for the year ended December 31, 2000.</font></td></tr></table>





<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM" align="center">
    <TH align="left" width="61%"><b><font size="1">Name of Municipal Strategy
      Director </font></b>
      <hr size="1" noshade width="43%" align="left">
    </TH>
    <TH><b><font size="1">Aggregate Compensation from Affiliate-Advised <br>
      Funds Paid to Directors($)(*) </font></b>
      <hr noshade size="1" width="97%">
    </TH>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD WIDTH="61%" ALIGN="LEFT"><font size="2">Ronald W. Forbes**</font></TD>
    <TD WIDTH="34%" ALIGN="center"><font size="2">$295,008</font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Cynthia A. Montgomery</font></TD>
    <TD ALIGN="center" width="34%"><font size="2">$264,008</font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Charles C. Reilly</font></TD>
    <TD ALIGN="center" width="34%"><font size="2">$352,050</font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Kevin A. Ryan</font></TD>
    <TD ALIGN="center" width="34%"><font size="2">$264,008</font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Roscoe S. Suddarth</font></TD>
    <TD ALIGN="center" width="34%"><font size="2">$193,977</font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Richard R. West</font></TD>
    <TD ALIGN="center" width="34%"><font size="2">$373,000</font></TD>
  </TR>
  <TR VALIGN="BOTTOM">
    <TD ALIGN="LEFT" width="61%"><font size="2">Edward D. Zinbarg</font></TD>
    <TD ALIGN="center" width="34%"><font size="2">$242,435</font></TD>
  </TR>
</TABLE>

<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600>
  <tr>
    <td width=3% valign=top align="right"><font size="1">*</font></td>
    <td width=2%><font size="1"></font></td>
    <td width=95%><font size="1">The
Directors serve on the boards of Affiliate-Advised Funds as follows: Mr. Forbes
(51 registered investment companies consisting of 58 portfolios); Ms.
Montgomery (51 registered investment companies consisting of 58 portfolios);
Mr. Reilly (51 registered investment companies consisting of 58 portfolios);
Mr. Ryan (51 registered investment companies consisting of 58 portfolios); Mr.
Suddarth (51 registered investment companies consisting of 58 portfolios); Mr.
West (66 registered investment companies consisting of 72 portfolios); and Mr.
Zinbarg (51 registered investment companies consisting of 58 portfolios).</font></td>
  </tr>
  <tr>
    <td width=3% valign=top align="right"><font size="1">*</font><font size="1">*</font></td>
    <td width=2%>&nbsp;</td>
    <td width=95% valign="top"><font size="1">On the Record Date, Mr. Forbes owned 276 shares of Municipal Strategy Common Stock.</font></td>
  </tr>
</table>

<p><table width=600><tr><td><font size=2><B>Information Pertaining to Directors
of MuniYield and Municipal Strategy</B></font></td></tr></table>


<br>
<table 0 cellspacing=0 cellpadding=0 border="0" width=600>
  <tr>
    <td valign="bottom" colspan="2">&nbsp;</td>
    <td valign="bottom" width="40">&nbsp;</td>
    <td valign="bottom" align="center" width="48">&nbsp;</td>
    <td valign="bottom" colspan="2" align="center">
      <p align="center"><b><font size="1">Director Since </font></b>
      <hr size="1" noshade width="95%" align="left">
    </td>
  </tr>
  <tr>
    <td valign="bottom" colspan="2" align="left">
      <p align="JUSTIFY"><b><font size="1">Name, Address and Biography </font></b>
      <hr size="1" noshade align="left" width="35%">
    </td>
    <td valign="bottom" width="40">
      <p align="JUSTIFY">&nbsp;
    </td>
    <td valign="bottom" align="center" width="48">
      <p align="center"><b><font size="1">Age </font></b>
      <hr size="1" noshade width="50%">
    </td>
    <td valign="bottom" align="center" width="50"><b><font size="1">MuniYield
      </font></b>
      <hr size="1" noshade width="100%">
      <b><font size="1"> </font></b></td>
    <td valign="bottom" align="center" width="74"><b><font size="1"> Municipal
      <br>
      Strategy </font></b>
      <hr size="1" noshade width="80%">
    </td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">James H. Bodurtha</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">57</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">1995</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">N/A</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="TOP" width="373">
      <p><font size="2">36 Popponesset Road, Cotuit, Massachusetts 02635. Director
        and Executive Vice President, The China Business Group, Inc. since 1996;
        Chairman and Chief Executive Officer, China Enterprise Management Corporation
        from 1993 to 1996; Chairman, Berkshire Corporation since 1980; Partner,
        Squire, Sanders &amp; Dempsey from 1980 to 1993.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Ronald W. Forbes</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">60</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">N/A</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">1996</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p><font size="2">1400 Washington Avenue, Albany, New York 12222. Professor
        Emeritus of Finance, School of Business, State University of New York
        at Albany since 2000 and Professor thereof from 1989 to 2000; International
        Consultant, Urban Institute, Washington, D.C. since 1999.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
</table>
<p>&nbsp; </p>
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
I-2</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp; <!-- *************************************************************************** -->
  <!-- MARKER LABEL="sheet: 3, page: 3" -->
<p>&nbsp;
<table 0 cellspacing=0 cellpadding=0 border="0" width=600>
  <tr>
    <td valign="bottom" colspan="2">&nbsp;</td>
    <td valign="bottom" width="40">&nbsp;</td>
    <td valign="bottom" align="center" width="48">&nbsp;</td>
    <td valign="bottom" colspan="2" align="center">
      <p align="center"><b><font size="1">Director Since </font></b>
      <hr size="1" noshade width="95%" align="left">
    </td>
  </tr>
  <tr>
    <td valign="bottom" colspan="2" align="left">
      <p align="JUSTIFY"><b><font size="1">Name, Address and Biography </font></b>
      <hr size="1" noshade align="left" width="35%">
    </td>
    <td valign="bottom" width="40">
      <p align="JUSTIFY">&nbsp;
    </td>
    <td valign="bottom" align="center" width="48">
      <p align="center"><b><font size="1">Age </font></b>
      <hr size="1" noshade width="50%">
    </td>
    <td valign="bottom" align="center" width="50"><b><font size="1">MuniYield
      </font></b>
      <hr size="1" noshade width="100%">
      <b><font size="1"> </font></b></td>
    <td valign="bottom" align="center" width="74"><b><font size="1"> Municipal
      <br>
      Strategy </font></b>
      <hr size="1" noshade width="80%">
    </td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2">&lt;R&gt;</font></td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Terry K. Glenn</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">60</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">1999</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">1999</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p><font size="2">P.O. Box 9011, Princeton, New Jersey 08543-9011. Chairman (Americas Region) since 2001, and Executive
        Vice President of FAM and MLIM (which terms as used herein include their
        corporate predecessors) since 1983; President, Merrill Lynch Mutual Funds since 1999; President of FAM Distributors, Inc. (&#147;FAMD&#148;) since 1986 and
        Director thereof since 1991; Executive Vice President and Director
        of Princeton Services, Inc. (&#147;Princeton Services&#148;) since 1993;
        President of Princeton Administrators, L.P.
        (&#147;Princeton Administrators&#148;) since 1988; Director of Financial
        Data Services, Inc. (&#147;FDS&#148;) since 1985.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Herbert I. London</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">62</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">1991</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">N/A</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p><font size="2">2 Washington Square Village, New York, New York 10012.
        John M. Olin Professor of Humanities, New York University since 1993 and
        Professor since 1980; President, Hudson Institute since 1997 and Trustee
        thereof since 1980; Dean, Gallatin Division of New York University from
        1976 to 1993; Distinguished Fellow, Herman Kahn Chair, Hudson Institute
        from 1984 to 1985; Director, Damon Corp. from 1991 to 1995; Overseer,
        Center for Naval Analyses from 1983 to 1993; Limited Partner, Hypertech
        LP since 1996.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Joseph L. May</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">71</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">1991</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">N/A</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p><font size="2">424 Church Street, Suite 2000, Nashville, Tennessee 37219.
        Attorney in private practice since 1984; President, May and Athens Hosiery
        Mills Division, Wayne-Gossard Corporation from 1954 to 1983; Vice President,
        Wayne-Gossard Corporation from 1972 to 1983; Chairman, The May Corporation
        (personal holding company) from 1972 to 1983; Director, Signal Apparel
        Co. from 1972 to 1989.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Cynthia A. Montgomery</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">49</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">N/A</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">1996</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"> <font size="2"> </font>
      <p>&nbsp;
    </td>
    <td valign="TOP" width="373"><font size="2">Harvard Business School, Soldiers
      Field Road, Boston, Massachusetts 02163. Professor, Harvard Business School
      since 1989; Associate Professor, J.L. Kellogg Graduate School of Management,
      Northwestern University from 1985 to 1989; Assistant Professor, Graduate
      School of Business Administration, The University of Michigan from 1979
      to 1985; Director UnumProvident Corporation since 1990 and Director of NewellRubbermaid
      Inc. since 1995.</font></td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Andr&eacute; F. Perold</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">48</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">1991</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">N/A</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p align="JUSTIFY"><font size="2">Morgan Hall, Soldiers Field, Boston, Massachusetts
        02163. Harvard Business School: George Gund Professor of Finance and Banking
        since 2000, Finance Area Chair since 1996, Sylvan C. Coleman Professor
        of Financial Management from 1993 to 2000; Trustee, The Common Fund since
        1989; Director, Genbel Securities Limited and Gensec Bank since 1999;
        Director, Gensec Asset Management since 2000; Director, Bulldogresearch.com
        since 2000; Director, Stockback.com since 2000; Director, Quantec Limited
        from 1991 to 1999; Director, TIBCO from 1994 to 1996.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" width="388" colspan="2"><font size="2">&lt;/R&gt;</font></td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
I-3</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp;


<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 4, page: 4" -->


<table 0 cellspacing=0 cellpadding=0 border="0" width=600>
  <tr>
    <td valign="bottom" colspan="2">&nbsp;</td>
    <td valign="bottom" width="40">&nbsp;</td>
    <td valign="bottom" align="center" width="48">&nbsp;</td>
    <td valign="bottom" colspan="2" align="center">
      <p align="center"><b><font size="1">Director Since </font></b>
      <hr size="1" noshade width="95%" align="left">
    </td>
  </tr>
  <tr>
    <td valign="bottom" colspan="2" align="left">
      <p align="JUSTIFY"><b><font size="1">Name, Address and Biography </font></b>
      <hr size="1" noshade align="left" width="35%">
    </td>
    <td valign="bottom" width="40">
      <p align="JUSTIFY">&nbsp;
    </td>
    <td valign="bottom" align="center" width="48">
      <p align="center"><b><font size="1">Age </font></b>
      <hr size="1" noshade width="50%">
    </td>
    <td valign="bottom" align="center" width="50"><b><font size="1">MuniYield
      </font></b>
      <hr size="1" noshade width="100%">
      <b><font size="1"> </font></b></td>
    <td valign="bottom" align="center" width="74"><b><font size="1"> Municipal
      <br>
      Strategy </font></b>
      <hr size="1" noshade width="80%">
    </td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2">&lt;R&gt;</font></td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Roberta Cooper Ramo</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">59</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">1999</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">N/A</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p><font size="2">P.O. Box 2168, 500 Fourth Street, N.W., Albuquerque, New
        Mexico 87103. Shareholder, Modrall, Sperling, Roehl, Harris &amp; Sisk,
        P.A. since 1993; President, American Bar Association from 1995 to 1996
        and Member of the Board of Governors thereof from 1994 to 1997; Partner,
        Poole, Kelly &amp; Ramo, Attorneys at Law, P.C. from 1977 to 1993; Director,
        Coopers, Inc. since 1999; Director of ECMC Group since 2001; Director,
        United New Mexico Bank (now Wells Fargo) from 1983 to 1988; Director,
        First National Bank of New Mexico (now First Security) from 1975 to 1976.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p align="JUSTIFY"><font size="2">Charles C. Reilly</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font size="2">70</font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font size="2">N/A</font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font size="2">1996</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15"><font size="2"></font></td>
    <td valign="TOP" width="373">
      <p><font size="2">9 Hampton Harbor Road, Hampton Bays, New York 11946. Self-employed
        financial consultant since 1990; President and Chief Investment Officer
        of Verus Capital, Inc. from 1979 to 1990; Senior Vice President of Arnhold
        and S. Bleichroeder, Inc. from 1973 to 1990; Adjunct Professor, Columbia
        University Graduate School of Business from 1990 to 1991; Adjunct Professor,
        Wharton School, University of Pennsylvania from 1989 to 1990; Partner,
        Small Cities Cable Television from 1986 to 1997.</font>
    </td>
    <td valign="TOP" width="40"><font size="2"></font></td>
    <td valign="TOP" align="center" width="48"><font size="2"></font></td>
    <td valign="TOP" align="center" width="50"><font size="2"></font></td>
    <td valign="TOP" align="center" width="74"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">
      <p align="JUSTIFY"><font face="Times" size="2">Kevin A. Ryan </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font face="Times" size="2">68 </font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font face="Times" size="2">N/A </font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font face="Times" size="2">1996 </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="373">
      <p><font face="Times" size="2">127 Commonwealth Avenue, Chestnut Hill, Massachusetts
        02467. Founder and currently Director Emeritus of The Boston University
        Center for the Advancement of Ethics and Character and Director thereof
        from 1989 until 1999; Professor from 1982 to 1999 and currently Professor
        Emeritus of Education at Boston University; formerly taught on the faculties
        of The University of Chicago, Stanford University and Ohio State University.
        </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">
      <p align="JUSTIFY"><font face="Times" size="2">Roscoe S. Suddarth </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font face="Times" size="2">66 </font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font face="Times" size="2">N/A </font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font face="Times" size="2">2000 </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="373">
      <p><font face="Times" size="2">7403 MacKenzie Court, Bethesda, Maryland
        20817. President, Middle East Institute, from 1995 to 2001; Foreign Service
        Officer, United States Foreign Service, from 1961 to 1995; Career Minister,
        from 1989 to 1995; U.S. Ambassador to the Hashemite Kingdom of Jordan,
        from 1987 to 1990; Deputy Inspector General, U.S. Department of State,
        from 1991 to 1994 </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">
      <p align="JUSTIFY"><font face="Times" size="2">Richard R. West </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font face="Times" size="2">63 </font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font face="Times" size="2">N/A </font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font face="Times" size="2">1996 </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15">&nbsp;</td>
    <td valign="TOP" width="373">
      <p><font face="Times" size="2">Box 604, Genoa, Nevada 89411. Professor of
        Finance since 1984, Dean from 1984 to 1993, and currently Dean Emeritus
        of New York University, Leonard N. Stern School of Business Administration;
        Director of Bowne &amp; Co., Inc. (financial printers), Vornado Realty
        Trust, Inc. (real estate holding company) and Alexander&#146;s Inc. (real estate
        company). </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">
      <p align="JUSTIFY"><font face="Times" size="2">Edward D. Zinbarg </font>
    </td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">
      <p align="center"><font face="Times" size="2">66 </font>
    </td>
    <td valign="TOP" align="center" width="50">
      <p align="center"><font face="Times" size="2">N/A </font>
    </td>
    <td valign="TOP" align="center" width="74">
      <p align="center"><font face="Times" size="2">2000 </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="15">
      <p>&nbsp;
    </td>
    <td valign="TOP" width="373"><font size=2>5 Hardwell Road, Short Hills, New
      Jersey 07078-2117. Self-employed financial consultant since 1994; Executive
      Vice President of The Prudential Insurance Company of America from 1988
      to 1994; former Director of Prudential Reinsurance Company and former Trustee
      of the Prudential Foundation.</font></td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="388" colspan="2"><font size="2">&lt;/R&gt;</font></td>
    <td valign="TOP" width="40">&nbsp;</td>
    <td valign="TOP" align="center" width="48">&nbsp;</td>
    <td valign="TOP" align="center" width="50">&nbsp;</td>
    <td valign="TOP" align="center" width="74">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
I-4</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 5, page: 5" -->






<p><table width=600><tr><td><font size=2><B>Information Pertaining to Officers
of MuniYield and Municipal Strategy</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set
forth in the table below is information about the officers of MuniYield and
Municipal Strategy.</font></td></tr></table>


<br>
<table 0 cellspacing=0 cellpadding=0 width=600>
  <tr>
    <td valign="TOP" colspan="2"><font size="2">&lt;R&gt;</font></td>
    <td valign="TOP" width="45"><b></b></td>
    <td valign="TOP" width="49"><b></b></td>
    <td valign="TOP" width="71">
      <p>&nbsp;
    </td>
    <td valign="TOP" width="21">&nbsp;</td>
    <td valign="bottom" colspan="2" align="center"><b><font size="1">Officer Since
      </font></b>
      <hr width="92%" size="1" noshade align="left">
    </td>
  </tr>
  <tr valign="bottom">
    <td colspan="2" align="left" valign="bottom">
      <p><b><font size="1">Name, Address and Biography* </font></b>
      <hr align="left" size="1" noshade width="50%">
    </td>
    <td width="45">
      <p>&nbsp;
    </td>
    <td align="center" valign="bottom" width="49">
      <p><b><font size="1">Age </font></b>
      <hr size="1" noshade width="50%">
    </td>
    <td align="center" valign="bottom" width="71">
      <p><b><font size="1">Office </font></b>
      <hr size="1" noshade width="55%">
    </td>
    <td align="left" valign="bottom" width="21">&nbsp;</td>
    <td align="center" valign="bottom" width="56"><b><font size="1">MuniYield
      </font></b>
      <hr size="1" noshade width="100%">
    </td>
    <td align="center" valign="bottom" width="74"><b><font size="1">Municipal
      Strategy </font></b>
      <hr size="1" noshade width="75%">
    </td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="TOP" width="49">&nbsp;</td>
    <td valign="TOP" width="71">&nbsp;</td>
    <td valign="TOP" width="21">&nbsp;</td>
    <td valign="TOP" width="56">&nbsp;</td>
    <td valign="TOP" width="74">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">Terry K. Glenn</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">60</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">President</font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">1991**</font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">1995**</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="12"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td valign="TOP" width="270">
      <p><font size="2">Chairman (Americas Region) since 2001, and Executive Vice President of MLIM and FAM since 1983; President, Merrill Lynch Mutual Funds since 1999; President
        of FAMD since 1986 and Director thereof since 1991; Executive
        Vice President and Director of Princeton Services since 1993; President of Princeton
        Administrators since 1988; Director of FDS since 1985.</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center"><font size="2"></font></td>
    <td valign="top" width="71" align="left"><font size="2"></font></td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center"><font size="2"></font></td>
    <td valign="top" width="74" align="center"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">Vincent R. Giordano</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">57</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">Senior Vice <br>
        President </font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">1991</font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">1995</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" rowspan="2" width="12"><font size="2"></font>
      <p>&nbsp;
    </td>
    <td valign="TOP" rowspan="2" width="270">
      <p><font size="2">Managing Director of MLIM since 2001; Senior Vice</font>
        <font size="2">President of FAM and MLIM from 1984 to 2000; Senior Vice
        President of Princeton Services since 1993.</font>
    </td>
    <td valign="TOP" rowspan="2" width="45">
      <p>&nbsp; <font size="2"></font>
    </td>
    <td valign="top" rowspan="2" width="49" align="center"><font size="2"></font><font size="2"></font></td>
    <td valign="top" rowspan="2" width="71" align="left"><font size="2"></font><font size="2"></font></td>
    <td valign="top" rowspan="2" width="21" align="left">&nbsp;</td>
    <td valign="top" rowspan="2" width="56" align="center"><font size="2"></font><font size="2"></font></td>
    <td valign="top" rowspan="2" width="74" align="center"><font size="2"></font><font size="2"></font></td>
  </tr>
  <tr> </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">Kenneth A. Jacob</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">50</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">Vice President </font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">1991</font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">1995</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="12"><font size="2"></font></td>
    <td valign="TOP" width="270">
      <p><font size="2">First Vice President of MLIM since 1997; Vice President
        of MLIM from 1984 to 1997; Vice President of FAM since 1984.</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center"><font size="2"></font></td>
    <td valign="top" width="71" align="left"><font size="2"></font></td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center"><font size="2"></font></td>
    <td valign="top" width="74" align="center"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">Donald C. Burke</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">41</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">Vice President; <br>
        Treasurer </font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">1993 <br>
        1999 </font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">1995 <br>
        1999 </font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" rowspan="2" width="12"><font size="2"></font>
      <p>&nbsp;
    </td>
    <td valign="TOP" rowspan="2" width="270">
      <p><font size="2">First Vice President of MLIM and FAM since 1997</font>
        <font size="2">and Treasurer thereof since 1999; Senior Vice President
        and Treasurer of Princeton Services since 1999; Vice President of FAMD
        since 1999; Vice President of MLIM from 1990 to 1997; Director of Taxation
        of MLIM since 1990.</font>
    </td>
    <td valign="TOP" rowspan="2" width="45">
      <p>&nbsp; <font size="2"></font>
    </td>
    <td valign="top" rowspan="2" width="49" align="center">
      <p>&nbsp; <font size="2"></font>
    </td>
    <td valign="top" rowspan="2" width="71" align="left">
      <p>&nbsp; <font size="2"></font>
    </td>
    <td valign="top" rowspan="2" width="21" align="left">&nbsp;</td>
    <td valign="top" rowspan="2" width="56" align="center"><font size="2"></font><font size="2"></font></td>
    <td valign="top" rowspan="2" width="74" align="center"><font size="2"></font><font size="2"></font></td>
  </tr>
  <tr> </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">John M. Loffredo, CFA</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">37</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">Vice President </font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">N/A</font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">1997</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="12"><font size="2"></font></td>
    <td valign="TOP" width="270">
      <p><font size="2">First Vice President of MLIM since 1997; Vice President
        of MLIM from 1991 to 1997.</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center"><font size="2"></font></td>
    <td valign="top" width="71" align="left"><font size="2"></font></td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center"><font size="2"></font></td>
    <td valign="top" width="74" align="center"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">Roberto W. Roffo</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">35</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">Vice President </font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">2000</font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">2000</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="12"><font size="2"></font></td>
    <td valign="TOP" width="270">
      <p><font size="2">Vice President of MLIM since 1996 and a Portfolio Manager
        thereof since 1992.</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center"><font size="2"></font></td>
    <td valign="top" width="71" align="left"><font size="2"></font></td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center"><font size="2"></font></td>
    <td valign="top" width="74" align="center"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2">&nbsp;</td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan="2"><font size="2"></font>
      <p><font size="2">Alice A. Pellegrino</font>
    </td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center">
      <p><font size="2">41</font>
    </td>
    <td valign="top" width="71" align="left">
      <p><font size="2">Secretary</font>
    </td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">
      <p><font size="2">1999</font>
    </td>
    <td valign="top" width="74" align="center">
      <p><font size="2">2001</font>
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="12">
      <p>&nbsp;
    </td>
    <td valign="TOP" width="270"><font size="2">Vice President of MLIM since 1999;
      Attorney associated with MLIM since 1997; Associate with Kirkpatrick &amp;
      Lockhart <font size="1">LLP</font> from 1992</font></td>
    <td valign="TOP" width="45"><font size="2"></font></td>
    <td valign="top" width="49" align="center"><font size="2"></font></td>
    <td valign="top" width="71" align="left"><font size="2"></font></td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center"><font size="2"></font></td>
    <td valign="top" width="74" align="center"><font size="2"></font></td>
  </tr>
  <tr>
    <td valign="TOP" width="282" colspan="2"><font size="2">&lt;/R&gt;</font></td>
    <td valign="TOP" width="45">&nbsp;</td>
    <td valign="top" width="49" align="center">&nbsp;</td>
    <td valign="top" width="71" align="left">&nbsp;</td>
    <td valign="top" width="21" align="left">&nbsp;</td>
    <td valign="top" width="56" align="center">&nbsp;</td>
    <td valign="top" width="74" align="center">&nbsp;</td>
  </tr>
</table>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>


<table width=600><tr><td width=3% align=right valign=top><font size="1">*
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">The
address of each officer is 800 Scudders Mill Road, Plainsboro, New Jersey 08536.</font></td></tr></table>

<table width=600><tr><td width=3% align=right valign=top><font size="1">**
</font></td><td width=2%><font size="1"></font></td><td width=95%><font size="1">Mr.
Glenn was elected President of each Fund in 1999. Prior to that he served as
Executive Vice President of each Fund.</font></td></tr></table>




<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
I-5</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 6, page: 6" -->




<p><table width=600><tr>
    <td align=right><font size=2><B><a name="II1"></a>APPENDIX II</B></font></td>
  </tr></table>

<p><table width=600><tr><td  align=center><font size=2><B>AGREEMENT AND PLAN OF
REORGANIZATION</B></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS AGREEMENT AND
      PLAN OF REORGANIZATION (this &#147;Agreement&#148;) is made as of the 13th
      day of September, 2001, by and between Merrill Lynch Municipal Strategy
      Fund, Inc., a Maryland corporation (&#147;Municipal Strategy&#148;), and
      MuniYield Fund, Inc., a Maryland corporation (&#147;MuniYield&#148;). Municipal
      Strategy and MuniYield are sometimes referred to herein collectively as
      the &#147;Funds&#148; and individually as a &#147;Fund,&#148; as the context
      requires.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2><B>PLAN OF REORGANIZATION</B>&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
reorganization will constitute the following:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the
acquisition by MuniYield of substantially all of the assets, and the assumption
by MuniYield of substantially all of the liabilities of Municipal Strategy in
return solely for an equal aggregate value of newly issued full shares of (A)
common stock, with a par value of $0.10 per share, of MuniYield (&#147;MuniYield
Common Stock&#148;) and (B) auction market preferred stock (&#147;AMPS&#148;) of MuniYield,
with a par value of $0.10 per share and a liquidation preference of $25,000 per
share plus an amount equal to accumulated but unpaid dividends thereon (whether
or not earned or declared), designated Series F (&#147;MuniYield Series F AMPS&#148;), and</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;(2) the subsequent distribution
      by Municipal Strategy to Municipal Strategy stockholders of (A) all of the
      shares of MuniYield Common Stock received by Municipal Strategy in return
      for Municipal Strategy stockholders&#146; shares of common stock, with a par
      value of $0.10 per share, including shares of common stock of Municipal
      Strategy representing the Dividend Reinvestment Plan (&#147;DRIP&#148;) shares held
      in the book deposit accounts of the holders of common stock of Municipal
      Strategy (&#147;Municipal Strategy Common Stock&#148;) (plus cash in lieu of fractional
      shares), and (B) all of the shares of MuniYield Series F AMPS received by
      Municipal Strategy in return for Municipal Strategy stockholders&#146; shares
      of AMPS, with a par value of $0.10 per share and a liquidation preference
      of $25,000 per share plus an amount equal to accumulated but unpaid dividends
      thereon (whether or not earned or declared), designated Series A (&#147;Municipal
      Strategy AMPS&#148;);&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;all upon
and subject to the terms hereinafter set forth (collectively, the
&#147;Reorganization&#148;).</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the
course of the Reorganization, MuniYield Common Stock and MuniYield Series F
AMPS will be distributed to the stockholders of Municipal Strategy as follows:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) each
holder of Municipal Strategy Common Stock will be entitled to receive a number
of full shares of MuniYield Common Stock, plus cash in lieu of fractional
shares, equal to the aggregate net asset value of Municipal Strategy Common
Stock owned by such stockholder on the Closing Date (as defined in Section 7(a)
below); and (2) each holder of Municipal Strategy AMPS will be entitled to
receive a number of shares of MuniYield Series F AMPS equal to the aggregate
liquidation preference (and aggregate value) of the Municipal Strategy AMPS
owned by such stockholder on the Closing Date.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is
intended that the Reorganization described in this Agreement shall be a
reorganization within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the &#147;Code&#148;), and any successor provision.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to
the Closing Date, Municipal Strategy shall declare a dividend or dividends
which, together with all such previous dividends, shall have the effect of
distributing to its stockholders all of its net investment company taxable
income to and including the Closing Date, if any (computed without regard to
any deduction for dividends paid), and all of its net capital gain, if any,
realized to and including the Closing Date. In this regard and in connection
with the Reorganization, the last dividend period for the Municipal Strategy
AMPS prior to the Closing Date may be shorter than the dividend period for such
AMPS determined as set forth in the Articles Supplementary to Municipal
Strategy&#146;s Articles of Incorporation establishing the powers, rights and
preferences of the Municipal Strategy AMPS.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Articles
Supplementary to MuniYield&#146;s Articles of Incorporation establishing the powers,
rights and preferences of the MuniYield Series F AMPS will have been filed with
the State Department of Assessments and Taxation of Maryland (the &#147;Maryland
Department&#148;) prior to the Closing Date.</font></td></tr></table>




<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-1</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 7, page: 7" -->




<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
promptly as practicable after the consummation of the Reorganization, Municipal
Strategy shall be dissolved in accordance with the laws of the State of
Maryland and will terminate its registration under the Investment Company Act
of 1940, as amended (the &#147;1940 Act&#148;).</font></td></tr></table>

<p><table width=600><tr>
    <td  align=center><font size=2>&lt;R&gt;<b>AGREEMENT</b>&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order
to consummate the Reorganization and in consideration of the promises and the
covenants and agreements hereinafter set forth, and intending to be legally
bound, each Fund hereby agrees as follows:</font></td></tr></table>

<P><table width=600><TR>
    <TD width=05% valign=top><font size=2> 1.</FONT></TD>
    <TD width=95% valign=top><FONT SIZE="2"><I>Representations and
Warranties of MuniYield</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield
represents and warrants to, and agrees with, Municipal Strategy that:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
MuniYield is a corporation duly organized, validly existing and in good
standing in conformity with the laws of the State of Maryland, and has the
power to own all of its assets and to carry out this Agreement. MuniYield has
all necessary Federal, state and local authorizations to carry on its business
as it is now being conducted and to carry out this Agreement.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(b) MuniYield is duly
      registered under the 1940 Act as a non-diversified, closed-end management
      investment company (File No. 811-06435), and such registration has not been
      revoked or rescinded and is in full force and effect. MuniYield has elected
      and qualified at all times since its inception for the special tax treatment
      afforded regulated investment companies (&#147;RICs&#148;) under Sections
      851-855 of the Code and intends to continue to so qualify until consummation
      of the Reorganization and thereafter.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td>
      <p><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Municipal Strategy has
        been furnished with MuniYield&#146;s Annual Report to Stockholders for
        the fiscal year ended October 31, 2000, and the audited financial statements
        appearing therein, having been audited by Deloitte &amp; Touche<font size="1">
        LLP</font>, independent auditors, fairly present the financial position
        of MuniYield as of the respective dates indicated, in conformity with
        accounting principles generally accepted in the United States of America</font><font size=2>.</font></p>
      </td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Municipal Strategy has
      been furnished with MuniYield&#146;s Semi-Annual Report to Stockholders
      for the period ended April 30, 2001, and the unaudited financial statements
      appearing therein, fairly present the financial position of MuniYield as
      of the respective dates indicated, in conformity with accounting principles
      generally accepted in the United States of America.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) An
unaudited statement of assets, liabilities and capital of MuniYield and an
unaudited schedule of investments of MuniYield, each as of the Valuation Time
(as defined in Section 3(d) of this Agreement), will be furnished to Municipal
Strategy, at or prior to the Closing Date for the purpose of determining the
number of shares of MuniYield Common Stock and MuniYield Series F AMPS to be
issued pursuant to Section 4 of this Agreement; each will fairly present the
financial position of MuniYield as of the Valuation Time in conformity with
generally accepted accounting principles applied on a consistent basis.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
MuniYield has full power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary action of its Board
of Directors, and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors&#146; rights generally and court decisions with respect thereto.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)
There are no material legal, administrative or other proceedings pending or, to
the knowledge of MuniYield, threatened against it which assert liability on the
part of MuniYield or which materially affect its financial condition or its
ability to consummate the Reorganization. MuniYield is not charged with or, to
the best of its knowledge, threatened with any violation or investigation of
any possible violation of any provisions of any Federal, state or local law or
regulation or administrative ruling relating to any aspect of its business.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
MuniYield is not obligated under any provision of its Articles of
Incorporation, as amended, or its by-laws, as amended, or a party to any
contract or other commitment or obligation, and is not subject to any order or
decree which would be violated by its execution of or performance under this
Agreement, except insofar as the Funds have mutually agreed to amend such
contract or other commitment or obligation to cure any potential violation as a
condition precedent to the Reorganization.</font></td></tr></table>




<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-2</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 8, page: 8" -->





<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
There are no material contracts outstanding to which MuniYield is a party that
have not been disclosed in the N-14 Registration Statement (as defined in
subsection (l) below) or will not otherwise be disclosed to Municipal Strategy
prior to the Valuation Time.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)
MuniYield has no known liabilities of a material amount, contingent or
otherwise, other than those shown on its statements of assets, liabilities and
capital referred to above, those incurred in the ordinary course of its
business as an investment company since April 30, 2001; and those incurred in
connection with the Reorganization. As of the Valuation Time, MuniYield will
advise Municipal Strategy in writing of all known liabilities, contingent or
otherwise, whether or not incurred in the ordinary course of business, existing
or accrued as of such time.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) No
consent, approval, authorization or order of any court or governmental
authority is required for the consummation by MuniYield of the Reorganization,
except such as may be required under the Securities Act of 1933, as amended
(the &#147;1933 Act&#148;), the Securities Exchange Act of 1934, as amended (the &#147;1934
Act&#148;) and the 1940 Act or state securities laws (which term as used herein
shall include the laws of the District of Columbia and Puerto Rico).</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The registration statement
      filed by MuniYield on Form N-14 which includes the proxy statement of Municipal
      Strategy with respect to the transactions contemplated herein and the prospectus
      of MuniYield relating to the MuniYield Common Stock and MuniYield Series
      F AMPS to be issued pursuant to this Agreement (the &#147;Proxy Statement
      and Prospectus&#148;), and any supplement or amendment thereto or to the
      documents therein (as amended or supplemented, the &#147;N-14 Registration
      Statement&#148;), on its effective date, at the time of the stockholder&#146;s
      meeting of Municipal Strategy referred to in Section 6(a) of this Agreement
      and at the Closing Date, insofar as it relates to MuniYield (i) complied
      or will comply in all material respects with the provisions of the 1933
      Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
      and (ii) did not or will not contain any untrue statement of a material
      fact or omit to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading; and the Proxy Statement
      and Prospectus included therein did not or will not contain any untrue statement
      of a material fact or omit to state any material fact necessary to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading; <i>provided, however</i>, that the representations
      and warranties in this subsection only shall apply to statements in or omissions
      from the N-14 Registration Statement made in reliance upon and in conformity
      with information furnished by MuniYield for use in the N-14 Registration
      Statement as provided in Section 6(e) of this Agreement.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(m) MuniYield is authorized
      to issue 200,000,000 shares of capital stock, of which 1,800 shares have
      been designated as Series A AMPS, 1,800 shares have been designated as Series
      B AMPS, 1,800 shares have been designated as Series C AMPS, 1,800 shares
      have been designated as Series D AMPS and 2,800 shares have been designated
      as Series E AMPS (the Series A AMPS of MuniYield, the Series B AMPS of MuniYield,
      the Series C AMPS of MuniYield, the Series D AMPS of MuniYield and the Series
      E AMPS of MuniYield being collectively referred to herein as the &#147;MuniYield
      AMPS&#148;), each with a par value of $0.05, and 199,990,000 shares have
      been designated as common stock, par value $0.10 per share; each outstanding
      share of which is fully paid and nonassessable and has full voting rights.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) The
shares of MuniYield Common Stock and MuniYield Series F AMPS to be issued to
Municipal Strategy pursuant to this Agreement will have been duly authorized
and, when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable and will have full
voting rights, and no stockholder of MuniYield will have any preemptive right
of subscription or purchase in respect thereof.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) At
or prior to the Closing Date, the MuniYield Common Stock to be transferred to
Municipal Strategy for distribution to the stockholders of Municipal Strategy
on the Closing Date will be duly qualified for offering to the public in all
states of the United States in which the sale of shares of Municipal Strategy
presently are qualified, and there will be a sufficient number of such shares
registered under the 1933 Act and, as may be necessary, with each pertinent
state securities commission to permit the transfers contemplated by this
Agreement to be consummated.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;(p) At or prior to
      the Closing Date, the shares of MuniYield Series F AMPS to be transferred
      to Municipal Strategy on the Closing Date will be duly qualified for offering
      to the public in all states of the United States in which the sale of Municipal
      Strategy AMPS presently are qualified, and there are a sufficient number
      of MuniYield Series F AMPS registered under the 1933 Act and, as may be
      necessary, with each pertinent state securities commission to permit the
      transfers contemplated by this Agreement to be consummated.&lt;/R&gt;</font></td>
  </tr></table>





<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-3</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 9, page: 9" -->




<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) At
or prior to the Closing Date, MuniYield will have obtained any and all
regulatory, Director and stockholder approvals necessary to issue the MuniYield
Common Stock and MuniYield Series F AMPS to Municipal Strategy.
</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
2.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>Representations and
Warranties of Municipal Strategy</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal
Strategy represents and warrants to, and agrees with, MuniYield that:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Municipal Strategy is a corporation duly organized, validly existing and in
good standing in conformity with the laws of the State of Maryland, and has the
power to own all of its assets and to carry out this Agreement. Municipal
Strategy has all necessary Federal, state and local authorizations to carry on
its business as it is now being conducted and to carry out this Agreement.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(b) Municipal Strategy
      is duly registered under the 1940 Act as a continuously offered, non-diversified,
      closed-end management investment company (File No. 811-07203), and such
      registration has not been revoked or rescinded and is in full force and
      effect. Municipal Strategy has elected and qualified at all times since
      its inception for the special tax treatment afforded RICs under Sections
      851-855 of the Code and intends to continue to so qualify through its taxable
      year ending upon liquidation.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) As
used in this Agreement, the term &#147;Municipal Strategy Investments&#148; shall mean
(i) the investments of Municipal Strategy shown on the schedule of its
investments as of the Valuation Time furnished to MuniYield; and (ii) all other
assets owned by Municipal Strategy or liabilities incurred as of the Valuation
Time.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
Municipal Strategy has full power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action of its Board of
Directors and this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors&#146; rights generally and court decisions with respect thereto.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) MuniYield has been furnished
      with Municipal Strategy&#146;s Annual Report to Stockholders for the fiscal
      year ended October 31, 2000, and the audited financial statements appearing
      therein, having been audited by Deloitte &amp; Touche <font size="1">LLP</font>,
      independent auditors, fairly present the financial position of Municipal
      Strategy as of the respective dates indicated, in conformity with accounting
      principles generally accepted in the United States of America applied on
      a consistent basis.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) MuniYield has been furnished
      with Municipal Strategy&#146;s Semi-Annual Report to Stockholders for the
      period ended April 30, 2001 and the unaudited financial statements appearing
      therein, fairly present the financial position of Municipal Strategy as
      of the respective dates indicated, in conformity with accounting principles
      generally accepted in the United States of America.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) An
unaudited statement of assets, liabilities and capital of Municipal Strategy
and an unaudited schedule of investments of Municipal Strategy, each as of the
Valuation Time, will be furnished to MuniYield at or prior to the Closing Date
for the purpose of determining the number of shares of MuniYield Common Stock
and MuniYield Series F AMPS to be issued to Municipal Strategy pursuant to
Section 4 of this Agreement; each will fairly present the financial position of
Municipal Strategy as of the Valuation Time in conformity with generally
accepted accounting principles applied on a consistent basis.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
There are no material legal, administrative or other proceedings pending or, to
the knowledge of Municipal Strategy, threatened against it which assert
liability on the part of Municipal Strategy or which materially affect its
financial condition or its ability to consummate the Reorganization. Municipal
Strategy is not charged with or, to the best of its knowledge, threatened with
any violation or investigation of any possible violation of any provisions of
any Federal, state or local law or regulation or administrative ruling relating
to any aspect of its business.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
There are no material contracts outstanding to which Municipal Strategy is a
party that have not been disclosed in the N-14 Registration Statement or will
not otherwise be disclosed to MuniYield prior to the Valuation Time.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)
Municipal Strategy is not obligated under any provision of its Articles of
Incorporation, as amended, or its by-laws, as amended, or a party to any
contract or other commitment or obligation, and is not subject to any order or
decree which would be violated by its execution of or performance under this
Agreement, except insofar as the Funds have mutually agreed to amend such
contract or other commitment or obligation to cure any potential violation as a
condition precedent to the Reorganization.</font></td></tr></table>





<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-4</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 10, page: 10" -->





<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)
Municipal Strategy has no known liabilities of a material amount, contingent or
otherwise, other than those shown on its statements of assets, liabilities and
capital referred to above, those incurred in the ordinary course of its
business as an investment company since April 30, 2001 and those incurred in
connection with the Reorganization. As of the Valuation Time, Municipal
Strategy will advise MuniYield in writing of all known liabilities, contingent
or otherwise, whether or not incurred in the ordinary course of business,
existing or accrued as of such time.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)
Municipal Strategy has filed, or has obtained extensions to file, all Federal,
state and local tax returns which are required to be filed by it, and has paid
or has obtained extensions to pay, all Federal, state and local taxes shown on
said returns to be due and owing and all assessments received by it, up to and
including the taxable year in which the Closing Date occurs. All tax
liabilities of Municipal Strategy have been adequately provided for on its
books, and no tax deficiency or liability of Municipal Strategy has been
asserted and no question with respect thereto has been raised by the Internal
Revenue Service or by any state or local tax authority for taxes in excess of
those already paid, up to and including the taxable year in which the Closing
Date occurs.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) At
both the Valuation Time and the Closing Date, Municipal Strategy will have full
right, power and authority to sell, assign, transfer and deliver the Municipal
Strategy Investments. At the Closing Date, subject only to the obligation to
deliver the Municipal Strategy Investments as contemplated by this Agreement,
Municipal Strategy will have good and marketable title to all of the Municipal
Strategy Investments, and MuniYield will acquire all of the Municipal Strategy
Investments free and clear of any encumbrances, liens or security interests and
without any restrictions upon the transfer thereof (except those imposed by the
Federal or state securities laws and those imperfections of title or
encumbrances as do not materially detract from the value or use of the
Municipal Strategy Investments or materially affect title thereto).</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) No
consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Municipal Strategy of the
Reorganization, except such as may be required under the 1933 Act, the 1934
Act, the 1940 Act or state securities laws.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) The N-14 Registration Statement,
      on its effective date, at the time of the stockholder&#146;s meeting of
      Municipal Strategy referred to in Section 6(a) of this Agreement and on
      the Closing Date, insofar as it relates to Municipal Strategy (i) complied
      or will comply in all material respects with the provisions of the 1933
      Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder,
      and (ii) did not or will not contain any untrue statement of a material
      fact or omit to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading; and the Proxy Statement
      and Prospectus included therein did not or will not contain any untrue statement
      of a material fact or omit to state any material fact necessary to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading; <i>provided, however</i>, that the representations
      and warranties in this subsection shall apply only to statements in or omissions
      from the N-14 Registration Statement made in reliance upon and in conformity
      with information furnished by Municipal Strategy for use in the N-14 Registration
      Statement as provided in Section 6(e) of this Agreement.</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)
Municipal Strategy is authorized to issue 200,000,000 shares of capital stock,
of which 8,000 shares have been designated as Series A AMPS, 8,000 shares have
been designated as Series B AMPS, 8,000 shares have been designated as Series C
AMPS, 8,000 shares have been designated as Series D AMPS, 8,000 shares have
been designated as Series E AMPS and 199,960,000 shares have been designated as
common stock, par value $.10 per share; each outstanding share of which is
fully paid and nonassessable and has full voting rights. Series A AMPS are the
only issued and outstanding AMPS of Municipal Strategy.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) All
of the issued and outstanding shares of Municipal Strategy Common Stock and
Municipal Strategy AMPS were offered for sale and sold in conformity with all
applicable Federal and state securities laws.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) The
books and records of Municipal Strategy made available to MuniYield and/or its
counsel are substantially true and correct and contain no material
misstatements or omissions with respect to the operations of Municipal Strategy.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)
Municipal Strategy will not sell or otherwise dispose of any of the shares of
MuniYield Common Stock or MuniYield Series F AMPS to be received in the
Reorganization, except in distribution to the stockholders of Municipal
Strategy, as provided in Section 3 of this Agreement.</font></td></tr></table>





<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-5</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<P><table width=600><TR><TD width=05% valign=top><font size=2>
3.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>The Reorganization</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Subject to receiving the requisite approvals of the stockholders of each Fund,
and to the other terms and conditions contained herein, Municipal Strategy
agrees to convey, transfer and deliver to MuniYield and MuniYield agrees to
acquire from Municipal Strategy on the Closing Date, all of the Municipal
Strategy Investments (including interest accrued as of the Valuation Time on
debt instruments) and assume substantially all of the liabilities of Municipal
Strategy in return solely for that number of full shares of MuniYield Common
Stock and MuniYield Series F AMPS provided in Section 4 of this Agreement.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to this Agreement, as soon as practicable after the Closing Date Municipal
Strategy will distribute all of the full shares of MuniYield Common Stock (plus
cash in lieu of fractional shares) and MuniYield Series F AMPS received by it
to its stockholders in return for their shares of Municipal Strategy Common
Stock and Municipal Strategy AMPS, respectively. Such distributions shall be
accomplished by the opening of stockholder accounts on the stock ledger records
of MuniYield in the amounts due the stockholders of Municipal Strategy based on
their holdings in Municipal Strategy as of the Valuation Time.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(b) Prior to the Closing
      Date, Municipal Strategy shall declare a dividend or dividends which, together
      with all such previous dividends, shall have the effect of distributing
      to its stockholders all of its net investment company taxable income to
      and including the Closing Date, if any (computed without regard to any deduction
      for dividends paid), and all of its net capital gain, if any, realized to
      and including the Closing Date. In this regard and in connection with the
      Reorganization, the last dividend period for Municipal Strategy AMPS prior
      to the Closing Date may be shorter than the dividend period for such AMPS
      determined as set forth in the Articles Supplementary.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
Municipal Strategy will pay or cause to be paid to MuniYield any interest
Municipal Strategy receives on or after the Closing Date with respect to any of
the Municipal Strategy Investments transferred to MuniYield hereunder.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Valuation
      Time shall be 4:00 p.m., Eastern time, on November 9, 2001, or such earlier
      or later day and time as may be mutually agreed upon in writing (the &#147;Valuation
      Time&#148;).</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Recourse for liabilities
      assumed from Municipal Strategy by MuniYield in the Reorganization will
      be limited to the net assets of Municipal Strategy acquired by MuniYield.
      The known liabilities of Municipal Strategy, as of the Valuation Time, shall
      be confirmed in writing to MuniYield pursuant to Section 2(k) of this Agreement.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The
Funds will jointly file Articles of Transfer with the Maryland Department and
any other such instrument as may be required by the State of Maryland to effect
the transfer of the Municipal Strategy Investments.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)
Municipal Strategy will be dissolved following the Closing Date by filing
Articles of Dissolution with the Maryland Department.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
MuniYield will file with the Maryland Department Articles Supplementary to its
Articles of Incorporation establishing the powers, rights and preferences of
the MuniYield Series F AMPS prior to the closing of the Reorganization.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) As
promptly as practicable after the liquidation of Municipal Strategy pursuant to
the Reorganization, Municipal Strategy shall terminate its registration under
the 1940 Act.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
4.
</FONT></TD>
    <TD width=95% valign=top><font size=2><i>Issuance and Valuation of MuniYield
      Common Stock and MuniYield Series F AMPS in the Reorganization.</i></font></TD>
  </TR></TABLE>
<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;Full shares of MuniYield
      Common Stock and MuniYield Series F AMPS of an aggregate net asset value
      or liquidation preference, as the case may be, equal (to the nearest one
      ten thousandth of one cent) to the value of the assets of Municipal Strategy
      acquired by MuniYield in the Reorganization determined as hereinafter provided,
      reduced by the amount of liabilities of Municipal Strategy assumed by MuniYield
      in the Reorganization, shall be issued by MuniYield to Municipal Strategy
      in return for such assets of Municipal Strategy. MuniYield will issue to
      Municipal Strategy (a) a number of shares of MuniYield Common Stock the
      aggregate net asset value of which will equal the aggregate net asset value
      of the shares of Municipal Strategy Common Stock, determined as set forth
      below, and (b) a number of shares of MuniYield Series F AMPS, the aggregate
      liquidation preference and value of which will equal the aggregate liquidation
      preference and value of Municipal Strategy AMPS, determined as set forth
      below.&lt;/R&gt;</font></td>
  </tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-6</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;The net asset value
      of each Fund and the liquidation preference and value of the AMPS of each
      Fund shall be determined as of the Valuation Time in accordance with the
      procedures described in the N-14 Registration Statement filed by MuniYield
      in connection with the Reorganization and no formula will be used to adjust
      the net asset value so determined of either Fund to take into account differences
      in realized and unrealized gains and losses. Values in all cases shall be
      determined as of the Valuation Time. The value of the Municipal Strategy
      Investments to be transferred to MuniYield shall be determined by MuniYield
      pursuant to the procedures utilized by MuniYield in valuing its own assets
      and determining its own liabilities for purposes of the Reorganization.
      Such valuation and determination shall be made by MuniYield in cooperation
      with Municipal Strategy and shall be confirmed in writing by MuniYield to
      Municipal Strategy. The net asset value per share of the MuniYield Common
      Stock and the liquidation preference and value per share of the MuniYield
      Series F AMPS shall be determined in accordance with such procedures and
      MuniYield shall certify the computations involved. For purposes of determining
      the net asset value of a share of Common Stock of each Fund, the value of
      the securities held by the Fund plus any cash or other assets (including
      interest accrued but not yet received) minus all liabilities (including
      accrued expenses) and the aggregate liquidation value of the outstanding
      shares of AMPS of that Fund is divided by the total number of shares of
      Common Stock of that Fund outstanding at such time.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MuniYield
shall issue to Municipal Strategy separate certificates or share deposit
receipts for the MuniYield Common Stock and the MuniYield Series F AMPS, each
registered in the name of Municipal Strategy. Municipal Strategy then shall
distribute the MuniYield Common Stock and the MuniYield Series F AMPS to the
holders of Municipal Strategy Common Stock and Municipal Strategy AMPS by
redelivering the certificates or share deposit receipts evidencing ownership of
(i) the MuniYield Common Stock to The Bank of New York (&#147;BONY&#148;), as the
transfer agent and registrar for the MuniYield Common Stock for distribution to
the holders of Municipal Strategy Common Stock on the basis of such holder&#146;s
proportionate interest in the aggregate net asset value of the Common Stock of
Municipal Strategy and (ii) the MuniYield Series F AMPS to BONY as the transfer
agent and registrar for the MuniYield Series F AMPS for distribution to the
holders of Municipal Strategy AMPS on the basis of such holder&#146;s proportionate
interest in the aggregate liquidation preference and value of Municipal
Strategy AMPS. With respect to any Municipal Strategy stockholder holding
certificates evidencing ownership of either Municipal Strategy Common Stock or
Municipal Strategy AMPS as of the Closing Date, and subject to MuniYield being
informed thereof in writing by Municipal Strategy, MuniYield will not permit
such stockholder to receive new certificates evidencing ownership of the
MuniYield Common Stock or MuniYield Series F AMPS, exchange MuniYield Common
Stock or MuniYield Series F AMPS credited to such stockholder&#146;s account for
shares of other investment companies managed by Fund Asset Management, L.P.
(&#147;FAM&#148;) or any of its affiliates, or pledge or redeem such MuniYield Common
Stock or MuniYield Series F AMPS, in any case, until notified by Municipal
Strategy or its agent that such stockholder has surrendered his or her
outstanding certificates evidencing ownership of Municipal Strategy Common
Stock or, in the event of lost certificates, posted adequate bond. Municipal
Strategy, at its own expense, will request its stockholders to surrender their
outstanding certificates evidencing ownership of Municipal Strategy Common
Stock or post adequate bond therefor.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends
payable to holders of record of shares of MuniYield Common Stock and MuniYield
Series F AMPS, as of any date after the Closing Date and prior to the receipt
of certificates in connection with the Reorganization by any stockholder of
Municipal Strategy, shall be payable to such stockholder without interest;
however, such dividends shall not be paid unless and until such stockholder
surrenders the stock certificates representing shares of common stock or AMPS
of Municipal Strategy, as the case may be, in return for shares of common stock
or AMPS of MuniYield, as the case may be.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
fractional shares of MuniYield Common Stock will be issued to holders of
Municipal Strategy Common Stock. In lieu thereof, MuniYield&#146;s transfer agent,
BONY, will aggregate all fractional shares of MuniYield Common Stock and sell
the resulting full shares on the New York Stock Exchange at the current market
price for shares of MuniYield Common Stock for the account of all holders of
fractional interests, and each such holder will receive such holder&#146;s pro rata
share of the proceeds of such sale upon surrender of such holder&#146;s certificates
representing Municipal Strategy Common Stock.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
5.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>Payment of Expenses</I>.</FONT></TD></TR></TABLE>
<font size=2>&lt;R&gt;</font><br>
<table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The expenses of the Reorganization
      that are directly attributable to Municipal Strategy and the conduct of
      its business will be deducted from the assets of Municipal Strategy as of
      the Valuation Time. These expenses are expected to include transfer agent
      fees, the expenses incurred in preparing, printing and mailing the proxy
      materials to be utilized in connection with the special meeting of the stockholders
      of Municipal Strategy to consider the Reorganization, the expenses related
      to the solicitation of proxies to be voted at that meeting and a &lt;/R&gt;</font></td>
  </tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-7</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;









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<!-- MARKER LABEL="sheet: 13, page: 13" -->






<p>
<font size=2>&lt;R&gt;</font><br>
<table width=600><tr>
    <td><font size=2>portion of the expenses of printing the N-14 Registration
      Statement. FAM has agreed to bear the expenses of the Reorganization that
      are directly attributable to MuniYield and the conduct of its business.
      The expenses attributable to MuniYield include fees, if any, of the rating
      agencies with respect to MuniYield Series F AMPS, the costs of printing
      stock certificates, transfer agent fees and a portion of the expenses incurred
      in printing the N-14 Registration Statement. Certain other expenses of the
      Reorganization, including expenses in connection with obtaining an opinion
      of counsel as to certain tax matters, the preparation of this Agreement,
      legal fees, audit fees and any listing or registration fees, will be borne
      equally by Municipal Strategy and FAM, which has agreed to bear such expenses
      on behalf of MuniYield.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If
for any reason the Reorganization is not consummated, no party shall be liable
to any other party for any damages resulting therefrom, including, without
limitation, consequential damages.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
6.
</FONT></TD>
    <TD width=95% valign=top><font size=2><i>Covenants of the Funds.</i></font></TD>
  </TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Municipal Strategy agrees to hold a special meeting of its stockholders as soon
as is practicable after the effective date of the N-14 Registration Statement
for the purpose of considering the Reorganization as described in this
Agreement.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each
Fund covenants to operate its business as presently conducted between the date
hereof and the Closing Date.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
Municipal Strategy agrees that following the consummation of the
Reorganization, it will dissolve in accordance with the laws of the State of
Maryland and any other applicable law, it will not make any distributions of
any shares of MuniYield Common Stock and MuniYield Series F AMPS, as
applicable, other than to its respective stockholders and without first paying
or adequately providing for the payment of all of its respective liabilities
not assumed by MuniYield, if any, and on and after the Closing Date it shall
not conduct any business except in connection with its dissolution.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)
Municipal Strategy undertakes that if the Reorganization is consummated, it
will file an application pursuant to Section 8(f) of the 1940 Act for an order
declaring that Municipal Strategy has ceased to be a registered investment
company.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
MuniYield will file the N-14 Registration Statement with the Securities and
Exchange Commission (the &#147;Commission&#148;) and will use its best efforts to provide
that the N-14 Registration Statement becomes effective as promptly as
practicable. Each Fund agrees to cooperate fully with the other, and each will
furnish to the other the information relating to itself to be set forth in the
N-14 Registration Statement as required by the 1933 Act, the 1934 Act, the 1940
Act, and the rules and regulations thereunder and the state securities laws.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)
MuniYield has no plan or intention to sell or otherwise dispose of the
Municipal Strategy Investments, except for dispositions made in the ordinary
course of business.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;(g) Each Fund agrees
      that by the Closing Date all of its Federal and other tax returns and reports
      required to be filed on or before such date shall have been filed and all
      taxes shown as due on said returns either have been paid or adequate liability
      reserves have been provided for the payment of such taxes. In connection
      with this covenant, the Funds agree to cooperate with each other in filing
      any tax return, amended return or claim for refund, determining a liability
      for taxes or a right to a refund of taxes or participating in or conducting
      any audit or other proceeding in respect of taxes. MuniYield agrees to retain
      for a period of ten (10) years following the Closing Date all returns, schedules
      and work papers and all material records or other documents relating to
      tax matters of Municipal Strategy for such Fund&#146;s taxable period first
      ending after the Closing Date and for all prior taxable periods. Any information
      obtained under this subsection shall be kept confidential except as otherwise
      may be necessary in connection with the filing of returns or claims for
      refund or in conducting an audit or other proceeding. After the Closing
      Date, Municipal Strategy shall prepare, or cause its agents to prepare,
      any Federal, state or local tax returns, including any Forms 1099, required
      to be filed by such Fund with respect to its final taxable year ending with
      its complete liquidation and for any prior periods or taxable years and
      further shall cause such tax returns and Forms 1099 to be duly filed with
      the appropriate taxing authorities. Notwithstanding the aforementioned provisions
      of this subsection, any expenses incurred by Municipal Strategy (other than
      for payment of taxes) in connection with the preparation and filing of said
      tax returns and Forms 1099 after the Closing Date shall be borne by such
      Fund to the extent such expenses have been accrued by such Fund in the ordinary
      course without regard to the Reorganization; any excess expenses shall be
      borne by FAM at the time such tax returns and Forms 1099 are prepared.&lt;/R&gt;</font></td>
  </tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-8</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 14, page: 14" -->





<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)
Municipal Strategy agrees to mail to its stockholders of record entitled to
vote at the special meeting of its stockholders at which action is to be
considered regarding this Agreement, in sufficient time to comply with
requirements as to notice thereof, a combined proxy statement and prospectus
which complies in all material respects with the applicable provisions of
Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and the rules
and regulations, respectively, thereunder.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
Following the consummation of the Reorganization, MuniYield will stay in
existence and continue its business as a non-diversified, closed-end management
investment company registered under the 1940 Act.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
7.
</FONT></TD>
    <TD width=95% valign=top><i><font size=2>Closing Date.</font></i></TD>
  </TR></TABLE>
<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(a) Delivery of the
      assets of Municipal Strategy to be transferred and the shares of MuniYield
      Common Stock and MuniYield Series F AMPS to be issued as provided in this
      Agreement, shall be made at the offices of Sidley Austin Brown &amp; Wood
      <font size="1">LLP</font>, 875 Third Avenue, New York, New York 10022,
      at 10:00 a.m. on the next full business day following the Valuation Time,
      or at such other place, time and date agreed to by the Funds, the date and
      time upon which such delivery is to take place being referred to herein
      as the &#147;Closing Date.&#148; To the extent that any Municipal Strategy
      Investments, for any reason, are not transferable on the Closing Date, Municipal
      Strategy shall cause such Municipal Strategy Investments to be transferred
      to MuniYield&#146;s account with BONY at the earliest practicable date thereafter.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Municipal Strategy will
      deliver to MuniYield on the Closing Date confirmations or other adequate
      evidence as to the tax basis of each of its respective Municipal Strategy
      Investments delivered to MuniYield hereunder, certified by Deloitte &amp;
      Touche <font size="1">LLP</font>.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) As
soon as practicable after the close of business on the Closing Date, Municipal
Strategy shall deliver to MuniYield a list of the names and addresses of all of
the stockholders of record of Municipal Strategy on the Closing Date and the
number of shares of Municipal Strategy Common Stock and AMPS owned by each such
stockholder, certified to the best of their knowledge and belief by the
transfer agent for Municipal Strategy or by its President.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
8.
</FONT></TD>
    <TD width=95% valign=top><font size=2><i>Conditions of Municipal Strategy.</i></font></TD>
  </TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
obligations of Municipal Strategy hereunder shall be subject to the following
conditions:</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(a) That this Agreement
      shall have been adopted, and the Reorganization shall have been approved,
      by the affirmative vote of (i) the Board of Directors of MuniYield, and
      (ii) at least two-thirds of the members of the Board of Directors of Municipal
      Strategy, and by the affirmative vote of (A) a majority of the shares of
      Municipal Strategy Common Stock and Municipal Strategy AMPS, voting together
      as a single class, and (B) a majority of the shares of Municipal Strategy
      AMPS, voting separately as a class, in each case issued and outstanding
      and entitled to vote thereon. MuniYield shall have delivered to Municipal
      Strategy a copy of the resolution approving this Agreement adopted by such
      Fund&#146;s Board of Directors.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) That
Municipal Strategy shall have received from MuniYield a statement of assets,
liabilities and capital, with values determined as provided in Section 4 of
this Agreement, together with a schedule of such Fund&#146;s investments, all as of
the Valuation Time, certified on MuniYield&#146;s behalf by its President (or any
Vice President) and its Treasurer, and a certificate signed by MuniYield&#146;s
President (or any Vice President) and its Treasurer, dated as of the Closing
Date, certifying that as of the Valuation Time and as of the Closing Date there
has been no material adverse change in the financial position of MuniYield
since the date of such Fund&#146;s most recent Annual or Semi-Annual Report, as
applicable, other than changes in its portfolio securities since that date or
changes in the market value of its portfolio securities.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) That
MuniYield shall have furnished to Municipal Strategy a certificate signed by
MuniYield&#146;s President (or any Vice President) and its Treasurer, dated as of
the Closing Date, certifying that, as of the Valuation Time and as of the
Closing Date all representations and warranties of MuniYield made in this
Agreement are true and correct in all material respects with the same effect as
if made at and as of such dates, and that MuniYield has complied with all of
the agreements and satisfied all of the conditions on its part to be performed
or satisfied at or prior to each of such dates.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) That
there shall not be any material litigation pending with respect to the matters
contemplated by this Agreement.</font></td></tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-9</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 15, page: 15" -->





<p><table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(e) That Municipal
      Strategy shall have received an opinion of Sidley Austin Brown &amp; Wood
      <font size="1">LLP</font>, as counsel to the Funds, in form and substance
      satisfactory to Municipal Strategy and dated the Closing Date, to the effect
      that (i) each Fund is a corporation duly organized, validly existing and
      in good standing in conformity with the laws of the State of Maryland; (ii)
      the shares of MuniYield Common Stock and MuniYield Series F AMPS to be issued
      pursuant to this Agreement are duly authorized and, upon delivery, will
      be validly issued and outstanding and fully paid and nonassessable by MuniYield,
      and no stockholder of MuniYield has any preemptive right to subscription
      or purchase in respect thereof (pursuant to the Articles of Incorporation
      or the by-laws of MuniYield or the state law of Maryland, or to the best
      of such counsel&#146;s knowledge, otherwise); (iii) this Agreement has been
      duly authorized, executed and delivered by the Funds, and represents a valid
      and binding contract, enforceable in accordance with its terms, except as
      enforceability may be limited by bankruptcy, insolvency, reorganization
      or other similar laws pertaining to the enforcement of creditors&#146; rights
      generally and court decisions with respect thereto; provided, such counsel
      shall express no opinion with respect to the application of equitable principles
      in any proceeding, whether at law or in equity and, <I>provided further</I>,
      that such counsel shall express no opinion with respect to the indemnification
      and contribution provisions set forth in this Agreement; (iv) the execution
      and delivery of this Agreement does not, and the consummation of the Reorganization
      will not, violate any material provisions of Maryland law or the Articles
      of Incorporation, as amended, the by-laws, as amended, or any agreement
      (known to such counsel) to which either Fund is a party or by which a Fund
      is bound, except insofar as the parties have agreed to amend such provision
      as a condition precedent to the Reorganization; (v) Municipal Strategy has
      the power to sell, assign, transfer and deliver the assets transferred by
      it hereunder and, upon consummation of the Reorganization in accordance
      with the terms of this Agreement, Municipal Strategy will have duly transferred
      such assets and liabilities in accordance with this Agreement; (vi) to the
      best of such counsel&#146;s knowledge, no consent, approval, authorization
      or order of any United States federal or Maryland state court or governmental
      authority is required for the consummation by the Funds of the Reorganization,
      except such as have been obtained under the 1933 Act, the 1934 Act and the
      1940 Act and the published rules and regulations of the Commission thereunder
      and under Maryland law and such as may be required under state securities
      laws; (vii) the N-14 Registration Statement has become effective under the
      1933 Act, no stop order suspending the effectiveness of the N-14 Registration
      Statement has been issued and no proceedings for that purpose have been
      instituted or are pending or contemplated under the 1933 Act, and the N-14
      Registration Statement, and each amendment or supplement thereto, as of
      their respective effective dates, appear on their face to be appropriately
      responsive in all material respects to the requirements of the 1933 Act,
      the 1934 Act and the 1940 Act and the published rules and regulations of
      the Commission thereunder; (viii) the descriptions in the N-14 Registration
      Statement of statutes, legal and governmental proceedings and contracts
      and other documents are accurate and fairly present the information required
      to be shown; (ix) the information in the Proxy Statement and Prospectus
      under &#147;Comparison of the Funds&#151;Tax Rules Applicable to the Funds
      and their Stockholders&#148; and &#147;Agreement and Plan of Reorganization&#151;Tax
      Consequences of the Reorganization,&#148; to the extent that it constitutes
      matters of law, summaries of legal matters or legal conclusions, has been
      reviewed by such counsel and is correct in all material respects as of the
      date of the Proxy Statement and Prospectus; (x) such counsel does not know
      of any statutes, legal or governmental proceedings or contracts or other
      documents related to the Reorganization of a character required to be described
      in the N-14 Registration Statement which are not described therein or, if
      required to be filed, filed as required; (xi) neither Fund, to the knowledge
      of such counsel, is required to qualify to do business as a foreign corporation
      in any jurisdiction except as may be required by state securities laws,
      and except where it has so qualified or the failure so to qualify would
      not have a material adverse effect on the Fund or its respective stockholders;
      (xii) except as disclosed in the N-14 Registration Statement, such counsel
      does not have actual knowledge of any material suit, action or legal or
      administrative proceeding pending or threatened against the Fund, the unfavorable
      outcome of which would materially and adversely affect the Fund; (xiii)
      all corporate actions required to be taken by the Funds to authorize this
      Agreement and to effect the Reorganization have been duly authorized on
      the part of the Funds; and (xiv) such opinion is solely for the benefit
      of the Funds and their respective Directors and officers. Such opinion also
      shall state that (A) while such counsel cannot make any representation as
      to the accuracy or completeness of statements of fact in the N-14 Registration
      Statement or any amendment or supplement thereto, nothing has come to their
      attention that would lead them to believe that, on the respective effective
      dates of the N-14 Registration Statement and any amendment or supplement
      thereto, (1) the N-14 Registration Statement or any amendment or supplement
      thereto contained any untrue statement of a material fact or omitted to
      state any material fact required to be stated therein or necessary to make
      the statements therein not misleading; and (2) the prospectus included in
      the N-14 Registration Statement contained any untrue statement of a material
      fact or omitted to state any material fact necessary to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading; and (B) such</FONT><font size=2>&lt;/R&gt;</font> </td>
  </tr></table>





<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-10</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 16, page: 16" -->





<p><table width=600><tr>
    <td><font size=2>counsel does not express any opinion or belief as to the
      financial statements or other financial or statistical data relating to
      either Fund contained or incorporated by reference in the N-14 Registration
      Statement. In giving the opinion set forth above, Sidley Austin Brown &amp;
      Wood <font size="1">LLP</font> may state that it is relying on certificates
      of officers of the Funds with regard to matters of fact and certain certificates
      and written statements of governmental officials with respect to the organization
      and good standing of the Funds.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(f) That Municipal
      Strategy shall have received an opinion of Sidley Austin Brown &amp; Wood
      <FONT SIZE="1">LLP</FONT>, to the effect that for Federal income tax purposes
      (i) the transfer by Municipal Strategy of substantially all of its assets
      to MuniYield in exchange solely for shares of MuniYield Common Stock and
      MuniYield Series F AMPS, as provided in this Agreement, will constitute
      a reorganization within the meaning of Section 368(a)(1)(C) of the Code,
      and Municipal Strategy and MuniYield will each be deemed to be a &#147;party&#148;
      to a reorganization within the meaning of Section 368(b); (ii) in accordance
      with Section 361(a) of the Code, no gain or loss will be recognized to Municipal
      Strategy as a result of the asset transfer solely in exchange for shares
      of MuniYield Common Stock and MuniYield Series F AMPS or on the distribution
      of MuniYield Common Stock and MuniYield Series F AMPS to stockholders of
      Municipal Strategy under Section 361(c)(1); (iii) under Section 1032 of
      the Code, no gain or loss will be recognized to MuniYield on the receipt
      of assets of Municipal Strategy in exchange for its shares; (iv) in accordance
      with Section 354(a)(1) of the Code, no gain or loss will be recognized to
      the stockholders of Municipal Strategy on their respective receipt of shares
      of MuniYield Common Stock and MuniYield Series F AMPS in exchange for their
      shares of Municipal Strategy (except to the extent that Municipal Strategy
      common stockholders receive cash representing an interest in fractional
      shares of MuniYield Common Stock in the Reorganization); (v) in accordance
      with Section 362(b) of the Code, the tax basis of Municipal Strategy&#146;s assets
      in the hands of MuniYield will be the same as the tax basis of such assets
      in the hands of Municipal Strategy immediately prior to the consummation
      of the Reorganization; (vi) in accordance with Section 358 of the Code,
      immediately after the Reorganization, the tax basis of the shares of MuniYield
      Common Stock and MuniYield Series F AMPS received by the stockholders of
      Municipal Strategy in the Reorganization will be equal to the tax basis
      of the shares of Municipal Strategy surrendered in exchange; (vii) in accordance
      with Section 1223 of the Code, a stockholder&#146;s holding period for the shares
      of MuniYield will be determined by including the period for which such stockholder
      held the Municipal Strategy shares exchanged therefor, provided, that such
      shares were held as a capital asset; (viii) in accordance with Section 1223
      of the Code, MuniYield&#146;s holding period with respect to Municipal Strategy&#146;s
      assets transferred will include the period for which such assets were held
      by Municipal Strategy; (ix) the payment of cash to common stockholders of
      Municipal Strategy in lieu of fractional shares of MuniYield Common Stock
      will be treated as though the fractional shares were distributed as part
      of the Reorganization and then redeemed by MuniYield, with the result that
      such stockholders will have short- or long-term capital gain or loss to
      the extent that the cash distribution differs from the stockholder&#146;s basis
      allocable to the MuniYield fractional shares; and (x) the taxable year of
      Municipal Strategy will end on the effective date of the Reorganization,
      and pursuant to Section 381(a) of the Code and regulations thereunder, MuniYield
      will succeed to and take into account, subject to limitation, certain tax
      attributes of Municipal Strategy, such as earnings and profits, capital
      loss carryovers and method of accounting.</FONT></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) That all proceedings taken
      by MuniYield and its counsel in connection with the Reorganization and all
      documents incidental thereto shall be satisfactory in form and substance
      to Municipal Strategy and its counsel.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) That
the N-14 Registration Statement shall have become effective under the 1933 Act,
and no stop order suspending such effectiveness shall have been instituted or,
to the knowledge of MuniYield, be contemplated by the Commission.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;(i) That Municipal
      Strategy shall have received from Deloitte &amp; Touche <font size="1">LLP</font>
      a letter dated within three days prior to the effective date of the N-14
      Registration Statement and a similar letter dated within five days prior
      to the Closing Date, in form and substance satisfactory to Municipal Strategy,
      to the effect that (i) they are independent public accountants with respect
      to MuniYield within the meaning of the 1933 Act and the applicable published
      rules and regulations thereunder; (ii) in their opinion, the financial statements
      and supplementary information of MuniYield included or incorporated by reference
      in the N-14 Registration Statement and reported on by them comply as to
      form in all material respects with the applicable accounting requirements
      of the 1933 Act and the published rules and regulations thereunder; (iii)
      on the basis of limited procedures agreed upon by the Funds and described
      in such letter (but not an examination in accordance with generally accepted
      auditing standards) consisting of a reading of any unaudited interim financial
      statements and unaudited supplementary information of MuniYield included
      in the N-14 Registration Statement, and inquiries of certain officials of
      MuniYield responsible for financial and accounting matters, nothing came
      to their attention that caused them to&lt;/R&gt; </font></td>
  </tr></table>





<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-11</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 17, page: 17" -->





<p><table width=600><tr><td><font size=2>believe that (a) such unaudited
financial statements and related unaudited supplementary information do not
comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the published rules and regulations
thereunder, (b) such unaudited financial statements are not fairly presented in
conformity with generally accepted accounting principles, applied on a basis
substantially consistent with that of the audited financial statements, or (c)
such unaudited supplementary information is not fairly stated in all material
respects in relation to the unaudited financial statements taken as a whole;
and (iv) on the basis of limited procedures agreed upon by the Funds and
described in such letter (but not an examination in accordance with generally
accepted auditing standards), the information relating to MuniYield appearing
in the N-14 Registration Statement, which information is expressed in dollars
(or percentages derived from such dollars) (with the exception of performance
comparisons, if any), if any, has been obtained from the accounting records of
MuniYield or from schedules prepared by officials of MuniYield having
responsibility for financial and reporting matters and such information is in
agreement with such records, schedules or computations made therefrom.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) That
the Commission shall not have issued an unfavorable advisory report under
Section 25(b) of the 1940 Act, nor instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Reorganization under Section
25(c) of the 1940 Act, and no other legal, administrative or other proceeding
shall be instituted or threatened which would materially affect the financial
condition of MuniYield or would prohibit the Reorganization.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) That Municipal Strategy
      shall have received from the Commission such orders or interpretations as
      Sidley Austin Brown &amp; Wood <font size="1">LLP</font>, as counsel to
      Municipal Strategy, deems reasonably necessary or desirable under the 1933
      Act and the 1940 Act in connection with the Reorganization, provided, that
      such counsel shall have requested such orders as promptly as practicable,
      and all such orders shall be in full force and effect.</font></td>
  </tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
9.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>Conditions of MuniYield</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
obligations of MuniYield hereunder shall be subject to the following conditions:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) That
this Agreement shall have been adopted, and the Reorganization shall have been
approved, by the Board of Directors of each of the Funds and by the
stockholders of Municipal Strategy as set forth in Section 8(a); and that
Municipal Strategy shall have delivered to MuniYield a copy of the resolution
approving this Agreement adopted by such Fund&#146;s Board of Directors, and a
certificate setting forth the vote of the stockholders of Municipal Strategy
obtained at the special meeting of its stockholders, certified by its Secretary.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) That
Municipal Strategy shall have furnished to MuniYield a statement of its assets,
liabilities and capital, with values determined as provided in Section 4 of
this Agreement, together with a schedule of investments with their respective
dates of acquisition and tax costs, all as of the Valuation Time, certified on
such Fund&#146;s behalf by its President (or any Vice President) and its Treasurer,
and a certificate signed by such Fund&#146;s President (or any Vice President) and
its Treasurer, dated as of the Closing Date, certifying that as of the
Valuation Time and as of the Closing Date there has been no material adverse
change in the financial position of Municipal Strategy since the date of such
Fund&#146;s most recent Annual Report or Semi-Annual Report, as applicable, other
than changes in the Municipal Strategy Investments since that date or changes
in the market value of the Municipal Strategy Investments.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) That
Municipal Strategy shall have furnished to MuniYield a certificate signed by
such Fund&#146;s President (or any Vice President) and its Treasurer, dated the
Closing Date, certifying that as of the Valuation Time and as of the Closing
Date all representations and warranties of Municipal Strategy made in this
Agreement are true and correct in all material respects with the same effect as
if made at and as of such dates and Municipal Strategy has complied with all of
the agreements and satisfied all of the conditions on its part to be performed
or satisfied at or prior to such dates.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(d) That Municipal
      Strategy shall have delivered to MuniYield a letter from Deloitte &amp;
      Touche <font size="1">LLP</font>, dated the Closing Date, stating that such
      firm has performed a limited review of the Federal, state and local income
      tax returns of Municipal Strategy for the period ended October 31, 2000
      (which returns originally were prepared and filed by Municipal Strategy),
      and that based on such limited review, nothing came to their attention which
      caused them to believe that such returns did not properly reflect, in all
      material respects, the Federal, state and local income taxes of Municipal
      Strategy for the period covered thereby; and that for the period from November
      1, 2000, to and including the Closing Date and for any taxable year of Municipal
      Strategy ending upon the liquidation of Municipal Strategy, such firm has
      performed a limited review to ascertain the amount of applicable Federal,
      state and local taxes, and has determined that either such amount has been
      paid or reserves have been&lt;/R&gt;</font></td>
  </tr></table>




<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-12</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<!-- MARKER LABEL="sheet: 18, page: 18" -->





<p><table width=600><tr><td><font size=2>established for payment of such taxes,
this review to be based on unaudited financial data; and that based on such
limited review, nothing has come to their attention which caused them to
believe that the taxes paid or reserves set aside for payment of such taxes
were not adequate in all material respects for the satisfaction of Federal,
state and local taxes for the period from November 1, 2000, to and including
the Closing Date and for any taxable year of Municipal Strategy, ending upon
the liquidation of such Fund or that such Fund would not qualify as a regulated
investment company for Federal income tax purposes for the tax years in
question.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) That
there shall not be any material litigation pending with respect to the matters
contemplated by this Agreement.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;&nbsp;(f) That MuniYield
      shall have received an opinion of Sidley Austin Brown &amp; Wood <font size="1">LLP</font>,
      as counsel to the Funds, in form and substance satisfactory to MuniYield
      and dated the Closing Date, with respect to the matters specified in Section
      8(e) of this Agreement and such other matters as MuniYield reasonably may
      deem necessary or desirable.</font></td>
  </tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) That MuniYield shall have
      received an opinion of Sidley Austin Brown &amp; Wood <font size="1">LLP</font>
      with respect to the matters specified in Section 8(f) of this Agreement.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) That
MuniYield shall have received from Deloitte &amp; Touche <FONT SIZE="1">LLP</FONT> a letter dated
within three days prior to the effective date of the N-14 Registration
Statement and a similar letter dated within five days prior to the Closing
Date, in form and substance satisfactory to MuniYield, to the effect that (i)
they are independent public accountants with respect to Municipal Strategy
within the meaning of the 1933 Act and the applicable published rules and
regulations thereunder; (ii) in their opinion, the financial statements and
supplementary information of Municipal Strategy included or incorporated by
reference in the N-14 Registration Statement and reported on by them (if
applicable) comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published rules and regulations
thereunder; (iii) on the basis of limited procedures agreed upon by the Funds
and described in such letter (but not an examination in accordance with
generally accepted auditing standards) consisting of a reading of any unaudited
interim financial statements and unaudited supplementary information of
Municipal Strategy included in the N-14 Registration Statement, and inquiries
of certain officials of Municipal Strategy responsible for financial and
accounting matters, nothing came to their attention that caused them to believe
that (a) such unaudited financial statements and related unaudited
supplementary information do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder, (b) such unaudited financial statements are
not fairly presented in conformity with generally accepted accounting
principles, or (c) such unaudited supplementary information is not fairly
stated in all material respects in relation to the unaudited financial
statements taken as a whole; and (iv) on the basis of limited procedures agreed
upon by the Funds and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the information
relating to Municipal Strategy appearing in the N-14 Registration Statement,
which information is expressed in dollars (or percentages derived from such
dollars) (with the exception of performance comparisons, if any), if any, has
been obtained from the accounting records of Municipal Strategy or from
schedules prepared by officials of Municipal Strategy having responsibility for
financial and reporting matters and such information is in agreement with such
records, schedules or computations made therefrom.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) That
the Municipal Strategy Investments to be transferred to MuniYield shall not
include any assets or liabilities which MuniYield, by reason of charter
limitations or otherwise, may not properly acquire or assume.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) That
the N-14 Registration Statement shall have become effective under the 1933 Act
and no stop order suspending such effectiveness shall have been instituted or,
to the knowledge of Municipal Strategy, be contemplated by the Commission.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) That
the Commission shall not have issued an unfavorable advisory report under
Section 25(b) of the 1940 Act, nor instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Reorganization under Section
25(c) of the 1940 Act, and no other legal, administrative or other proceeding
shall be instituted or threatened which would materially affect the financial
condition of Municipal Strategy or would prohibit the Reorganization.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) That
MuniYield shall have received from the Commission such orders or
interpretations as Sidley Austin Brown &amp; Wood <FONT SIZE="1">LLP</FONT>, as counsel to MuniYield,
deems reasonably necessary or desirable under the 1933 Act and the 1940 Act in
connection with the Reorganization, provided, that such counsel shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect.</FONT></td></tr></table>







<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-13</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;









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<!-- MARKER LABEL="sheet: 19, page: 19" -->






<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;(m) That all proceedings
      taken by Municipal Strategy and its counsel in connection with the Reorganization
      and all documents incidental thereto shall be satisfactory in form and substance
      to MuniYield and its counsel.&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) That
prior to the Closing Date, Municipal Strategy shall have declared a dividend or
dividends which, together with all such previous dividends, shall have the
effect of distributing to its stockholders all of its net investment company
taxable income for the period to and including the Closing Date, if any
(computed without regard to any deduction for dividends paid), and all of its
net capital gain, if any, realized to and including the Closing Date. In this
regard, the last dividend period for Municipal Strategy AMPS may be shorter
than the dividend period for such AMPS determined as set forth in the
applicable Articles Supplementary.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
10.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>Termination, Postponement and
Waivers</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated and the Reorganization abandoned at any time
(whether before or after adoption thereof by the stockholders of the Funds)
prior to the Closing Date, or the Closing Date may be postponed, (i) by mutual
consent of the Boards of Directors of the Funds, (ii) by the Board of Directors
of Municipal Strategy if any condition of Municipal Strategy&#146;s obligations set
forth in Section 8 of this Agreement has not been fulfilled or waived by such
Board; or (iii) by the Board of Directors of MuniYield if any condition of
MuniYield&#146;s obligations set forth in Section 9 of this Agreement has not been
fulfilled or waived by such Board.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If
the transactions contemplated by this Agreement have not been consummated by
June 30, 2002, this Agreement automatically shall terminate on that date,
unless a later date is mutually agreed to by the Boards of Directors of the
Funds.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In
the event of termination of this Agreement pursuant to the provisions hereof,
the same shall become void and have no further effect, and there shall not be
any liability on the part of either Fund or persons who are their directors,
trustees, officers, agents or stockholders in respect of this Agreement.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) At
any time prior to the Closing Date, any of the terms or conditions of this
Agreement may be waived by the Board of Directors of either Fund (whichever is
entitled to the benefit thereof), if, in the judgment of such Board after
consultation with its counsel, such action or waiver will not have a material
adverse effect on the benefits intended under this Agreement to the
stockholders of their respective Fund, on behalf of which such action is taken.
In addition, the Boards of Directors of the Funds have delegated to FAM the
ability to make non-material changes to the transaction if it deems it to be in
the best interests of the Funds to do so.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The
respective representations and warranties contained in Sections 1 and 2 of this
Agreement shall expire with, and be terminated by, the consummation of the
Reorganization, and no Fund nor any of its officers, directors, trustees,
agents or stockholders shall have any liability with respect to such
representations or warranties after the Closing Date. This provision shall not
protect any officer, director, trustee, agent or stockholder of either Fund
against any liability to the entity for which that officer, director, trustee,
agent or stockholder so acts or to its stockholders, to which that officer,
director, trustee, agent or stockholder otherwise would be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties in the conduct of such office.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If
any order or orders of the Commission with respect to this Agreement shall be
issued prior to the Closing Date and shall impose any terms or conditions which
are determined by action of the Boards of Directors of the Funds to be
acceptable, such terms and conditions shall be binding as if a part of this
Agreement without further vote or approval of the stockholders of Municipal
Strategy, unless such terms and conditions shall result in a change in the
method of computing the number of shares of MuniYield Common Stock and
MuniYield Series F AMPS to be issued to Municipal Strategy, as applicable, in
which event, unless such terms and conditions shall have been included in the
proxy solicitation materials furnished to the stockholders of Municipal
Strategy prior to the meeting at which the Reorganization shall have been
approved, this Agreement shall not be consummated and shall terminate unless
Municipal Strategy promptly shall call a special meeting of stockholders at
which such conditions so imposed shall be submitted for approval.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
11.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>Indemnification</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Municipal Strategy hereby agrees to indemnify and hold MuniYield harmless from
all loss, liability and expenses (including reasonable counsel fees and
expenses in connection with the contest of any claim), as incurred, which
MuniYield may incur or sustain by reason of the fact that (i) MuniYield shall
be required to pay any corporate obligation of Municipal Strategy, whether
consisting of tax deficiencies or otherwise, based upon
</font></td></tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-14</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 20, page: 20" -->





<p><table width=600><tr><td><font size=2>a claim or claims against Municipal
Strategy which were omitted or not fairly reflected in the financial statements
to be delivered to MuniYield in connection with the Reorganization; (ii) any
representations or warranties made by Municipal Strategy in this Agreement
should prove to be false or erroneous in any material respect; (iii) any
covenant of Municipal Strategy has been breached in any material respect; or
(iv) any claim is made alleging that (a) the N-14 Registration Statement
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (b) the Proxy Statement and Prospectus delivered to
the stockholders of Municipal Strategy and forming a part of the N-14
Registration Statement included any untrue statement of a material fact or
omitted to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except with respect to (iv)(a) and (b) herein insofar as such claim is based on
written information furnished to Municipal Strategy by MuniYield.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
MuniYield hereby agrees to indemnify and hold Municipal Strategy harmless from
all loss, liability and expenses (including reasonable counsel fees and
expenses in connection with the contest of any claim), as incurred, which
Municipal Strategy may incur or sustain by reason of the fact that (i) any
representations or warranties made by MuniYield in this Agreement should prove
false or erroneous in any material respect, (ii) any covenant of MuniYield has
been breached in any material respect, or (iii) any claim is made alleging that
(a) the N-14 Registration Statement included any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) the Proxy
Statement and Prospectus delivered to stockholders of Municipal Strategy and
forming a part of the N-14 Registration Statement included any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except with respect to (iii)(a) and (b) herein insofar as
such claim is based on written information furnished to MuniYield by Municipal
Strategy.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In
the event that any claim is made against MuniYield in respect of which
indemnity may be sought by MuniYield from Municipal Strategy under Section
11(a) of this Agreement, or in the event that any claim is made against
Municipal Strategy in respect of which indemnity may be sought by Municipal
Strategy from MuniYield under Section 11(b) of this Agreement, then the party
seeking indemnification (the &#147;Indemnified Party&#148;), with reasonable promptness
and before payment of such claim, shall give written notice of such claim to
the other party (the &#147;Indemnifying Party&#148;). If no objection as to the validity
of the claim is made in writing to the Indemnified Party by the Indemnifying
Party within thirty (30) days after the giving of notice hereunder, then the
Indemnified Party may pay such claim and shall be entitled to reimbursement
therefor, pursuant to this Agreement. If, prior to the termination of such
thirty-day period, objection in writing as to the validity of such claim is
made to the Indemnified Party, the Indemnified Party shall withhold payment
thereof until the validity of such claim is established (i) to the satisfaction
of the Indemnifying Party, or (ii) by a final determination of a court of
competent jurisdiction, whereupon the Indemnified Party may pay such claim and
shall be entitled to reimbursement thereof, pursuant to this Agreement, or
(iii) with respect to any tax claims, within seven (7) calendar days following
the earlier of (A) an agreement between MuniYield and Municipal Strategy that
an indemnity amount is payable, (B) an assessment of a tax by a taxing
authority, or (C) a &#147;determination&#148; as defined in Section 1313(a) of the Code.
For purposes of this Section 11, the term &#147;assessment&#148; shall have the same
meaning as used in Chapter 63 of the Code and Treasury Regulations thereunder,
or any comparable provision under the laws of the appropriate taxing authority.
In the event of any objection by the Indemnifying Party, the Indemnifying Party
promptly shall investigate the claim, and if it is not satisfied with the
validity thereof, the Indemnifying Party shall conduct the defense against such
claim. All costs and expenses incurred by the Indemnifying Party in connection
with such investigation and defense of such claim shall be borne by it. These
indemnification provisions are in addition to, and not in limitation of, any
other rights the parties may have under applicable law.</font></td></tr></table>

<P><table width=600><TR><TD width=05% valign=top><font size=2>
12.
</FONT></TD><TD width=95% valign=top><FONT SIZE="2"><I>Other Matters</I>.</FONT></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
Pursuant to Rule 145 under the 1933 Act, and in connection with the issuance of
any shares to any person who at the time of the Reorganization is, to its
knowledge, an affiliate of a party to the Reorganization pursuant to Rule
145(c), MuniYield will cause to be affixed upon the certificate(s) issued to
such person (if any) a legend as follows:</font></td></tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-15</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 21, page: 21" -->





<p><table width=600><tr><td width=60>&nbsp;</td><td width=540><font size=2>THESE
SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO MUNIYIELD FUND, INC. (OR
ITS STATUTORY SUCCESSOR), OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT OF 1933 OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
FUND, SUCH REGISTRATION IS NOT REQUIRED.</font></td></tr></table>
<p><table width=600><tr><td><font size=2>and, further, that stop transfer
instructions will be issued to MuniYield&#146;s transfer agent with respect to such
shares. Municipal Strategy will provide MuniYield on the Closing Date with the
name of any stockholder of Municipal Strategy who is to the knowledge of
Municipal Strategy an affiliate of Municipal Strategy on such date.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All
covenants, agreements, representations and warranties made under this Agreement
and any certificates delivered pursuant to this Agreement shall be deemed to
have been material and relied upon by each of the parties, notwithstanding any
investigation made by them or on their behalf.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any
notice, report or demand required or permitted by any provision of this
Agreement shall be in writing and shall be made by hand delivery, prepaid
certified mail or overnight service, addressed to either Fund, at 800 Scudders
Mill Road, Plainsboro, New Jersey 08536, Attn: Terry K. Glenn, President.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This
Agreement supersedes all previous correspondence and oral communications
between the parties regarding the Reorganization, constitutes the only
understanding with respect to the Reorganization, may not be changed except by
a letter of agreement signed by each party and shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said state.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)
Copies of the Articles of Incorporation, as amended, and Articles
Supplementary, as amended, of each Fund are on file with the Maryland
Department and notice is hereby given that this instrument is executed on
behalf of the Directors of each Fund.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement may be executed in any number of counterparts, each of which, when
executed and delivered, shall be deemed to be an original but all such
counterparts together shall constitute but one instrument.</font></td></tr></table>


<br>
<br>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="305" align="left"><font size="2">&lt;R&gt;</font></td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="left"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width="295"><font size="2">M<font size="1">UNI<font size="2">Y<font size="1">IELD</font>
      </font></font> F<font size="1">UND</font>, I<font size="1">NC</font>.</font></td>
  </tr>
  <tr>
    <td width="305">&nbsp;</td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td align="right" valign="top" width="305">&nbsp;</td>
    <td valign="bottom" align="left" width="295"><font size="2">B<font size="1">Y</font><font size="2">:</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/
      T<font size="1">ERRY</font> K. G<font size="1">LENN</font></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td width="305">&nbsp;</td>
    <td align="left" valign="top" width="295"><font size="2"> Name: Terry K. Glenn
      <font size="1"></font></font></td>
  </tr>
  <tr>
    <td width="305">&nbsp;</td>
    <td align="left" valign="top" width="295"><font size="2">Title: President</font></td>
  </tr>
</table>
<br>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="305"><font size="2">A<font size="1">TTEST</font>:</font></td>
    <td width="295">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="center" valign="bottom"><font size="2">/s/ A<font size="1">LICE
      </font>A. P<font size="1">ELLEGRINO</font></font></td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="center" valign="bottom">
      <hr size="1" noshade width="92%" align="right">
    </td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="center" valign="top"><font size="2">S<font size="1">ECRETARY</font></font></td>
    <td width="295">&nbsp;</td>
  </tr>
</table>
<br>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="305"><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width="295"><font size="2">M<font size="1">ERRILL</font> L<font size="1">YNCH</font>
      M<font size="1">UNICIPAL</font> S<font size="1">TRATEGY</font> F<font size="1">UND</font>,
      I<font size="1">NC.</font></font></td>
  </tr>
  <tr>
    <td width="305">&nbsp;</td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td align="right" valign="top" width="305">&nbsp;</td>
    <td valign="bottom" align="left" width="295"><font size="2">B<font size="1">Y</font><font size="2">:</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/
      T<font size="1">ERRY</font> K. G<font size="1">LENN</font></font>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr>
    <td width="305">&nbsp;</td>
    <td align="left" valign="top" width="295"><font size="2"> Name: Terry K. Glenn
      <font size="1"></font></font></td>
  </tr>
  <tr>
    <td width="305">&nbsp;</td>
    <td align="left" valign="top" width="295"><font size="2">Title: President</font></td>
  </tr>
</table>
<br>
<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="305"><font size="2">A<font size="1">TTEST</font>:</font></td>
    <td width="295">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="center" valign="bottom"><font size="2">/s/ A<font size="1">LICE
      </font>A. P<font size="1">ELLEGRINO</font></font></td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="center" valign="bottom">
      <hr size="1" noshade width="92%" align="right">
    </td>
    <td width="295">&nbsp;</td>
  </tr>
  <tr>
    <td width="305" align="center" valign="top"><font size="2">S<font size="1">ECRETARY</font></font></td>
    <td width="295"><font size="2">&lt;/R&gt;</font></td>
  </tr>
</table>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
II-16</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<p><table width=600><tr>
    <td align=right><font size=2><B><a name="III1"></a>APPENDIX III</B></font></td>
  </tr></table>

<p><table width=600><tr><td  align=center><font size=2><B>RATINGS OF MUNICIPAL
BONDS AND COMMERCIAL PAPER</B></font></td></tr></table>

<p><table width=600><tr><td  align=center><font size=2><B>Description of
Moody&#146;s Investors Service, Inc.&#146;s (&#147;Moody&#146;s&#148;) <BR>Municipal Bond Ratings</B></font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
Aaa
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated Aaa are
judged to be of the best quality. They carry the smallest degree of investment
risk and are generally referred to as &#147;gilt edge.&#148; Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
Aa
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated Aa are
judged to be of high quality by all standards. Together with the Aaa group they
comprise what are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
A
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated A
possess many favorable investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
Baa
</FONT></TD><TD width=90% valign=top><FONT SIZE="2">Bonds which are rated Baa are
considered as medium grade obligations, <I>i.e</I>., they are neither highly protected
nor poorly secured. Interest payment and principal security appear adequate for
the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
Ba
</FONT></TD>
    <TD width=90% valign=top><font size=2>Bonds which are rated Ba are judged
      to have speculative elements; their future cannot be considered as well
      assured. Often the protection of interest and principal payments may be
      very moderate and thereby not well safeguarded during both good and bad
      times over the future. Uncertainty </font><font size=2>of position characterizes
      bonds in this class.</font></TD>
  </TR></TABLE>
<P>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
B
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated B
generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
Caa
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated Caa are
of poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
Ca
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated Ca
represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
C
</FONT></TD><TD width=90% valign=top><font size=2>Bonds which are rated C are
the lowest rated class of bonds and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.</font></TD></TR></TABLE>
<P><table width=600><TR>
    <TD width=18% valign=top><font size=2> <i>Note</i>: </FONT></TD>
    <TD width=82% valign=top><font size=2>Those bonds in the Aa, A to Baa, Ba
      and B groups which Moody&#146;s believes possess the strongest investment attributes
      are designated by the symbols Aa1, A1, Baa1, Ba1 and B1.</font></TD>
  </TR></TABLE>
<P><table width=600><TR>
    <TD width=18% valign=top><font size=2> <i>Short-term Notes</i>: </FONT></TD>
    <TD width=82% valign=top><font size=2> The three ratings of Moody&#146;s for short-term
      notes are MIG-1/VMIG-1, MIG-2/ VMIG-2 and MIG-3/VMIG-3; MIG-1/VMIG-1 denotes
      &#147;best quality...strong protection by established cash flows&#148;; MIG-2/VMIG-2
      denotes &#147;high quality&#148; with ample margins of protection; MIG-3/ VMIG-3 notes
      are of &#147;favorable quality... but... lacking the undeniable strength of the preceding
      grades.&#148;</font></TD>
  </TR></TABLE>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
III-1</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;








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<p><table width=600><tr><td><font size=2><B>Description of Moody&#146;s Commercial
Paper Ratings</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moody&#146;s
Commercial Paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody&#146;s employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuers
rated Prime-1 (or related supporting institutions) have a superior ability for
repayment of short-term promissory obligations. Prime-1 repayment ability will
often be evidenced by the following characteristics: leading market positions
in well established industries; high rates of return on funds employed;
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well established access to a range of
financial markets and assured sources of alternate liquidity.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuers
rated Prime-2 (or related supporting institutions) have a strong ability for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
by external conditions. Ample alternate liquidity is maintained.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuers
rated Prime-3 (or related supporting institutions) have a acceptable ability
for repayment of short-term promissory obligations. The effect of industry
characteristics and market composition may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt
protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuers
rated Not Prime do not fall within any of the Prime rating categories.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&lt;R&gt;<B>Description of Standard &amp; Poor&#146;s (&#147;Standard &amp; Poor&#146;s&#148;) Municipal Debt Ratings</B>&lt;/R&gt;</font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
Standard &amp; Poor&#146;s municipal debt rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial obligation,
a specific class of financial obligations, or a specific financial program. It
takes into consideration the creditworthiness of guarantors, insurers or other
forms of credit enhancement on the obligation.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The debt
rating is not a recommendation to purchase, sell or hold a financial
obligation, inasmuch as it does not comment as to market price or suitability
for a particular investor.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
ratings are based on current information furnished by the issuer or obtained by
Standard &amp; Poor&#146;s from other sources Standard &amp; Poor&#146;s considers
reliable. Standard &amp; Poor&#146;s does not perform an audit in connection with
any rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for sources other circumstances.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
ratings are based, in varying degrees, on the following considerations:</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
I.
</FONT></TD><TD width=90% valign=top><font size=2>Likelihood of
payment-capacity and willingness of the obligor to meet its financial
commitment on an obligation in accordance with the terms of the obligation;</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
II.
</FONT></TD><TD width=90% valign=top><font size=2>Nature of and provisions of
the obligation; and</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
III.
</FONT></TD><TD width=90% valign=top><font size=2>Protection afforded by, and
relative position of, the obligation in the event of bankruptcy, reorganization
or other arrangement under the laws of bankruptcy and other laws affecting
creditors&#146; rights.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
AAA
</FONT></TD><TD width=90% valign=top><font size=2>Debt rated &#147;AAA&#148; has the
highest rating assigned by Standard &amp; Poor&#146;s. The obligor&#146;s capacity to
meet its financial commitment on the obligation is extremely strong.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
AA
</FONT></TD><TD width=90% valign=top><font size=2>Debt rated &#147;AA&#148; differs from
the highest rated obligations only in small degree. The obligor&#146;s capacity to
meet its financial commitment on the obligation is very strong.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
A
</FONT></TD><TD width=90% valign=top><font size=2>Debt rated &#147;A&#148; is somewhat
more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher-rated categories. However, the
obligor&#146;s capacity to meet its financial commitment on the obligation is still
strong.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
BBB
</FONT></TD><TD width=90% valign=top><font size=2>Debt rated &#147;BBB&#148; exhibits
adequate protection parameters. However, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation.</font></TD></TR></TABLE>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
III-2</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>
<p>&nbsp; <!-- *************************************************************************** -->
  <!-- MARKER LABEL="sheet: 24, page: 24" -->
<p>&nbsp;
<table width=600>
  <tr>
    <td width=10% valign=top><font size=2> BB <br>
      B <br>
      CCC <br>
      CC <br>
      C </font></td>
    <td width=90% valign=top>
      <p><font size="2">Debt rated &#147;BB,&#148; &#147;B,&#148; &#147;CCC,&#148; &#147;CC&#148; and &#147;C&#148; are regarded
        as having significant speculative characteristics. &#147;BB&#148; indicates the
        least degree of speculation and &#147;C&#148; the highest degree of speculation.
        While such bonds will likely have some quality and protective characteristics,
        these may be outweighed by large uncertainties or major exposures to adverse
        conditions. </font>
      <p>
    </td>
  </tr>
</table>
<br>
<table width=600><TR><TD width=10% valign=top><font size=2>
D
</FONT></TD><TD width=90% valign=top><font size=2>Debt rated &#147;D&#148; is in payment
default. The &#147;D&#148; rating category is used when payments on an obligation are not
made on the date due even if the applicable grace period has not expired,
unless Standard &amp; Poor&#146;s believes that such payments will be made during
such grace period. The &#147;D&#148; rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.</font></TD></TR></TABLE>
<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Plus</I> (+)
or <I>Minus</I> (-): The ratings from &#147;AA&#148; to &#147;CCC&#148; may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2><B>Description of Standard &amp; Poor&#146;s
Commercial Paper Ratings</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
Standard &amp; Poor&#146;s Commercial Paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Ratings are graded into several categories, ranging from &#147;A-1&#148;
for the highest quality obligations to &#147;D&#148; for the lowest. These categories are
as follows:</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
A-1
</FONT></TD><TD width=90% valign=top><font size=2>This highest category
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are
denoted with a plus sign (+) designation.</font></TD></TR></TABLE>
<font size=2>&lt;R&gt;</font><br>
<table width=600><TR><TD width=10% valign=top><font size=2>
A-2
</FONT></TD>
    <TD width=90% valign=top><font size=2>Capacity for timely payment on issues
      with this designation is satisfactory. However, the relative degree of safety
      is not as high for issues designated &#147;A-1.&#148;&lt;/R&gt;</font></TD>
  </TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
A-3
</FONT></TD><TD width=90% valign=top><font size=2>Issues carrying this
designation have an adequate capacity for timely payment. They are, however,
more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
B
</FONT></TD><TD width=90% valign=top><font size=2>Issues rated &#147;B&#148; are regarded
as having only speculative capacity for timely payment.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
C
</FONT></TD><TD width=90% valign=top><font size=2>This rating is assigned to
short-term debt obligations with a doubtful capacity for payment.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
D
</FONT></TD><TD width=90% valign=top><font size=2>Debt rated &#147;D&#148; is in payment
default. The &#147;D&#148; rating category is used when interest payments or principal
payments are not made on the date due, even if the applicable grace period has
not expired, unless Standard &amp; Poor&#146;s believes that such payments will be
made during such grace period.</font></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
Commercial Paper rating is not a recommendation to purchase or sell a security.
The ratings are based on current information furnished to Standard &amp; Poor&#146;s
by the issuer or obtained by Standard &amp; Poor&#146;s from other sources it
considers reliable. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information.</font></td></tr></table>

<p><table width=600><tr><td><font size=2><B>Description of Standard &amp; Poor&#146;s
Short-Term Issue Credit Ratings</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
Standard &amp; Poor&#146;s note rating reflects the liquidity factors and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151; Amortization
schedule &#151; the larger the final maturity relative to other maturities, the
more likely it will be treated as a note.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151; Source
of payment &#151; the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>Note rating symbols are as follows:</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
SP-1
</FONT></TD><TD width=90% valign=top><font size=2>Strong capacity to pay
principal and interest. An issue determined to possess a very strong capacity
to pay debt service is given a plus &#147;+&#148; designation.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
SP-2
</FONT></TD><TD width=90% valign=top><font size=2>Satisfactory capacity to pay
principal and interest, with some vulnerability to adverse financial and
economic changes over the term of the notes.</font></TD></TR></TABLE>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
III-3</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<P><table width=600><TR><TD width=10% valign=top><font size=2>
SP-3
</FONT></TD><TD width=90% valign=top><font size=2>Speculative capacity to pay
principal and interest.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
c
</FONT></TD><TD width=90% valign=top><font size=2>The &#147;c&#148; subscript is used to
provide additional information to investors that the bank may terminate its
obligation to purchase tendered bonds if the long-term credit rating of the
issuer is below an investment-grade level and/or the issuer&#146;s bonds are deemed
taxable.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
p
</FONT></TD>
    <TD width=90% valign=top><font size=2>&lt;R&gt;The letter &#147;p&#148; indicates that
      the rating is provisional. A provisional rating assumes the successful completion
      of the project financed by the debt being rated and indicates that payment
      of the debt service requirements is largely or entirely dependent upon the
      successful, timely completion of the project. This rating, however, while
      addressing credit quality subsequent to completion of the project, makes
      no comment on the likelihood of or the risk of default upon failure of such
      completion. The investor should exercise his own judgment with respect to
      such likelihood and risk.&lt;/R&gt;</font></TD>
  </TR></TABLE>
<P><table width=600><TR>
    <TD width=10% valign=top><font size=2> </FONT></TD>
    <TD width=90% valign=top><font size=2>Continuance of the ratings is contingent
      upon Standard &amp; Poor&#146;s receipt of an executed copy of the escrow agreement
      or closing documentation confirming investments and cash flows.</font></TD>
  </TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
r
</FONT></TD><TD width=90% valign=top><font size=2>The &#147;r&#148; highlights
derivative, hybrid, and certain other obligations that Standard &amp; Poor&#146;s
believes may experience high volatility or high variability in expected returns
as a result of noncredit risks. Examples of such obligations are securities
with principal or interest return indexed to equities, commodities, or
currencies; certain swaps and options; and interest-only and principal-only
mortgage securities. The absence of an &#147;r&#148; symbol should not be taken as an
indication that an obligation will exhibit no volatility or variability in
total return.</font></TD></TR></TABLE>
<p><table width=600><tr><td><font size=2><B>Description of Fitch, Inc.&#146;s
(&#147;Fitch&#148;) Investment Grade Bond Ratings</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch
investment grade bond ratings provide a guide to investors in determining the
credit risk associated with a particular security. The rating represents
Fitch&#146;s assessment of the issuer&#146;s ability to meet the obligations of a
specific debt issue or class of debt in a timely manner.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
rating takes into consideration special features of the issue, its relationship
to other obligations of the issuer, the current and prospective financial
condition and operating performance of the issuer and any guarantor, as well as
the economic and political environment that might affect the issuer&#146;s future
financial strength and credit quality.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch
ratings do not reflect any credit enhancement that may be provided by insurance
policies or financial guarantees unless otherwise indicated.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bonds
that have the same rating are of similar but not necessarily identical credit
quality since the rating categories do not fully reflect small differences in
the degrees of credit risk.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch
ratings are not recommendations to buy, sell, or hold any security. Ratings do
not comment on the adequacy of market price, the suitability of any security
for a particular investor, or the tax-exempt nature or taxability of payments
made in respect of any security.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch
ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information.
Ratings may be changed, suspended, or withdrawn as a result of changes in, or
the unavailability of, information or for other reasons.</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
AAA
</FONT></TD><TD width=90% valign=top><font size=2>Bonds considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
AA
</FONT></TD><TD width=90% valign=top><font size=2>Bonds considered to be
investment grade and of very high credit quality. The obligor&#146;s ability to pay
interest and repay principal is very strong, although not quite as strong as
bonds rated &#147;AAA.&#148; Because bonds rated in the &#147;AAA&#148; and &#147;AA&#148; categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated &#147;F-1+.&#148;</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
A
</FONT></TD><TD width=90% valign=top><font size=2>Bonds considered to be
investment grade and of high credit quality. The obligor&#146;s ability to pay
interest and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances than
bonds with higher ratings.</font></TD></TR></TABLE>
<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
III-4</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;






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<P><table width=600><TR><TD width=10% valign=top><font size=2>
BBB
</FONT></TD><TD width=90% valign=top><font size=2>Bonds considered to be
investment grade and of satisfactory credit quality. The obligor&#146;s ability to
pay interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.</font></TD></TR></TABLE>
<p><table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Plus</I> (+)
or <I>Minus</I> (-): Plus and minus signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the &#147;AAA&#148; category.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NR:
Indicates that Fitch does not rate the specific issue.</font></td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2"><B>Conditional</B> A conditional rating is
premised on the successful completion of a project or the occurrence of a
specific event.</FONT> </td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2"><B>Suspended</B> A rating is suspended when
Fitch deems the amount of information available from the issuer to be
inadequate for rating purposes.</FONT> </td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2"><B>Withdrawn</B> A rating will be withdrawn
when an issue matures or is called or refinanced and, at Fitch&#146;s discretion,
when an issuer fails to furnish proper and timely information.</FONT>
</td></tr></table>

<p><table width=600><tr><td><FONT SIZE="2"><B>FitchAlert</B> Ratings are placed on
FitchAlert to notify investors of an occurrence that is likely to result in a
rating change and the likely direction of such change. These are designated as
&#147;Positive&#148; indicating a potential upgrade, &#147;Negative&#148; for potential downgrade,
or &#147;Evolving&#148; where ratings may be raised or lowered. FitchAlert is relatively
short-term, and should be resolved within three to 12 months.</FONT></td></tr></table>

<p><table width=600><tr><td><font size=2><B>Description of Fitch&#146;s Speculative
Grade Bond Ratings</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch
speculative grade bond ratings provide a guide to investors in determining the
credit risk associated with a particular security. The ratings (&#147;BB&#148; to &#147;C&#148;)
represent Fitch&#146;s assessment of the likelihood of timely payment of principal
and interest in accordance with the terms of obligation for bond issues not in
default. For defaulted bonds, the rating (&#147;DDD&#148; to &#147;D&#148;) is an assessment of the
ultimate recovery value through reorganization or liquidation.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
rating takes into consideration special features of the issue, its relationship
to other obligations of the issuer, the current and prospective financial
condition and operating performance of the issuer and any guarantor, as well as
the economic and political environment that might affect the issuer&#146;s future
financial strength.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bonds
that have the rating are of similar but not necessarily identical credit
quality since rating categories cannot fully reflect the differences in degrees
of credit risk.</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
BB
</FONT></TD><TD width=90% valign=top><font size=2>Bonds are considered
speculative. The obligor&#146;s ability to pay interest and repay principal may be
affected over time by adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in satisfying its
debt service requirements.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
B
</FONT></TD><TD width=90% valign=top><font size=2>Bonds are considered highly
speculative. While bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of principal and
interest reflects the obligor&#146;s limited margin of safety and the need for
reasonable business and economic activity throughout the life of the issue.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
CCC
</FONT></TD><TD width=90% valign=top><font size=2>Bonds have certain
identifiable characteristics which, if not remedied, may lead to default. The
ability to meet obligations requires an advantageous business and economic
environment.</font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
CC
</FONT></TD><TD width=90% valign=top><font size=2>Bonds are minimally
protected. Default in payment of interest and/or principal seems probable over
time. </font></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
C
</FONT></TD><TD width=90% valign=top><font size=2>Bonds are in imminent default
in payment of interest or principal.</font></TD></TR></TABLE>
<br>
<table width=600>
  <tr>
    <td width=10% valign=top><font size=2> DDD <br>
      DD <br>
      D </font></td>
    <td width=90% valign=top>
      <p><font size="2">Bonds are in default on interest and/or principal payments.
        Such bonds are extremely speculative and should be valued on the basis
        of their ultimate recovery value in liquidation or reorganization of the
        obligor. &#147;DDD&#148; represents the highest potential for recovery on these
        bonds, and &#147;D&#148; represents the lowest potential for recovery. </font></p>
      <p>
    </td>
  </tr>
</table>
<br>
<table width=600><tr><td><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Plus</I> (+)
or <I>Minus</I> (-): Plus and minus signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the &#147;DDD,&#148; &#147;DD,&#148; or &#147;D&#148; categories.</FONT></td></tr></table>






<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
III-5</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;







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<!-- MARKER LABEL="sheet: 27, page: 27" -->






<p><table width=600><tr><td><font size=2><B>Description of Fitch&#146;s Short-Term
Ratings</B></font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch&#146;s
short-term ratings apply to debt obligations that are payable on demand or have
original maturities of up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment notes.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer&#146;s obligations in a timely
manner.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fitch
short-term ratings are as follows:</font></td></tr></table>

<P><table width=600><TR><TD width=10% valign=top><font size=2>
F-1+
</FONT></TD><TD width=90% valign=top><FONT SIZE="2"><I>Exceptionally Strong Credit
Quality</I>. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
F-1
</FONT></TD><TD width=90% valign=top><FONT SIZE="2"><I>Very Strong Credit Quality</I>.
Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated &#147;F-1+.&#148;</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
F-2
</FONT></TD><TD width=90% valign=top><FONT SIZE="2"><I>Good Credit Quality</I>. Issues
assigned this rating have a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues assigned &#147;F-1+&#148;
and &#147;F-1&#148; ratings.</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
F-3
</FONT></TD><TD width=90% valign=top><FONT SIZE="2"><I>Fair Credit Quality</I>. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
F-4
</FONT></TD><TD width=90% valign=top><FONT SIZE="2"><I>Weak Credit Quality</I>. Issues
assigned this rating have characteristics suggesting a minimal degree of
assurance for timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
D
</FONT></TD><TD width=90% valign=top><FONT SIZE="2"><I>Default</I>. Issues assigned this
rating are in actual or imminent payment default.</FONT></TD></TR></TABLE>
<P><table width=600><TR><TD width=10% valign=top><font size=2>
LOC
</FONT></TD><TD width=90% valign=top><font size=2>The symbol &#147;LOC&#148; indicates
that the rating is based on a letter of credit issued by a commercial bank.</font></TD></TR></TABLE>



<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
III-6</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;








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<!-- MARKER LABEL="sheet: 1, page: 1" -->


<p><table width=600><tr><td  align=center><font size=2><B>PART C<BR>OTHER
INFORMATION</B></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B>Item 15.<i> &nbsp;Indemnification.</i></B></font></td>
  </tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
2-418 of the General Corporation Law of the State of Maryland, Article VI of
the Registrant&#146;s By-Laws, filed as Exhibit 2 hereto, and the Investment
Advisory Agreement, a form of which is filed as Exhibit 6 hereto, provide for
indemnification.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended (the &#147;1933 Act&#148;), may be provided to directors, officers and
controlling persons of the Registrant, pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in connection with any successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.</font></td></tr></table>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference
is made to (i) Section 6 of the Purchase Agreement relating to the Registrant&#146;s
Common Stock, a form of which is filed as Exhibit 7(a) hereto, and (ii) Section
7 of the Purchase Agreement relating to the Registrant&#146;s Auction Market
Preferred Stock (&#147;AMPS&#148;), a form of which is filed as Exhibit 7(b) hereto, for
provisions relating to the indemnification of the underwriter.</font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2><B>Item 16. &nbsp;<i>Exhibits.&lt;R&gt;</i></B></font></td>
  </tr></table>

<P>
<TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=601 border="0">
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 1 </FONT></TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (a) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles of Incorporation of the Registrant,
      dated September 20, 1991.(a) </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (b) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles of Amendment to the Articles of Incorporation
      of the Registrant, dated November 15, 1991.(a) </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (c) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles Supplementary creating the Registrant&#146;s
      Five Series of AMPS. </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (d) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles of Amendment to Articles Supplementary
      creating the Registrant&#146;s Five Series of AMPS, dated November 13, 1992.(a)
      </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (e) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles of Amendment to Articles Supplementary
      creating the Registrant&#146;s Five Series of AMPS, dated November 30, 1994.
      </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (f) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles of Amendment to Articles Supplementary
      creating the Registrant&#146;s Five Series of AMPS, dated November 30, 1994.(a)
      </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (g) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Articles of Amendment to Articles Supplementary
      creating the Registrant&#146;s Five Series of AMPS, dated June 23, 1999.(a)
      </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (h) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Form of Articles Supplementary creating the
      Registrant&#146;s Series F AMPS.(c) </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 2 </FONT></TD>
    <TD WIDTH="18" align="left">&nbsp;</TD>
    <td width="19" align="center"> <font size=2> &#151; </font></td>
    <TD WIDTH="551"><font size=2>By-Laws of the Registrant.(a)</font></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 3 </FONT></TD>
    <TD WIDTH="18" align="left">&nbsp;</TD>
    <td width="19" align="center"> <font size=2> &#151; </font></td>
    <TD WIDTH="551"><font size=2>Not applicable.</font></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 4 </FONT></TD>
    <TD WIDTH="18" align="left">&nbsp;</TD>
    <td width="19" align="center"> <font size=2> &#151; </font></td>
    <TD WIDTH="551"><font size=2>Form of Agreement and Plan of Reorganization
      among the Registrant and Merrill Lynch Municipal Strategy Fund, Inc. (&#147;Municipal
      Strategy&#148;) (included as Appendix II to the Proxy Statement and Prospectus
      contained in this Registration Statement).</font></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 5 </FONT></TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (a) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Copies of instruments defining the rights of
      stockholders, including the relevant portions of the Articles of Incorporation
      and the By-Laws of the Registrant.(b) </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (b) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Form of specimen certificate for the common
      stock of the Registrant. </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (c) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Form of specimen certificate for the AMPS of
      the Registrant. </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 6 </FONT></TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> &nbsp; </FONT></TD>
    <TD WIDTH="19" align="center">
      <center>
        <FONT SIZE=2>&#151;</FONT>
      </center>
    </TD>
    <TD WIDTH="551"><font size=2>Investment Advisory Agreement between Registrant
      and Fund Asset Management, L.P. (&#147;FAM&#148;).(a)</font></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 7 </FONT></TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (a) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Form of Purchase Agreement for the common stock
      of the Registrant. </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (b) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Form of Purchase Agreement for the AMPS of
      the Registrant. </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left"> <FONT SIZE=2> (c) </FONT></TD>
    <TD WIDTH="19" align="center"> <FONT SIZE=2> &#151; </FONT></TD>
    <TD WIDTH="551"> <FONT SIZE=2> Form of Merrill Lynch Standard Dealer Agreement.
      </FONT></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right"> <FONT SIZE=2> 8 </FONT></TD>
    <TD WIDTH="18" align="left">&nbsp;</TD>
    <td width="19" align="center"> <font size=2> &#151; </font></td>
    <TD WIDTH="551"><font size=2>Not applicable.&lt;/R&gt; </font></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="13" align="right">&nbsp;</TD>
    <TD WIDTH="18" align="left">&nbsp;</TD>
    <td width="19" align="center">&nbsp;</td>
    <TD WIDTH="551">&nbsp;</TD>
  </TR>
</TABLE>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
C-1</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT>





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<!-- MARKER LABEL="sheet: 2, page: 2" -->



<p>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&lt;R&gt;</font></td>
  </tr></table>

<table 0 cellspacing=0 cellpadding=0 width=601 border="0">
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 9 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Custodian Contract between the Registrant and
      The Bank of New York (&#147;BONY&#148;).</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 10 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Form of Terms and Conditions of Amended Automatic
      Dividend Reinvestment Plan.(a)</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 11 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Opinion and Consent of Sidley Austin Brown &amp;
      Wood <font size="1">LLP</font>, counsel for the Registrant.</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 12 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Opinion of Sidley Austin Brown &amp; Wood <font size="1">LLP</font>,
      relating to certain tax matters.(d)</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 13 </font></td>
    <td width="18" align="left"> <font size=2> (a) </font></td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"> <font size=2> Form of Registrar, Transfer Agency and Service
      Agreement between the Registrant and BONY. </font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right">&nbsp;</td>
    <td width="18" align="left"> <font size=2> (b) </font></td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"> <font size=2> Form of Auction Agent Agreement between the
      Registrant and BONY. </font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right">&nbsp;</td>
    <td width="18" align="left"><font size="2">(c)</font></td>
    <td width="17" align="center"><font size=2>&#151;</font></td>
    <td width="551"><font size="2">Form of Agreement of Resignation, Appointment
      and Acceptance between the Registrant, IBJ Whitehall Bank &amp; Trust Company
      and BONY.</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right">&nbsp;</td>
    <td width="18" align="left"> <font size=2> (d) </font></td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"> <font size=2> Form of Broker-Dealer Agreement. </font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right">&nbsp;</td>
    <td width="18" align="left"> <font size=2> (e) </font></td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"> <font size=2> Form of Letter of Representations. </font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 14 </font></td>
    <td width="18" align="left"><font size="2">(a)</font></td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Consent of Deloitte &amp; Touche <font size="1">LLP</font>,
      independent auditors for the Registrant.</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"><font size=2>14</font></td>
    <td width="18" align="left"><font size=2>(b)</font></td>
    <td width="17" align="center"><font size=2>&#151;</font></td>
    <td width="551"><font size=2>Consent of Deloitte &amp; Touche <font size="1">LLP</font>,
      independent auditors for Municipal Strategy.</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 15 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Not applicable.</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 16 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Power of Attorney.(e).</font></td>
  </tr>
  <tr valign="top">
    <td width="15" align="right"> <font size=2> 17 </font></td>
    <td width="18" align="left">&nbsp;</td>
    <td width="17" align="center"> <font size=2> &#151; </font></td>
    <td width="551"><font size=2>Not applicable.</font></td>
  </tr>
</table>
<table width=600><tr><td><hr size=1 noshade align=left  width=75></td></tr></table>

<table width=600>
  <tr>
    <td width=3% valign=top><font size="2">(a) </font></td>
    <td width=2%>&nbsp;</td>
    <td width=95%><font size="2">Refiled on July 17, 2001 as an Exhibit to the
      Registrant&#146;s Registration Statement on Form N-14 (File No. 333-65242)
      (the &#147;N-14 Registration Statement&#148;) pursuant to Electronic Data
      Gathering, Analysis and Retrieval (EDGAR) requirements.&lt;/R&gt;</font></td>
  </tr>
</table>

<table width=600>
  <tr>
    <td width=3% valign=top><font size="2">(b) </font></td>
    <td width=2%>&nbsp;</td>
    <td width=95%><font size="2">Reference is made to Article V, Article VI (sections
      2, 3, 4, 5 and 6), Article VII, Article VIII, Article X, Article XI, Article
      XII and Article XIII of the Registrant&#146;s Articles of Incorporation,
      filed as Exhibit 1(a) hereto, to Article II, Article III (sections 1, 2,
      3, 5 and 17), Article VI, Article VII, Article XII, Article XIII and Article
      XIV of the Registrant&#146;s By-Laws, filed as Exhibit 2 hereto, and to
      the Form of Articles Supplementary relating to the Registrant&#146;s Five
      Series of AMPS, filed as Exhibit 1(c) hereto. Reference is also made to
      the Form of Articles Supplementary relating to the Registrant&#146;s Series
      F AMPS, filed as Exhibit 1(h) hereto.</font></td>
  </tr>
</table>

<table width=600>
  <tr>
    <td width=3% valign=top><font size="2">(c) </font></td>
    <td width=2%>&nbsp;</td>
    <td width=95%><font size="2">&lt;R&gt;Filed on July 17, 2001 as an Exhibit
      to the N-14 Registration Statement.</font></td>
  </tr>
  <tr>
    <td width=3% valign=top><font size="2">(d)</font></td>
    <td width=2%>&nbsp;</td>
    <td width=95%><font size="2">To be filed by post-effective amendment to the
      N-14 Registration Statement.</font></td>
  </tr>
  <tr>
    <td width=3% valign=top><font size="2">(e)</font></td>
    <td width=2%>&nbsp;</td>
    <td width=95%><font size="2">Included on the signature page of the N-14 Registration
      Statement filed on July 17, 2001 and incorporated herein by reference.&lt;/R&gt;</font></td>
  </tr>
</table>

<p><table width=600><tr>
    <td><font size=2><B>Item 17.&nbsp;<i> Undertakings.</i></B></font></td>
  </tr></table>

<table width=600><tr><td width=3% valign=top><FONT SIZE="2">(1)</FONT>
</td><td width=2%><FONT SIZE="2"></FONT></td><td width=95%><FONT SIZE="2">The
undersigned Registrant agrees that prior to any public reoffering of the
securities registered through use of a prospectus which is part of this
Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as
amended, the reoffering prospectus will contain information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by other items of the
applicable form.</FONT></td></tr></table>

<table width=600><tr><td width=3% valign=top><FONT SIZE="2">(2)</FONT>
</td><td width=2%><FONT SIZE="2"></FONT></td><td width=95%><FONT SIZE="2">The
undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, as amended, each
post-effective amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of securities at that time
shall be deemed to be the initial bona fide offering of them.</FONT></td></tr></table>

<table width=600><tr><td width=3% valign=top><FONT SIZE="2">(3)</FONT>
</td><td width=2%><FONT SIZE="2"></FONT></td><td width=95%><FONT SIZE="2">The
Registrant undertakes to file, by post-effective amendment, an opinion of
counsel as to certain tax matters within a reasonable time after receipt of
such opinion.</FONT></td></tr></table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
C-2</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;





<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 3, page: 3" -->



<p><table width=600><tr><td  align=center><font size=2><B>SIGNATURES</B></font></td></tr></table>

<p><table width=600><tr>
    <td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&lt;R&gt;As required by the
      Securities Act of 1933, this Registration Statement has been signed on behalf
      of the Registrant, in the Township of Plainsboro and State of New Jersey,
      on the 14th day of September, 2001.&lt;/R&gt;</font></td>
  </tr></table>

<P><TABLE 0 CELLSPACING=0 CELLPADDING=0 WIDTH=600 border="0">
  <TR>
    <TD VALIGN="TOP" WIDTH="1">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="284">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="43">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="270" align="center"> <FONT SIZE=2> M<font size="1">UNI</font>Y<font size="1">IELD</font>
      F<font size="1">UND</font>, I<font size="1">NC</font>.</FONT> </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" WIDTH="1">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="284">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="43">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="270" align="center"> <FONT SIZE=2>
      (Registrant)
      </FONT></TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" WIDTH="1">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="284" align="right"><font size=2>&lt;R&gt;</font></TD>
    <TD VALIGN="bottom" WIDTH="43">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="270" align="center">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" WIDTH="1">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="284" align="right"> <FONT SIZE=2>
      By:
      </FONT></TD>
    <TD VALIGN="bottom" WIDTH="43">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="270" align="center"> <FONT SIZE=2> /s/ T<font size="1">ERRY</font>
      K. G<font size="1">LENN</font> </FONT>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" WIDTH="1">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="284">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="43">&nbsp;</TD>
    <TD VALIGN="bottom" WIDTH="270" align="center"> <FONT SIZE=2> <font size="1"><b>(Terry
      K. Glenn, President) </b></font></FONT></TD>
  </TR>
</TABLE>

<p><table width=600><tr><td><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.</font></td></tr></table>

<P>
<table 0 cellspacing=0 cellpadding=0 border="0" width=600>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> <b><font size="1">Signatures</font>
      </b> </font>
      <hr noshade size="1" width="17%">
    </td>
    <td valign="bottom" align="center" width="23">&nbsp;</td>
    <td valign="bottom" align="center" width="168"> <font size=2> <b><font size="1">Title</font>
      </b> </font>
      <hr noshade size="1" width="10%">
    </td>
    <td valign="bottom" align="center" width="113"> <font size=2> <b><font size="1">Date</font>
      </b> </font>
      <hr noshade size="1" width="17%">
    </td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265">&nbsp;</td>
    <td valign="bottom" align="left" width="23">&nbsp;</td>
    <td valign="bottom" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> T<font size="1">ERRY</font>
      K. G<font size="1">LENN</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=1><b>(Terry K. Glenn)</b> </font> </td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"> <font size=2> President and Director<br>
      &nbsp;&nbsp;(Principal Executive Officer) </font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265">&nbsp;</td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> D<font size="1">ONALD</font>
      C. B<font size="1">URKE</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=2> <b> <font size="1">(Donald C. Burke)</font></b> </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"><font size="2">Vice President and<br>
      &nbsp;&nbsp;Treasurer (Principal Financial<br>
      &nbsp;&nbsp;and Accounting Officer)</font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265">&nbsp;</td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> J<font size="1">AMES</font>
      H. B<font size="1">ODURTHA</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=1><b>(James H. Bodurtha)</b> </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"> <font size=2> Director </font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> &nbsp; </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> H<font size="1">ERBERT</font>
      I. L<font size="1">ONDON</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=1><b>(Herbert I. London)</b> </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"> <font size=2> Director </font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> &nbsp; </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> J<font size="1">OSEPH</font>
      L. M<font size="1">AY</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=1><b>(Joseph L. May)</b> </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"> <font size=2> Director </font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> &nbsp; </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> A<font size="1">NDR&Eacute;</font>
      F. P<font size="1">EROLD</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=1><b>(Andr&eacute; F. Perold)</b> </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"> <font size=2> Director </font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> &nbsp; </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265"> <font size=2> R<font size="1">OBERTA</font>
      C<font size="1">OOPER</font> R<font size="1">AMO</font>* </font>
      <hr noshade size="1" width="95%">
      <font size=1><b>(Roberta Cooper Ramo)</b> </font></td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"> <font size=2> Director </font></td>
    <td valign="bottom" align="left" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" align="right" width="31">&nbsp;</td>
    <td valign="bottom" align="center" width="265">&nbsp;</td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="top" align="center" width="113">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" align="right" width="31"> <font size=2> *By: </font></td>
    <td valign="bottom" align="center" width="265"> <font size=2> /s/ T<font size="1">ERRY</font>
      K. G<font size="1">LENN</font> </font>
      <hr noshade size="1" width="95%">
      <font size="1"> <b>(Terry K. Glenn, Attorney-in-Fact)</b> </font> </td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168"><font size=2> </font></td>
    <td valign="top" align="center" width="113"> <font size="2">September&nbsp;14,
      2001</font> </td>
  </tr>
  <tr>
    <td valign="top" align="right" width="31"><font size=2><font size=2>&lt;/R&gt;</font>
      </font></td>
    <td valign="bottom" align="center" width="265">&nbsp;</td>
    <td valign="top" align="left" width="23">&nbsp;</td>
    <td valign="top" align="left" width="168">&nbsp;</td>
    <td valign="top" align="center" width="113">&nbsp;</td>
  </tr>
</table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
C-3</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;





<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 4, page: 4" -->



<p><table width=600><tr><td  align=center><font size=2><B>INDEX TO EXHIBITS</B></font></td></tr></table>

<P>
<table 0 cellspacing=0 cellpadding=0 width=600 border="0">
  <tr valign="bottom">
    <td colspan="2"><font size="1"><b>Exhibit<br>
      Number</b> </font>
      <hr noshade size="1" width="80%" align="left">
    </td>
    <td width="27" align="center">&nbsp;</td>
    <td width="529"> <font size="2"><b><font size="1">Description</font> &lt;R&gt;</b></font>
      <hr noshade size="1" width="12%" align="left">
    </td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">1 </font> </td>
    <td width="23"> <font size="2">(c) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Articles Supplementary creating the Registrant&#146;s
      Five Series of AMPS. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">1 </font> </td>
    <td width="23"> <font size="2">(e) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Articles of Amendment to Articles Supplementary
      creating the Registrant&#146;s Five Series of AMPS, dated November 30, 1994.</font>
    </td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">5 </font> </td>
    <td width="23"> <font size="2">(b) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of specimen certificate for the common
      stock of the Registrant. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">5</font> </td>
    <td width="23"> <font size="2">(c) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of specimen certificate for the AMPS.
      </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">7 </font> </td>
    <td width="23"> <font size="2">(a) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Purchase Agreement for the common
      stock of the Registrant. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">7</font></td>
    <td width="23"> <font size="2">(b) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Purchase Agreement for the AMPS of
      the Registrant. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">7</font></td>
    <td width="23"> <font size="2">(c) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Merrill Lynch Standard Dealer Agreement.
      </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">9 </font> </td>
    <td width="23">&nbsp;</td>
    <td width="23"> <font size="2">&#151; </font> </td>
    <td width="529"><font size=2>Form of Custody Agreement between the Registrant
      and BONY.</font></td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">11 </font> </td>
    <td width="23">&nbsp;</td>
    <td width="23"> <font size="2">&#151; </font> </td>
    <td width="529"><font size=2>Opinion and Consent of Sidley Austin Brown &amp;
      Wood <font size="1">LLP</font>, counsel for the Registrant. </font></td>
  </tr>
  <tr valign="top">
    <td width="19"> <font size="2">13 </font> </td>
    <td width="23"> <font size="2">(a) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Registrar, Transfer Agency and Service
      Agreement between the Registrant and BONY. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">13</font></td>
    <td width="23"> <font size="2">(b) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Auction Agent Agreement between the
      Registrant and BONY. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">13</font></td>
    <td width="23"><font size="2">(c)</font></td>
    <td width="27"><font size="2">&#151; </font> </td>
    <td width="529"><font size="2">Form of Agreement of Resignation, Appointment
      and Acceptance between the Registrant, IBJ Whitehall Bank &amp; Trust Company
      and BONY.</font></td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">13</font></td>
    <td width="23"> <font size="2">(d) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Broker-Dealer Agreement. </font> </td>
  </tr>
  <tr valign="top">
    <td width="19"><font size="2">13</font></td>
    <td width="23"> <font size="2">(e) </font> </td>
    <td width="27"> <font size="2">&#151; </font> </td>
    <td width="529"> <font size="2">Form of Letter of Representations. </font>
    </td>
  </tr>
  <tr valign="top">
    <td width="19" height="18"> <font size="2">14 </font> </td>
    <td width="23" height="18"><font size="2">(a)</font> </td>
    <td width="27" height="18"> <font size=2> &#151; </font></td>
    <td width="529" height="18"><font size=2>Consent of Deloitte &amp; Touche
      <font size="1">LLP</font>, independent auditors for the Registrant.</font></td>
  </tr>
  <tr valign="top">
    <td width="19" height="18"><font size="2">14</font></td>
    <td width="23" height="18"><font size="2">(b)</font></td>
    <td width="27" height="18"><font size=2>&#151;</font></td>
    <td width="529" height="18"><font size=2>Consent of Deloitte &amp; Touche
      <font size="1">LLP</font>, independent auditors for Municipal Stragegy.&lt;/R&gt;</font></td>
  </tr>
</table>

<p>&nbsp;
<table width=600><tr><td width=60 align=left><font size=1>&nbsp;</font></td><td width=480 align=center><font size="2">
</font></td><td width=60 align=right><font size="1">&nbsp;</font></td></tr></table><p>&nbsp;<hr size=5 noshade width=600 align=LEFT><p>&nbsp;

</BODY>
</HTML>






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1.C
<SEQUENCE>3
<FILENAME>file002.txt
<DESCRIPTION>ARTICLES SUPPLEMENTARY
<TEXT>

                                                                    Exhibit 1(c)

                              MUNIYIELD FUND, INC.
                 Articles Supplementary creating five series of
                        Auction Market Preferred Stock(R)

      MUNIYIELD FUND, INC., a Maryland corporation having its principal Maryland
office in the City of Baltimore (the "Corporation"), certifies to the State
Department of Assessments and Taxation of Maryland that:

      FIRST: Pursuant to Authority expressly vested in the Board of Directors of
the Corporation by article fifth of its Charter, the Board of Directors has
reclassified 5,000 authorized and unissued shares of common stock of the
Corporation as preferred stock of the Corporation had has authorized the
issuance of five series of preferred stock, par value $.10 per share,
liquidation preference $50,000 per share plus an amount equal to accumulated but
unpaid dividends (whether or not earned or declared) thereon, to be designated
respectively: Auction Market Preferred Stock, Series A; Auction Market Preferred
Stock, Series B; Auction Market Preferred Stock, Series C; Auction Market
Preferred Stock, Series D; and Auction Market Preferred Stock, Series E.

      SECOND: The preferences, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, of the shares
of each such series of preferred stock are as follows:

- ----------
(R) Registered trademark of Merrill Lynch & Co., Inc.


                                       1
<PAGE>

                                   DESIGNATION

      SERIES A: A series of 900 shares of preferred stock, par value $.10 per
share, liquidation preference $50,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) thereon, is
hereby designated "Auction Market Preferred Stock, Series A." Each share of
Auction Market Preferred Stock, Series A (sometimes referred to herein as
"Series A AMPS") shall be issued on a date to be determined by the Board of
Directors of the Corporation; have an Initial Dividend Rate and Initial Dividend
Payment Date as shall be determined in advance of the issuance thereof by the
Board of Directors of the Corporation; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Articles Supplementary. The Auction Market
Preferred Stock, Series A shall constitute a separate series of preferred stock
of the Corporation, and each share of Auction Market Preferred Stock, Series A
shall be identical.

      SERIES B: A series of 900 shares of preferred stock, par value $.10 per
share, liquidation preference $50,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) thereon, is
hereby designated "Auction Market Preferred Stock, Series B." Each share of
Auction Market Preferred Stock, Series B (sometimes referred to herein as
"Series B AMPS") shall be issued on a date to be determined by the Board of
Directors of the Corporation; have an Initial Dividend Rate and Initial Dividend
Payment Date as shall be determined in advance of the issuance thereof by the
Board of Directors of the Corporation; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Articles Supplementary. The Auction Market
Preferred Stock, Series B shall constitute a separate series


                                       2
<PAGE>

of preferred stock of the Corporation, and each share of Auction Market
Preferred Stock, Series B shall be identical.

      SERIES C: A series of 900 shares of preferred stock, par value $.10 per
share, liquidation preference $50,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) thereon, is
hereby designated "Auction Market Preferred Stock, Series C." Each share of
Auction Market Preferred Stock, Series C (sometimes referred to herein as
"Series C AMPS") shall be issued on a date to be determined by the Board of
Directors of the Corporation; have an Initial Dividend Rate and Initial Dividend
Payment Date as shall be determined in advance of the issuance thereof by the
Board of Directors of the Corporation; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Articles Supplementary. The Auction Market
Preferred Stock, Series C shall constitute a separate series of preferred stock
of the Corporation, and each share of Auction Market Preferred Stock, Series C
shall be identical.

      SERIES D: A series of 900 shares of preferred stock, par value $.10 per
share, liquidation preference $50,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) thereon, is
hereby designated "Auction Market Preferred Stock, Series D." Each share of
Auction Market Preferred Stock, Series D (sometimes referred to herein as
"Series D AMPS") shall be issued on a date to be determined by the Board of
Directors of the Corporation; have an Initial Dividend Rate and Initial Dividend
Payment Date as shall be determined in advance of the issuance thereof by the
Board of Directors of the Corporation; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Articles


                                       3
<PAGE>

Supplementary. The Auction Market Preferred Stock, Series D shall constitute a
separate series of preferred stock of the Corporation, and each share of Auction
Market Preferred Stock, Series D shall be identical.

      SERIES E: A series of 1,400 shares of preferred stock, par value $.10 per
share, liquidation preference $50,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) thereon, is
hereby designated "Auction Market Preferred Stock, Series E." Each share of
Auction Market Preferred Stock, Series E (sometimes referred to herein as
"Series E AMPS") shall be issued on a date to be determined by the Board of
Directors of the Corporation; have an Initial Dividend Rate and Initial Dividend
Payment Date as shall be determined in advance of the issuance thereof by the
Board of Directors of the Corporation; and have such other preferences, voting
powers, limitations as to dividends, qualifications and terms and conditions of
redemption as are set forth in these Articles Supplementary. The Auction Market
Preferred Stock, Series E shall constitute a separate series of preferred stock
of the Corporation, and each share of Auction Market Preferred Stock, Series E
shall be identical.

      1. Definitions. Unless the context or use indicates another or different
meaning or intent, in these Articles Supplementary the following terms have the
following meanings, whether used in the singular or plural:

      "'AA' Composite Commercial Paper Rate," on any date of determination,
means (i) the Interest Equivalent of the rate on commercial paper placed on
behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa" by Moody's
or the equivalent of such rating by another nationally recognized rating agency,
as such rate is made available on a discount basis or otherwise by the Federal
Reserve Bank of New York for the Business Day immediately


                                       4
<PAGE>

preceding such date, or (ii) in the event that the Federal Reserve Bank of New
York does not make available such a rate, then the arithmetic average of the
Interest Equivalent of the rate on commercial paper placed on behalf of such
issuers, as quoted on a discount basis or otherwise by Merrill Lynch, Pierce,
Fenner & Smith Incorporated or its successors that are Commercial Paper Dealers,
to the Auction Agent for the close of business on the Business Day immediately
preceding such date. If one of the Commercial Paper Dealers does not quote a
rate required to determine the "AA" Composite Commercial Paper Rate, the "AA"
Composite Commercial Paper Rate will be determined on the basis of the quotation
or quotations furnished by any Substitute Commercial Paper Dealer or Substitute
Commercial Paper Dealers selected by the Corporation to provide such rate or
rates not being supplied by the Commercial Paper Dealer. If the number of
Dividend Period Days shall be (i) 7 or more but fewer than 49 days, such rate
shall be the Interest Equivalent on the 30-day rate on such commercial paper;
(ii) 49 or more but fewer than 70 days, such rate shall be the Interest
Equivalent of the 60-day rate on such commercial paper; (iii) 70 or more days
but fewer than 85 days, such rate shall be the arithmetic average of the
Interest Equivalent on the 60-day and 90-day rates on such commercial paper;
(iv) 85 or more days but fewer than 99 days, such rate shall be the Interest
Equivalent of the 90-day rate on such commercial paper; (v) 99 or more days but
fewer than 120 days, such rate shall be the arithmetic average of the Interest
Equivalent of the 90-day and 120-day rates on such commercial paper; (vi) 120 or
more days but fewer than 141 days, such rate shall be the Interest Equivalent of
the 120-day rate on such commercial paper; (vii) 141 or more days but fewer than
162 days, such rate shall be the arithmetic average of the Interest Equivalent
of the 120-day and 180-day rates on such commercial paper; and (viii) 162 or
more days but fewer than 183 days, such rate shall be the Interest Equivalent of
the 180-day rate on such commercial paper.


                                       5
<PAGE>

      "Accountant's Confirmation" has the meaning set forth in paragraph 7(c) of
these Articles Supplementary.

      "Additional Dividend" has the meaning set forth in paragraph 2(e) of these
Articles Supplementary.

      "Adviser" means the Corporation's investment adviser which initially shall
be Fund Asset Management, Inc.

      "Affiliate" shall mean any Person, other than Merrill Lynch, Pierce,
Fenner & Smith Incorporated or its successors, known to the Auction Agent to be
controlled by, in control of, or under common control with, the Corporation.

      "Agent Member" means a member of the Securities Depository that will act
on behalf of an Existing Holder of one or more shares of AMPS or a Potential
Holder that is identified as such in such holder's Purchaser's Letter.

      "AMPS" means, as the case may be, the Auction Market Preferred Stock,
Series A; Auction Market Preferred Stock, Series B; Auction Market Preferred
Stock, Series C; Auction Market Preferred Stock, Series D; or Auction Market
Preferred Stock, Series E of the Corporation.

      "AMPS Basic Maintenance Amount," as of any Valuation Date, means the
dollar amount equal to (i) the sum of (A) the product of the number of shares of
AMPS of all series and Other AMPS Outstanding on such Valuation Date multiplied
by the sum of (a) $50,000 and (b) any applicable redemption premium attributable
to the designation of a Premium Call Period; (B) the aggregate amount of cash
dividends (whether or not earned or declared) that will have accumulated for
each share of AMPS and Other AMPS Outstanding, in each case (but not including)
the end of the current Dividend Period Date therefor that follows such Valuation
Date; (C)


                                       6
<PAGE>

the aggregate amount of cash dividends that would accumulate at the then current
Maximum Applicable Rate on any shares of AMPS and AMPS Outstanding
from the end of such Dividend Period through the 49th day after such
Valuation Date, multiplied by the larger of the potential dividend rate increase
factors (currently 304%) determined from time to time by Moody's and S&P (except
that if such Valuation Rate occurs during a Non-Payment Period, the cash
dividend for purposes of calculation would accumulate at the then current
Non-Payment Period Rate); (D) the amount of anticipated expenses of the
Corporation for the 90 days subsequent to such Valuation Date; (E) the amount of
the Corporation's Maximum Potential Additional Dividend Liability as of such
Valuation Date; and (F) any current liabilities as of such Valuation Date to the
extent not reflected in any of (i)(A) through (i)(E) (including, without
limitation, and immediately upon determination, any amounts due and payable by
the Corporation pursuant to repurchase agreements and any payables for Municipal
Bonds purchased as of such Valuation Date) less (ii) the sum of (A) the lesser
of (1) the aggregate of (a) the book value of receivables for Municipal Bonds
sold as of or prior to such Valuation Date if such receivables are due within
five business days of such Valuation Date, and if the trades which generated
such receivables are (x) settled through clearing house firms with respect to
which the Corporation has received prior written authorization from Moody's or
(y) with counterparties having a Moody's long-term debt rating of at least Baa3,
and (b) the Discounted Value Municipal Bonds sold as of or prior to such
Valuation Date which generated receivables calculated using the Moody's Discount
Factor applicable to such Municipal Bonds, if such receivables are due within
five business days of such Valuation Date but do not comply with either of
conditions (x) or (y) of the preceding clause (a) and (2) the Discounted Value
of such Municipal Bonds calculated using the higher of the S&P Discount Factor
and the Moody's


                                       7
<PAGE>

Discount Factor applicable to such Municipal Bonds and (B) the Discounted Value
of any of the Corporation's assets irrevocably deposited by the Corporation for
the payment of the amount needed to redeem shares of AMPS subject to redemption
or any of (i)(B) through (i)(F).

      "AMPS Basic Maintenance Cure Date," with respect to the failure by the
Corporation to satisfy the AMPS Basic Maintenance Amount (as required by
paragraph 7(a) of these Articles Supplementary) as of a given Valuation Date,
means the sixth Business Day following such Valuation Date.

      "AMPS Basic Maintenance Report" means a report signed by any of the
President, Treasurer, any Senior Vice President or any Vice President of the
Corporation which sets forth, as of the related Valuation Date, the assets of
the Corporation, the Market Value and the Discounted Value thereof (seriatim and
in aggregate), and the AMPS Basic Maintenance Amount.

      "Applicable Percentage" has the meaning set forth in paragraph 11(a)(vii)
of these Articles Supplementary.

      "Applicable Rate" means the rate per annum at which cash dividends are
payable on the AMPS or Other AMPS, as the case may be, for any Dividend Period.

      "Auction" means a periodic operation of the Auction Procedures.

      "Auction Agent" means IBJ Schroder Bank & Trust Company unless and until
another commercial bank, trust company or other financial institution appointed
by a resolution of the Board of Directors of the Corporation or a duly
authorized committee thereof enters into an agreement with the Corporation to
follow the Auction Procedures for the purpose of determining the Applicable Rate
and to act as transfer agent, registrar, dividend disbursing agent and
redemption agent for the AMPS and Other AMPS.


                                       8
<PAGE>

      "Auction Procedures" means the procedures for conducting Auctions set
forth in paragraph 11 of these Articles Supplementary.

      "Broker-Dealer" shall mean any broker-dealer, or other entity permitted by
law to perform the functions required of a Broker-Dealer in paragraph 11 of
these Articles Supplementary, that has been selected by the Corporation and has
entered into a Broker-Dealer Agreement with the Auction Agent that remains
effective.

      "Broker-Dealer Agreement" shall mean an agreement between the Auction
Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow
the procedures specified in paragraph 11 of these Articles Supplementary.

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

      "Charter" means the Articles of Incorporation, as amended and supplemented
(including these Articles Supplementary), of the Corporation on file in the
State Department of Assessments and Taxation of Maryland.

      "Code" means the Internal Revenue Code of 1986, as amended.

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

      "Common Stock" means the common stock, par value $.10 per share, of the
Corporation.

      "Corporation" means MuniYield Fund, Inc., a Maryland corporation.

      "Date of Original Issue" means, with respect to any share of AMPS or Other
AMPS, the date on which the Corporation originally issues such share.


                                       9
<PAGE>

      "Deposit Securities" means cash and Municipal Bonds rated at least AAA,
A-1+ or SP-1+ by S&P.

      "Discounted Value" means (i) with respect to an S&P Eligible Asset, the
quotient of the Market Value thereof divided by the applicable S&P Discount
Factor and (ii) with respect to a Moody's Eligible Asset, the lower of par and
the quotient of the Market Value thereof divided by the applicable Moody's
Discount Factor.

      "Dividend Coverage Amount," as of any Valuation Date, means (i) the
aggregate amount of cash dividends that will accumulate on all shares of
outstanding AMPS and Other AMPS, in each case to (but not including) the next
Dividend Payment Date therefor that follows such Valuation Date plus (ii) the
aggregate amount of all liabilities existing on such Valuation Date which are
payable on or prior to such next Dividend Payment Date less (iii) the combined
Market Value of Deposit Securities irrevocably deposited with the Auction Agent
for the payment of cash dividends on all shares of AMPS and Other AMPS.

      "Dividend Coverage Assets," as of any Valuation Date, means, in the case
of shares of AMPS and Other AMPS, Deposit Securities with maturity or tender
payment dates not later in each case than the Dividend Payment Date therefor
that follows such Valuation Date.

      "Dividend Payment Date," with respect to AMPS, has the meaning set forth
in paragraph 2(b)(i) of these Articles Supplementary and, with respect to Other
AMPS, has the equivalent meaning.

      "Dividend Period" means the Initial Dividend Period, any 7-day Dividend
Period, any 28-day Dividend Period and any Special Dividend Period.

      "Existing Holder" means a Person who has signed a Purchaser's Letter and
is listed as the holder of record of shares of AMPS in the Stock Books.


                                       10
<PAGE>

      "Forward Commitment" has the meaning set forth in paragraph 9(c) of these
Articles Supplementary.

      "Holder" means a Person identified as a holder of record of shares of AMPS
in the Stock Register.

      "Independent Accountant" means a nationally recognized accountant, or firm
of accountants, that is, with respect to the Corporation, an independent public
accountant or firm of independent public accountants under the Securities Act of
1933, as amended.

      "Initial Dividend Payment Date" means the Initial Dividend Payment Date as
determined by the Board of Directors of the Corporation with respect to each
Series of AMPS or Other AMPS, as the case may be.

      "Initial Dividend Period," with respect to each Series of AMPS, has the
meaning set forth in paragraph 2(c)(i) of these Articles Supplementary and, with
respect to Other AMPS, has the equivalent meaning.

      "Initial Dividend Rate," with respect to each series of AMPS, means the
rate per annum applicable to the Initial Dividend Period for such series of AMPS
and, with respect to other AMPS, has the equivalent meaning.

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

      "Interest Equivalent" means a yield on a 360-day basis of a discount basis
security which is equal to the yield on an equivalent interest-bearing security.

      "Long Term Dividend Period" means a Special Dividend Period consisting of
a specified period of whole years not greater than five years.


                                       11
<PAGE>

      "Mandatory Redemption Price" means $50,000 per share of AMPS plus an
amount equal to accumulated but unpaid dividends (whether or not earned or
declared) to the date fixed for redemption and excluding Additional Dividends.

      "Market Value" of any asset of the Corporation shall be the market value
thereof determined by the Pricing Service. Market Value of any asset shall
include any interest accrued thereon. The Pricing Service shall value portfolio
securities at the quoted bid prices or the mean between the quoted bid and asked
price or the yield equivalent when quotations are not readily available.
Securities for which quotations are not readily available shall be valued at
fair value as determined by the Pricing Service using methods which include
consideration of: yields or prices of municipal bonds of comparable quality,
type of issue, coupon, maturity and rating; indications as to value from
dealers; and general market conditions. The Pricing Service may employ
electronic data processing techniques and/or a matrix system to determine
valuations. In the event the Pricing Service is unable to value a security, the
security shall be valued at the lower of two dealer bids obtained by the
Corporation, at least one of which shall be in writing. Futures contracts and
options are valued at closing prices for such instruments established by the
exchange or board of trade on which they are traded, or if market quotations are
not readily available, are valued at fair value on a consistent basis using
methods determined in good faith by the Board of Directors.

      "Maximum Applicable Rate," with respect to AMPS, has the meaning set forth
in paragraph 11(a)(vii) of these Articles Supplementary and, with respect to
Other AMPS, has the equivalent meaning.

      "Maximum Potential Additional Dividend Liability," as of any Valuation
Date, means the aggregate amount of Additional Dividends that would be due if
the Corporation were to


                                       12
<PAGE>

make Retroactive Taxable Allocations, with respect to any fiscal year, estimated
based upon dividends paid and the amount of undistributed realized net capital
gains and other taxable income earned by the Corporation, as of the end of the
calendar month immediately preceding such Valuation Date and assuming such
Additional Dividends are fully taxable.

      "Minimum Liquidity Level" means, as of any Valuation Date, an aggregate
Market Value of the Corporation's Dividend Coverage Assets not less than the
Dividend Coverage Amount.

      "Moody's" means Moody's Investors Service, Inc. or its successors.

      "Moody's Discount Factor" means, for purposes of determining the
Discounted Value of any Municipal Bond which constitutes a Moody's Eligible
Asset, the percentage determined by reference to (a) the rating by Moody's or
S&P on such Bond and (b) the Moody's Exposure Period, in accordance with the
table set forth below:

<TABLE>
<CAPTION>
                                                                           Rating Category
                                                        -----------------------------------------------------
              Moody's Exposure Period                   Aaa*        Aa*          A*        Baa*       Other**
              -----------------------                   ----        ---          --        ----       -------
<S>                                                     <C>         <C>         <C>        <C>         <C>
7 weeks or less...................................      151%        159%        168%       202%        229%
8 weeks or less but greater than seven weeks......       154        164         173        205          235
9 weeks or less but greater than eight weeks......       158        169         179        209          242
</TABLE>

- ----------
*  Moody's rating.
** Municipal Bonds not rated by Moody's but rated BBB-, BBB or BBB+ S&P.

      Notwithstanding the foregoing, (i) the Moody's Discount Factor for
short-term Municipal Bonds will be 115%, so long as such Municipal Bonds are
rated at least MIG-1, VMIG-1 or P-1 by Moody's and mature or have a demand
feature at par exercisable in 30 days or less, or 125% if such Bonds are not
rated by Moody's but are rated A-1+ or SP-1+ or AA by S&P, and (ii) no Moody's
Discount Factor will be applied to cash or to Receivables for Municipal Bonds
Sold. "Receivables for Municipal Bonds Sold," for purposes of calculating
Moody's Eligible Assets as of any Valuation Date, means no more than the
aggregate of the following: (i) the book value of receivables for Municipal
Bonds sold as of or prior to such Valuation Date if such receivables


                                       13
<PAGE>

are due within five business days of such Valuation Date, and if the trades
which generated such receivables are (x) settled through clearing house firms
with respect to which the Corporation has received prior written authorization
from Moody's or (y) with counterparties having a Moody's long-term debt rating
of at least Baa3; and (ii) the Moody's Discounted Value of Municipal Bonds sold
as of or prior to such Valuation Date which generated receivables, if such
receivables are due within five business days of such Valuation Date but do not
comply with either of conditions (x) or (y) of the preceding clause (i).

      "Moody's Eligible Asset" means cash, Receivables for Municipal Bonds sold
(as defined for purposes of calculating Moody's Eligible Assets) or a Municipal
Bond that (i) pays interest in cash, (ii) is publicly rated Baa or higher by
Moody's or, if not rated by Moody's but rated by S&P, is rated at least BBB- by
S&P (provided that, for purposes of determining the Moody's Discount Factor
applicable to any such S&P-rated Municipal Bond, such Municipal Bond (excluding
any short-term Municipal Bond) will be deemed to have a Moody's rating which is
one full rating category lower than its S&P rating), (iii) does not have its
Moody's rating suspended by Moody's, and (iv) is part of an issue of Municipal
Bonds of at least $10,000,000. In addition, Municipal Bonds in the Corporation's
portfolio must be within the following diversification requirements in order to
be included within Moody's Eligible Assets:

                                                                   Maximum or
                              Minimum             Maximum          Territory
                            Issue Size           Underlying       Concentration
         Rating            ($ Millions)        Obligor (%)(1)        (%)(1)
         ------            ------------        --------------     -------------
Aaa..................           10                  100               100
Aa...................           10                   20                60
A....................           10                   10                40
Baa..................           10                    6                20
Other(2).............           10                    4                12


                                       14
<PAGE>

- -------------
(1)   The referenced percentages represent maximum cumulative totals for the
      related rating category and each lower rating category.
(2)   Municipal Bonds not rated by Moody's but rated BBB-, BBB or BBB+ by S&P.

      For purposes of the maximum underlying obligor requirement described
above, any Municipal Bond backed by the guaranty, letter of credit or insurance
issued by a third party will be deemed to be issued by such third party if the
issuance of such third party credit is the sole determinant of the rating on
such Bond.

      Municipal Bonds subject to a repurchase agreement that obligates the
Corporation to repurchase such Municipal Bonds will constitute Moody's Eligible
Assets to the extent they satisfy Moody's current guidelines. Cash receivable by
the Corporation pursuant to a repurchase agreement that obligates a third party
to repurchase Municipal Bonds from the Corporation will only constitute Moody's
Eligible Assets if the long-term debt of such third party is rated at least A2
by Moody's and such agreement has a term of 30 days or less.

      Notwithstanding the foregoing, an asset will not be considered a Moody's
Eligible Asset if it is (i) held in a margin account, (ii) subject to any
material lien, mortgage, pledge, security interest or security agreement of any
kind,(iii) held for the purchase of a security pursuant to a Forward Commitment
or (iv) irrevocably deposited by the Corporation for the payment of dividends or
redemption.

      "Moody's Exposure Period" means a period that is the same length or longer
than the number of days used in calculating the cash dividend component of the
AMPS Basic Maintenance Amount and shall initially be the period commencing on a
given Valuation Date and ending 49 days thereafter.

      "Moody's Hedging Transaction" has the meaning set forth in paragraph 9(b)
of these Articles Supplementary.


                                       15
<PAGE>

      "Municipal Bonds" means "Municipal Bonds" as defined in the Corporation's
Registration Statement on Form N-2 (File No. 33-43264) on file with the
Securities and Exchange Commission, as such Registration Statement may be
amended from time to time.

      "Municipal Index" has the meaning set forth in paragraph 9(a) of these
Articles Supplementary.

      "1940 Act" means the Investment Company Act of 1940, as amended from time
to time.

      "1940 Act AMPS Asset Coverage" means asset coverage, as defined in section
18(h) of the 1940 Act, of at least 200% with respect to all outstanding senior
securities of the Corporation which are stock, including all outstanding shares
of AMPS and Other Amps (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
paying dividends on its common stock).

      "1940 Act Cure Date," with respect to the failure by the Corporation to
maintain the 1940 Act AMPS Asset Coverage (as required by paragraph 6 of these
Articles Supplementary) as of the last Business Day of each month, means the
last Business Day of the following month.

      "Non-Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions".

      "Non-Payment Period" means, with respect to each series of AMPS, any
period commencing on and including the day on which the Corporation shall fail
to (i) declare, prior to the close of business on the second Business Day
preceding any Dividend Payment Date, for payment on or (to the extent permitted
by paragraph 2(c)(i) of these Articles Supplementary) within three Business Days
after such Dividend Payment Date to the Holders as of 12:00 noon, New York City
time, on the Business Day preceding such Dividend Payment Date, the full


                                       16
<PAGE>

amount of any dividend on shares of AMPS payable on such Dividend Payment Date
or (ii) deposit, irrevocably in trust, in same-day funds, with the Auction Agent
by 12:00 noon, New York City time, (A) on such Dividend Payment Date the full
amount of any cash dividend on such shares payable (if declared) on such
Dividend Payment Date or (B) on any redemption date for any shares of AMPS
called for redemption, the Mandatory Redemption Price per share of such AMPS or,
in the case of an optional redemption, the Optional Redemption Price per share,
and ending on and including the Business Day on which, by 12:00 noon, New York
City time, all unpaid cash dividends and unpaid redemption prices shall have
been so deposited or shall have otherwise been made available to Holders in
same-day funds; provided that, a Non-Payment Period shall not end unless the
Corporation shall have given at least five days' but no more than 30 days'
written notice of such deposit or availability to the Auction Agent, all
Existing Holders (at their addresses appearing in the Stock Books) and the
Securities Depository. Notwithstanding the foregoing, the failure by the
Corporation to deposit funds as provided for by clauses (ii)(A) or (ii)(B) above
within three Business Days after any Dividend Payment Date or redemption date,
as the case may be, in each case to the extent contemplated by paragraph 2(c)(i)
of these Articles Supplementary, shall not constitute a "Non-Payment Period."

      "Non-Payment Period Rate" means, initially, 200% of the applicable
Reference Rate (or 275% of such rate if the Corporation has provided
notification to the Auction Agent prior to the Auction establishing the
Applicable Rate for any dividend pursuant to paragraph 2(f) hereof that net
capital gains or other taxable income will be included in such dividend on
shares of AMPS), provided that the Board of Directors of the Corporation shall
have the authority to adjust, modify, alter or change from time to time the
initial Non-Payment Period Rate if the Board of Directors of the Corporation
determines and Moody's and S&P (and any Substitute Rating


                                       17
<PAGE>

Agency in lieu of Moody's or S&P in the event either of such parties shall not
rate the AMPS) advise the Corporation in writing that such adjustment,
modification, alteration or change will not adversely affect their then-current
ratings on the AMPS.

      "Normal Dividend Payment Date" has the meaning set forth in paragraph
2(b)(1) of these Articles Supplementary.

      "Notice of Redemption" means any notice with respect to the redemption of
shares of AMPS pursuant to paragraph 4 of these Articles Supplementary.

      "Notice of Revocation" has the meaning set forth in paragraph 2(c)(iii) of
these Articles Supplementary.

      "Notice of Special Dividend Period" has the meaning set forth in paragraph
2(c)(iii) of these Articles Supplementary.

      "Optional Redemption Price" shall mean $50,000 per share plus an amount
equal to accumulated but unpaid dividends (whether or not earned or declared) to
the date fixed for redemption and excluding Additional Dividends plus any
applicable redemption premium attributable to the designation of a Premium Call
Period.

      "Other AMPS" means the auction rate preferred stock of the Corporation,
other than the AMPS.

      "Outstanding" means, as of any date (i) with respect to AMPS, shares of
AMPS theretofore issued by the Corporation except, without duplication, (A) any
shares of AMPS theretofore cancelled or delivered to the Auction Agent for
cancellation, or redeemed by the Corporation, or as to which a Notice of
Redemption shall have been given and moneys shall have been deposited in trust
by the Corporation pursuant to paragraph 4(c) and (B) any shares of AMPS as to
which the Corporation or any Affiliate thereof shall be an Existing Holder,
provided


                                       18
<PAGE>

that shares of AMPS held by an Affiliate shall be deemed outstanding for
purposes of calculating the AMPS Basic Maintenance Amount and (ii) with respect
to shares of other Preferred Stock, has the equivalent meaning.

      "Parity Stock" means the AMPS and each other outstanding series of
Preferred Stock the holders of which, together with the holders of the AMPS,
shall be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in proportion to the
full respective preferential amounts to which they are entitled, without
preference or priority one over the other.

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

      "Potential Holder" shall mean any Person, including any Existing Holder,
(A) who shall have executed a Purchaser's Letter and (B) who may be interested
in acquiring shares of AMPS (or, in the case of an Existing Holder, additional
shares of AMPS).

      "Preferred Stock" means the preferred stock of the Corporation, and
includes AMPS and Other AMPS.

      "Premium Call Period" has the meaning set forth under the definition of
"Specific Redemption Provisions".

      "Pricing Services" shall mean J.J. Kenney or any pricing service
designated by the Board of Directors of the Corporation provided the Corporation
obtains written assurance from S&P and Moody's that such designation will not
impair the rating then assigned by S&P and Moody's to the AMPS.


                                       19
<PAGE>

      "Purchaser's Letter" means a letter addressed to the Corporation, the
Auction Agent and a Broker-Dealer in which a Person agrees, among other things,
to offer to purchase, purchase, offer to sell and/or sell shares of AMPS as set
forth in paragraph 11 of these Articles Supplementary.

      "Quarterly Valuation Date" means the last Business Day of each fiscal
quarter of the Corporation in each fiscal year of the Corporation, commencing
January 31, 1992.

      "Receivables for Municipal Bonds Sold" has the meaning set forth under the
definition of S&P Discount Factor.

      "Reference Rate" means: (i) with respect to a Dividend Period or a Short
Term Dividend Period having fewer than 183 days, the applicable "AA" Composite
Commercial Paper Rate, (ii) with respect to any Short Term Dividend Period
having 183 or more but fewer than 364 days, the applicable U.S. Treasury Bill
Rate and (iii) with respect to any Long Term Dividend Period, the applicable
U.S. Treasury Note Rate.

      "Request for Special Dividend Period" has the meaning set forth in
paragraph 2(c)(iii) of these Articles Supplementary.

      "Response" has the meaning set forth in paragraph 2(c)(iii) of these
Articles Supplementary.

      "Retroactive Taxable Allocation" has the meaning set forth in paragraph
2(e) of these Articles Supplementary.

      "Right," with respect to AMPS, has the meaning set forth in paragraph 2(e)
of these Articles Supplementary and, with respect to Other AMPS, has the
equivalent meaning.

      "S&P" means Standard & Poor's Corporation or its successors.


                                       20
<PAGE>

      "S&P Discount Factor" means, for purposes of determining the Discounted
Value of any Municipal Bond which constitutes an S&P Eligible Asset, the
percentage determined by reference to (a) the rating by S&P or Moody's on such
Bond and (b) the S&P Exposure Period, in accordance with the tables set forth
below:

                                             Rating Category
                                -----------------------------------------------
S&P Exposure Period             AAA*          AA*            A*            BBB*
- -------------------             ----          ---            --            ----
 40 Business Days               190%          195%          210%           250%
 22 Business Days               170           175           190            230
 10 Business Days               155           160           175            215
  7 Business Days               150           155           170            210
  3 Business Days               130           135           150            190

- ----------
* S&P rating.

      Notwithstanding the foregoing, (i) the S&P Discount Factor for short-term
Municipal Bonds will be 115%, so long as such Municipal Bonds are rated A-1+ or
SP-1+ by S&P and mature or have a demand feature exercisable in 30 days or less,
or 125% if such Municipal Bonds are not rated by S&P but are rated VMIG-1, P-1
or MIG-1 by Moody's; provided, however, that if such short-term Municipal Bonds
are backed by any letter of credit, liquidity facility or guarantee from a bank
or other financial institution, such bank or institution must have a short-term
rating of at least A-1+ from S&P; and further provided that such short-term
Municipal Bonds rated by Moody's but not rated by S&P may comprise no more than
50% of short-term Municipal Bonds that qualify as S&P Eligible Assets and (ii)
no S&P Discount Factor will be applied to cash or to Receivables for Municipal
Bonds Sold. "Receivables for Municipal Bonds Sold," for purposes of calculating
S&P's Eligible Assets as of any Valuation Date, means the book value of
receivables for Municipal Bonds Sold as of or prior to such Valuation Date if
such receivables are due within five business days of such Valuation Date.


                                       21
<PAGE>

      "S&P Eligible Asset" means cash, Receivables for Municipal Bonds Sold (as
defined for purposes of calculating S&P Eligible Assets) or a Municipal Bond
that (i) is issued by any of the 50 states, the territories and their
subdivisions, counties, cities, towns, villages, and school districts, agencies,
such as authorities and special districts created by the states, and certain
federally sponsored agencies such as local housing authorities (payments made on
these bonds are exempt from regular federal income taxes and are generally
exempt from state and local taxes in the state of issuance), (ii) is interest
bearing and pays interest at least semi-annually; (iii) is payable with respect
to principal and interest in United States Dollars; (iv) is publicly rated BBB
or higher by S&P or, if not rated by S&P but rated by Moody's, is rated at least
A by Moody's (provided that such Moody's-rated Municipal Bonds will be included
in S&P Eligible Assets only to the extent the Market Value of such Municipal
Bonds does not exceed 50% of the aggregate Market Value of the S&P Eligible
Assets; and further provided that, for purposes of determining the S&P Discount
Factor applicable to any such Moody's-rated Municipal Bond, such Municipal Bond
will be deemed to have an S&P rating which is one full rating category lower
than its Moody's rating); (v) is not subject to a covered to call or covered put
option written by the Corporation; (vi) is not part of a private placement of
Municipal Bonds; and (vii) is part of an issue of Municipal Bonds with an
original issue size of at least $20 million or, if of an issue with an original
issue size below $20 million (but in no event below $10 million), is issued by
an issuer with a total of at least $50 million of securities outstanding.
Notwithstanding the foregoing:

            (1) Municipal Bonds of any one issuer or guarantor (excluding bond
      insurers) will be considered S&P Eligible Assets only to the extent the
      Market Value of such Municipal Bonds does not exceed 10% of the Aggregate
      Market Value of the S&P


                                       22
<PAGE>

      Eligible Assets, provided that 2% is added to the applicable S&P Discount
      Factor for every 1% by which the Market Value of such Municipal Bonds
      exceeds 5% of the aggregate Market Value of the S&P Eligible Assets;

            (2) Municipal Bonds guaranteed or insured by any one bond insurer
      will be considered S&P Eligible Assets only to the extent the fair market
      value of such Municipal Bonds does not exceed 25% of the aggregate Market
      Value of the S&P Eligible Assets; and

            (3) Municipal Bonds issued by issuers in any one state or territory
      will be considered S&P Eligible Assets only to the extent the Market Value
      of such Municipal Bonds does not exceed 20% of the aggregate Market Value
      of S&P Eligible Assets.

      "S&P Exposure Period" means the maximum period of time following a
Valuation Date, including the Valuation Date and the AMPS Basic Maintenance Cure
Date, that the Corporation has under these Articles Supplementary to cure any
failure to maintain, as of such Valuation Date, the Discounted Value for its
portfolio at least equal to the AMPS Basic Maintenance Amount (as described in
paragraph 7(a) of these Articles Supplementary).

      "S&P Hedging Transactions" has the meaning set forth in paragraph 9(a) of
these Articles Supplementary.

      "Securities Depository" means The Depository Trust Company or any
successor company or other entities elected by the Corporation as securities
depository for the shares of AMPS that agrees to follow the procedures required
to be followed by such securities depository in connection with the shares of
AMPS.

      "Service" means the United States Internal Revenue Service.


                                       23
<PAGE>

      "7-Day Dividend Period" means, with respect to Series E AMPS, a Dividend
Period consisting of seven days.

      "Short Term Dividend Period" means a Dividend Period consisting of a
specified number of days (other than 28 in the case of Series A AMPS, Series B
AMPS, Series C AMPS and Series D AMPS and other than seven in the case of Series
E AMPS), evenly divisible by seven and not fewer than seven or more than 364.

      "Special Dividend Period" means a Dividend Period consisting of (i) a
specified number of days (other than 28 in the case of Series A AMPS, Series B
AMPS, Series C AMPS and Series D AMPS and other than seven in the case of Series
E AMPS), evenly divisible by seven, and not fewer than seven nor more than 364
or (ii) a specified number of whole years not greater than five years (in each
case subject to adjustment as provided in paragraph 2 (b) (i)).

      "Specific Redemption Provisions" means, with respect to a Special Dividend
Period either, or any combination of, (i) a period (a "Non-Call Period")
determined by the Board of Director of the Corporation, after consultation with
the Auction Agent and the Broker-Dealers, during which the shares of AMPS
subject to such Dividend Period shall not be subject to redemption at the option
of the Corporation and (ii) a period (a "Premium Call Period"), consisting of a
number of whole years and determined by the Board of Directors of the
Corporation, after consultation with the Auction Agent and the Broker-Dealers,
during each year of which the shares of AMPS subject to such Dividend Period
shall be redeemable at the Corporation's option at a price per share equal to
$50,000 plus accumulated but unpaid dividends plus a premium expressed as a
percentage of $50,000, as determined by the Board of Directors of the
Corporation after consultation with the Auction Agent and the Broker-Dealers.


                                       24
<PAGE>

      "Stock Books" means the books maintained by the Auction Agent setting
forth at all times a current list, as determined by the Auction Agent, of
Existing Holders of the AMPS.

      "Stock Register" means the register of Holders maintained on behalf of the
Corporation by the Auction Agent in its capacity as transfer agent and registrar
for the AMPS.

      "Subsequent Dividend Period," with respect to AMPS, has the meaning set
forth in paragraph 2(c)(i) of these Articles Supplementary and, with respect to
Other AMPS, has the equivalent meaning.

      "Substitute Commercial Paper Dealers" means such Substitute Commercial
Paper Dealer or Dealers as the Corporation may from time to time appoint or, in
lieu of any thereof, their respective affiliates or successors.

      "Substitute Rating Agency" and "Substitute Rating Agencies" mean a
nationally recognized statistical rating organization or two nationally
recognized statistical rating organizations, respectively, selected by Merrill
Lynch, Pierce, Fenner & Smith Incorporated or its affiliates and successors,
after consultation with the Corporation, to act as the substitute rating agency
or substitute rating agencies, as the case may be, to determine the credit
ratings of the shares of AMPS.

      "Treasury Bonds" shall have the meaning set forth in paragraph 9(a) of
these Articles Supplementary.

      "28-day Dividend Period" means with respect to Series A AMPS, Series B
AMPS, Series C AMPS and Series D AMPS a Dividend Period consisting of 28 days.

      "U.S. Treasury Bill Rate" on any date means (i) the Interest Equivalent of
the rate on the actively traded Treasury Bill with a maturity most nearly
comparable to the length of the related Dividend Period, as such rate is made
available on a discount basis or otherwise by the Federal


                                       25
<PAGE>

Reserve Bank of New York in its Composite 3:30 P.M. Quotations for U.S.
Government Securities report for such Business Day, or (ii) if such yield as so
calculated is not available, the Alternate Treasury Bill Rate on such date.
"Alternate Treasury Bill Rate" on any date means the Interest Equivalent of the
yield as calculated by reference to the arithmetic average of the bid price
quotations of the actively traded Treasury Bill with a maturity most nearly
comparable to the length of the related Dividend Period, as determined by bid
price quotations as of any time on the Business Day immediately preceding such
date, obtained from at least three recognized primary U.S. Government securities
dealers selected by the Auction Agent.

      "U.S. Treasury Note Rate" on any date means (i) the yield as calculated by
reference to the bid price quotation of the actively traded, current coupon
Treasury Note with a maturity most nearly comparable to the length of the
related Dividend Period, as such bid price quotation is published on the
Business Day immediately preceding such date by the Federal Reserve Bank of New
York in its Composite 3:30 P.M. Quotations for U.S. Government Securities report
for such Business Day, or (ii) if such yield as so calculated is not available,
the Alternate Treasury Note Rate on such date. "Alternate Treasury Note Rate" on
any date means the yield as calculated by reference to the arithmetic average of
the bid price quotations of the actively traded, current coupon Treasury Note
with a maturity most nearly comparable to the length of the related Dividend
Period, as determined by the bid-price quotations as of any time on the Business
Day immediately preceding such date, obtained from at least three recognized
primary U.S. Government securities dealers selected by the Auction Agent.

      "Valuation Date" means, for purposes of determining whether the
Corporation is maintaining the AMPS Basic Maintenance Amount and the Minimum
Liquidity Level, each Business Day commencing with the Date of Original Issue.


                                       26
<PAGE>

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

      (b) The foregoing definitions of Accountants Confirmation, AMPS Basic
Maintenance Amount, AMPS Basic Maintenance Cure Date, AMPS Basic Maintenance
Report, Deposit Securities, Discounted Value, Dividend Coverage Amount, Dividend
Coverage Assets, Independent Accountants, Initial Margin, Market Value, Minimum
Liquidity Level, Moody's Discount Factor, Moody's Eligible Asset, Moody's
Exposure Period, Moody's Hedging Transactions, S&P Discount Factor, S&P Eligible
Asset, S&P Exposure Period, S&P Hedging Transactions, Valuation Date and
Variation Margin have been determined by the Board of Directors of the
Corporation in order to obtain a "aaa" rating from Moody's and a AAA rating from
S&P on the AMPS on their Date of Original Issue; and the Board of Directors of
the Corporation shall have the authority to adjust, modify, alter or change from
time to time the foregoing definitions and the restrictions and guidelines set
forth thereunder if Moody's and S&P or any Substitute Rating Agency advises the
Corporation in writing that such adjustment, modification, alteration or change
will not adversely affect their then-current ratings on the AMPS.

      2. Dividends. (a) The Holders shall be entitled to receive, when, as and
if declared by the Board of Directors of the Corporation, out of funds legally
available therefor, cumulative dividends each consisting of (i) cash at the
Applicable Rate and (ii) a Right to receive cash as set forth in paragraph 2(e)
below, and no more, payable on the respective dates set forth below. Dividends
on the shares of AMPS so declared and payable shall be paid (i) in preference to
and


                                       27
<PAGE>

in priority over any dividends declared and payable on the Common Stock, and
(ii) to the extent permitted under the Code and to the extent available, out of
net tax-exempt income earned on the Corporation's investments. To the extent
permitted under the Code, dividends on shares of AMPS will be designated as
exempt-interest dividends. For the purposes of this section, the term "net
tax-exempt income" shall exclude capital gains of the Corporation.

      (b) (i) Cash dividends on shares of AMPS shall accumulate from the Date of
Original Issue and shall be payable, when, as and if declared by the Board of
Directors commencing on the Initial Dividend Payment Date with respect to each
series of AMPS. Following the initial Dividend Payment Date for each series of
AMPS, dividends on such series of AMPS will be payable, at the option of the
Corporation, either (i) with respect to any 7-day Dividend Period, any 28-day
Dividend Period and any Short Term Dividend Period of 91 or fewer days on the
day next succeeding the last day thereof, (ii) with respect to any Short Term
Dividend Period of more than 91 and fewer than 365 days, on the 92nd day
thereof, the 183rd day thereof, if any, the 274th day thereof, if any, and on
the day next succeeding the last day thereof and (iii) with respect to any Long
Term Dividend Period, quarterly on the first day of each January, April, July
and October during such Long Term Dividend Period and on the day next succeeding
the last day thereof (each such date referred to in clause (i), (ii) or (iii)
being herein referred to as a "Normal Dividend Payment Date"), except that (i)
if such Normal Dividend Payment Date is not a Business Day, then the Dividend
Payment Date shall be the next succeeding date if both such dates following the
Normal Dividend Payment Date are Business Days, or (ii) if the date following
such Normal Dividend Payment Date is not a Business Day, then the Dividend
Payment Date will be the date next preceding such Normal Dividend Payment Date
if both such date and such Normal Dividend Payment Date are Business Days or
(iii) if


                                       28
<PAGE>

such Normal Dividend Payment Date and either the preceding date or the
succeeding date are not Business Days, then the Dividend Payment Date shall be
the first Business Day next preceding such Normal Dividend Payment Date that is
next succeeded by a Business Day. Although any particular Dividend Payment Date
may not occur on the originally scheduled date because of the exceptions
discussed above, the next succeeding Dividend Payment Date, subject to such
exceptions, will occur on the next following originally scheduled date. If for
any reason a Dividend Payment Date cannot be fixed as described above, then the
Board of Directors shall fix the Dividend Payment Date. The Initial Dividend
Period, 7-day Dividend Periods, 28-day Dividend Periods and Special Dividend
Periods are hereinafter sometimes referred to as Dividend Periods. Each dividend
payment date determined as provided above is hereinafter referred to as a
"Dividend Payment Date."

      (ii) Each dividend shall be paid to the Holders as they appear in the
Stock Register as of 12:00 noon, New York City time, on the Business Day
preceding the Dividend Payment Date. Dividends in arrears for any past Dividend
Period may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the Holders as they appear on the Stock Register on a
date, not exceeding 15 days prior to the payment date therefor, as may be fixed
by the Board of Directors of the Corporation.

      (c) (i) During the period from and including the Date of Original Issue to
but excluding the Initial Dividend Payment Date (the "Initial Dividend Period"),
the Applicable Rate shall be the Initial Dividend Rate. Commencing on the
Initial Dividend Payment Date, the Applicable Rate for each subsequent dividend
period (hereinafter referred to as a "Subsequent Dividend Period"), which
Subsequent Dividend Period shall commence on and include a Dividend Payment Date
and shall end on and include the calendar day prior to the next Dividend


                                       29
<PAGE>

Payment Date, shall be equal to the rate per annum that results from
implementation of the Auction Procedures.

      The Applicable Dividend Rate for each Dividend Period commencing during a
Non-Payment Period shall be equal to the Non-Payment Period Rate; and each
Dividend Period, commencing after the first day of, and during, a Non-Payment
Period shall be a 28-day Dividend Period in the case of Series A AMPS, Series B
AMPS, Series C AMPS and Series D AMPS and a 7-day Dividend Period in the case of
Series E AMPS, provided that if the preceding Dividend Period for Series A AMPS,
Series B AMPS, Series C AMPS or Series D AMPS is a Special Dividend Period of
less than 28 days, the Dividend Period commencing during a Non-Payment Period
will be the same length as such preceding Dividend Period. Except in the case of
the willful failure of the Corporation to pay a Dividend on a Dividend Payment
Date or to redeem any shares of AMPS on the date set for such redemption, any
amount of any dividend due on any Dividend Payment Date (if, prior to the close
of business on the second Business Day preceding such Dividend Payment Date, the
Corporation has declared such dividend payable on such Dividend Payment Date to
the Holders of such shares of AMPS as of 12:00 noon, New York City time, on the
Business Day preceding such Dividend Payment Date) or redemption price with
respect to any shares of AMPS not paid to such Holders when due may be paid to
such Holders in the same form of funds by 12:00 noon, New York City time, on any
of the first three Business Days after such Dividend Payment Date or due date,
as the case may be, provided that, such amount is accompanied by a late charge
calculated for such period of non-payment at the Non-Payment Period Rate applied
to the amount of such non-payment based on the actual number of days comprising
such period divided by 365. In the case of a willful failure of the Corporation
to pay a dividend on a Dividend Payment Date or to redeem any shares of AMPS on


                                       30
<PAGE>

the date set for such redemption, the preceding sentence shall not apply and the
Applicable Dividend Rate for the Dividend Period commencing during the
Non-Payment Period resulting from such failure shall be the Non-Payment Period
Rate. For the purposes of the foregoing, payment to a person in same-day funds
on any Business Day at any time shall be considered equivalent to payment to
such person in New York Clearing House (next-day) funds at the same time on the
preceding Business Day, and any payment made after 12:00 noon, New York City
time, on any Business Day shall be considered to have been made instead in the
same form of funds and to the same person before 12:00 noon, New York City time,
on the next Business Day.

      (ii) The amount of cash dividends per share of AMPS payable (if declared)
on each Dividend Payment Date of each 7-day Dividend Period, 28-day Dividend
Period and Short Term Dividend Period shall be computed by multiplying the
Applicable Rate for such Dividend Period by a fraction, the numerator of which
will be the number of days in such Dividend Period such share was outstanding
and the denominator of which will be 365, multiplying the amount so obtained by
$50,000, and rounding the amount so obtained to the nearest cent. During any
Long Term Dividend Period, the amount of dividends per share payable on any
Dividend Payment Date shall be computed on the basis of a year consisting of
twelve 30-day months.

      (iii) With respect to each Dividend Period that is a Special Dividend
Period, the Corporation may, at its sole option and to the extent permitted by
law, by telephonic and written notice (a "Request for Special Dividend Period")
to the Auction Agent and to each Broker-Dealer, request that the next succeeding
Dividend Period for a series of AMPS be a number of days (other than 28 in the
case of Series A AMPS, Series B AMPS, Series C AMPS and Series D AMPS and other
than seven in the case of Series E AMPS) evenly divisible by seven, and not
fewer than seven or more than 364 in the case of a Short Term Dividend Period or


                                       31
<PAGE>

a number of whole years not greater than five years in the case of a Long Term
Dividend Period, specified in such notice, provided that for any Auction
occurring after the initial Auction, the Corporation may not give a Request for
Special Dividend Period (and any such request shall be null and void) unless the
Corporation has received written confirmation from S&P that such action would
not impair the ratings then assigned to the AMPS by S&P and unless Sufficient
Clearing Bids were made in the last occurring Auction and unless full cumulative
dividends, any amounts due with respect to redemptions, and any Additional
Dividends payable prior to such date have been paid in full. Such Request for
Special Dividend Period, in the case of a Short Term Dividend Period, shall be
given on or prior to the fourth day but not more than seven days prior to an
Auction Date for a series of AMPS and, in the case of a Long Term Dividend
Period, shall be given on or prior to the 14th day but not more than 28 days
prior to an Auction Date for the AMPS. Upon receiving such Request for Special
Dividend Period, the Broker-Dealer(s) shall jointly determine whether, given the
factors set forth below, it is advisable that the Corporation issue a Notice of
Special Dividend Period for the series of AMPS as contemplated by such Request
for Special Dividend Period and the Optional Redemption Price of the AMPS during
such Special Dividend Period and the Specific Redemption Provisions and shall
give the Corporation and the Auction Agent written notice (a "Response") of such
determination by no later than the third day prior to such Auction Date. In
making such determination the Broker-Dealer(s) will consider (1) existing
short-term and long-term market rates and indices of such short-term and
long-term rates, (2) existing market supply and demand for short-term and
long-term securities, (3) existing yield curves for short-term and long-term
securities comparable to the AMPS, (4) industry and financial conditions which
may affect the AMPS, (5) the investment objective of the Corporation, and (6)
the Dividend Periods and dividend rates at


                                       32
<PAGE>

which current and potential beneficial holders of the AMPS would remain or
become beneficial holders. If the Broker-Dealer(s) shall not give the
Corporation and the Auction Agent a Response by such third day or if the
Response states that given the factors set forth above it is not advisable that
the Corporation give a Notice of Special Dividend Period for the series of AMPS,
the Corporation may not give a Notice of Special Dividend Period in respect of
such Request for Special Dividend Period. In the event the Response indicates
that it is advisable that the corporation give a Notice of Special Dividend
Period for the series of AMPS, the Corporation may by no later than the second
day prior to such Auction Date give a notice (a "Notice of Special Dividend
Period") to the Auction Agent, the Securities Depository and each Broker-Dealer
which notice will specify (i) the duration of the Special Dividend Period, (ii)
the Optional Redemption Price as specified in the related Response and (iii) the
Specific Redemption Provisions, if any, as specified in the related Response.
The Corporation shall not give a Notice of Special Dividend Period and, if the
Corporation has given a Notice of Special Dividend Period, the Corporation is
required to give telephonic and written notice (a "Notice of Revocation") to the
Auction Agent, each Broker-Dealer, and the Securities Depository on or prior to
the Business Day prior to the relevant Auction Date if (x) either the 1940 Act
AMPS Coverage is not satisfied or the Corporation shall fail to maintain S&P
Eligible Assets and Moody's Eligible Assets each with an aggregate Discounted
Value at least equal to the AMPS Basic Maintenance Amount, in each case on each
of the two Valuation Dates immediately preceding the Business Day prior to the
relevant Auction Date on an actual basis and on a pro forma basis giving effect
to the proposed Special Dividend Period (using as a pro forma dividend rate with
respect to such Special Dividend Period the dividend rate which the
Broker-Dealers shall advise the Corporation is an approximately equal rate for
securities similar to the AMPS


                                       33
<PAGE>

with an equal dividend period), provided that, in calculating the aggregate
Discounted Value of Moody's Eligible Assets for this purpose, the Moody's
Collateral Period shall be deemed to be one week longer, (y) sufficient funds
for the payment of dividends payable on the immediately succeeding Dividend
Payment Date have not been irrevocably deposited with the Auction Agent by the
close of business on the third Business Day preceding the related Auction Date
or (z) the Broker-Dealers) jointly advise the Corporation that after
consideration of the factors listed above they have concluded that it is
advisable to give a Notice of Revocation. If the Corporation is prohibited from
giving a Notice of Special Dividend Period as a result of any of the factors
enumerated in clause (x), (y) or (z) of the prior sentence or if the Corporation
gives a Notice of Revocation with respect to a Notice of Special Dividend Period
for any series of AMPS, the next succeeding Dividend Period for that series will
be a 28-day Dividend Period in the case of Series A AMPS, Series B AMPS, Series
C AMPS and Series D AMPS, and a 7-day Dividend Period in the case of Series E
AMPS, provided that if the then current Dividend Period for Series A AMPS,
Series B AMPS, Series C AMPS or Series D AMPS is a Special Dividend Period of
less than 28 days, the next succeeding Dividend Period for such series of AMPS
will be the same length as such current Dividend Period. In addition, in the
event Sufficient Clearing Bids are not made in the applicable Auction or such
Auction is not held for any reason, such next succeeding Dividend Period will be
a 28-day Dividend Period (in the case of Series A AMPS, Series B AMPS, Series C
AMPS and Series D AMPS) or a 7-day Dividend Period (in the case of Series E
AMPS) and the Corporation may not again give a Notice of Special Dividend Period
for the AMPS (and any such attempted notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction with respect to a 28-day
Dividend Period (in the case of Series A


                                       34
<PAGE>

AMPS, Series B AMPS, Series C AMPS and Series D AMPS) or a 7-day Dividend Period
(in the case of Series E AMPS).

      (d) (i) Holders shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of full cumulative dividends and applicable
late charge, as herein provided, on the shares of AMPS (except for Additional
Dividends as provided in paragraph 2(e) hereof). Except for the late charge
payable pursuant to paragraph 2(c)(i) hereof, no interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment on the
shares of AMPS that may be in arrears.

      (ii) For so long as any share of AMPS is Outstanding, the Corporation
shall not declare, pay or set apart for payment any dividend or other
distribution (other than a dividend or distribution paid in shares of, or
options, warrants or rights to subscribe for or purchase, Common Stock or other
stock, if any, ranking junior to the shares of AMPS as to dividends or upon
liquidation) in respect of the Common Stock or any other stock of the
Corporation ranking junior to or on a parity with the shares of AMPS as to
dividends or upon liquidation, or call for redemption, redeem, purchase or
otherwise acquire for consideration any shares of the Common Stock or any other
such junior stock (except by conversion into or exchange for stock of the
Corporation ranking junior to the shares of AMPS as to dividends and upon
liquidation) or any other such Parity Stock (except by conversion into or
exchange for stock of the Corporation ranking junior to or on a parity with the
shares of AMPS as to dividends and upon liquidation), unless (A) immediately
after such transaction, the Corporation shall have S&P Eligible Assets and
Moody's Eligible Assets each with an aggregate Discounted Value equal to or
greater than the AMPS Basic Maintenance Amount and the Corporation shall
maintain the 1940 Act AMPS Asset Coverage, (B) full cumulative dividends on
shares of AMPS and shares of Other AMPS


                                       35
<PAGE>

due on or prior to the date of the transaction have been declared and paid or
shall have been declared and sufficient funds for the payment thereof deposited
with the Auction Agent, (C) any additional Dividend required to be paid under
paragraph 2(e) below on or before the date of such declaration or payment has
been paid and (D) the Corporation has redeemed-the full number of shares of AMPS
required to be redeemed by any provision for mandatory redemption contained
herein.

      (e) Each dividend shall consist of (i) cash at the Applicable Dividend
Rate and (ii) an uncertificated right (a "Right") to receive an Additional
Dividend (as defined below). Each Right shall thereafter be independent of the
Share or Shares of AMPS on which the dividend was paid. The Corporation shall
cause to be maintained a record of each Right received by the respective
Holders. A Right may not be transferred other than by operation of law. If the
Corporation retroactively allocates any net capital gains or other taxable
income to shares of AMPS without having given advance notice thereof to the
Auction Agent as described in paragraph 2(f) hereof solely by reason of the fact
that such allocation is made as a result of the redemption of all or a portion
of the outstanding shares of AMPS or the liquidation of the Corporation (the
amount of such allocation referred to herein as a "Retroactive Taxable
Allocation"), the corporation will, within 90 days (and generally within 60
days) after the end of the Corporation's fiscal year for which a Retroactive
Taxable Allocation is made, provide notice thereof to the Auction Agent and to
each holder of a Right applicable to such shares of AMPS (initially Cede & Co.
as nominee of the Depository Trust Company) during such fiscal year at such
holder's address as the same appears or last appeared on the stock books of the
corporation. The corporation will, within 30 days after such notice is given to
the Auction Agent, pay to the Auction Agent (who will then distribute to such
holders of Rights), out of funds legally available


                                       36
<PAGE>

therefor, an amount equal to the aggregate Additional Dividend with respect to
all Retroactive Taxable Allocations made to such holders during the fiscal year
in question.

      An "Additional Dividend" means payment to a present or former holder of
shares of Amps of an amount which, when taken together with the aggregate amount
of Retroactive Taxable Allocations made to such holder with respect to the
fiscal year in question, would cause such holder's dividends in dollars from the
aggregate of both the Retroactive Taxable Allocations and the Additional
Dividend to be equal to the dollar amount of the dividends which would have been
received by such holder if the amount of the aggregate Retroactive Taxable
Allocations would have been excludable from the gross income of such holder.
Such Additional Dividend shall be calculated (i) without consideration being
given to the time value of money; (ii) assuming that no holder of shares of AMPS
is subject to the Federal alternative minimum tax with respect to dividends
received from the Corporation; and (iii) assuming that each Retroactive Taxable
Allocation would be taxable in the hands of each holder of shares of AMPS at the
maximum marginal regular Federal income tax rate applicable to individuals or
corporations, whichever is greater, in effect during the-fiscal year in
question.

      (f) Whenever the Corporation intends to include any net capital gains or
other taxable income in any dividend on shares of AMPS, the Corporation will
notify the Auction Agent of the amount to be so included at least five Business
Days prior to the Auction Date on which the Applicable Rate for such dividend is
to be established.

      (g) No fractional shares of AMPS shall be issued.

      3. Liquidation Rights. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the Holders shall be entitled
to receive, out of the assets of the Corporation available for distribution to
shareholders, before any distribution or


                                       37
<PAGE>

payment is made upon any Common Stock or any other capital stock ranking junior
in right of payment upon liquidation to the AMPS, the sum of $50,000 per share
plus accumulated but unpaid dividends (whether or not earned or declared)
thereon to date of distribution, and after such payment the holders of AMPS will
be entitled to no other payments other than Additional Dividends as provided in
paragraph 2(e) hereof. If upon any liquidation, dissolution or winding up of the
corporation, the amounts payable with respect to the AMPS and any other
outstanding class or series of Preferred Stock of the Corporation ranking on a
parity with the AMPS as to payment upon liquidation are not paid in full, the
Holders and the holders of such other class or series will share ratably in any
such distribution of assets in proportion to the respective preferential
amounts-to which they are entitled. After payment of the full amount of the
liquidating distribution to which they are entitled, the Holders will not be
entitled to any further participation in any distribution of assets by the
Corporation except for any Additional Dividends. A consolidation, merger or
statutory share exchange of the Corporation with or into any other corporation
or entity or a sale, whether for cash, shares of stock, securities or
properties, of all or substantially all or any part of the Assets of the
Corporation shall not be deemed or construed to se a liquidation, dissolution or
winding up of the Corporation.

      4. Redemption. (a) Shares of AMPS shall be redeemable by the Corporation
as provided below:

            (i) To the extent permitted under the 1940 Act and Maryland law,
      upon giving a Notice of Redemption, the Corporation at its option may
      redeem shares of AMPS, in whole or in part, out of funds legally available
      therefor, at the Optional Redemption Price per share, on any Dividend
      Payment Date; provided that no share of AMPS may be redeemed at the option
      of the Corporation during a Non-Call Period to


                                       38
<PAGE>

      which such share is subject. In addition, holders of AMPS which are
      redeemed shall be entitled to receive Additional Dividends to the extent
      provided herein. The Corporation may not give a Notice of Redemption
      relating to an optional redemption as described in this paragraph 4(a)(i)
      unless, at the time of giving such Notice of Redemption, the Corporation
      has available Deposit Securities with maturity or tender dates not later
      than the day preceding the applicable redemption date and having a value
      not less than the amount due to Holders by reason of the redemption of
      their shares of AMPS on such redemption date.

            (ii) The Corporation shall redeem, out of funds legally available
      therefor, at the Mandatory Redemption Price per share, shares of AMPS to
      the extent permitted under the 1940 Act and Maryland law, on a date fixed
      by the Board of Directors, if the Corporation fails to maintain S&P
      Eligible Assets and Moody's Eligible Assets each with an aggregate
      Discounted Value equal to or greater than the AMPS Basic Maintenance
      Amount as provided in paragraph 7(a) or to satisfy the 1940 Act AMPS Asset
      Coverage as provided in paragraph 6 and such failure is not cured on or
      before the AMPS Basic Maintenance Cure Date or the 1940 Act Cure Date
      (herein respectively referred to as a "Cure Date"), as the case may be. In
      addition, holders of AMPS so redeemed shall be entitled to receive
      Additional Dividends to the extent provided herein. The number of shares
      of AMPS to be redeemed shall be equal to the lesser of (i) the minimum
      number of shares of AMPS the redemption of which, if deemed to have
      occurred immediately prior to the opening of business on the Cure Date,
      together with all shares of other Preferred Stock subject to redemption or
      retirement, would result in the Corporation having S&P Eligible Assets and
      Moody's Eligible Assets each with an aggregate Discounted Value


                                       39
<PAGE>

      equal to or greater than the AMPS Basic Maintenance Amount or satisfaction
      of the 1940 Act AMPS Asset Coverage, as the case may be, on such Cure Date
      (provided that, if there is no such minimum number of shares of AMPS and
      shares of other Preferred Stock the redemption of which would have such
      result, all shares of AMPS and shares of other Preferred Stock then
      Outstanding shall be redeemed), and (ii) the maximum number of shares of
      AMPS, together with all shares of other Preferred Stock subject to
      redemption or retirement, that can be redeemed out of funds expected to be
      legally available therefor on such redemption date. In determining the
      number of shares of AMPS required to be redeemed in accordance with the
      foregoing, the Corporation shall allocate the number required to be
      redeemed which would result in the Corporation having S&P Eligible Assets
      and Moody's Eligible Assets each with an aggregate Discounted Value equal
      to or greater than the AMPS Basic Maintenance Amount or satisfaction of
      the 1940 Act AMPS Asset Coverage, as the case may be, pro rata among
      shares of AMPS of all series, Other AMPS and other Preferred Stock subject
      to redemption pursuant to provisions similar to those contained in this
      paragraph 4(a)(ii); provided that, shares of AMPS which may not be
      redeemed at the option of the Corporation due to the designation of a
      Non-Call Period applicable to such shares (A) will be subject to mandatory
      redemption only to the extent that other shares are not available to
      satisfy the number of shares required to be redeemed and (B) will be
      selected for redemption in an ascending order of outstanding number of
      days in the Non-Call Period (with shares with the lowest number of days to
      be redeemed first) and by lot in the event of shares having an equal
      number of days in such Non-Call Period. The Corporation shall effect such
      redemption on a Business Day which is not later than 35 days after such
      Cure Date, except that if the Corporation does not have


                                       40
<PAGE>

      funds legally available for the redemption of all of the required number
      of shares of AMPS and shares of other Preferred Stock which are subject to
      mandatory redemption or the Corporation otherwise is unable to effect such
      redemption on or prior to 35 days after such Cure Date, the Corporation
      shall redeem those shares of AMPS which it is unable to redeem on the
      earliest practicable date on which it is able to effect such redemption
      out of funds legally available therefor.

      (b) Notwithstanding any other provision of this paragraph 4, no shares of
AMPS may be redeemed pursuant to paragraph 4(a)(i) of these Articles
Supplementary (i) unless all dividends in arrears on all remaining outstanding
shares of Parity Stock shall have been or are being contemporaneously paid or
declared and set apart for payment and (ii) if redemption thereof would result
in the Corporation's failure to maintain Moody's Eligible Assets with an
aggregate Discounted Value equal to or greater than the AMPS Basic Maintenance
Amount. In the event that less than all the outstanding shares of a series of
AMPS are to be redeemed and there is more than one Holder, the shares of that
series of AMPS to be redeemed shall be selected by lot or such other method as
the Corporation shall deems fair and equitable.

      (c) Whenever shares of AMPS are to be redeemed, the Corporation, not less
than 10 nor more than 30 days prior to the date fixed for redemption, shall mail
a notice ("Notice of Redemption") by first-class mail, postage prepaid, to each
Holder of shares of AMPS to be redeemed and to the Auction Agent. The
Corporation shall cause the Notice of Redemption to also be published in the
eastern and national editions of The Wall Street Journal. The Notice of
Redemption shall set forth (i) the redemption date, (ii) the amount of the
redemption price, (iii) the aggregate number of shares of AMPS of such series to
be redeemed, (iv) the place or places where shares of AMPS of such series are to
be surrendered for payment of the redemption price,


                                       41
<PAGE>

(v) a statement that dividends on the shares to the redeemed shall cease to
accumulate on such redemption date (except that holders may be entitled to
Additional Dividends) and (vi) the provision of these Articles Supplementary
pursuant to which such shares are being redeemed. No defect in the Notice of
Redemption or in the mailing or publication thereof shall affect the validity of
the redemption proceedings, except as required by applicable law.

      If the Notice of Redemption shall have been given as aforesaid and,
concurrently or thereafter, the Corporation shall have deposited in trust with
the Auction Agent a cash amount equal to the redemption payment for the shares
of AMPS as to which such Notice of Redemption has seen given with irrevocable
instructions and authority to pay the redemption price to the Holders of such
shares, then upon the date of such deposit or, if no such deposit is made, then
upon such date fixed for redemption (unless the Corporation shall default in
making the redemption payment), all rights of the Holders of such shares as
shareholders of the Corporation by reason of the ownership of such shares will
cease and terminate (except their right to receive the redemption price in
respect thereof and any Additional Dividends, but without interest), and such
shares shall no longer be deemed outstanding. The Corporation shall be entitled
to receive, from time to time, from the Auction Agent the interest, if any, on
such moneys deposited with it and the Holders of any shares so redeemed shall
have no claim to any of such interest. In case the Holder of any shares, so
called for redemption shall not claim the redemption payment for his shares
within one year after the date of redemption, the Auction Agent shall, upon
demand, pay over to the Corporation such amount remaining on deposit and the
Auction Agent shall thereupon be relieved of all responsibility to the Holder of
such shares called for redemption and such Holder thereafter shall look only to
the Corporation for the redemption payment.


                                       42
<PAGE>

      5. Voting Rights. (a) General. Except as otherwise provided in the Charter
or By-Laws, each Holder of shares of AMPS shall be entitled to-one vote for each
share held on each matter submitted to a vote of shareholders of the
Corporation, and the holders of outstanding shares of Preferred Stock, including
AMPS, and of shares of Common Stock shall vote together as a single class;
provided that, at any meeting of the shareholders of the Corporation held for
the election of directors, the holders of outstanding shares of Preferred stock,
including AMPS, shall be entitled, as a class, to the exclusion of the holders
of all other securities and classes of capital stock of the Corporation, to
elect two directors of the Corporation. Subject to paragraph 5(b) hereof, the
holders of outstanding shares of capital stock of the Corporation, including the
holders of outstanding shares of Preferred Stock, including AMPS, voting as a
single class, shall elect the balance of the directors.

      (b) Right to Elect-Majority of Board of Directors. 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 of directors
constituting the Board of Directors shall be automatically increased by the
smallest number that, when added to the two directors elected exclusively the
holders of shares of Preferred Stock, would constitute a majority of the Board
of Directors as so increased by such smallest number; and the holders of shares
of Preferred Stock shall be entitled, voting separately as one class (to the
exclusion of the holders of all other securities and classes of capital stock of
the Corporation), to elect such smallest number additional directors, together
with the two directors that such holders are in any event entitled to elect. 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


                                       43
<PAGE>

      the outstanding shares of AMPS equal to at least two full years' dividends
      shall be due and unpaid and sufficient cash or specified securities shall
      not have been deposited with the Auction Agent for the payment of such
      accumulated dividends; or

            (ii) if at any time holders of any other shares of Preferred Stock
      are entitled to elect a majority of the directors of the Corporation under
      the 1940 Act. Upon the termination of a Voting Period, the voting rights
      described in this paragraph 5(b), shall cease, subject always, however, to
      the reverting of such voting rights in the Holders upon the further
      occurrence of any of the events described in paragraph 5(b).

      (c) Right to Vote with Respect to Certain Other Matters. So long as any
shares of AMPS are outstanding, the Corporation shall not, without the
affirmative vote of the holders of a majority of the shares of Preferred Stock
Outstanding at the time, voting separately as one class: (i) authorize, create
or issue, or increase the authorized or issued amount of, any class or series of
stock ranking prior to or on a parity with any series of Preferred Stock with
respect to payment of dividends or distribution of assets on liquidation, or
increase the authorized amount of AMPS or any other Preferred Stock, or (ii)
amend, alter or repeal the provisions of the Charter, whether by merger,
consolidation or otherwise, so as to adversely affect any of the contract rights
expressly set forth in the Charter of holders of shares of AMPS or any other
Preferred Stock. To the extent permitted under the 1940 Act, in the event shares
of more than one series of AMPS are outstanding, the Corporation shall not
approve any of the actions set forth in clause (i) or (ii) which adversely
affects the contract rights expressly set forth in the Charter of a Holder of
shares of a series of AMPS differently than those of a Holder of shares of any
other series of AMPS without the affirmative vote of the holders of at least a
majority of the shares of AMPS of each series adversely affected and outstanding
at such time (each such adversely affected series voting


                                       44
<PAGE>

separately as a class). The Corporation shall notify Moody's and S&P 10 Business
Days prior to any such vote described in clause (i) or (ii). Unless a higher
percentage is provided for under the Charter, the affirmative vote of the
holders of a majority of the outstanding shares of Preferred Stock, including
AMPS, voting together as a single class, will be required to approve any plan of
reorganization (including bankruptcy proceedings) adversely affecting such
shares or any action requiring a vote of security holders under Section 13(a) of
the 1940 Act. The class-vote of holders of shares of Preferred Stock, including
AMPS, described above will in each case be in addition to a separate vote of the
site percentage of shares of Common Stock and shares of Preferred Stock,
including AMPS, voting together as a single class necessary to authorize the
action in question.

      (d) Voting Procedures.

            (i) As soon as practicable after the accrual of any right of the
      holders of shares of Preferred Stock to elect additional directors as
      described in paragraph 5(b) above, the Corporation shall call a special
      meeting of such holders and instruct the Auction Agent to mail a notice of
      such special meeting to such holders, such meeting to be held not less
      than 10 nor more than 20 days after the date of mailing of such notice. If
      the Corporation fails to send such notice to the Auction Agent or if the
      Auction Agent does not call such a special meeting, it may be called by
      any such holder on like notice. The record date for determining the
      holders entitled to notice of and to vote at such special meeting shall be
      the close of business on the fifth Business Day preceding the day on which
      such notice is mailed. At any such special meeting and at each meeting
      held during a Voting Period, such Holders, voting together as a class (to
      the exclusion of the holders of all other securities and classes of
      capital stock of the Corporation), shall be


                                       45
<PAGE>

      entitled to elect the number of directors prescribed in paragraph 5(b)
      above. At any such meeting or adjournment thereof in the absence of a
      quorum, a majority of such holders present in person or by proxy shall
      have the power to adjourn the meeting without notice, other than by an
      announcement at the meeting, to a date not more than 120 days after the
      original record date.

            (ii) For purposes of determining any rights of the Holders to vote
      on any matter or the number of shares required to constitute a quorum,
      whether such right is created by these Articles Supplementary, by the
      other provisions of the Charter, by statute or otherwise, a share of AMPS
      which is not Outstanding shall not be counted.

            (iii) The terms of office of all persons who are directors of the
      Corporation at the time of a special meeting of Holders and holders of
      other Preferred Stock to elect directors shall continue, notwithstanding
      the election at such meeting by the Holders and such other holders of the
      number of directors that they are entitled to elect, and the persons so
      elected by the Holders and such other holders, together with the two
      incumbent directors elected by the Holders and such other holders of
      Preferred Stock and the remaining incumbent directors elected by the
      holders of the Common Stock and Preferred Stock, shall constitute the duly
      elected directors of the Corporation.

            (iv) Simultaneously with the expiration of a Voting Period, the
      terms of office of the additional directors elected by the Holders and
      holders of other Preferred Stock pursuant to paragraph 5(b) above shall
      terminate, the remaining directors shall constitute the directors of the
      Corporation and the voting rights of the Holders and such other holders to
      elect additional directors pursuant to paragraph 5(b) above shall cease,
      subject to the provisions of the last sentence of paragraph 5(b)(ii).


                                       46
<PAGE>

      (e) Exclusive Remedy. Unless otherwise required by law, the Holders of
shares of AMPS shall not have any rights or preferences other than those
specifically set forth herein. The Holders of shares of AMPS shall have no
preemptive rights or rights to cumulative voting. In the event that the
Corporation fails to pay any dividends on the shares of AMPS, the exclusive
remedy of the Holders shall be the right to vote for directors pursuant to the
provisions of this paragraph 5.

      (f) Notification to S&P and Moody's. In the event a vote of Holders of
AMPS is required pursuant to the provisions of Section 13 (a) of the 1940 Act,
the Corporation shall, not later than ten business days prior to the date on
which such vote is to be taken, notify S&P and Moody's that such vote is to be
taken and the nature of the action with respect to which such vote is to be
taken.

      6. 1940 Act AMPS Asset Coverage. The Corporation shall maintain, as of the
last Business Day of each month in which any share of AMPS is outstanding, the
1940 Act AMPS Asset Coverage.

      7. AMPS Basic Maintenance Amount. (a) The Corporation shall maintain, on
each Valuation Date, and shall verify to its satisfaction that it is maintaining
on such Valuation Date, (i) S&P Eligible Assets having an aggregate Discounted
Value equal to or greater than the AMPS Basic Maintenance Amount and (i) Moody's
Eligible Assets having an aggregate Discounted Value usual to or greater than
the AMPS Basic Maintenance Amount. Upon any failure to maintain the required
Discounted Value, the Corporation will use its best efforts to alter the
composition of its portfolio to reattain the AMPS Basic Maintenance Amount on or
prior to the AMPS Basic Maintenance Cure Date.


                                       47
<PAGE>

      (b) On or before 5:00 p.m., New York City time, on tile third Business Day
after a Valuation Date on which the Corporation fails to satisfy the AMPS Basic
Maintenance Amount, the Corporation shall complete and deliver to the Auction
Agent, Moody's and S&P a complete AMPS Basic Maintenance Report as of the date
of such failure, which will be deemed to have been delivered to the Auction
Agent if the Auction Agent receives a copy or telecopy, telex or other
electronic transcription thereof and on the same day the Corporation mails to
the Auction Agent for delivery on the next Business Day the complete AMPS Basic
Maintenance Report. The Corporation will deliver an AMPS Basic Maintenance
Report to Moody's on or before 5:00 p.m., New York City time, on the third
Business Day after a Valuation Date on which the Corporation cures its failure
to maintain Moody's Eligible Assets with an aggregate Discounted Value equal to
or greater than the AMPS Basic Maintenance Amounts or on which the Corporation
fails to maintain Moody's Eligible Assets with an aggregate Discounted Value
which exceeds that AMPS Basic Maintenance Amount by 5% or more. The Corporation
will also deliver an AMPS Basic Maintenance Report to the Auction Agent and S&P
and a Certificate of Minimum Liquidity to S&P as of (i) the fifteenth day of
each month (or, if such day is not a Business Day, the next succeeding Business
Day) and (ii) the last Business Day of each month, in each case on or before the
third Business Day after such day. A failure by the Corporation to deliver an
AMPS Basic Maintenance Report under this paragraph 7(b) shall be deemed to be
delivery of an AMPS Basic Maintenance Report indicating the Discounted Value for
S&P Eligible Assets and Moody's Eligible Assets of the Corporation is less than
the AMPS Basic Maintenance Amount, as of the relevant Valuation Date.

      (c) Within ten Business Days after the date of delivery of an AMPS Basic
Maintenance Report and a Certificate of Minimum Liquidity in accordance with
paragraph 7(b)


                                       48
<PAGE>

above relating to a Quarterly Valuation Date, the Independent Accountant will
confirm in writing to the Auction Agent, S&P and Moody's (i) the mathematical
accuracy of the calculations reflected in such Report (and in any other AMPS
Basic Maintenance Report, randomly selected by the Independent Accountant, that
was delivered by the Corporation during the quarter ending on such Quarterly
Valuation Date) and (with respect to S&P only while S&P is rating the AMPS) such
Certificate, (ii) that, in such Report (and in such randomly selected Report),
the Corporation correctly determined the assets of the Corporation which
constitute S&P Eligible Assets or Moody's Eligible Assets, as the case may be,
at such Quarterly Valuation Date in accordance with these Articles
Supplementary, (iii) that, in such Report (and in such randomly selected
Report), the Corporation determined whether the Corporation had, at such
Quarterly Valuation Date (and at the Valuation Date addressed in such
randomly-selected Report) in accordance with these Articles Supplementary, S&P
Eligible Assets of an aggregate Discounted Value at least equal to the AMPS
Basic Maintenance amount and Moody's Eligible Assets of an aggregate Discounted
Value at least equal to the AMPS Basic Maintenance Amount, (iv) that (with
respect to S&P only) in such Certificate, the Corporation determined the Minimum
Liquidity Level and the Corporation's Deposit Securities in accordance with
these Articles Supplementary, including maturity or tender date, (v) with
respect to the S&P rating on Municipal Bonds, the issuer name, issue size and
coupon rate listed in such Report and (with respect to S&P only) such
Certificate, that the Independent Accountant has requested that S&P verify such
information and the Independent Accountant shall provide a listing in its letter
of any differences, (vi) with respect to the Moody's ratings on Municipal Bonds,
the issuer name, issue size and coupon rate listed in such Report and (with
respect to S&P only) such Certificate, that such information has been verified
by Moody's (in the event such information is not verified by


                                       49
<PAGE>

Moody's, the Independent Accountant will inquire of Moody's what such
information is, and provide a listing in its letter of any differences), (vii)
with respect to the bid or mean price (or such alternative permissible factor
used in calculating the Market Value) provided by the custodian of the
Corporation's assets to the Corporation for purposes of valuing securities in
the Corporation's portfolio, the Independent Accountant has traced the price
used in such Report and (with respect to S&P only) such Certificate to the bid
or mean price listed in such Report and (with respect to S&P only) such
Certificate as provided to the Corporation and verified that such information
agrees (in the event such information does not agree, the Independent Accountant
will provide a listing in its letter of such differences) and (viii) with
respect to such confirmation to Moody's, that the Corporation has satisfied the
requirements of paragraph 9(b) of these Articles Supplementary (such
confirmation is herein called the "Accountant's Confirmation").

      (d) Within ten Business Days after the date of delivery to the Auction
Agent, S&P and Moody's of an AMPS Basic Maintenance Report in accordance with
paragraph 7(b) above relating to any valuation Date on which the Corporation
failed to maintain S&P Eligible Assets with an aggregate Discounted Value and
Moody's Eligible Assets with an aggregate Discounted Value equal to or greater
than the AMPS Basic Maintenance Amount, and relating to the AMPS Basic
Maintenance Cure Date with respect to such failure, the Independent Accountant
will provide to the Auction Agent, S&P and Moody's an Accountant's Confirmation
as to such AMPS Basic Maintenance Report.

      (e) If any Accountant's Confirmation delivered pursuant to subparagraph
(c) or (d) of this paragraph 7 shows that an error was made in the AMPS Basic
Maintenance Report for a particular Valuation Date for which such Accountant's
Confirmation as required to be delivered, or shows that a lower aggregate
Discounted Value for the aggregate of all S&P Eligible Assets or


                                       50
<PAGE>

Moody's Eligible Assets, as the case may be, of the Corporation was determined
by the Independent Accountant, the calculation or determination made by such
Independent Accountant shall be final and conclusive and shall be binding on the
Corporation, and the Corporation shall accordingly amend and deliver the AMPS
Basic Maintenance Report to the Auction Agent, S&P and Moody's promptly
following receipt by the Corporation of such Accountant's Confirmation.

      (f) On or before 5:00 p.m., New York City time, on the first Business Day
after the Date of Original Issue of the shares of AMPS, the Corporation will
complete and deliver to S&P and Moody's an AMPS Basic Maintenance Report as of
the close of business on such Date of Original Issue. Within five business days
of such Date of Original Issue, the Independent Accountant will confirm in
writing to S&P and Moody's (i) the mathematical accuracy of the calculations
reflected in such Report and (ii) that the aggregate Discounted Value of S&P
Eligible Assets and the aggregate Discounted Value of Moody's Eligible Assets
reflected thereon equals or exceeds the AMPS Basic Maintenance Amount reflected
thereon.

      (g) For so long as shares of AMPS are rated by Moody's, in managing the
Corporation's portfolio, the adviser will not alter the composition of the
Corporation's portfolio if, in the reasonable belief of the adviser, the effect
of any such alteration would be to cause the Corporation to have Moody's
Eligible Assets with an aggregate Discounted Value, as of the immediately
preceding Valuation Date, less than the AMPS Basic Maintenance Amount as of such
Valuation Date; provided, however, that in the event that, as of the immediately
preceding Valuation Date, the aggregate Discounted Value of Moody's Eligible
Assets exceeded the AMPS Basic Maintenance Amount by five percent or less, the
adviser will not alter the composition of the Corporation's portfolio in a
manner reasonably expected to reduce the aggregate Discounted Value of Moody's
Eligible Assets unless the Corporation shall have


                                       51
<PAGE>

confirmed that, after giving effect to such alteration, the aggregate Discounted
Value of Moody's Eligible Assets would exceed the AMPS Basic Maintenance Amount.

      8. Minimum Liquidity Level. (a) For so long as any shares of AMPS are
rated by S&P, the Corporation shall be required to have, as of each Valuation
Date, Dividend Coverage Assets having in the aggregate a Market Value not less
than the Dividend Coverage Amount.

      (b) As of each Valuation Date as long as any shares of AMPS are rated by
S&P, the Corporation shall determine (i) the Market Value of the Dividend
Coverage Assets owned by the Corporation as of that Valuation Date, (ii) the
Dividend Coverage Amount on that Valuation Date, and (iii) whether the Minimum
Liquidity Level is met as of that Valuation Date. The calculations of the
Dividend Coverage Assets, the Dividend Coverage Amount and whether the Minimum
Liquidity Level is met shall be set forth in a certificate (a "Certificate of
Minimum Liquidity") dated as of the Valuation Date. The AMPS Basic Maintenance
Report and the Certificate of Minimum Liquidity may be combined in one
certificate. The Corporation shall cause the Certificate of Minimum Liquidity to
be delivered to S&P not later than the close of business on the third Business
Day after the Valuation Date applicable to such Certificate pursuant to
paragraph 7(b). The Minimum Liquidity Level shall be deemed to be met as of any
date of determination if the Corporation has timely delivered a Certificate of
Minimum Liquidity relating to such date which states that the same has been met
and which is not manifestly inaccurate. In the event that a Certificate of
Minimum Liquidity is not delivered to S&P when required, the Minimum Liquidity
Level shall be deemed not to have been met as of the applicable date.

      (c) If the Minimum Liquidity Level is not met as of any valuation Date,
then the Corporation shall purchase or otherwise acquire Dividend Coverage
Assets to the extent


                                       52
<PAGE>

necessary so that the Minimum Liquidity Level is met as of the fifth Business
Day following such Valuation Date. The Corporation shall, by such fifth Business
Day, provide to S&P a Certificate of Minimum Liquidity setting forth the
calculations of the Dividend Coverage Assets and the Dividend Coverage Amount
and showing that the Minimum Liquidity Level is met as of such fifth Business
Day together with a report of the custodian of the Corporation's assets
confirming the amount of the corporation's Dividend Coverage Assets as of such
fifth Business Day.

      9. Certain Other Restrictions.

      (a) For so long as any shares of AMPS are rated by S&P, the Corporation
will not purchase or sell futures contracts, write, purchase or sell options on
futures contracts or write put options (except covered put options) or call
options (except covered call options) on portfolio securities unless it receives
written confirmation from S&P that engaging in such transactions will not impair
the ratings then assigned to the shares of AMPS by S&P, except that the
Corporation may purchase or sell futures contracts based on the Bond Buyer
Municipal Bond Index (the "Municipal Index") or United States Treasury Bonds
with remaining maturities of ten years of more ("Treasury Bonds") and write,
purchase or sell put and call options on such contracts (collectively "S&P
Hedging Transactions"), subject to the following limitations:

            (i) the corporation will not engage in any S&P Hedging Transaction
      based on the Municipal Index (other than transactions which terminate a
      futures contract or option held by the Corporation by the Corporation's
      taking an opposite position thereto ("Closing Transactions")), which would
      cause the Corporation at the time of such transaction to own or have sold
      the least of (A) more than 1,000 outstanding futures contracts based on
      the Municipal Index, (B) outstanding futures contracts based on the


                                       53
<PAGE>

      Municipal Index exceeding in number 25% of the quotient of the Market
      Value of the Corporation's total assets divided by $100,000 or (C)
      outstanding futures contracts based on the Municipal Index exceeding in
      number 10% of the average number of daily traded futures contracts based
      on the Municipal Index in the thirty days preceding the time of effecting
      such transaction as reported by The Wall Street Journal;

            (ii) the Corporation will not engage in any S&P Hedging Transaction
      based on Treasury Bonds (other than Closing Transactions) which would
      cause the Corporation at the time of such transaction to own or have sold
      the lesser of (A) outstanding futures contracts based on Treasury Bonds
      and on the Municipal Index exceeding in number 25% of the quotient of the
      Market Value of the Corporation's total assets divided by $100,000 or (B)
      outstanding futures contracts based on Treasury Bonds exceeding in number
      10% of the average number of daily traded futures contracts based on
      Treasury Bonds in the thirty days preceding the time of effecting such
      transaction as reported by The Wall Street Journal;

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

            (iv) the Corporation will engage in a Closing Transaction to close
      out any outstanding futures contract or option thereon in the month prior
      to the delivery month


                                       54
<PAGE>

      under the terms of such futures contract or option thereon unless the
      Corporation holds the securities deliverable under such terms; and

            (v) when the Corporation writes a futures contract or option
      thereon, it will either maintain an amount of cash, cash equivalents or
      short-term, fixed-income securities in a segregated account with the
      Corporation's custodian, so that the amount so segregated plus the amount
      of initial Margin and Variation Margin held in the account of or on behalf
      of the Corporation's broker with respect to such futures contract or
      option equals the market Value of the futures contract or option, or, in
      the event the Corporation writes a futures contract or option thereon
      which requires delivery of an underlying security, it shall hold such
      underlying security in its portfolio.

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

      (b) For so long as any shares of AMPS are rated by Moody's, the
Corporation will not buy or sell futures contracts, write, purchase or sell call
options on futures contracts or purchase put options on futures contracts or
write call options (except covered call options) on portfolio securities unless
it receives written confirmation from Moody's that engaging in such transactions
would not impair the ratings then assigned to the shares of AMPS by Moody's,


                                       55
<PAGE>

except that the Corporation may purchase or sell exchange-traded futures
contracts based on the Municipal Index or Treasury Bonds and purchase or sell
exchange-traded put options on such futures contracts and write exchange-traded
call options on such futures contracts (collectively "Moody's Hedging
Transactions"), subject to the following limitations:

            (i) the Corporation will not engage in any Moody's Hedging
      Transaction based on the Municipal Index (other than Closing Transactions)
      which would cause the Corporation at the time of such transaction to own
      or have sold (A) outstanding futures contracts based on the Municipal
      Index exceeding in number 10% of the average number of daily traded
      futures contracts based on the Municipal Index in the thirty days
      preceding the time of effecting such transaction as reported by The Wall
      Street Journal or (B) outstanding futures contracts based on the Municipal
      Index having a Market Value exceeding the Market Value of all Moody's
      Eligible Assets owned by the Corporation (other than Moody's Eligible
      Assets already subject to a Moody's Hedging Transaction);

            (ii) the Corporation will not engage in any Moody's Hedging
      Transaction based on Treasury Bonds (other than Closing Transactions)
      which would cause the Corporation at the time of such transaction to own
      or have sold (A) outstanding futures contracts based on Treasury Bonds
      having an aggregate Market Value exceeding 40% of the aggregate Market
      Value of Moody's Eligible Assets owned by the Corporation and rated Aa by
      Moody's (or, if not rated by Moody's but rated by S&P, rated AAA by S&P)
      or (B) outstanding futures contracts based on Treasury Bonds having an
      aggregate Market Value exceeding 80% of the aggregate Market Value of all
      Moody's Eligible Assets owned by the Corporation (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


                                       56
<PAGE>

      Moody's but rated by S&P, rated A or AA by S&P) (for purposes of the
      foregoing clauses (i) and (ii), the Corporation shall be deemed to own the
      number of futures contracts that underlie any outstanding options written
      by the Corporation);

            (iii) the Corporation will engage in Closing Transactions to close
      out any outstanding futures contract based on the Municipal Index if the
      amount of open interest in the Municipal Index as reported by The Wall
      Street Journal is less than 5,000;

            (iv) the Corporation will engage in a Closing Transaction to close
      out any outstanding 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 futures
      contract by no later than the first Business Day of the month in which
      such option expires;

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

            (vi) the Corporation will not engage in options and futures
      transactions for leveraging or speculative purposes and will not write any
      call options or sell any futures contracts for the purpose of hedging the
      anticipated purchase of an asset prior to completion of such purchase; and

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


                                       57
<PAGE>

      For purposes of determining whether the Corporation has Moody's Eligible
Assets with an aggregate Discounted Value that equals or exceeds the AMPS Basic
Maintenance Amount, the Discounted Value of Moody's Eligible Assets which the
Corporation is obligated to deliver or receive pursuant to an outstanding
futures contract or option shall be as follows: (i) assets subject to call
options written by the Corporation which are either exchange-traded and "readily
reversible" or which expire within 49 days after the date as of which such
valuation is made shall be valued at the lesser of (a) Discounted Value and (b)
the exercise price of the call option written by the Corporation; (ii) assets
subject to call options written by the Corporation not meeting the requirements
of clause (i) of this sentence shall have no value; (iii) assets subject to put
options written by the Corporation shall be valued at the lesser of (A) the
exercise price and (B) the Discounted Value of the subject security; (iv)
futures contracts shall be valued at the lesser of (A) settlement price and (B)
the Discounted Value of the subject security, provided that, if a contract
matures within 49 days after the date as of which such valuation is made, where
the Corporation is the Seller the contract be valued at the settlement price and
where the Corporation is the buyer the contract may be valued at the Discounted
Value of the subject securities and (v) where delivery may be made to the
Corporation with any security of a class of securities, the Corporation shall
assume that it will take delivery of the security with the lowest Discounted
Value.

      For purposes of determining whether the Corporation has Moody's Eligible
Assets with an aggregate Discounted Value that equals or exceeds the AMPS Basic
Maintenance Amount, the following amounts shall be subtracted from the aggregate
Discounted Value of the Moody's Eligible Assets held by the Corporation: (i) 10%
of the exercise price of a written call option; (ii) the exercise price of any
written put option; (iii) where the Corporation is the seller under a


                                       58
<PAGE>

futures contract, 10% of the settlement price of the futures contract; (iv)
where the Corporation is the purchaser under a futures contract, the settlement
price of assets purchased under such futures contract; the settlement price of
the underlying futures contract if corporation writes put options on a futures
contract; and (vi) 105% of the Market Value of the underlying futures contracts
if the Corporation writes call options on a futures contract and not on the
underlying contract.

      (c) For so long as any shares of AMPS are rated by Moody's, the
Corporation will not enter into any contract to purchase securities for a fixed
price at a future date beyond customary settlement time (other than such
contracts that constitute Moody's Hedging Transactions that are permitted under
paragraph 9(b) of these Articles Supplementary), except that the Corporation may
enter into such contracts to purchase newly-issued securities on the date such
securities are issued ("Forward Commitments"), subject to the following
limitations:

            (i) the Corporation will maintain in a segregated account with its
      custodian cash, cash equivalents or short-term, fixed-income securities
      rated P-1, MIG-1 or VMIG-1 by Moody's and maturing prior to the date of
      the Forward Commitment with a Market Value that equals or exceeds the
      amount of the Corporation's obligations under any Forward Commitments to
      which it is from time to time a party or long-term fixed-income securities
      with a Discounted Value that equals or exceeds the amount of the
      Corporation's obligations under any Forward Commitment to which it is from
      time to time a party; and

            (ii) the Corporation will not enter into a Forward Commitment
      unless, after giving effect thereto the Corporation would continue to have
      Moody's Eligible Assets


                                       59
<PAGE>

      with an aggregate Discounted Value equal to or greater than the AMPS Basic
      Maintenance Account.

      For purposes of determining whether the Corporation has Moody's Eligible
Assets with an aggregate Discounted Value that equals or exceeds the AMPS Basic
Maintenance Amount, the Discounted Value of all Forward Commitments to which the
Corporation is a party and of all securities deliverable to the Corporation
pursuant to such Forward Commitments shall be zero.

      (d) For so long as shares of AMPS are rated by S&P or Moody's, the
Corporation will not, unless it has received written confirmation from S&P
and/or Moody's, as the case may be, that such action would not impair the
ratings then assigned to shares of AMPS by S&P and/or Moody's, as the case may
be, (i) borrow money except for the purpose of clearing transactions in
portfolio securities (which borrowings shall under any circumstances be limited
to the lesser of $10 million and an amount equal to 5% of the Market Value of
the Corporation's assets at the time of such borrowings), (ii) engage in short
sales of securities, (iii) lend any securities, (iv) issue any class or series
of stock ranking prior to or on a parity with the AMPS with respect to the
payment of dividends or the distribution of assets upon dissolution, liquidation
or winding up of the Corporation, (v) reissue any AMPS previously purchased or
redeemed by the Corporation, (vi) merge or consolidate into or with any other
corporation or entity, (vii) change the Pricing Service or (viii) engage in
reverse repurchase agreements.

      10. Notice. All notices or communications, unless otherwise specified in
the By-Laws of the Corporation or these Articles Supplementary, shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail, postage prepaid. Notice shall be deemed given on the earlier
of the date received or the date seven days after which such notice is mailed.


                                       60
<PAGE>

      11. Auction Procedures. (a) Certain definitions. As used in this paragraph
11, the following terms shall have the following meanings, unless the context
otherwise requires:

            (i) "AMPS" shall mean the shares of AMPS being auctioned pursuant to
      this paragraph 11.

            (ii) "Auction Date" shall mean the first Business Day preceding the
      first day of a Dividend period.

            (iii) "Available AMPS" shall have the meaning specified in paragraph
      11(d)(i) below.

            (iv) "Bid" shall have the meaning specified in paragraph 11(b)(i)
      below.

            (v) "Bidder" shall have the meaning specified in paragraph 11(b)(i)
      below.

            (vi) "Hold Order" shall have the meaning specific paragraph
      11(b)(i) below.

            (vii) "Maximum Applicable Rate" for any Dividend Period will be the
      Applicable Percentage of the Reference Rate. The Applicable Percentage
      will be determined based on (i) the lower of the credit rating or ratings
      assigned on such date to such shares by Moody's and S&P (or if Moody's or
      S&P or both shall not make such rating available, the equivalent of either
      or both of such ratings by a Substitute Rating Agency or two Substitute
      Rating Agencies or, in the event that only one such rating shall be
      available, such rating) and (ii) whether the Corporation has provided
      notification to the Auction Agent prior to the Auction establishing the
      Applicable Rate for any dividend pursuant to paragraph 2(f) hereof that
      net capital gains or other taxable income will be included in such
      dividend on shares of AMPS as follows:


                                       61
<PAGE>

                                                 Applicable        Applicable
                                                 Percentage        Percentage
              Credit Ratings                     Reference         Reference
- ----------------------------------------         Rate -            Rate -
     Moody's                   S&P               No Notification   Notification
- -----------------         --------------         ---------------   ------------
"aa3" or higher           AA- or higher             110%              150%
"a3" to "a1"              A- to A+                  125%              160%
"baa3" to "baa1"          BBB- to BBB+              150%              250%
Below "baa3"              Below BBB-                200%              275%

      The Corporation shall take all reasonable action necessary to enable S&P
and Moody's to provide a rating for each series of AMPS. If either S&P or
Moody's shall not make such a rating available, or neither S&P nor Moody's shall
make such a rating available, Merrill Lynch, Pierce, Fenner & Smith Incorporated
or its affiliates and successors, after consultation with the Corporation, shall
select a nationally recognized statistical rating organization or two nationally
recognized statistical rating organizations to act as a Substitute Rating Agency
or Substitute Rating Agencies, as the case may be.

            (viii) "Order" shall gave the meaning specified in paragraph
      11(b)(i) below.

            (ix) "Sell Order" shall have the meaning specified in paragraph
      11(b)(i) below.

            (x) "Submission Deadline" shall mean 1:00 P.M., New York City time,
      on any Auction Date or such other time on any Auction Date as may be
      specified by the Auction Agent from time to time as the time by which each
      Broker-Dealer must submit to the Auction Agent in writing all orders
      obtained by it for the Auction to be conducted on such Auction Date.

            (xi) "Submitted Bid" shall have the meaning specified in paragraph
      11(d) (i) below.

            (xii) "Submitted Hold Order" shall have the meaning specified in
      paragraph 11(d) (i) below.


                                       62
<PAGE>

            (xiii) "Submitted Order" shall have the meaning specified in
      paragraph 11(d)(i) below.

            (xiv) "Submitted Sell Order" shall have the meaning specified in
      paragraph 11(d)(i) below.

            (xv) "Sufficient Clearing Bids" shall have the meaning specified in
      paragraph 11(d)(i) below.

            (xvi) "Winning Bid Rate" shall have the meaning specified in
      paragraph 11(d)(i) below.

            (b) Orders by Existing Holders and Potential Holders.

            (i) On or prior to the Submission Deadline on each Auction Date:

            (A) each Existing Holder may submit to a Broker-Dealer information
      as to:

                  (1) the number of Outstanding shares, if any, of AMPS held by
            such Existing Holder which such Existing Holder desires to continue
            to hold without regard to the Applicable Rate for the next
            succeeding Dividend Period;

                  (2) the number of Outstanding shares, if any, of AMPS held by
            such Existing Holder which such Existing Holder desires to continue
            to hold, provided that the Applicable Rate for the next succeeding
            Dividend Period shall not be less than the rate per annum specified
            by such Existing Holder; and/or

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

            (B) each Broker-Dealer, using a list of Potential Holders that shall
      be maintained in good faith for the purpose of conducting a competitive
      Auction, shall


                                       63
<PAGE>

      contact Potential Holders, including Persons that are not Existing
      Holders, on such list to determine the number of Outstanding shares, if
      any, of AMPS which each such Potential Holder offers to purchase, provided
      that the Applicable Rate for the next succeeding Dividend Period shall not
      be less than the rate per annum specified by such Potential Holder.

      For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (A) or (B) of this paragraph 11(b)(i) is
hereinafter referred to as an "Order" and each Existing Holder and each
Potential Holder placing an Order is hereinafter referred to as a "Bidder"; an
Order containing the information referred to in clause (A)(1) of this paragraph
11(b)(i) is hereinafter referred to as a "Hold Order"; an Order containing the
information referred to in clause (A)(2) or (B) of this paragraph 11(b)(i) is
hereinafter referred to as a "Bid"; and an Order containing the information
referred to in clause (A)(3) of this paragraph 11(b)(i) is hereinafter referred
to as a "Sell Order".

            (ii) (A) A Bid by an Existing Holder shall constitute an irrevocable
      offer to sell:

                  (1) the number of Outstanding shares of AMPS specified in such
            Bid if the Applicable Rate determined on such Auction Date shall be
            less than the rate per annum specified in such Bid; or

                  (2) such number or a lesser number of Outstanding shares of
            AMPS to be determined as set forth in paragraph 11(e)(i)(D) of the
            Applicable Rate determined on such Auction Date shall be equal to
            the rate per annum specified therein; or

                  (3) a lesser number of Outstanding shares of AMPS to be
            determined as set forth in paragraph 11(e)(ii)(C) if such specified
            rate per annum shall be


                                       64
<PAGE>

            higher than the Maximum Applicable Rate and Sufficient Clearing Bids
            do not exist.

            (B) A Sell Order by an Existing Holder shall constitute an
      irrevocable offer to sell:

                  (1) the number of Outstanding shares of AMPS specified in such
            Sell Order; or

                  (2) such number or a lesser number of Outstanding shares of
            AMPS to be determined as set forth in paragraph 11(e)(ii)(C) if
            Sufficient Clearing Bids do not exist.

            (C) A Bid by a Potential Holder shall constitute an irrevocable
      offer to purchase:

                  (1) the number of Outstanding shares of AMPS specified in such
            Bid if the Applicable Rate determined on such Auction Date shall be
            higher than the rate per annum specified in such Bid; or

                  (2) such number or a lesser number of Outstanding shares of
            AMPS to be determined as set forth in paragraph 11(e)(i)(E) if the
            Applicable Rate determined on such Auction Date shall be equal to
            the rate per annum specified therein.

      (c) Submission of Orders by Broker-Dealers to Auction Agent.

      (i) Each Broker-Dealer shall submit in writing or through the Auction
Agent's Auction Processing System to the Auction Agent prior to the Submission
Deadline on each Auction Date all Orders obtained by such Broker-Dealer and
specifying with respect to each Order:


                                       65
<PAGE>

            (A) the name of the Bidder placing such Order;

            (B) the aggregate number of Outstanding shares of AMPS that are the
      subject of such order;

            (C) to the extent that such Bidder is an Existing Holder:

                  (1) the number of Outstanding shares, if any, of AMPS subject
            to any Hold Order placed by such Existing Holder;

                  (2) the number of Outstanding shares, if any, of AMPS subject
            to any Bid placed by such Existing Holder and the rate per annum
            specified in such Bid; and

                  (3) the number of Outstanding shares, if any, of AMPS subject
            to any Sell Order placed by such Existing Holder; and

            (D) to the extent such Bidder is a Potential Holder, the rate per
      annum specified in such Potential Holder's Bid.

      (ii) If any rate per annum 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%.

      (iii) If an Order or Orders covering all of the Outstanding Shares of AMPS
held by an Existing Holder are not submitted to the Auction Agent prior to the
Submission Deadline, the Auction Agent shall deem a Hold Order (in the case of
an Auction relating to a Dividend Period which is not a Special Dividend Period)
and a Sell Order (in the case of an Auction relating to a Special Dividend
Period) to have been submitted on behalf of such Existing Holder covering the
number of Outstanding shares of AMPS and by such Existing Holder and not subject
to Orders submitted to the Auction Agent.


                                       66
<PAGE>

      (iv) If one or more Orders on behalf of an Existing Holder covering in the
aggregate more than the number of Outstanding Shares of AMPS held by such
Existing Holder are submitted to the Auction Agent, such Order shall be
considered valid as follows and in the following order of priority:

            (A) any Hold Order submitted on behalf of such Existing Holder shall
      be considered valid up to and including the number of Outstanding shares
      of AMPS held by such Existing Holder; provided that if more than one Hold
      Order is submitted on behalf of such Existing Holder and the number of
      shares of AMPS subject to such Hold Orders exceeds the number of
      Outstanding shares of AMPS held by such Existing Holder, the number of
      shares of AMPS subject to each of such Hold Orders shall be reduced pro
      rata so that such Hold Orders, in the aggregate, will cover exactly the
      number of Outstanding shares of AMPS held by such Existing Holder;

            (B) any Bids submitted on behalf of such Existing Holder shall be
      considered valid, in the ascending order of their respective rates per
      annum if more than one Bid is submitted on behalf of such Existing Holder,
      up to and including the excess of the number of Outstanding shares of AMPS
      held by such Existing Holder over the number of shares of AMPS subject to
      any Hold Order referred to in paragraph 11(c)(iv)(A) above (and if more
      than one Bid submitted on behalf of such Existing Holder specifies the
      same rate per annum and together they cover more than the remaining number
      of shares that can be the subject of valid Bids after application of
      paragraph 11(c)(iv)(A) above and of the foregoing portion of this
      paragraph 1l(c)(iv)(B) to any Bid or Bids specifying a lower rate or rates
      per annum, the number of shares subject to each of such Bids shall be
      reduced pro rata so that such Bids, in the aggregate, cover exactly such
      remaining number


                                       67
<PAGE>

      of shares); and the number of shares, if any, subject to Bids not valid
      under this paragraph 11(c)(iv)(B) shall be treated as the subject of a Bid
      by a Potential Holder; and

            (C) any Sell Order shall be considered valid up to and including the
      excess of the number of Outstanding shares of AMPS held by such Existing
      Holder over the number of shares of AMPS subject to Hold Orders referred
      to in paragraph 11(c)(iv)(A) and Bids referred to in paragraph
      11(c)(iv)(B); provided that if more than one Sell Order is submitted on
      behalf of any Existing Holder and the number of shares of AMPS subject to
      such Sell Orders is greater than such excess, the number of shares of AMPS
      subject to each of such Sell Orders shall be reduced pro rata so that such
      Sell Orders, in the aggregate, cover exactly the number of shares of AMPS
      equal to such excess.

      (v) If more than one Bid is submitted on behalf of any Potential Holder,
each Bid submitted shall be a separate Bid with the rate per annum and number of
shares of AMPS specified.

      (d) Determination of Sufficient Clearing Bids Winning Bid Rate and
Applicable Rate.

      (i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all 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 shall determine:

            (A) the excess of the total number of Outstanding shares of AMPS
      over the number of Outstanding shares of AMPS that are the subject of
      Submitted Hold Orders (such excess being hereinafter referred to as the
      "Available AMPS");


                                       68
<PAGE>

            (B) from the Submitted Orders whether the number of Outstanding
      shares of AMPS that are the subject of Submitted Bids by Potential Holders
      specifying one or more rates per annum equal to or lower than the Maximum
      Applicable Rate exceeds or is equal to the sum of:

                  (1) the number of Outstanding shares of AMPS that are the
            subject of Submitted Bids by Existing Holders specifying one or more
            rates per annum higher than the Maximum Applicable Rate, and

                  (2) the number of Outstanding shares of AMPS that are subject
            to Submitted Sell orders (if such excess or such equality exists
            (other than because the number of Outstanding shares of AMPS in
            clauses (1) and (2) above are each zero because all of the
            Outstanding shares of AMPS are the subject of Submitted Hold
            Orders), such Submitted Bids by Potential Holders being hereinafter
            referred to collectively as "Sufficient Clearing Bids"); and

            (C) if Sufficient Clearing Bids exist, the lowest rate per annum
      specified in the Submitted Bids (the "Winning Bid Rate") that if:

                  (1) each Submitted Bid from Existing Holders specifying the
            Winning Bid Rate and all other Submitted Bids from Existing Holders
            specifying lower rates per annum were rejected, thus entitling such
            Existing Holders to continue to hold the shares of AMPS that are the
            subject of such Submitted Bids, and

                  (2) each Submitted Bid from Potential Holders specifying the
            Winning Bid Rate and all other Submitted Bids from Potential Holders
            specifying lower rates per annum were accepted, thus entitling the
            Potential Holders to purchase the shares of AMPS that are the
            subject of such Submitted Bids,


                                       69
<PAGE>

            would result in the number of shares subject to all Submitted Bids
            specifying the Winning Bid Rate or a lower rate per annum being at
            least equal to the Available AMPS.

      (ii) Promptly after the Auction Agent has made the determinations pursuant
to paragraph 11(d)(i), the Auction Agent shall advise the Corporation of the
Maximum Applicable Rate and, based on such determinations, the Applicable Rate
for the next succeeding Dividend Period as follows:

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

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

            (C) if all of the Outstanding shares of AMPS are the subject of
      Submitted Hold Orders, that the Dividend Period next succeeding the
      Auction shall automatically be the same length as the immediately
      preceding Dividend Period and the Applicable Rate for the next succeeding
      Dividend Period shall be equal to 59% of the Reference Rate (or 90% of
      such rate if the Corporation has provided notification to the Auction
      Agent prior to the Auction establishing the Applicable Rate for any
      dividend pursuant to paragraph 2(f) hereof that net capital gains or other
      taxable income will be included in such dividend on shares of AMPS) on the
      date of the Auction.

      (e) Acceptance and Refection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Based on the determinations made pursuant to paragraph
11(d)(i), the


                                       70
<PAGE>

Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the
Auction Agent shall take such other action as set forth below:

      (i) If Sufficient Clearing Bids have been made, subject to the provisions
of paragraph 11(e)(iii) and paragraph 11(e)(iv), Submitted Bids and Submitted
Sell Orders shall be accepted or rejected in the following order of priority and
all other Submitted Bids shall be rejected:

            (A) the Submitted Sell Orders of Existing Holders shall be accepted
      and the Submitted Bid of each of the Existing Holders specifying any rate
      per annum that is higher than the Winning Bid Rate shall be accepted, thus
      requiring each such Existing Holder to sell the Outstanding shares of AMPS
      that are the subject of such Submitted Sell order or Submitted Bid;

            (B) the Submitted Bid of each of the Existing Holders specifying any
      rate per annum that is lower than the Winning Bid Rate shall be rejected,
      thus entitling each such Existing Holder to continue to hold the
      Outstanding shares of AMPS that are the subject of such Submitted Bid;

            (C) the Submitted Bid of each of the Potential Holders specifying
      any rate per annum that is lower than the Winning Bid Rate shall be
      accepted;

            (D) the Submitted Bid of each of the Existing Holders specifying a
      rate per annum that is equal to the Winning Bid Rate shall be rejected,
      thus entitling each such Existing Holder to continue to hold the
      Outstanding shares of AMPS that are the subject of such Submitted Bid,
      unless the number of Outstanding shares of AMPS subject to all such
      Submitted Bids shall be greater than the number of Outstanding shares of
      AMPS ("Remaining Shares") equal to the excess of the Available AMPS over
      the number of Outstanding shares of AMPS subject to Submitted Bids
      described in paragraph


                                       71
<PAGE>

      11(e)(i)(B) and paragraph 11(e)(i)(C), in which event the Submitted Bids
      of each such Existing Holder shall be accepted, and each such Existing
      Holder shall be required to sell outstanding shares of AMPS, but only in
      an amount equal to the difference between (1) the number of Outstanding
      shares of AMPS then held by such Existing Holder subject to such Submitted
      Bid and (2) the number of shares of AMPS obtained by multiplying (x) the
      number of Remaining Shares by (y) a fraction the numerator of which shall
      be the number of Outstanding shares of AMPS held by such Existing Holder
      subject to such Submitted Bid and the denominator of which shall be the
      sum of the numbers of Outstanding shares of AMPS subject to such Submitted
      Bids made by all such Existing Holders that specified a rate per annum
      equal to the Winning Bid Rate; and

            (E) the Submitted Bid of each of the Potential Holders specifying a
      rate per annum that is equal to the Winning Bid Rate shall be accepted but
      only in an amount equal to the number of outstanding shares of AMPS
      obtained by multiplying (x) the difference between the Available AMPS and
      the number of Outstanding shares of AMPS subject to Submitted Bids
      described in paragraph 11(e)(i)(B), paragraph 1l(e)(i)(C) and paragraph
      11(e)(i)(D) by (y) a fraction the numerator of which shall be the number
      of outstanding shares of AMPS subject to such Submitted Bid and the
      denominator of which shall be the sum of the number of Outstanding shares
      of AMPS subject to such Submitted Bids made by all such Potential Holders
      that specified rates per annum equal to the Winning Bid Rate.

      (ii) If Sufficient Clearing Bids have not been made (other than because
all of the Outstanding shares of AMPS are subject to Submitted Hold Orders),
subject to the provisions of


                                       72
<PAGE>

paragraph 11(e) (iii) , Submitted Orders shall be accepted or rejected as
follows in the following order of priority and all other Submitted Bids shall be
rejected:

            (A) the Submitted Bid of each Existing Holder specifying any rate
      per annum that is equal to or lower than the Maximum Applicable Rate shall
      be rejected, thus entitling such Existing Holder to continue to hold the
      Outstanding shares of AMPS that are the subject of such Submitted Bid;

            (B) the Submitted Bid of each Potential Holder specifying any rate
      per annum that is equal to or lower than the Maximum Applicable Rate shall
      be accepted, thus requiring such Potential Holder to purchase the
      Outstanding shares of AMPS that are the subject of such Submitted Bid; and

            (C) the Submitted Bids of each Existing Holder specifying any rate
      per annum that is higher than the specifying the Maximum Applicable Rate
      shall be accepted and the Submitted Sell Orders of each Existing Holder
      shall be accepted, in both cases only an amount equal to the difference
      between (1) the number of Outstanding shares of AMPS then held by such
      Existing Holder subject to such Submitted Bid or Submitted Sell Order and
      (2) the number of shares of AMPS obtained by multiplying (x) the
      difference between the Available AMPS and the aggregate number of
      Outstanding shares of AMPS subject to Submitted Bids described in
      paragraph 11(e)(ii)(A) and paragraph 11(e)(ii)(B) by (y) a fraction the
      numerator of which shall be the number of Outstanding shares of AMPS held
      by such Existing Holder subject to such Submitted Bid or Submitted Sell
      Order and the denominator of which shall be the number of Outstanding
      shares of AMPS subject to all such Submitted Bids and Submitted Sell
      Orders.


                                       73
<PAGE>

      (iii) If, as a result of the procedures described in paragraph 11(e)(i) or
paragraph 1l(e)(ii), 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 AMPS on any Auction Date, the Auction Agent shall, in such manner as
in its sole discretion it shall determine, round up or down the number of shares
of AMPS to be purchased or sold by any Exiting Holder or Potential Holder on
such Auction Date so that each Outstanding share of AMPS purchased or sold by
each Existing Holder or Potential Holder on such Auction Date shall be a whole
share of AMPS.

      (iv) If, as a result of the procedures described in paragraph 11(e)(i),
any Potential Holder would be entitled or required to purchase less than a whole
share of AMPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, allocate shares of AMPS for purchase
among Potential Holders so that only whole shares of AMPS are purchased on such
Auction Date by any Potential Holder, even if such allocation results in one or
more of such Potential Holders not purchasing any shares of AMPS on such Auction
Date.

      (v) Based on the results of each Auction, the Auction Agent shall
determine, with respect to each Broker-Dealer that submitted Bids or Sell Orders
on behalf of Existing Holders or Potential Holders, the aggregate number of
Outstanding shares of AMPS to be purchased and the aggregate number of the
Outstanding shares of AMPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares to
be purchased and such aggregate number of outstanding shares to be sold differ,
the Auction Agent shall determine to which other Broker-Dealer or Broker-Dealers
acting for one or more purchasers such Broker-Dealer shall deliver, or from
which other Broker-Dealer or


                                       74
<PAGE>

Broker-Dealers acting for one or more sellers such Broker-Dealer shall receive,
as the case may be, Outstanding shares of AMPS.

      (f) Miscellaneous. The Corporation may interpret the provisions of this
paragraph 11 to resolve any inconsistency or ambiguity, remedy any formal defect
or make any other change or modification that does not substantially adversely
affect the rights of Existing Holders of AMPS. An Exiting Holder (A) may sell,
transfer or otherwise dispose of shares of AMPS only pursuant to a Bid or Sell
Order in accordance with the procedures described in this paragraph 11 or to or
through a Broker-Dealer or to a Person that has delivered a signed copy of a
Purchaser's Letter to the Auction Agent, provided that in the case of all
transfers other than pursuant to Auctions such Existing Holder, its
Broker-Dealer or its Agent Member advises the Auction Agent of such transfer and
(B) except as otherwise required by law, shall have the ownership of the shares
of AMPS held by it maintained in book entry form by the Securities Depository in
the account of its Agent Member, which in turn will maintain records of such
Existing Holder's beneficial ownership. Neither the Corporation nor any
affiliate shall submit an Order in any Auction. Any Existing Holder that is an
Affiliate shall not sell, transfer or otherwise dispose of shares of AMPS to any
Person other than the Corporation. All of the Outstanding shares of AMPS shall
be represented by a single certificate registered in the name of the nominee of
the Securities Depository unless otherwise required by law or unless there is no
Securities Depository. If there is no Securities Depository, at the
Corporation's option and upon its receipt of such documents as it deems
appropriate, any shares of AMPS may be registered in the Stock Register in the
name of the Existing Holder thereof and such Existing Holder thereupon will be
entitled to receive certificates therefor and required to deliver certificates
therefor upon transfer or exchange thereof.


                                       75
<PAGE>

      12. Securities Depositary; Stock Certificates. (a) If there is a
Securities Depository, one certificate for all of the shares of Series A AMPS,
one certificate for all of the shares of Series B AMPS, one certificate for all
of the shares of Series C AMPS, one certificate for all of the shares of Series
D AMPS and one certificate for all of the shares of Series E AMPS shall be
issued to the Securities Depository and registered in the name of the Securities
Depository or its nominee. Additional certificates may be issued as necessary to
represent shares of AMPS. All such certificates shall bear a legend to the
effect that such certificates are issued subject to the provisions restricting
the transfer of shares of AMPS contained in these Articles Supplementary and
each Purchaser's Letter. Unless the Corporation shall have elected, during a
Non-Payment Period, to waive this requirement, the Corporation will also issue
stop-transfer instructions to the Auction Agent for the shares of AMPS. Except
as provided in paragraph (b) below, the Securities Depository or its nominee
will be the Holder, and no Existing Holder shall receive certificates
representing its ownership interest in such shares.

      (b) If the Applicable Rate applicable to all shares of AMPS shall be the
Non-Payment Period Rate or there is no Securities Depository, the Corporation
may at its option issue one or more new certificates with respect to such shares
(without the legend referred to in paragraph 12(a)) registered in the names of
the Existing Holders or their nominees and rescind the stop-transfer
instructions referred to in paragraph 12(a) with respect to such shares.


                                       76
<PAGE>

      IN WITNESS WHEREOF, MUNIYIELD FUND, INC. 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 Corporation further acknowledge said instrument to be the
corporate act of the Corporation, and state under the penalties of perjury that
to the best of their knowledge, information and belief the matters and facts
herein set forth with respect to approval are true in all material respects, all
on December 19, 1991.

                                               MUNIYIELD FUND, INC.

                                               By /s/ Kenneth A. Jacob
                                                  ------------------------------
                                                  Name:  Kenneth A. Jacob
                                                  Title: Vice President

Attest:

  /s/ Mark Goldfus
- -----------------------
    Mark Goldfus
     Secretary


                                       77


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1.E
<SEQUENCE>4
<FILENAME>file003.txt
<DESCRIPTION>ARTICLES SUPPLEMETARY
<TEXT>

                                                                   Exhibit 1(e)

                              MUNIYIELD FUND, INC.
                         Articles Supplementary creating

                five series of Auction Market Preferred Stock (R)

         MUNIYIELD FUND, INC., a Maryland corporation having its principal
Maryland office in the City of Baltimore (the "Corporation"), certifies to the
Maryland State Department of Assessments and Taxation that:

         FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article FIFTH of its Charter, the Board of Directors has
reclassified 5,000 authorized and unissued shares of common stock of the
Corporation as additional preferred stock of the Corporation and has authorized
the issuance of preferred stock, par value $.10 per share, liquidation
preference $50,000 per share plus an amount equal to accumulated but unpaid
dividends (whether or not earned or declared) thereon, to be designated Auction
Market Preferred Stock.

         SECOND: The preferences, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, of the shares
of such preferred stock shall be identical to the 5,000 shares of Auction Market
Preferred Stock previously reclassified and authorized by the Board of Directors
pursuant to Articles Supplementary dated December 19, 1991 and filed on December
20, 1991 with the Maryland State Department of Assessments and Taxation, as
amended by Articles of Amendment to Articles Supplementary filed on November 13,
1992. Accordingly, these Articles Supplementary hereby incorporate by reference
such previously filed Articles Supplementary beginning with the section entitled
"DESIGNATION"

- --------------------------
(R) Registered trademark of Merrill Lynch & Co., Inc.


<PAGE>


and continuing until the end of the final section entitled "Securities
Depository; Stock Certificates," with the following exception:

         At page 2, in the section entitled "DESIGNATION," strike out "a date to
be determined by the Board of Directors of the Corporation" and insert in lieu
thereof the date " Dec. 1, 1994";

         IN WITNESS WHEREOF, MUNIYIELD FUND, INC. has caused these presents to
be signed in its name and on its behalf by a duly authorized officer, and
attested by its Secretary, and the said officers of the Corporation further
acknowledge said instrument to be the corporate act of the Corporation, and
state under the penalties of perjury that to the best of their knowledge,
information and belief the matters and facts herein set forth with respect to
approval are true in all material respects, all on Nov. 30, 1994.

                                             MUNIYIELD FUND, INC.


                                             By /s/ Vincent R. Giordano
                                                ----------------------------
                                                Name: Vincent R. Giordano
                                                Title: Senior Vice President


Attest:

/s/ Mark B. Goldfus
- ---------------------
Name: Mark B. Goldfus
Its: Secretary


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.B
<SEQUENCE>5
<FILENAME>file004.txt
<DESCRIPTION>HOLDER'S RIGHTS
<TEXT>

                                                                    Exhibit 5(b)

==========================================================================

             Common Stock                             Common Stock
            par value $0.10                          par value $0.10

NUMBER                                                                    SHARES

            INCORPORATED
           UNDER THE LAWS
      OF THE STATE OF MARYLAND

                                                   CUSIP 626299 10 1
                                          SEE REVERSE FOR CERTAIN DEFINITIONS

                              MuniYield Fund, Inc.

      This certifies that

      Is the owner of


             FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF

   MuniYield  Fund,  Inc.,  transferable  on the books of the Corporation by the
   holder  in person  or by duly  authorized  attorney  upon  surrender  of this
   Certificate  properly  endorsed.  This Certificate and the shares represented
   hereby are issued and shall be held subject to all of the  provisions  of the
   Articles of  Incorporation  and of the By-Laws of the  Corporation and of all
   the amendments  from time to time thereto.  This  Certificate is valid unless
   countersigned and registered by the Transfer Agent and Registrar.

         Witness the  facsimile  seal of the  Corporation  and the  facsimile
   signatures of its duly authorized officers.

   Dated:                     Countersigned and Registered:
                                         THE BANK OF NEW YORK

                                                               Transfer Agent
                                                                and Registrar
                              By

         President

                    Secretary

                                                         Authorized Signature

=============================================================================
<PAGE>

                              MuniYield Fund, Inc.

      A full statement of the designations  and any preferences,  conversion and
other  rights,  voting  powers,  restrictions,   limitations  as  to  dividends,
qualifications  and terms and  conditions  of  redemption  of the shares of each
class of stock which the  Corporation is authorized to issue and the differences
in the relative rights and preferences  between the shares of each series to the
extent that they have been set,  and the  authority of the Board of Directors to
set the relative rights and preferences of subsequent series,  will be furnished
by the  Corporation  to any  stockholder,  without  charge,  upon request to the
Secretary of the Corporation at its principal office.

The following  abbreviations,  when used in the  inscription on the face of this
certificate,  shall  be  construed  as  though  they  were  written  out in full
according to applicable laws or regulations:

TEN COM -as tenants in common   UNIF GIFT MIN ACT- ..........Custodian..........
TEN ENT -as tenants by the                           (Cust)            (Minor)
         entireties
JT TEN  -as joint tenants with                     Under Uniform Gifts to Minors
         right of survivorship                     Act..........................
         and not as                                            (State)
         tenants in common

     Additional abbreviations may also be used though not in the above list.

      For  value   received,..........................hereby  sell,  assign  and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
    IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
                                       -----------------------------------------
- --------------------------------------

- --------------------------------------------------------------------------------
Please Print or Typewrite Name and Address including Postal Zip Code of Assignee

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

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

- ------------------------------------------------------------------------- Shares

represented by the within Certificate,  and do hereby irrevocably constitute and
appoint

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

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

Attorney  to  transfer  the  said  shares  on  the  books  of  the  within-named
Corporation with full power of substitution in the premises.

Dated:.............................
                            ....................................................

NOTICE:  The  signature  to this  assignment  must  correspond  with the name as
written  upon  the  face  of  the  Certificate,  in  every  particular,  without
alteration or enlargement, or any change whatever.

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

Signatures must be guaranteed by a national bank or other bank which is a member
of the Federal Reserve System (not a savings bank) or by a member firm of any
national or regional stock exchange. Notarized signatures are not sufficient.

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


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.C
<SEQUENCE>6
<FILENAME>file005.txt
<DESCRIPTION>AUCTION MARKET PREFERRED
<TEXT>

                                                                    Exhibit 5(c)

      Auction Market Preferred
      Stock, Series A

      NUMBER                                               SHARES 900
M
                              MUNIYIELD FUND, INC.

      INCORPORATED UNDER THE LAWS                           SEE REVERSE FOR
      OF THE STATE OF MARYLAND                              CERTAIN DEFINITIONS

      THIS CERTIFICATE IS TRANSFERABLE                      CUSIP 626299-200
       IN NEW YORK, NY

      THIS CERTIFIES THAT

                                   CEDE & CO.

      IS THE OWNER OF NINE HUNDRED (900)

            FULLY PAID AND  NON-ASSESSABLE  SHARES OF AUCTION  MARKET  PREFERRED
            STOCK,  SERIES A, PAR VALUE $.10 PER SHARE,  LIQUIDATION  PREFERENCE
            $50,000  PER SHARE PLUS AN AMOUNT  EQUAL TO  ACCUMULATED  BUT UNPAID
            DIVIDENDS THEREON (WHETHER OR NOT EARNED OR DECLARED) OF

                              MUNIYIELD FUND, INC.

      transferable  on the  books  of  said  Corporation  in  person  or by duly
      authorized attorney upon surrender of this certificate properly endorsed.

      This  certificate is not valid until  countersigned  by the Transfer Agent
      and registered by the Registrar. In Witness Whereof,  MUNIYIELD FUND, INC.
      has caused its corporate seal to be hereto affixed and this certificate to
      be executed in its name and behalf by its duly authorized officers.

      Dated December 23, 1991                           [SEAL]

      Countersigned and Registered:

      IBJ SCHRODER BANK & TRUST COMPANY                -------------------------
          (New York)           Transfer Agent              Vice President


      By
                                                       -------------------------
          Authorized Signature                               Secretary


<PAGE>

THE TRANSFER OF THE SHARES OF AUCTION MARKET PREFERRED STOCK REPRESENTED. HEREBY
IS SUBJECT TO THE RESTRICTIONS  CONTAINED IN THE CORPORATION'S  CHARTER, AND THE
PURCHASER'S LETTERS REFERRED TO HEREIN. THE CORPORATION WILL FURNISH INFORMATION
ABOUT SUCH RESTRICTION TO ANY STOCKHOLDER,  WITHOUT CHARGE,  UPON REQUEST TO THE
SECRETARY OF THE CORPORATION.

                              MUNIYIELD FUND, INC.

      A full statement of the designations  and any preferences,  conversion and
other  rights,  voting  powers,  restrictions,   limitations  as  to  dividends,
qualifications,  and terms and  conditions  of  redemption of the shares of each
class of stock which the  Corporation is authorized to issue and the differences
in the relative rights and preferences  between the shares of each series to the
extent that they have been set,  and the  authority of the Board of Directors to
set the relative rights and preferences of subsequent series,  will be furnished
by the  Corporation  to any  stockholder,  without  charge,  upon request to the
Secretary of the Corporation at its principal office.

      The following  abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or  regulations:

TEN COM-as tenants in common           UNIF GIFT MIN ACT- ______Custodian ______
TEN ENT-as  tenants by the entireties                     (Cust)         (Minor)
JT TEN- as joint tenants with right           under Uniform Gifts to
         of survivorship  and not as          Minors Act_______________________
         tenants in common                                     (State)

    Additional abbreviations may also be used though not in the above list.


For value received  _____________________  hereby sell, assign and transfer unto
Please insert social securities or other identifying number of assignee

- --------------------------------------------
|                                          |
- --------------------------------------------


- --------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)


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

- --------------------------------------------------------------------------------
                                                                          shares
- --------------------------------------------------------------------------
of the  capital  stock  represented  by the  within  Certificate,  and do hereby
irrevocably   constitute   and  appoint   ______________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with fully power of substitution in the premises.

Dated______________________


                --------------------------------------------------------
        NOTICE: The Signature to this  assignment  must correspond  with
                the name as written upon the face of the  Certificate in
                every particular,  without  alteration or enlargement or
                any change whatever.


<PAGE>


      Auction Market Preferred
      Stock, Series B

      NUMBER                                               SHARES 900
M

                              MUNIYIELD FUND, INC.

      INCORPORATED UNDER THE LAWS                          SEE REVERSE FOR
      OF THE STATE OF MARYLAND                             CERTAIN DEFINITIONS

      THIS CERTIFICATE IS TRANSFERABLE                     CUSIP 626299-309
       IN NEW YORK, NY

      THIS CERTIFIES THAT

                                   CEDE & CO.

      IS THE OWNER OF NINE HUNDRED (900)

            FULLY PAID AND  NON-ASSESSABLE  SHARES OF AUCTION  MARKET  PREFERRED
            STOCK,  SERIES B, PAR VALUE $.10 PER SHARE,  LIQUIDATION  PREFERENCE
            $50,000  PER SHARE PLUS AN AMOUNT  EQUAL TO  ACCUMULATED  BUT UNPAID
            DIVIDENDS THEREON (WHETHER OR NOT EARNED OR DECLARED) OF

                              MUNIYIELD FUND, INC.

      transferable  on the  books  of  said  Corporation  in  person  or by duly
      authorized attorney upon surrender of this certificate  properly endorsed.
      This  certificate is not valid until  countersigned  by the Transfer Agent
      and registered by the Registrar.

      In Witness Whereof,  MUNIYIELD FUND, INC. has caused its corporate seal to
      be hereto  affixed  and this  certificate  to be  executed in its name and
      behalf by its duly authorized officers.

      Dated December 23, 1991                           [SEAL]

      Countersigned and Registered:

      IBJ SCHRODER BANK & TRUST COMPANY                -------------------------
          (New York)           Transfer Agent              Vice President


      By
                                                       -------------------------
          Authorized Signature                               Secretary


<PAGE>


THE TRANSFER OF THE SHARES OF AUCTION MARKET PREFERRED STOCK REPRESENTED. HEREBY
IS SUBJECT TO THE RESTRICTIONS  CONTAINED IN THE CORPORATION'S  CHARTER, AND THE
PURCHASER'S LETTERS REFERRED TO HEREIN. THE CORPORATION WILL FURNISH INFORMATION
ABOUT SUCH RESTRICTION TO ANY STOCKHOLDER,  WITHOUT CHARGE,  UPON REQUEST TO THE
SECRETARY OF THE CORPORATION.

                              MUNIYIELD FUND, INC.

      A full statement of the designations  and any preferences,  conversion and
other  rights,  voting  powers,  restrictions,   limitations  as  to  dividends,
qualifications,  and terms and  conditions  of  redemption of the shares of each
class of stock which the  Corporation is authorized to issue and the differences
in the relative rights and preferences  between the shares of each series to the
extent that they have been set,  and the  authority of the Board of Directors to
set the relative rights and preferences of subsequent series,  will be furnished
by the  Corporation  to any  stockholder,  without  charge,  upon request to the
Secretary of the Corporation at its principal office.

      The following  abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations:

TEN COM-as tenants in common           UNIF GIFT MIN ACT- ______Custodian ______
TEN ENT-as  tenants by the entireties                     (Cust)         (Minor)
JT TEN- as joint tenants with right           under Uniform Gifts to
         of survivorship  and not as          Minors Act_______________________
         tenants in common                                     (State)

     Additional abbreviations may also be used though not in the above list.


For value  received  ___________________  hereby sell,  assign and transfer unto
Please insert social securities or other identifying number of assignee

- --------------------------------------------
|                                          |
- --------------------------------------------


- --------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)


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

- --------------------------------------------------------------------------------
                                                                          shares
- --------------------------------------------------------------------------
of the  capital  stock  represented  by the  within  Certificate,  and do hereby
irrevocably   constitute   and  appoint   ______________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with fully power of substitution in the premises.

Dated______________________


                  --------------------------------------------------------
          NOTICE: The Signature to this  assignment  must correspond  with
                  the name as written upon the face of the  Certificate in
                  every particular,  without  alteration or enlargement or
                  any change whatever.


<PAGE>


      Auction Market Preferred

      Stock, Series C

      NUMBER                                               SHARES 900
M
                              MUNIYIELD FUND, INC.

      INCORPORATED UNDER THE LAWS                          SEE REVERSE FOR
      OF THE STATE OF MARYLAND                             CERTAIN DEFINITIONS

      THIS CERTIFICATE IS TRANSFERABLE                     CUSIP 626299-408
      IN NEW YORK, NY

      THIS CERTIFIES THAT

                                   CEDE & CO.

      IS THE OWNER OF NINE HUNDRED (900)

            FULLY PAID AND  NON-ASSESSABLE  SHARES OF AUCTION  MARKET  PREFERRED
            STOCK,  SERIES C, PAR VALUE $.10 PER SHARE,  LIQUIDATION  PREFERENCE
            $50,000  PER SHARE PLUS AN AMOUNT  EQUAL TO  ACCUMULATED  BUT UNPAID
            DIVIDENDS THEREON (WHETHER OR NOT EARNED OR DECLARED) OF

                              MUNIYIELD FUND, INC.

      transferable  on the  books  of  said  Corporation  in  person  or by duly
      authorized attorney upon surrender of this certificate  properly endorsed.
      This  certificate is not valid until  countersigned  by the Transfer Agent
      and registered by the Registrar.

      In Witness Whereof,  MUNIYIELD FUND, INC. has caused its corporate seal to
      be hereto  affixed  and this  certificate  to be  executed in its name and
      behalf by its duly authorized officers.


      Dated December 23, 1991                           [SEAL]

      Countersigned and Registered:

      IBJ SCHRODER BANK & TRUST COMPANY                -------------------------
          (New York)           Transfer Agent              Vice President


      By
                                                       -------------------------
          Authorized Signature                               Secretary


<PAGE>


THE TRANSFER OF THE SHARES OF AUCTION MARKET PREFERRED STOCK REPRESENTED. HEREBY
IS SUBJECT TO THE RESTRICTIONS  CONTAINED IN THE CORPORATION'S  CHARTER, AND THE
PURCHASER'S LETTERS REFERRED TO HEREIN. THE CORPORATION WILL FURNISH INFORMATION
ABOUT SUCH RESTRICTION TO ANY STOCKHOLDER,  WITHOUT CHARGE,  UPON REQUEST TO THE
SECRETARY OF THE CORPORATION.

                              MUNIYIELD FUND, INC.

      A full statement of the designations  and any preferences,  conversion and
other  rights,  voting  powers,  restrictions,   limitations  as  to  dividends,
qualifications,  and terms and  conditions  of  redemption of the shares of each
class of stock which the  Corporation is authorized to issue and the differences
in the relative rights and preferences  between the shares of each series to the
extent that they have been set,  and the  authority of the Board of Directors to
set the relative rights and preferences of subsequent series,  will be furnished
by the  Corporation  to any  stockholder,  without  charge,  upon request to the
Secretary of the Corporation at its principal office.

      The following  abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations:

TEN COM-as tenants in common           UNIF GIFT MIN ACT- ______Custodian ______
TEN ENT-as  tenants by the entireties                     (Cust)         (Minor)
JT TEN- as joint tenants with right           under Uniform Gifts to
         of survivorship  and not as          Minors Act_______________________
         tenants in common                                     (State)

    Additional abbreviations may also be used though not in the above list.

For value  received  hereby sell,  assign and transfer unto Please insert social
securities or other identifying number of assignee

- --------------------------------------------
|                                          |
- --------------------------------------------


- --------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)


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

- --------------------------------------------------------------------------------
                                                                          shares
- --------------------------------------------------------------------------
of the  capital  stock  represented  by the  within  Certificate,  and do hereby
irrevocably   constitute   and  appoint   ______________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with fully power of substitution in the premises.

Dated______________________


                  --------------------------------------------------------
          NOTICE: The Signature  to this  assignment must correspond  with
                  the name as written upon the face of the  Certificate in
                  every particular,  without  alteration or enlargement or
                  any change whatever.


<PAGE>

      Auction Market Preferred
      Stock, Series D

      NUMBER                                               SHARES 900
M

                              MUNIYIELD FUND, INC.

      INCORPORATED UNDER THE LAWS                          SEE REVERSE FOR
      OF THE STATE OF MARYLAND                             CERTAIN DEFINITIONS

      THIS CERTIFICATE IS TRANSFERABLE                     CUSIP 626299-507
      IN NEW YORK, NY

      THIS CERTIFIES THAT

                                   CEDE & CO.

      IS THE OWNER OF NINE HUNDRED (900)

            FULLY PAID AND  NON-ASSESSABLE  SHARES OF AUCTION  MARKET  PREFERRED
            STOCK,  SERIES D, PAR VALUE $.10 PER SHARE,  LIQUIDATION  PREFERENCE
            $50,000  PER SHARE PLUS AN AMOUNT  EQUAL TO  ACCUMULATED  BUT UNPAID
            DIVIDENDS THEREON (WHETHER OR NOT EARNED OR DECLARED) OF

                              MUNIYIELD FUND, INC.

      transferable  on the  books  of  said  Corporation  in  person  or by duly
      authorized attorney upon surrender of this certificate  properly endorsed.
      This  certificate is not valid until  countersigned  by the Transfer Agent
      and registered by the Registrar.

      In Witness Whereof,  MUNIYIELD FUND, INC. has caused its corporate seal to
      be hereto  affixed  and this  certificate  to be  executed in its name and
      behalf by its duly authorized officers.

      Dated December 23, 1991                           [SEAL]

      Countersigned and Registered:

      IBJ SCHRODER BANK & TRUST COMPANY                -------------------------
          (New York)           Transfer Agent              Vice President


      By
                                                       -------------------------
          Authorized Signature                               Secretary


<PAGE>


THE TRANSFER OF THE SHARES OF AUCTION MARKET PREFERRED STOCK REPRESENTED. HEREBY
IS SUBJECT TO THE RESTRICTIONS  CONTAINED IN THE CORPORATION'S  CHARTER, AND THE
PURCHASER'S LETTERS REFERRED TO HEREIN. THE CORPORATION WILL FURNISH INFORMATION
ABOUT SUCH RESTRICTION TO ANY STOCKHOLDER,  WITHOUT CHARGE,  UPON REQUEST TO THE
SECRETARY OF THE CORPORATION.

                              MUNIYIELD FUND, INC.

      A full statement of the designations  and any preferences,  conversion and
other  rights,  voting  powers,  restrictions,   limitations  as  to  dividends,
qualifications,  and terms and  conditions  of  redemption of the shares of each
class of stock which the  Corporation is authorized to issue and the differences
in the relative rights and preferences  between the shares of each series to the
extent that they have been set,  and the  authority of the Board of Directors to
set the relative rights and preferences of subsequent series,  will be furnished
by the  Corporation  to any  stockholder,  without  charge,  upon request to the
Secretary of the Corporation at its principal office.

      The following  abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations:

TEN COM-as tenants in common           UNIF GIFT MIN ACT- ______Custodian ______
TEN ENT-as  tenants by the entireties                     (Cust)         (Minor)
JT TEN- as joint tenants with right           under Uniform Gifts to
         of survivorship  and not as          Minors Act_______________________
         tenants in common                                     (State)

    Additional abbreviations may also be used though not in the above list.

For value  received  hereby sell,  assign and transfer unto Please insert social
securities or other identifying number of assignee

- --------------------------------------------
|                                          |
- --------------------------------------------


- --------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)


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

- --------------------------------------------------------------------------------
                                                                          shares
- --------------------------------------------------------------------------
of the  capital  stock  represented  by the  within  Certificate,  and do hereby
irrevocably   constitute   and  appoint   ______________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with fully power of substitution in the premises.

Dated______________________


                  --------------------------------------------------------
          NOTICE: The Signature to  this  assignment must correspond  with
                  the name as written upon the face of the  Certificate in
                  every particular,  without  alteration or enlargement or
                  any change whatever.


<PAGE>


      Auction Market Preferred
      Stock, Series E

      NUMBER                                               SHARES 1,400
M
                              MUNIYIELD FUND, INC.

      INCORPORATED UNDER THE LAWS                          SEE REVERSE FOR
      OF THE STATE OF MARYLAND                             CERTAIN DEFINITIONS

      THIS CERTIFICATE IS TRANSFERABLE                     CUSIP 626299-606
      IN NEW YORK, NY

      THIS CERTIFIES THAT

                                   CEDE & CO.

      IS THE OWNER OF ONE THOUSAND FOUR HUNDRED (1,400)

            FULLY PAID AND  NON-ASSESSABLE  SHARES OF AUCTION  MARKET  PREFERRED
            STOCK,  SERIES E, PAR VALUE $.10 PER SHARE,  LIQUIDATION  PREFERENCE
            $50,000  PER SHARE PLUS AN AMOUNT  EQUAL TO  ACCUMULATED  BUT UNPAID
            DIVIDENDS THEREON (WHETHER OR NOT EARNED OR DECLARED) OF

                              MUNIYIELD FUND, INC.

      transferable  on the  books  of  said  Corporation  in  person  or by duly
      authorized attorney upon surrender of this certificate  properly endorsed.
      This  certificate is not valid until  countersigned  by the Transfer Agent
      and registered by the Registrar.

      In Witness Whereof,  MUNIYIELD FUND, INC. has caused its corporate seal to
      be hereto  affixed  and this  certificate  to be  executed in its name and
      behalf by its duly authorized officers.

      Dated December 23, 1991                           [SEAL]

      Countersigned and Registered:

      IBJ SCHRODER BANK & TRUST COMPANY                -------------------------
          (New York)           Transfer Agent              Vice President


      By
                                                       -------------------------
          Authorized Signature                               Secretary


<PAGE>


THE TRANSFER OF THE SHARES OF AUCTION MARKET PREFERRED STOCK REPRESENTED. HEREBY
IS SUBJECT TO THE RESTRICTIONS  CONTAINED IN THE CORPORATION'S  CHARTER, AND THE
PURCHASER'S LETTERS REFERRED TO HEREIN. THE CORPORATION WILL FURNISH INFORMATION
ABOUT SUCH RESTRICTION TO ANY STOCKHOLDER,  WITHOUT CHARGE,  UPON REQUEST TO THE
SECRETARY OF THE CORPORATION.

                              MUNIYIELD FUND, INC.

      A full statement of the designations  and any preferences,  conversion and
other  rights,  voting  powers,  restrictions,   limitations  as  to  dividends,
qualifications,  and terms and  conditions  of  redemption of the shares of each
class of stock which the  Corporation is authorized to issue and the differences
in the relative rights and preferences  between the shares of each series to the
extent that they have been set,  and the  authority of the Board of Directors to
set the relative rights and preferences of subsequent series,  will be furnished
by the  Corporation  to any  stockholder,  without  charge,  upon request to the
Secretary of the Corporation at its principal office.

      The following  abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations:

TEN COM-as tenants in common           UNIF GIFT MIN ACT- ______Custodian ______
TEN ENT-as  tenants by the entireties                     (Cust)         (Minor)
JT TEN- as joint tenants with right           under Uniform Gifts to
         of survivorship  and not as          Minors Act_______________________
         tenants in common                                     (State)

    Additional abbreviations may also be used though not in the above list.

For value received  ____________________  hereby sell,  assign and transfer unto
Please insert social securities or other identifying number of assignee

- --------------------------------------------
|                                          |
- --------------------------------------------


- --------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)


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

- --------------------------------------------------------------------------------
                                                                          shares
- --------------------------------------------------------------------------
of the  capital  stock  represented  by the  within  Certificate,  and do hereby
irrevocably   constitute   and  appoint   ______________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with fully power of substitution in the premises.

Dated______________________


                  --------------------------------------------------------
          NOTICE: The Signature to  this  assignment must correspond  with
                  the name as written upon the face of the  Certificate in
                  every particular,  without  alteration or enlargement or
                  any change whatever.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-7.A
<SEQUENCE>7
<FILENAME>file006.txt
<DESCRIPTION>FORM OF PURCHASE AGREEMENT
<TEXT>

                                                                    Exhibit 7(a)

                                30,000,000 Shares

                              MuniYield Fund, Inc.
                            (a Maryland corporation)

                                  Common Stock
                           (Par Value $0.10 Per Share)

                               PURCHASE AGREEMENT

                                                               November 21, 1991

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
                      INCORPORATED
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, NY  10281-1305

Dear Sirs:

      MuniYield Fund, Inc., a Maryland  corporation (the "Fund"), and Fund Asset
Management,  Inc., a Delaware  corporation  (the  "Adviser"),  each confirms its
agreement  with  Merrill  Lynch & Co.,  Merrill  Lynch,  Pierce,  Fenner & Smith
Incorporated (the  "Underwriter"),  with respect to the sale by the Fund and the
purchase by the Underwriter of 30,000,000 shares of common stock, par value $.10
per share,  of the Fund (the "Common  Stock") and,  with respect to the grant by
the Fund to the  Underwriter  of the  option  described  in  Section 2 hereof to
purchase all or any part of 4,500,000 additional shares of Common Stock to cover
overallotments. The aforesaid 30,000,000 shares (the "Initial Shares"), together
with all or any part of the 4,500,000  additional shares of Common Stock subject
to the  option  described  in  Section  2  hereof  (the  "Option  Shares"),  are
collectively hereinafter called the "Shares".

      Prior  to  the  purchase  and  public   offering  of  the  Shares  by  the
Underwriter,  the  Fund  and the  Underwriter  shall  enter  into  an  agreement
substantially  in the form of Exhibit A hereto (the  "Pricing  Agreement").  The
Pricing  Agreement  may take the form of an  exchange  of any  standard  form of
written telecommunication between the Fund and the Underwriter and shall specify
such applicable information as is indicated in Exhibit A hereto. The offering of
the Shares will be governed by this  Agreement,  as  supplemented by the Pricing
Agreement.  From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.

      The Fund has  filed  with the  Securities  and  Exchange  Commission  (the
"Commission") a registration  statement on Form N-2 (No. 33-42878) and a related
preliminary  prospectus for the  registration of the Shares under the Securities
Act of 1933,  as amended (the "1933 Act"),  and a  notification  on Form N-8A of
registration of the Fund as an investment  company under the Investment  Company
Act of 1940, as amended (the "1940 Act"),  and the rules and  regulations of the
Commission under the 1940 Act (together with the rules and regulations under the
1933 Act, the "Rules and  Regulations")  and has filed such  amendments  to such
registration  statement  on Form  N-2,  if any,  and  such  amended  preliminary
prospectuses as may have been required to the
<PAGE>

date hereof.  The Fund will prepare and file such additional  amendments thereto
and such amended  prospectuses as may hereafter be required.  Such  registration
statement (as amended,  if applicable)  and the  prospectus  constituting a part
thereof  (including  in each  case the  information,  if any,  deemed to be part
thereof pursuant to Rule 430A(b) of the Rules and Regulations),  as from time to
time amended or supplemented  pursuant to the 1933 Act, are hereinafter referred
to as the "Registration  Statement" and the "Prospectus",  respectively,  except
that if any revised  prospectus shall be provided to the Underwriter by the Fund
for use in  connection  with the offering of the Shares  which  differs from the
Prospectus  on file at the  Commission  at the time the  Registration  Statement
becomes  effective  (whether such revised  prospectus is required to be filed by
the Fund  pursuant to Rule 497(b) or Rule 497(h) of the Rules and  Regulations),
the term "Prospectus" shall refer to each such revised prospectus from and after
the time it is first provided to the Underwriter for such use.

      The  Fund  understands  that  the  Underwriter  proposes  to make a public
offering  of the Shares as soon as the  Underwriter  deems  advisable  after the
Registration  Statement  becomes  effective  and the Pricing  Agreement has been
executed and delivered.

      SECTION 1.  Representations  and Warranties.  (a) The Fund and the Adviser
each severally  represents and warrants to the Underwriter as of the date hereof
and as of the date of the Pricing  Agreement (such later date being  hereinafter
referred to as the "Representation Date") as follows:

            (i) At the time the Registration  Statement becomes effective and at
      the  Representation  Date, the  Registration  Statement will comply in all
      material  respects with the requirements of the 1933 Act, the 1940 Act and
      the Rules and  Regulations  and will not contain an untrue  statement of a
      material  fact or omit to state a  material  fact  required  to be  stated
      therein or necessary to make the statements therein not misleading. At the
      time the Registration  Statement becomes effective,  at the Representation
      Date and at Closing Time referred to in Section 2, the Prospectus  (unless
      the term  "Prospectus"  refers to a prospectus  which has been provided to
      the Underwriter by the Fund for use in connection with the offering of the
      Shares which differs from the  Prospectus  on file with the  Commission at
      the time the Registration  Statement becomes  effective,  in which case at
      the time such  prospectus is first  provided to the  Underwriter  for such
      use) will not contain an untrue  statement  of a material  fact or omit to
      state a material fact necessary in order to make the  statements  therein,
      in the  light  of the  circumstances  under  which  they  were  made,  not
      misleading;  provided, however, that the representations and warranties in
      this  subsection  shall not apply to statements  in or omissions  from the
      Registration  Statement  or  Prospectus  made  in  reliance  upon  and  in
      conformity  with  information  furnished  to the  Fund in  writing  by the
      Underwriter expressly for use in the Registration Statement or Prospectus.

            (ii) The  accountants  who  certified  the  statement  of assets and
      liabilities included in the Registration  Statement are independent public
      accountants as required by the 1933 Act and the Rules and Regulations.

            (iii)  The  statement  of assets  and  liabilities  included  in the
      Registration  Statement presents fairly the financial position of the Fund
      as at  the  date  indicated  and  said  statement  has  been  prepared  in
      conformity with generally accepted accounted principles.


                                       2
<PAGE>

            (iv) Since the respective dates as of which  information is given in
      the Registration Statement and the Prospectus,  except as otherwise stated
      therein,  (A) there has been no material  adverse change in the condition,
      financial or otherwise, of the Fund, or in the earnings,  business affairs
      or business  prospects of the Fund, whether or not arising in the ordinary
      course of business,  (B) there have been no  transactions  entered into by
      the Fund which are  material to the Fund other than those in the  ordinary
      course of business,  and (C) there has been no dividend or distribution of
      any kind  declared,  paid or made by the Fund on any class of its  capital
      stock.

            (v) The Fund has been duly incorporated and is validly existing as a
      corporation  in good standing under the laws of the State of Maryland with
      corporate power and authority to own, lease and operate its properties and
      conduct its business as described in the Registration Statement;  the Fund
      is duly qualified as a foreign  corporation to transact business and is in
      good  standing  in  each  jurisdiction  in  which  such  qualification  is
      required; and the Fund has no subsidiaries.

            (vi) The Fund is registered  with the Commission  under the 1940 Act
      as a closed-end  non-diversified  management  investment  company,  and no
      order of suspension or revocation of such  registration has been issued or
      proceedings therefor initiated or threatened by the Commission.

            (vii) The authorized,  issued and outstanding  capital stock, of the
      Fund is as set forth in the Prospectus  under the caption  "Description of
      Capital Stock"; the Shares have been duly authorized for issuance and sale
      to the  Underwriter  pursuant  to this  Agreement  and,  when  issued  and
      delivered by the Fund pursuant to this  Agreement  against  payment of the
      consideration set forth in the Pricing  Agreement,  will be validly issued
      and fully  paid and  nonassessable;  the Shares  conform  in all  material
      respects to all statements  relating thereto contained in the Registration
      Statement;  and the  issuance of the Shares is not  subject to  preemptive
      rights.

            (viii)  The  Fund  is  not  in   violation   of  its   articles   of
      incorporation, as amended (the "Charter") or in default in the performance
      or observance of any material obligation, agreement, covenant or condition
      contained in any material contract,  indenture,  mortgage, loan agreement,
      note,  lease or other  instrument to which it is a party or by which it or
      its  properties  may be bound;  and the  execution  and  delivery  of this
      Agreement, the Pricing Agreement and the Investment Advisory Agreement and
      the Custodial Agreement referred to in the Registration Statement (as used
      herein,   the   "Advisory   Agreement"   and  the   "Custody   Agreement",
      respectively) and the consummation of the transactions contemplated herein
      and therein have been duly  authorized by all necessary  corporate  action
      and will not conflict with or constitute a breach of, or default under, or
      result in the creation or  imposition of any lien,  charge or  encumbrance
      upon any property or assets of the Fund pursuant to any material contract,
      indenture,  mortgage,  loan agreement,  note, lease or other instrument to
      which  the Fund is a party or by which it may be bound or to which  any of
      the property or assets of the Fund is subject, nor will such action result
      in any violation of the provisions of the Charter or by-laws,  as amended,
      of the Fund (the  "By-Laws") or, to the best knowledge of the Fund and the
      Adviser,  any law,  administrative  regulation or  administrative or court
      decree; and no consent,  approval,  authorization or order of any court or
      governmental  authority or agency is required for the  consummation by the
      Fund of the  transactions  contemplated  by


                                       3
<PAGE>

      this  Agreement,  the Pricing  Agreement,  the Advisory  Agreement and the
      Custody Agreement,  except such as has been obtained under the 1940 Act or
      as may be required under the 1933 Act,  state  securities or Blue Sky laws
      or  foreign   securities   laws  in  connection   with  the  purchase  and
      distribution of the Shares by the Underwriter.

            (ix)  The  Fund  owns or  possesses  or has  obtained  all  material
      governmental  licenses,  permits,  consents,  orders,  approvals and other
      authorizations  necessary  to  lease or own,  as the  case may be,  and to
      operate its properties and to carry on its businesses as  contemplated  in
      the Prospectus.

            (x) There is no action, suit or proceeding before or by any court or
      governmental agency or body, domestic or foreign,  now pending, or, to the
      knowledge of the Fund,  threatened  against or affecting,  the Fund, which
      might result in any material adverse change in the condition, financial or
      otherwise,  business  affairs or business  prospects of the Fund, or might
      materially and adversely  affect the properties or assets of the Fund; and
      there  are no  material  contracts  or  documents  of the Fund  which  are
      required to be filed as exhibits to the Registration Statement by the 1933
      Act, the 1940 Act or by the Rules and  Regulations  which have not been so
      filed.

            (xi) The Fund owns or possesses, or can acquire on reasonable terms,
      adequate  trademarks,  service marks and trade names  necessary to conduct
      its business as described in the Registration Statement,  and the Fund has
      not  received  any notice of  infringement  of or conflict  with  asserted
      rights of others with respect to any  trademarks,  service  marks or trade
      names which, singly or in the aggregate,  if the subject of an unfavorable
      decision, ruling or finding, would materially adversely affect the conduct
      of the business, operations, financial condition or income of the Fund.

      (b) The Adviser  represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:

            (i) The Adviser has been duly  incorporated  as a corporation  under
      the laws of the State of Delaware  with  corporate  power and authority to
      conduct its business as described in the Prospectus.

            (ii) The Adviser is duly  registered as an investment  adviser under
      the Investment  Advisers Act of 1940, as amended (the "Advisers Act"), and
      is not  prohibited  by the  Advisers Act or the 1940 Act, or the rules and
      regulations under such acts, from acting under the Advisory  Agreement for
      the Fund as contemplated by the Prospectus.

            (iii)  This  Agreement  has  been  duly  authorized,   executed  and
      delivered by the Adviser; the Advisory Agreement has been duly authorized,
      executed and delivered by the Adviser and  constitutes a valid and binding
      obligation  of the  Adviser,  enforceable  in  accordance  with its terms,
      subject, as to enforcement, to bankruptcy,  insolvency,  reorganization or
      other  laws  relating  to or  affecting  creditors'  rights and to general
      equity  principles;  and  neither  the  execution  and  delivery  of  this
      Agreement, or the Advisory Agreement nor the performance by the Adviser of
      its obligations hereunder or thereunder will conflict with, or result in a
      breach of any of the  terms and  provisions  of,  or  constitute,  with or
      without  the giving of notice or lapse of time or both,  a default  under,
      any agreement or instrument to which the Adviser is a party or by which it
      is bound,  or


                                       4
<PAGE>

      any law, order,  rule or regulation  applicable to it of any jurisdiction,
      court,  federal or state regulatory body,  administrative  agency or other
      governmental  body,  stock  exchange  or  securities   association  having
      jurisdiction over the Adviser or its respective properties or operations.

            (iv)  The  Adviser  has  the  financial  resources  available  to it
      necessary  for  the   performance  of  its  services  and  obligations  as
      contemplated in the Prospectus.

            (v) Any advertisement  approved by the Adviser for use in the public
      offering  of  the  Shares  pursuant  to  Rule  482  under  the  Rules  and
      Regulations (an "Omitting  Prospectus")  complies with the requirements of
      such Rule 482.

      (c) Any  certificate  signed by any officer of the Fund or the Adviser and
delivered to the Underwriter  shall be deemed a  representation  and warranty by
the  Fund or the  Adviser,  as the case may be,  to the  Underwriter,  as to the
matters covered thereby.

      SECTION 2. Sale and Delivery to the Underwriter;  Closing. On the basis of
the representations and warranties herein contained and subject to the terms and
conditions  herein set forth,  the Fund agrees to sell the Initial shares to the
Underwriter,  and the Underwriter agrees to purchase the Initial Shares from the
Fund, at the price per share set forth in the Pricing Agreement.

      (a) If the Fund has elected not to rely upon Rule 430A under the Rules and
Regulations, the initial public offering prices and the purchase price per share
to be paid by the  Underwriter  for the Shares has been determined and set forth
in the  Pricing  Agreement,  dated  the date  hereof,  and an  amendment  to the
Registration  Statement and the Prospectus will be filed before the Registration
Statement becomes effective.

      (b) If the Fund has  elected  to rely upon  Rule 430A  under the Rules and
Regulations,  the purchase price per share to be paid by the Underwriter for the
Shares shall be an amount equal to the applicable initial public offering price,
less an amount per share to be determined by agreement  between the  Underwriter
and the Fund. The applicable  initial public offering price per share shall be a
fixed price based upon the number of Shares purchased in a single transaction to
be determined by agreement  between the  Underwriter  and the Fund.  The initial
public offering prices and the purchase price, when so determined,  shall be set
forth in the  Pricing  Agreement.  In the event that such  prices  have not been
agreed upon and the Pricing Agreement has not been executed and delivered by all
parties  thereto by the close of business on the fourth  business day  following
the date of this Agreement,  this Agreement shall terminate  forthwith,  without
liability  of any party to any other  party,  except as  provided  in Section 4,
unless otherwise agreed to by the Fund, the Adviser and the Underwriter.

      In addition,  on the basis of the  representations  and warranties  herein
contained  and subject to the terms and  conditions  herein set forth,  the Fund
hereby  grants an option to the  Underwriter  to purchase all or any part of the
Option Shares at the price per share set forth above.  The option hereby granted
will expire 45 days after the date hereof (or, if the Fund,  has elected to rely
upon Rule 430A under the Rules and  Regulations,  45 days after the execution of
the Pricing  Agreement)  and may be  exercised  only for the purpose of covering
over-allotments   which  may  be  made  in  connection  with  the  offering  and
distribution  of the Initial  Shares upon notice by the  Underwriter to the Fund
setting  forth the number of Option Shares as to which the


                                       5
<PAGE>

Underwriter  is then  exercising  the  option  and the  time,  date and place of
payment and delivery for such Option Shares.  Any such time and date of delivery
(a "Date of Delivery")  shall be determined by the  Underwriter but shall not be
later than seven full  business  days after the exercise of said option,  nor in
any event prior to Closing Time, as hereinafter defined, unless otherwise agreed
upon by the Underwriter and the Fund.

      Payment of the purchase price for, and delivery of  certificates  for, the
Initial  Shares  shall be made at the  office of Brown & Wood,  One World  Trade
Center, New York, New York 10048-0557, or at such other place as shall be agreed
upon by the  Underwriter  and the Fund, at 10:00 A.M. on the fifth  business day
(unless postponed in accordance with the provisions of Section 10) following the
date the Registration  Statement  becomes effective (or, if the Fund has elected
to rely upon Rule 430A under the Rules and  Regulations,  the fifth business day
after execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Underwriter and the
Fund (such time and date of payment and delivery  being herein  called  "Closing
Time").  In  addition,  in the event  that any or all of the  Option  Shares are
purchased by the Underwriter, payment of the purchase price for, and delivery of
certificates for, such option Shares shall be made at the above-mentioned office
of Brown & Wood, or at such other place as shall be mutually  agreed upon by the
Fund and the  Underwriter,  on each Date of Delivery as  specified in the notice
from the Underwriter to the Fund.  Payment shall be made to the Fund by check or
checks drawn in New York Clearing House or similar next day funds and payable to
the order of the Fund,  against  delivery to the Underwriter of certificates for
the Shares to be purchased by it. Certificates for the Initial Shares and Option
Shares  shall  be in such  denominations  and  registered  in such  names as the
Underwriter  may request in writing at least two  business  days before  Closing
Time or the  Date of  Delivery,  as the case may be.  The  certificates  for the
Initial  Shares and the Option  Shares  will be made  available  by the Fund for
examination  and packaging by the  Underwriter  not later than 10:00 A.M. on the
last business day prior to Closing Time or the Date of Delivery, as the case may
be.

      SECTION 3. Covenants of the Fund. The Fund covenants with the  Underwriter
as follows:

      (a) The Fund will use its best efforts to cause the Registration Statement
to become effective under the 1933 Act, and will advise the Underwriter promptly
as to the time at which the  Registration  Statement and any amendments  thereto
(including any post-effective  amendment) becomes so effective and, if required,
to cause the issuance of any orders  exempting  the Fund from any  provisions of
the 1940 Act and will  advise the  Underwriter  promptly as to the time at which
any such orders are granted.

      (b) The Fund will  notify the  Underwriter  immediately,  and  confirm the
notice in writing,  (i) of the  effectiveness of the Registration  Statement and
any amendment  thereto  (including any  post-effective  amendment),  (ii) of the
receipt  of any  comments  from  the  Commission,  (iii) of any  request  by the
Commission for any amendment to the  Registration  Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by  the  Commission  of any  stop  order  suspending  the  effectiveness  of the
Registration  Statement or the initiation of any  proceedings  for that purpose,
and  (v)  of the  issuance  by the  Commission  of an  order  of  suspension  or
revocation of the  notification  on Form N-8A of  registration of the Fund as an
Investment  Company under the 1940 Act or the  initiation of any  proceeding for
that purpose. The Fund will make every reasonable effort to prevent the


                                       6
<PAGE>

issuance of any stop order  described in subsection  (iv) hereunder or any order
of suspension or revocation  described in subsection  (v) hereunder  and, if any
such stop order or order of suspension  or  revocation is issued,  to obtain the
lifting thereof at the earliest possible moment.

      (c) The Fund will give the Underwriter notice of its intention to file any
amendment to the Registration Statement (including any post-effective amendment)
or  any  amendment  or  supplement  to the  Prospectus  (including  any  revised
prospectus which the Fund proposes for use by the Underwriter in connection with
the offering of the Shares,  which  differs from the  prospectus  on file at the
Commission at the time the Registration  Statement  becomes  effective,  whether
such revised  prospectus is required to be filed pursuant to Rule 497(b) or Rule
497(h) of the Rules and Regulations), whether pursuant to the 1940 Act, the 1933
Act, or  otherwise,  and will  furnish the  Underwriter  with copies of any such
amendment  or  supplement  a  reasonable  amount of time prior to such  proposed
filing  or use,  as the case may be,  and  will not file any such  amendment  or
supplement to which the Underwriter shall reasonably object.

      (d) The Fund will deliver to the Underwriter, as soon as practicable,  two
signed copies of the notification of registration and registration  statement as
originally  filed and of each amendment  thereto,  in each case with two sets of
the  exhibits  filed  therewith,  and will also  deliver  to the  Underwriter  a
conformed  copy of the  registration  statement as originally  filed and of each
amendment  thereto (but without  exhibits to the  registration  statement or any
such amendment) for the Underwriter.

      (e) The Fund will furnish to the Underwriter, from time to time during the
period when the Prospectus is required to be delivered  under the 1933 Act, such
number  of  copies  of  the  Prospectus  (as  amended  or  supplemented)  as the
Underwriter may reasonably request for the purposes contemplated by the 1933 Act
or the Rules and Regulations.

      (f) If any event shall occur as a result of which it is necessary,  in the
opinion of counsel for the Underwriter, to amend or supplement the Prospectus in
order to make the Prospectus  not  misleading in the light of the  circumstances
existing at the time it is  delivered to a  purchaser,  the Fund will  forthwith
amend  or  supplement   the  Prospectus  by  preparing  and  furnishing  to  the
Underwriter a reasonable  number of copies of an amendment or amendments of or a
supplement or supplements to, the Prospectus (in form and substance satisfactory
to counsel for the  Underwriter,  so that,  as so amended or  supplemented,  the
Prospectus  will not contain an untrue  statement of a material  fact or omit to
state a material fact necessary in order to make the statements  therein, in the
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading.

      (g) The Fund  will  endeavor,  in  cooperation  with the  Underwriter,  to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other  jurisdictions of the United States as the Underwriter may
designate,  and will maintain such  qualifications in effect for a period of not
less than one year after the date hereof. The Fund will file such statements and
reports as may be required by the laws of each  jurisdiction in which the Shares
have been qualified as above provided.

      (h) The Fund will make generally available to its security holders as soon
as practicable,  but no later than 60 days after the close of the period covered
thereby,  an earnings  statement (in form  complying with the provisions of Rule
158 of the Rules and Regulations)


                                       7
<PAGE>

covering a  twelve-month  period  beginning  not later than the first day of the
Fund's fiscal  quarter next following the  "effective"  date (as defined in said
Rule 158) of the Registration Statement.

      (i) Between the date of this Agreement and the  termination of any trading
restrictions  or Closing Time,  whichever is later,  the Fund will not,  without
your prior  consent,  offer or sell,  or enter into any  agreement to sell,  any
equity or equity related securities of the Fund other than the Shares and shares
of Common Stock issued in reinvestment of dividends or distributions.

      (j) If, at the time that the Registration Statement becomes effective, any
information  shall have been omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations,  then immediately  following the execution of the Pricing
Agreement,  the Fund will  prepare,  and file or  transmit  for filing  with the
Commission  in  accordance  with such Rule 430A and Rule 497(h) of the Rules and
Regulations,  copies of amended Prospectus, or, if required by such Rule 430A, a
post-effective  amendment to the  Registration  Statement  (including an amended
Prospectus), containing all information so omitted.

      (k) The Fund will use its best efforts to effect the listing of the Shares
on the New York Stock  Exchange so that trading on such  Exchange  will begin no
later than three weeks from the date of the Prospectus.

      SECTION 4. Payment of Expenses. The Fund will pay all expenses incident to
the performance of its  obligations  under this  Agreement,  including,  but not
limited to, expenses relating to (i) the printing and filing of the registration
statement as originally filed and of each amendment  thereto,  (ii) the printing
of this Agreement and the Pricing Agreement, (iii) the preparation, issuance and
delivery of the certificates  for the Shares to the  Underwriter,  (iv) the fees
and  disbursements of the Fund's counsel and accountants,  (v) the qualification
of the Shares under securities laws in accordance with the provisions of Section
3(g) of this  Agreement,  including  filing  fees  and  any  reasonable  fees or
disbursements  of counsel for the  Underwriter  in  connection  therewith and in
connection  with the  preparation of the Blue Sky Survey,  (vi) the printing and
delivery  to  the  Underwriter  of  copies  of  the  registration  statement  as
originally filed and of each amendment thereto,  of the preliminary  prospectus,
and of the  Prospectus  and any  amendments or  supplements  thereto,  (vii) the
printing  and  delivery  to the  Underwriter  of copies of the Blue Sky  Survey,
(viii) the fees and  expenses  incurred  with  respect  to the  filing  with the
National Association of Securities Dealers,  Inc. and (ix) the fees and expenses
incurred  with  respect  to the  listing  of the  Shares  on the New York  Stock
Exchange.

      If this Agreement is terminated by the  Underwriter in accordance with the
provisions  of  Section 5 or  Section  9(a)(i),  the Fund or the  Adviser  shall
reimburse the Underwriter for all of their  reasonable  out-of-pocket  expenses,
including the reasonable fees and  disbursements of counsel for the Underwriter.
In the event the transactions  contemplated  hereunder are not consummated,  the
Adviser  agrees  to pay all of the  costs  and  expenses  set forth in the first
paragraph of this Section 4 which the Fund would have paid if such  transactions
were consummated.


                                       8
<PAGE>

      SECTION 5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter  hereunder  are subject to the accuracy of the  representations  and
warranties of the Fund and the Adviser herein  contained,  to the performance by
the Fund and the Adviser of their respective obligations  hereunder,  and to the
following further conditions:

      (a) The Registration  Statement shall have become effective not later than
5:30 P.M., New York City time, on the date of this Agreement, or at a later time
and date not later,  however, than 5:30 P.M. on the first business day following
the date  hereof,  or at such  later  time and  date as may be  approved  by the
Underwriter,  and at Closing Time no stop order suspending the  effectiveness of
the  Registration  Statement  shall  have  been  issued  under  the  1933 Act or
proceedings therefor initiated or threatened by the Commission.  If the Fund has
elected to rely upon Rule 430A of the Rules and  Regulations,  the prices of the
Shares and any price-related  information  previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing  pursuant to Rule 497(h) of the Rules and  Regulations
within the prescribed time period, and prior to Closing Time the Fund shall have
provided  evidence  satisfactory to the Underwriter of such timely filing,  or a
post-effective  amendment  providing such  information  shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the Rules and Regulations.

      (b) At Closing Time, the Underwriter shall have received:

            (1) The  favorable  opinion,  dated as of Closing  Time,  of Brown &
      Wood, counsel for the Fund and the Underwriter, to the effect that:

                  (i)  The  Fund  has  been  duly  incorporated  and is  validly
            existing as a  corporation  in good  standing  under the laws of the
            State of Maryland.

                  (ii) The Fund has corporate  power and authority to own, lease
            and operate its  properties and conduct its business as described in
            the Registration Statement and the Prospectus.

                  (iii) The Fund is duly  qualified as a foreign  corporation to
            transact  business and is in good standing in each  jurisdiction  in
            which such qualification is required.

                  (iv) The Shares have been duly  authorized  for  issuance  and
            sale to the Underwriter  pursuant to this Agreement and, when issued
            and delivered by the Fund pursuant to this Agreement against payment
            of the  consideration  set forth in the Pricing  Agreement,  will be
            validly issued and fully paid and nonassessable; the issuance of the
            Shares is not  subject  to  preemptive  rights;  and the  authorized
            capital stock conforms as to legal matters in all material  respects
            to the description  thereof in the Registration  Statement under the
            caption "Description of Capital Stock".

                  (v) This  Agreement and the Pricing  Agreement  have each been
            duly  authorized,  executed  and  delivered  by the  Fund  and  each
            complies with all applicable provisions of the 1940 Act.


                                       9
<PAGE>

                  (vi) The  Registration  Statement is effective  under the 1933
            Act and, to the best of their  knowledge  and  information,  no stop
            order suspending the effectiveness of the Registration Statement has
            been issued under the 1933 Act or proceedings  therefor initiated or
            threatened by the Commission.

                  (vii) At the time the Registration  Statement became effective
            and at the  Representation  Date, the Registration  Statement (other
            than  the  financial  statements  included  therein,  as to which no
            opinion  need be  rendered)  complied  as to  form  in all  material
            respects with the  requirements of the 1933 Act and the 1940 Act and
            the Rules and Regulations.

                  (viii) To the best of their knowledge and  information,  there
            are no legal  or  governmental  proceedings  pending  or  threatened
            against  the  Fund  which  are  required  to  be  disclosed  in  the
            Registration Statement, other than those disclosed therein.

                  (ix) To the best of their knowledge and information, there are
            no contracts, indentures,  mortgages, loan agreements, notes, leases
            or  other  instruments  of the  Fund  required  to be  described  or
            referred to in the Registration Statement or to be filed as exhibits
            thereto  other than those  described or referred to therein or filed
            as exhibits  thereto,  the  descriptions  thereof are correct in all
            material respects,  references  thereto are correct,  and no default
            exists  in  the  due  performance  or  observance  of  any  material
            obligation,  agreement,  covenant  or  condition  contained  in  any
            contract,  indenture,  loan  agreement,  note or lease so described,
            referred to or filed.

                  (x) No consent, approval,  authorization or order of any court
            or  governmental  authority or agency is required in connection with
            the sale of the Shares to the  Underwriter,  except such as has been
            obtained  under  the  1933  Act,  the  1940  Act  or the  Rules  and
            Regulations  or such  as may be  required  under  state  or  foreign
            securities laws; and to the best of their knowledge and information,
            the execution and delivery of this Agreement, the Pricing Agreement,
            the  Advisory   Agreement   and  the  Custody   Agreement   and  the
            consummation  of the  transactions  contemplated  herein and therein
            will not conflict with or constitute a breach of, or default  under,
            or result  in the  creation  or  imposition  of any lien,  charge or
            encumbrance upon any property or assets of the Fund pursuant to, any
            contract, indenture,  mortgage, loan agreement, note, lease or other
            instrument  to which the Fund is a party or by which it may be bound
            or to which any of the  property  or assets of the Fund is  subject,
            nor will such action  result in any  violation of the  provisions of
            the  Charter or By-Laws  of the Fund,  or any law or  administrative
            regulation,  or,  to the best of their  knowledge  and  information,
            administrative or court decree.

                  (xi) The Advisory  Agreement  and the Custody  Agreement  have
            each been duly  authorized and approved by the Fund and comply as to


                                       10
<PAGE>

            form in all material respects with all applicable  provisions of the
            1940 Act, and both have been duly executed by the Fund.

                  (xii) The Fund is  registered  with the  Commission  under the
            1940  Act  as  a  closed-end  nondiversified  management  investment
            company,  and all  required  action has been taken by the Fund under
            the 1933 Act, the 1940 Act and the Rules and Regulations to make the
            public  offering and consummate  the sale of the Shares  pursuant to
            this  Agreement;  the  provisions  of the Charter and By-Laws of the
            Fund  comply  as  to  form  in  all  material   respects   with  the
            requirements  of the 1940 Act;  and, to the best of their  knowledge
            and  information,  no  order of  suspension  or  revocation  of such
            registration  under the 1940 Act,  pursuant  to Section  8(e) of the
            1940 Act,  has been  issued or  proceedings  therefor  initiated  or
            threatened by the Commission.

                  (xiii) The  information  in the  Prospectus  under the caption
            "Taxes",  to the extent that it constitutes  matters of law or legal
            conclusions,  has  been  reviewed  by  them  and is  correct  in all
            material respects.

            (2) The  favorable  opinion,  dated as of Closing Time, of Philip L.
      Kirstein,  Esq.,  General  Counsel to the Adviser,  in form and  substance
      satisfactory to counsel for the Underwriter, to the effect that:

                  (i) The Adviser has been duly organized as a corporation under
            the laws of the State of Delaware with corporate power and authority
            to conduct its business as described in the  Registration  Statement
            and the Prospectus.

                  (ii) The Adviser is duly  registered as an investment  adviser
            under the Advisers Act and is not  prohibited by the Advisers Act or
            the 1940 Act,  or the rules and  regulations  under such Acts,  from
            acting under the Advisory  Agreement for the Fund as contemplated by
            the Prospectus.

                  (iii) This Agreement and the Advisory Agreement have been duly
            authorized,  executed and delivered by the Adviser, and the Advisory
            Agreement constitutes a valid and binding obligation of the Adviser,
            enforceable   in  accordance   with  its  terms,   subject,   as  to
            enforcement, to bankruptcy, insolvency, reorganization or other laws
            relating to or  affecting  creditors'  rights and to general  equity
            principles;  and,  to the  best of his  knowledge  and  information,
            neither the execution and delivery of this Agreement or the Advisory
            Agreement  nor the  performance  by the  Adviser of its  obligations
            hereunder or thereunder  will  conflict  with, or result in a breach
            of,  any of the terms and  provisions  of,  or  constitute,  with or
            without giving notice or lapse of time or both, a default under, any
            agreement or  instrument to which the Adviser is a party or by which
            the  Adviser  is  bound,  or any  law,  order,  rule  or  regulation
            applicable  to the Adviser of any  jurisdiction,  court,  federal or
            state regulatory body,  administrative  agency or other governmental
            body, stock exchange or


                                       11
<PAGE>

            securities  association having  jurisdiction over the Adviser or its
            properties or operations.

                  (iv)  To  the  best  of his  knowledge  and  information,  the
            description  of the Adviser in the  Registration  Statement  and the
            Prospectus does not contain any untrue  statement of a material fact
            or omit to state any material fact required to be stated  therein or
            necessary to make the statements therein not misleading.

            (3) In giving their opinion  required by sub-section  (b)(1) of this
      Section,  Brown & Wood shall  additionally  state that nothing has come to
      their  attention  that would lead them to  believe  that the  Registration
      Statement (other than the financial  statements  included  therein,  as to
      which no opinion need be rendered),  at the time it became effective or at
      the Representation  Date, contained an untrue statement of a material fact
      or omitted  to state a  material  fact  required  to be stated  therein or
      necessary  to make  the  statements  therein  not  misleading  or that the
      Prospectus (other than the financial  statement  included  therein,  as to
      which no opinion need be rendered), at the Representation Date (unless the
      term  "Prospectus"  refers to a prospectus  which has been provided to the
      Underwriter  by the Fund for use in  connection  with the  offering of the
      Shares which differs from the  Prospectus on file at the Commission at the
      time the Registration  Statement becomes  effective,  in which case at the
      time  they are  first  provided  to the  Underwriter  for such  use) or at
      Closing Time,  included an untrue  statement of a material fact or omitted
      to state a  material  fact  necessary  in  order  to make  the  statements
      therein, in the light of the circumstances under which they were made, not
      misleading.  In giving their opinion,  Brown & Wood may rely as to matters
      involving  the laws of the State of Maryland  upon the opinion of Venable,
      Baetjer and Howard. Venable, Baetjer and Howard and Brown & Wood may rely,
      as to  matters  of fact,  upon  certificates  and  written  statements  of
      officers and employees of and accountants for the Fund and the Adviser and
      of public officials.

      (c) At Closing Time,  (i) the  Registration  Statement and the  Prospectus
shall  contain  all  statements  which  are  required  to be stated  therein  in
accordance  with the 1933 Act, the 1940 Act and the Rules and Regulations and in
all material  respects  shall conform to the  requirements  of the 1933 Act, the
1940 Act and the Rules and  Regulations and neither the  Registration  Statement
nor the Prospectus shall contain any untrue statement of a material fact or omit
to state any material  fact  required to be stated  therein or necessary to make
the statements therein not misleading,  and no action, suit or proceeding at law
or in equity  shall be pending or, to the  knowledge of the Fund or the Adviser,
threatened  against  the Fund or the  Adviser  which would be required to be set
forth in the Prospectus  other than as set forth  therein,  (ii) there shall not
have been,  since the respective  dates as of which  information is given in the
Registration  Statement and the Prospectus,  any material  adverse change in the
condition,  financial or  otherwise,  of the Fund or in its  earnings,  business
affairs or business prospects,  whether or not arising in the ordinary course of
business,  from that set forth in the  Registration  Statement  and  Prospectus,
(iii) the Adviser shall have the financial  resources  available to it necessary
for the  performance  of its services and  obligations  as  contemplated  in the
Registration  Statement  and the  Prospectus  and (iv) no  proceedings  shall be
pending or, to the knowledge of the Fund or the Adviser,  threatened against the
Fund or the Adviser before or by any Federal,  state or other commission,  board
or  administrative  agency  wherein an unfavorable  decision,  ruling or finding


                                       12
<PAGE>

would  materially  and  adversely  affect  the  business,   property,  financial
condition or income of either the Fund or the Adviser other than as set forth in
the Registration  Statement and the Prospectus;  and the Underwriter  shall have
received,  at Closing Time, a  certificate  of the President or Treasurer of the
Fund and of the President or a Vice President of the Adviser dated as of Closing
Time, evidencing  compliance with the appropriate  provisions of this subsection
(c).

      (d) At Closing Time,  the  Underwriter  shall have received  certificates,
dated as of Closing  Time,  (i) of the President or Treasurer of the Fund to the
effect that the  representations and warranties of the Fund contained in Section
1(a) are true and  correct  with the same force and  effect as though  expressly
made at and as of Closing Time and, (ii) of the President or a Vice President of
the Adviser to the effect that the representations and warranties of the Adviser
contained in Sections  1(a) and (b) are true and correct with the same force and
effect as though expressly made at and as of Closing Time.

      (e) At the time of execution of this Agreement, the Underwriter shall have
received from Deloitte & Touche a letter,  dated such date in form and substance
satisfactory to the Underwriter, to the effect that:

            (i) they are independent accountants with respect to the Fund within
      the meaning of the 1933 Act and the Rules and Regulations;

            (ii) in their  opinion,  the  statement  of assets  and  liabilities
      examined by them and included in the Registration Statement complies as to
      form in all material respects with the applicable accounting  requirements
      of the 1933 Act and the 1940 Act and the Rules and Regulations; and

            (iii) they have performed specified procedures,  not constituting an
      audit,  including  a reading of the  latest  available  interim  financial
      statements  of the  Fund,  a  reading  of the  minute  books of the  Fund,
      inquiries of officials of the Fund  responsible  for financial  accounting
      matters and such other  inquiries  and  procedures  as may be specified in
      such letter,  and on the basis of such  inquiries and  procedures  nothing
      came to their  attention  that caused them to believe  that at the date of
      the latest  available  statement  of assets and  liabilities  read by such
      accountants,  or at a  subsequent  specified  date not more than five days
      prior to the date of this  Agreement,  there was any change in the capital
      stock or net  assets of the Fund as  compared  with  amounts  shown on the
      statement of net assets included in the Prospectus.

      (f) At Closing Time, the  Underwriter  shall have received from Deloitte &
Touche a letter,  dated as of Closing Time, to the effect that they reaffirm the
statements  made in the letter  furnished  pursuant  to  subsection  (e) of this
Section,  except that the "specified  date" referred to shall be a date not more
than five days prior to Closing Time.

      (g) At Closing Time, all proceedings  taken by the Fund and the Adviser in
connection with the organization and registration of the Fund under the 1940 Act
and the issuance and sale of the Shares as herein and therein contemplated shall
be satisfactory in form and substance to the Underwriter.

      (h) In the event the underwriter  exercises its option provided in Section
2  hereof  to  purchase   all  or  any  portion  of  the  Option   Shares,   the
representations  and warranties of the Fund


                                       13
<PAGE>

and the Adviser contained herein and the statements in any certificate furnished
by the Fund and the Adviser  hereunder shall be true and correct as of each Date
of Delivery, and the Underwriter shall have received:

            (1)  Certificates,  dated the Date of Delivery,  of the President or
      Treasurer  of the Fund and of the  President  or a Vice  President  of the
      Adviser  confirming  that the  information  contained  in the  certificate
      delivered  by each of them at Closing Time  pursuant to Sections  5(c) and
      (d), as the case may be, remains true as of such Date of Delivery.

            (2) The favorable opinion of Brown & Wood,  counsel for the Fund and
      Philip L. Kirstein, Esq., General Counsel to the Adviser, each in form and
      substance  satisfactory to the  Underwriter,  dated such Date of Delivery,
      relating  to the Option  Shares and  otherwise  to the same  effect as the
      opinions required by Sections 5(b)(1) and (2), respectively.

            (3)  A  letter  from  Deloitte  &  Touche,  in  form  and  substance
      satisfactory   to  the  Underwriter  and  dated  such  Date  of  Delivery,
      substantially  the same in scope and substance as the letter  furnished to
      the Underwriter pursuant to Section 5(e), except that the "specified date"
      in the letter  furnished  pursuant to this Section 5(h)(3) shall be a date
      not more than five days prior to such Date of Delivery.

      If any condition  specified in this Section shall not have been  fulfilled
when and as required to be  fulfilled,  this  Agreement may be terminated by the
Underwriter  by notice to the Fund at any time at or prior to Closing Time,  and
such  termination  shall be without  liability  of any party to any other  party
except as provided in Section 4.

      SECTION 6.  Indemnification.  (a) The Fund and the  Adviser,  jointly  and
severally, agree to indemnify and hold harmless the Underwriter and each person,
if any,  who controls  the  Underwriter  within the meaning of Section 15 of the
1933 Act as follows:

            (i) against any and all loss,  liability,  claim, damage and expense
      whatsoever,  as incurred,  arising out of any untrue  statement or alleged
      untrue  statement  of  a  material  fact  contained  in  the  Registration
      Statement (or any amendment thereto),  including the information deemed to
      be part of the Registration  Statement  pursuant to Rule 430A of the Rules
      and  Regulations,  if  applicable,  or the  omission  or alleged  omission
      therefrom of a material fact required to be stated therein or necessary to
      make the  statements  therein not  misleading or arising out of any untrue
      statement or alleged untrue  statement of a material fact contained in any
      preliminary  prospectus or the  Prospectus (or any amendment or supplement
      thereto) or the omission or alleged omission  therefrom of a material fact
      necessary  in order to make the  statements  therein,  in the light of the
      circumstances under which they were made, not misleading;

            (ii) against any and all loss, liability,  claim, damage and expense
      whatsoever  as  incurred  to the extent of the  aggregate  amount  paid in
      settlement  of any  litigation,  or  investigation  or  proceeding  by any
      governmental  agency or body,  commenced  or  threatened,  or of any claim
      whatsoever based upon any such untrue  statement or


                                       14
<PAGE>

      omission,  or any such  alleged  untrue  statement  or  omission,  if such
      settlement is effected with the written consent of the indemnifying party;
      and

            (iii) against any and all expense whatsoever (including the fees and
      disbursements of counsel chosen by the Underwriter) reasonably incurred in
      investigating,   preparing  or  defending   against  any  litigation,   or
      investigation or proceeding by any governmental agency or body,  commenced
      or  threatened,  or any  claim  whatsoever  based  upon  any  such  untrue
      statement or omission,  or any such alleged untrue  statement or omission,
      to the extent that any such expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).

      (b) The Underwriter  agrees,  severally and not jointly,  to indemnify and
hold harmless the Fund and the Adviser, their respective directors,  each of the
Fund's officers who signed the Registration Statement,  and each person, if any,
who  controls  the Fund or the  Adviser  within the meaning of Section 15 of the
1933 Act,  against  any and all  loss,  liability,  claim,  damage  and  expense
described in the  indemnity  contained in  subsection  (a) of this  Section,  as
incurred,  but only with respect to untrue  statements or omissions,  or alleged
untrue  statements  or  omissions,  made in the  Registration  Statement (or any
amendment  thereto) or any  preliminary  prospectus  or the  Prospectus  (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information  furnished to the Fund by the  Underwriter  expressly for use in the
Registration  Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

      (c) In addition to the foregoing indemnification,  the Adviser also agrees
to indemnify  and hold  harmless the  Underwriter  and each person,  if any, who
controls  the  Underwriter  within  the  meaning  of Section 15 of the 1933 Act,
against any and all loss, liability,  claim, damage and expense described in the
indemnity  contained  in  subsection  (a) of this  Section,  with respect to any
omitting Prospectus or any advertising materials approved by the Adviser for use
in connection with the public offering of the Shares.

      (d) Each  indemnified  party shall give  notice as promptly as  reasonably
practicable to each  indemnifying  party of any action  commenced  against it in
respect of which indemnity may be sought hereunder,  but failure to so notify an
indemnifying  party  shall not relieve it from any  liability  which it may have
otherwise than on account of this indemnity agreement. An indemnifying party may
participate  at its own expense in the defense of any such  action.  In no event
shall the indemnifying  parties be liable for the fees and expenses of more than
one counsel (in addition to any local  counsel)  separate from their own counsel
for all  indemnified  parties in connection  with any one action or separate but
similar or  related  actions in the same  jurisdiction  arising  out of the same
general allegations or circumstances.

      SECTION  7.  Contribution.  In order  to  provide  for just and  equitable
contribution in circumstances in which the indemnity  agreement  provided for in
Section 6 is for any reason held to be unenforceable by the indemnified  parties
although  applicable in accordance with its terms,


                                       15
<PAGE>

the Fund,  the Adviser and the  Underwriter  shall  contribute  to the aggregate
losses, liabilities,  claims, damages and expenses of the nature contemplated by
said  indemnity  agreement  as  incurred  by  the  Fund,  the  Adviser  and  the
Underwriter, as incurred, in such proportion that the Underwriter is responsible
for that portion  represented by the percentage that the aggregate  underwriting
compensation payable pursuant to Section 2 hereof bears to the aggregate initial
public  offering  price of the Shares sold under this Agreement and the Fund and
the Adviser are responsible for the balance;  provided,  however, that no person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the 1933 Act)  shall be  entitled  to  contribution  from any person who was not
guilty of such fraudulent misrepresentation.  For purposes of this Section, each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as the Underwriter,  and
each  director of the Fund and the  Adviser,  respectively,  each officer of the
Fund who  signed  the  Registration  Statement,  and each  person,  if any,  who
controls  the Fund or the  Adviser  within the meaning of Section 15 of the 1933
Act shall  have the same  rights to  contribution  as the Fund and the  Adviser,
respectively.

      SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All  representations,  warranties and agreements  contained in this Agreement or
the Pricing  Agreement,  or contained in certificates of officers of the Fund or
the Adviser submitted pursuant hereto,  shall remain operative and in full force
and  effect,  regardless  of  any  investigation  made  by or on  behalf  of the
Underwriter or controlling person, or by or on behalf of the Fund or the Adviser
and shall survive delivery of the Shares to the Underwriter.

      SECTION 9. Termination of Agreement. (a) The Underwriter, by notice to the
Fund,  may terminate  this Agreement at any time at or prior to Closing Time (i)
if there has  been,  since the date of this  Agreement  or since the  respective
dates  as of which  information  is given  in the  Registration  Statement,  any
material  adverse  change in the  condition,  financial or otherwise,  or in the
earnings,  business  affairs or business  prospects  of the Fund or the Adviser,
whether or not arising in the ordinary course of business,  or (ii) if there has
occurred  any material  adverse  change in the  financial  markets in the United
States or elsewhere or any outbreak of  hostilities  or other calamity or crisis
or any escalation of existing hostilities the effect of which is such as to make
it, in the Underwriter's judgment, impracticable to market the Shares or enforce
contracts  for the sale of the Shares,  or (iii) if trading in the Common  Stock
has been  suspended  by the  Commission  or if trading  generally  on either the
American Stock Exchange or the New York Stock  Exchange has been  suspended,  or
minimum or maximum  prices for trading  have been fixed,  or maximum  ranges for
prices for  securities  have been  required,  by either of said  exchanges or by
order of the  Commission or any other  governmental  authority,  or if a banking
moratorium has been declared by Federal or New York authorities.

      (b) If  this  Agreement  is  terminated  pursuant  to this  Section,  such
termination shall be without liability of any party to any other party except as
provided in Section 4.


                                       16
<PAGE>

      SECTION 10. Notices. All notices and other communications  hereunder shall
be in  writing  and  shall be  deemed  to have  been  duly  given if  mailed  or
transmitted  by any standard form of written  telecommunication.  Notices to the
Underwriter shall be directed to Merrill Lynch World Headquarters,  North Tower,
World  Financial  Center,  New York,  New York 10281,  Attention:  Theresa Lang,
Director;  notices to the Fund or the Adviser  shall be directed to each of them
at 800 Scudders  Mill Road,  Plainsboro,  New Jersey  08536,  Attention:  Arthur
Zeikel, President.

      SECTION 11. Parties.  This Agreement and the Pricing Agreement shall inure
to the benefit of and be binding upon the Underwriter, the Fund, the Adviser and
their respective successors. Nothing expressed or mentioned in this Agreement or
the Pricing Agreement is intended or shall be construed to give any person, firm
or corporation,  other than the parties hereto and their  respective  successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal  representatives,  any legal or equitable right,
remedy or claim under or in respect of this  Agreement or any  provision  herein
contained.  This  Agreement  and the Pricing  Agreement and all  conditions  and
provisions  hereof are intended to be for the sole and exclusive  benefit of the
parties hereto and thereto and their respective successors, and said controlling
persons and officers and  directors  and their heirs and legal  representatives,
and for the benefit of no other  person,  firm or  corporation.  No purchaser of
Shares from the  Underwriter  shall be deemed to be a successor by reason merely
of such purchase.

      SECTION  12.  Governing  Law and  Time.  This  Agreement  and the  Pricing
Agreement  shall be governed by the laws of the State of New York  applicable to
agreements made and to be performed in said State.  Specified times of day refer
to New York City time.


                                       17
<PAGE>

      If  the  foregoing  is  in  accordance  with  your  understanding  of  our
Agreement,  please sign and return to us a counterpart  hereof,  whereupon  this
instrument, along with all counterparts,  will become a single binding agreement
among the Underwriter, the Fund and the Adviser in accordance with its terms.

                                 Very truly yours,

                                 MUNIYIELD FUND, INC.

                                 By:____________________________________________
                                                (Authorized Officer)

                                 FUND ASSET MANAGEMENT, INC.

                                 By:____________________________________________
                                                (Authorized Officer)

Confirmed and Accepted, as of the
  date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
           INCORPORATED

By:_______________________________
   Vice President
   Investment Banking Group


                                       18
<PAGE>

                                                                       Exhibit A

                                30,000,000 Shares
                              MuniYield Fund, Inc.
                            (a Maryland corporation)

                                  Common Stock
                           (Par Value $.10 Per Share)

                                PRICING AGREEMENT

                                                               November 21, 1991

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281

Dear Sirs:

      Reference is made to the Purchase Agreement,  dated November 21, 1991 (the
"Purchase Agreement"),  relating to the purchase by Merrill Lynch & Co., Merrill
Lynch, Pierce,  Fenner & Smith Incorporated,  (the "Underwriter"),  of the above
shares of Common  Stock,  par value $.10 per share (the  "Initial  Shares"),  of
MuniYield  Fund,  Inc.  (the "Fund") and  relating to the option  granted to the
Underwriter  to purchase up to an additional  4,500,000  shares of Common Stock,
par value $.10 per share,  of the Fund to cover  over-allotments  in  connection
with the sale of the Initial  Shares (the "Option  Shares").  The Initial Shares
and all or any part of the Option Shares are collectively  herein referred to as
the "Shares".

      Pursuant to Section 2 of the Purchase Agreement,  the Fund agrees with the
Underwriter as follows:

            1. The applicable  initial  public  offering price per share for the
      Shares, determined as provided in said Section 2, shall be as follows:

                  (a) $15.00 for purchases in single  transactions  of less than
            3,500 Shares;

                  (b) $14.85 for  purchases in single  transactions  of 3,500 or
            more Shares but less than 7,000 Shares; and

                  (c) $14.70 for  purchases in single  transactions  of 7,000 or
            more Shares.

            2. The  purchase  price per  share for the  Shares to be paid by the
      Underwriter  shall be  $14.175  being an  amount  equal to the  applicable
      initial public offering price set forth above less (i) $.825 per share for
      purchases in single transactions of less than 3,500 Shares; (ii) $.675 per
      share for  purchases  in single  transactions  of 3,500 or more Shares


                                       A-1
<PAGE>

      but less than 7,000  Shares  and (iii)  $.525 per share for  purchases  in
      single transactions of 7,000 or more Shares.

      If  the  foregoing  is  in  accordance  with  your  understanding  of  our
Agreement,  please sign and return to the Fund a counterpart  hereof,  whereupon
this instrument,  along with all  counterparts,  will become a binding agreement
between the Underwriter and the Fund in accordance with its terms.

                                 Very truly yours,

                                 MUNIYIELD FUND, INC.

                                 By:____________________________________________
                                                (Authorized Officer)

Confirmed and Accepted, as of the
  date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
           INCORPORATED

By:_______________________________
   Vice President
   Investment Banking Group


                                      A-2


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-7.B
<SEQUENCE>8
<FILENAME>file007.txt
<DESCRIPTION>FORM OF PURCHASE AGREEMENT
<TEXT>

                                                                    Exhibit 7(b)

                                  $250,000,000

                              MUNIYIELD FUND, INC.
                            (a Maryland corporation)

                   AUCTION MARKET PREFERRED STOCK ["AMPS"(R)]

                    900 Shares Series A   900 Shares Series C
                    900 Shares Series B   900 Shares Series D
                              1,400 Shares Series E

                    Liquidation Preference $50,000 Per Share

                               PURCHASE AGREEMENT

                                                               December 18, 1991

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201

Dear Sirs:

      MuniYield Fund, Inc., a Maryland corporation (the "Fund"), and Fund Asset
Management, Inc., a Delaware corporation (the "Adviser"), each confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriter") with respect to the sale by the Fund and the
purchase by the Underwriter of 900 shares of auction market preferred stock,
Series A, of the Fund (the "Series A AMPS"), 900 shares of auction market
preferred stock, Series B, of the Fund (the "Series B AMPS"), 900 shares of
auction market preferred stock, Series C, of the Fund (the "Series C AMPS"), 900
shares of auction market preferred stock, Series D, of the Fund (the "Series D
AMPS") and 1,400 shares of auction market preferred stock, Series E, of the Fund
(the "Series E AMPS") all with a par value of $.10 per share and a liquidation
preference of $50,000 per share plus an amount equal to accumulated but unpaid
dividends (whether or not earned or declared). The Series A AMPS, Series B AMPS,
Series C AMPS, Series D AMPS and Series E AMPS are herein collectively referred
to as the "Shares."

      Prior to the purchase and public offering of the Shares by the
Underwriter, the Fund and the Underwriter, shall enter into an agreement
substantially in the form of Exhibit A hereto (the

- ----------
(R) Registered trademark of Merrill Lynch & Co., Inc.
<PAGE>

"Pricing Agreement"). The Pricing Agreement may take the form of an exchange of
any standard form of written telecommunication between the Fund and the
Underwriter and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be deemed
to incorporate the Pricing Agreement.

      The Fund has filed with the Securities and Exchange Commission (the
"Commission") a notification on Form N-8A of registration of the Fund as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") and a registration statement on Form N-2 (No. 33-43264) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act, and the
rules and regulations of the Commission under the 1933 Act and the 1940 Act (the
"Rules and Regulations") and has filed such amendments to such registration
statement on Form N-2, if any, and such amended preliminary prospectuses as may
have been required to the date hereof. The Fund will prepare and file such
additional amendments thereto and such amended prospectuses as may hereafter be
required. Such registration statement (as amended at the time it becomes
effective, if applicable) and the prospectus constituting a part thereof
(including in each case the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) of the Rules and Regulations), as from time to time
amended or supplemented pursuant to the 1933 Act, are hereinafter referred to as
the "Registration Statement" and the "Prospectus," respectively, except that if
any revised prospectus shall be provided to the Underwriter by the Fund for use
in connection with the offering of the Shares which differs from the Prospectus
on file at the Commission at the time the Registration Statement becomes
effective (whether such revised prospectus is required to be filed by the Fund
pursuant to Rule 497(b) or Rule 497(h) of the Rules and Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Underwriter for such use.

      The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after the
Registration Statement becomes effective and the Pricing Agreement has been
executed and delivered.

      SECTION 1. Representations and Warranties. (a) The Fund and the Adviser
each severally represents and warrants to the Underwriter as of the date hereof
and as of the date of the Pricing Agreement (such later date being hereinafter
referred to as the "Representation Date") as follows:

            (i) At the time the Registration Statement becomes effective and at
      the Representation Date, the Registration Statement will comply in all
      material respects with the requirements of the 1933 Act, the 1940 Act and
      the Rules and Regulations and will not contain an untrue statement of a
      material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading. At the
      time the Registration Statement becomes effective, at the Representation
      Date and at Closing Time as defined in Section 2, the Prospectus (unless
      the term "Prospectus" refers to a prospectus which has been provided to
      the Underwriter by the Fund for use in connection with the offering of the
      Shares which differs from the Prospectus on file with the Commission at
      the time the Registration Statement becomes effective, in which case at
      the time it is first provided to the Underwriter for such use) will not
      contain an untrue statement of a material fact or omit to state a material
      fact necessary in order to make the


                                       2
<PAGE>

      statements therein, in the light of the circumstances under which they
      were made, not misleading; provided, however, that the representations and
      warranties in this subsection shall not apply to statements in or
      omissions from the Registration Statement or Prospectus made in reliance
      upon and in conformity with information furnished to the Fund in writing
      by the Underwriter expressly for use in the Registration Statement or
      Prospectus.

            (ii) The accountants who certified the statement of assets and
      liabilities included in the Registration Statement are independent public
      accountants as required by the 1933 Act and the Rules and Regulations.

            (iii) The financial statements included in the Registration
      Statement present fairly the financial position of the Fund as at the date
      indicated and the results of its operations for the period specified; such
      financial statements have been prepared in conformity with generally
      accepted accounting principles; and the information in the Prospectus
      under the headings "Description of Capital Stock" and "Portfolio
      Composition" has been fairly presented.

            (iv) Since the respective dates as of which information is given in
      the Registration Statement and the Prospectus, except as otherwise stated
      therein, (A) there has been no material adverse change in the condition,
      financial or otherwise, of the Fund, or in the earnings, business affairs
      or business prospects of the Fund, whether or not arising in the ordinary
      course of business, (B) there have been no transactions entered into by
      the Fund which are material to the Fund other than those in the ordinary
      course of business and (C) except for regular monthly dividends on the
      outstanding shares of common stock, par value $.10 per share ("Common
      Shares") of the Fund, there has been no dividend or distribution of any
      kind declared, paid or made by the Fund or any class of its capital stock.

            (v) The Fund has been duly organized and is validly existing as a
      corporation in good standing under the laws of the State of Maryland, with
      corporate power and authority to own, lease and operate its properties and
      conduct its business as described in the Registration Statement; the Fund
      is duly qualified as a foreign corporation to transact business and is in
      good standing in each jurisdiction in which such qualification is
      required; and the Fund has no subsidiaries.

            (vi) The Fund is registered with the Commission under the 1940 Act
      as a closed-end, non-diversified management investment company, and no
      order of suspension or revocation of such registration has been issued or
      proceedings therefor initiated or threatened by the Commission.

            (vii) The authorized, issued and outstanding capital stock of the
      Fund is as set forth in the Prospectus under the caption "Description of
      Capital Stock"; the outstanding Common Shares have been duly authorized
      and validly issued and are fully paid and non-assessable; the Shares have
      been duly authorized for issuance and sale to the Underwriter pursuant to
      this Agreement and, when issued and delivered by the Fund pursuant to this
      Agreement against payment of the consideration set forth in the Pricing
      Agreement, will be validly issued and fully paid and nonassessable; the
      Common Shares and the Shares conform in all material respects to all
      statements relating thereto contained


                                       3
<PAGE>

      in the Registration Statement; and the issuance of the Shares to be
      purchased by the Underwriter is not subject to preemptive rights.

            (viii) The Fund is not in violation of its charter, as amended (the
      "Charter") or by-laws, as amended (the "By-Laws") or in default in the
      performance or observance of any material obligation, agreement, covenant
      or condition contained in any contract, indenture, mortgage, loan
      agreement, note, lease or other instrument to which it is a party or by
      which it or its properties may be bound; and the execution and delivery of
      this Agreement, the Pricing Agreement and the Investment Advisory
      Agreement, the Custodian Agreement, the Auction Agent Agreement and the
      Depository Agreement referred to in the Registration Statement (the
      "Advisory Agreement," "Auction Agreement," "Custodian Agreement" and
      "Depository Agreement," respectively), and the consummation of the
      transactions contemplated herein and therein, will not conflict with or
      constitute a breach of, or default under, or result in the creation or
      imposition of any lien, charge or encumbrance upon any property or assets
      of the Fund pursuant to any contract, indenture, mortgage, loan agreement,
      note, lease or other instrument to which the Fund is a party or by which
      it may be bound or to which any of the property or assets of the Fund is
      subject, nor will such action result in any violation of the provisions of
      the Charter or By-laws of the Fund or, to the best knowledge of the Fund
      and the Adviser, any law, administrative regulation or administrative or
      court decree; and no consent, approval, authorization or order of any
      court or governmental authority or agency is required for the consummation
      by the Fund of the transactions contemplated by this Agreement, the
      Pricing Agreement, the Advisory Agreement, the Custodian Agreement, the
      Auction Agreement and the Depository Agreement, except such as has been
      obtained under the 1940 Act or as may be required under the 1933 Act or
      state securities or Blue Sky laws in connection with the purchase and
      distribution of the Shares by the Underwriter.

            (ix) The Fund owns or possesses or has obtained all material
      governmental licenses, permits, consents, orders, approvals and other
      authorizations necessary to lease or own, as the case may be, and to
      operate its properties and to carry on its businesses as contemplated in
      the Prospectus and the Fund has not received any notice of proceedings
      relating to the revocation or modification of any such licenses, permits,
      covenants, orders, approvals or authorizations.

            (x) There is no action, suit or proceeding before or by any court or
      governmental agency or body, domestic or foreign, now pending, or, to the
      knowledge of the Fund or the Adviser, threatened against or affecting, the
      Fund, which might result in any material adverse change in the condition,
      financial or otherwise, business affairs or business prospects of the
      Fund, or might materially and adversely affect the properties or assets of
      the Fund; and there are no material contracts or documents of the Fund
      which are required to be filed as exhibits to the Registration Statement
      by the 1933 Act, the 1940 Act or by the Rules and Regulations which have
      not been so filed.

            (xi) The Fund owns or possesses, or can acquire on reasonable terms,
      adequate trademarks, service marks and trade names necessary to conduct
      the business now operated by it, and the Fund has not received any notice
      of infringement of or conflict with asserted rights of others with respect
      to any trademarks, service marks and trade names which, singly or in the
      aggregate, if the subject of an unfavorable decision, ruling


                                       4
<PAGE>

      or finding, would materially and adversely affect the conduct of the
      business, operations, financial condition or income of the Fund.

            (xii) The Fund intends to, and will, direct the investment of the
      proceeds of the offering described in the Registration Statement in such a
      manner as to comply with the requirements of Subchapter M of the Internal
      Revenue Code of 1986, as amended ("Subchapter M of the Code"), and intends
      to qualify as a regulated investment company under Subchapter M of the
      Code.

            (xiii) This Agreement, the Pricing Agreement, the Advisory Agreement
      and the Custodian Agreement have each been duly authorized, executed and
      delivered by the Fund and each complies with all applicable provisions of
      the 1940 Act.

            (xiv) The Auction Agreement and the Depository Agreement have each
      been duly authorized for execution and delivery by the Fund and, when
      executed and delivered by the Fund, will constitute a valid and binding
      obligation of the Fund, enforceable in accordance with its terms, subject,
      as to enforcement, to bankruptcy, insolvency, reorganization or other laws
      relating to or affecting creditors' rights and to general equity
      principles.

      (b) The Adviser represents and warrants to the Underwriter as of the date
hereof and as of the Representation Date as follows:

            (i) The Adviser has been duly incorporated under the laws of the
      State of Delaware with corporate power and authority to conduct its
      business as described in the Prospectus.

            (ii) The Adviser is duly registered as an investment adviser under
      the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
      is not prohibited by the Advisers Act or the 1940 Act or the rules and
      regulations under such acts from acting under the Advisory Agreement for
      the Fund as contemplated by the Prospectus.

            (iii) This Agreement has been duly authorized, executed and
      delivered by the Adviser; the Advisory Agreement is in full force and
      effect and constitutes a valid and binding obligation of the Adviser,
      enforceable in accordance with its terms, subject, as to enforcement, to
      bankruptcy, insolvency, reorganization or other laws relating to or
      affecting creditors' rights and to general equity principles; and neither
      the execution and delivery of this Agreement nor the performance by the
      Adviser of its obligations hereunder or under the Advisory Agreement will
      conflict with, or result in a breach of any of the terms and provisions
      of, or constitute, with or without the giving of notice or lapse of time
      or both, a default under, any agreement or instrument to which the Adviser
      is a party or by which it is bound, or any law, order, rule or regulation
      applicable to it of any jurisdiction, court, federal or state regulatory
      body, administrative agency or other governmental body, stock exchange or
      securities association having jurisdiction over the Adviser or its
      respective properties or operations.

            (iv) The Adviser has the financial resources available to it
      necessary for the performance of its services and obligations as
      contemplated in the Prospectus.


                                       5
<PAGE>

      (c) Any certificate signed by any officer of the Fund or the Adviser and
delivered to the Underwriter shall be deemed a representation and warranty by
the Fund or the Adviser, as the case may be, to the Underwriter as to the
matters covered thereby.

      SECTION 2. Sale and Delivery to the Underwriter; Closing.

      (a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Fund agrees to
sell the Shares to the Underwriter and the Underwriter agrees to purchase the
Shares from the Fund, at the price per share set forth in the Pricing Agreement.

            (i) If the Fund has elected not to rely upon rule 430A under the
      Rules and Regulations, the initial public offering price and the purchase
      price per share to be paid by the Underwriter for the Shares each has been
      determined and set forth in the Pricing Agreement, dated the date hereof,
      and an amendment to the Registration Statement and the Prospectus will be
      filed before the Registration Statement becomes effective.

            (ii) If the Fund has elected to rely upon rule 430A under the Rules
      and Regulations, the purchase price per share to be paid by the
      Underwriter for the Shares shall be an amount equal to the initial public
      offering price, less an amount per share to be determined by agreement
      between the Underwriter and the Fund. The initial public offering price
      per share shall be a fixed price to be determined by agreement between the
      Underwriter and the Fund. The initial public offering price and the
      purchase price, when so determined, shall be set forth in the Pricing
      Agreement. In the event that such prices have not been agreed upon and the
      Pricing Agreement has not been executed and delivered by all parties
      thereto by the close of business on the fourth business day following the
      date of this Agreement, this Agreement shall terminate forthwith, without
      liability of any party to any other party, except as provided in Section
      5, unless otherwise agreed to by the Fund, the Adviser and the
      Underwriter.

      (b) Payment of the purchase price for, and delivery of certificates for,
the Shares shall be made at the office of Brown & Wood, One World Trade Center,
New York, New York 10048-0557 or at such other place as shall be agreed upon by
the Underwriter and the Fund, at 10:00 A.M. on the fifth business day following
the date the Registration Statement becomes effective (or, if the Fund has
elected to rely upon rule 430A under the Rules and Regulations, the fifth
business day after execution of the Pricing Agreement), or such other time not
later than ten business days after such date as shall be agreed upon by the
Underwriter and the Fund (such time and date of payment and delivery being
herein called "Closing Time"). Payment shall be made to the Fund by Federal
funds check or checks or similar same-day funds and payable to the order of the
Fund, against delivery to the Underwriter of the certificates for the Shares to
be purchased by it. The Series A Shares, Series B Shares, Series C Shares,
Series D Shares and Series E Shares shall each be represented by a certificate
registered in the name of Cede & Co., as nominee for The Depository Trust
Company. The certificates for the Shares will be made available for examination
by the Underwriter not later than 10:00 A.M. on the last business day prior to
Closing Time.


                                       6
<PAGE>

      SECTION 3. Covenants of the Fund. The Fund covenants with the Underwriter
as follows:

      (a) The Fund will use its best efforts (i) to cause the Registration
Statement to become effective under the 1933 Act, and will advise the
Underwriter promptly as to the time at which the Registration Statement and any
amendments thereto (including any post-effective amendment) becomes so effective
and (ii) if required, to cause the issuance of any orders exempting the Fund
from any provisions of the 1940 Act and will advise the Underwriter promptly as
to the time at which any such orders are granted.

      (b) The Fund will notify the Underwriter immediately, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statement and
any amendments thereto (including any post-effective amendment), (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose and
(v) of the issuance by the Commission of an order of suspension or revocation of
the notification on Form N-8A of registration of the Fund as an investment
company under the 1940 Act or initiation of any proceeding for that purpose. The
Fund will make every reasonable effort to prevent the issuance of any stop order
described in subsection (iv) hereunder or any order of suspension or revocation
described in subsection (v) hereunder and, if any stop order or order of
suspension or revocation is issued, to obtain the lifting thereof at the
earliest possible moment.

      (c) The Fund will give the Underwriter notice of its intention to file any
amendment to the Registration Statement (including any post-effective amendment)
or any amendment or supplement to the Prospectus (including any revised
prospectus which the Fund proposes for use by the Underwriter in connection with
the offering of the Shares which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective, whether
such revised prospectus is required to be filed pursuant to Rule 497 (b) or rule
497 (h) of the Rules and Regulations) whether pursuant to the 1940 Act, the 1933
Act, or otherwise, and will furnish the Underwriter with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement to which the Underwriter or counsel for the Underwriter shall
reasonably object.

      (d) The Fund will deliver to the Underwriter, as soon as practicable, two
signed copies of the registration statement as originally filed and of each
amendment thereto, in each case with two sets of the exhibits filed therewith,
and will also deliver to the Underwriter a conformed copy of the registration
statement as originally filed and of each amendment thereto (but without
exhibits to the registration statement or to any such amendment) for the
Underwriter.

      (e) The Fund will furnish to the Underwriter, from time to time during the
period when the Prospectus is required to be delivered under the 1933 Act, such
number of copies of the Prospectus (as amended or supplemented) as the
Underwriter may reasonably request for the purposes contemplated by the 1933 Act
or the Rules and Regulations.


                                       7
<PAGE>

      (f) If any event shall occur as a result of which it is necessary, in the
opinion of counsel for the Underwriter, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Fund will forthwith
amend or supplement the Prospectus by preparing and furnishing to the
Underwriter a reasonable number of copies of an amendment or amendments of, or a
supplement or supplements to, the Prospectus (in form and substance satisfactory
to counsel for the Underwriter), so that, as so amended or supplemented, the
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading.

      (g) The Fund will endeavor, in cooperation with the Underwriter, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions of the United States as the Underwriter may
designate, and will maintain such qualifications in effect for a period of not
less than one year after the date hereof. The Fund will file such statements and
reports as may be required by the laws of each jurisdiction in which the Shares
have been qualified as above provided.

      (h) The Fund will make generally available to its security holders as soon
as practicable, but not later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 of the Rules and Regulations) covering a twelve-month period beginning not
later than the first day of the Fund's fiscal quarter next following the
"effective" date (as defined is said Rule 158) of the Registration Statement.

      (i) Between the date of this Agreement and the termination of any trading
restrictions or Closing time, whichever is later, the Fund will not, without
your prior consent, offer or sell or enter into any agreement to sell any equity
or equity related securities of the Fund other than the Shares and Common Shares
issued in reinvestment of dividends or distributions.

      (j) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations, then immediately following the execution of the Pricing
Agreement, the Fund will prepare and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 497(h) of the Rules and
Regulations, copies of an amended Prospectus, or, if required by such Rule 430A,
a post-effective amendment to the Registration Statement (including an amended
Prospectus) containing all information so omitted.

      (k) The Fund will use its best efforts to maintain its qualification as a
regulated investment company under Subchapter M of the Code.

      SECTION 4. Covenants of the Underwriter. The Underwriter covenants and
agrees with the Fund as follows:

      (a) It will sell Shares only to a person who has agreed to execute and
deliver or who has already executed and delivered a Master Purchaser's Letter
(as defined in the Prospectus) in accordance with the terms of the Prospectus.

      (b) No later than Closing Time, it will execute and deliver a Master
Purchaser's Letter in accordance with the terms of the Prospectus.


                                       8
<PAGE>

      (c) No later than the second business day succeeding Closing Time, it will
provide the Fund and the Auction Agent (as defined in the Prospectus) with a
list of the persons to whom it has sold Shares, the number of Shares sold to
each such person and the number of Shares it is holding as of the date of such
notice.

      SECTION 5. Payment of Expenses. The Fund will pay all expenses incident to
the performance of its obligations under this Agreement, including, but not
limited to, expenses relating to (i) the printing and filing of the registration
statement as originally filed and of each amendment thereto, (ii) the
preparation, issuance and delivery of the certificates for the Shares to the
Underwriter, (iii) the fees and disbursements of the Fund's counsel and
accountants, (iv) the qualification of the Shares under securities laws in
accordance with the provisions of Section 3 (g) of this Agreement, including
filing fees and any fees or disbursements of counsel for the Underwriter in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (v) the printing and delivery to the Underwriter of copies of the
registration statement as originally filed and of each amendment thereto, of the
preliminary prospectuses, and of the Prospectus and any amendments or
supplements thereto, (vi) the printing and delivery to the Underwriter of copies
of the Blue Sky Survey and (vii) the fees charged by rating agencies for the
rating of the Shares.

      If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 6 or Section 10(a)(i); the Fund or the Adviser shall
reimburse the Underwriter for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriter. In the event
the transactions contemplated hereunder are not consummated, the Adviser agrees
to pay all of the costs and expenses set forth in the first paragraph of this
Section 5 which the Fund would have paid if such transactions had been
consummated.

      SECTION 6. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Fund and the Adviser herein contained, to the performance by
the Fund and the Adviser of their respective obligations hereunder, and to the
following further conditions:

      (a) The Registration Statement shall have become effective not later than
5:30 P.M., New York City time, on the date hereof or at such later time and date
as may be approved by the Underwriter, and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission. If the Fund has elected to rely upon Rule 430A of the Rules and
Regulations, the price of the Shares and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 497(h) of the Rules and Regulations within the prescribed time period, and
prior to Closing Time the Fund shall have provided evidence satisfactory to the
Underwriter of such timely filing, or a post-effective amendment providing such
information shall have been promptly filed and declared effective in accordance
with the requirements of Rule 430A of the Rules and Regulations.

      (b) At Closing Time, the Underwriter shall have received:

            (i) The favorable opinion, dated as of Closing Time, of Brown &
      Wood, counsel for the Fund and the Underwriter, to the effect that:


                                       9
<PAGE>

                  (1) The Fund has been duly organized and is validly existing
            as a corporation in good standing under the laws of the State of
            Maryland.

                  (2) The Fund has corporate power and authority to own, lease
            and operate its properties and conduct its business as described in
            the Prospectus.

                  (3) The Fund is duly qualified as a foreign corporation to
            transact business and is in good standing in each jurisdiction in
            which such qualification is required, except where the failure to so
            qualify would not have a material adverse effect on the condition,
            financial or otherwise, business affairs or business prospects of
            the Fund.

                  (4) The outstanding Common Shares have been duly authorized
            and validly issued and are fully paid and non-assessable.

                  (5) The Shares have been duly authorized for issuance and sale
            to the Underwriter pursuant to this Agreement and, when issued and
            delivered by the Fund pursuant to this Agreement against payment of
            the consideration set forth in the Pricing Agreement, will be
            validly issued and fully paid and non-assessable; the issuance of
            the Shares is not subject to preemptive or other similar rights; and
            the authorized capital stock conforms in all material respects to
            the description thereof in the Registration Statement.

                  (6) This Agreement and the Pricing Agreement each has been
            duly authorized, executed and delivered by the Fund and each
            complies with all applicable provisions of the 1940 Act.

                  (7) The Registration Statement is effective under the 1933 Act
            and, to the best of their knowledge and information, no stop order
            suspending the effectiveness of the Registration Statement has been
            issued under the 1933 Act and no proceedings for that purpose have
            been instituted, are pending or are contemplated.

                  (8) At the time the Registration Statement became effective
            and at the Representation Date, the Registration Statement (other
            than the financial statements included therein, as to which no
            opinion need be rendered) complied as to form in all material
            respects with the requirements of the 1933 Act, the 1940 Act and the
            Rules and Regulations.

                  (9) To the best of their knowledge and information, there are
            no legal or governmental proceedings pending or threatened against
            the Fund which are required to be disclosed in the Registration
            Statement, other than those disclosed therein.

                  (10) To the best of their knowledge and information, there are
            no contracts, indentures, mortgages, loan agreements, notes, leases
            or other instruments of the Fund required to be described or
            referred to in the Registration Statement or to be filed as exhibits
            thereto other than those described or referred to therein or filed
            as exhibits thereto, the descriptions thereof or references thereto
            are correct, and no default exists in the due performance or
            observance of any


                                       10
<PAGE>

            material obligation, agreement, covenant or condition contained in
            any contract, indenture, loan agreement, note or lease so described,
            referred to or filed.

                  (11) No consent, approval, authorization or order of any court
            or governmental authority or agency is required in connection with
            the sale of the Shares to the Underwriter, except such as has been
            obtained under the 1933 Act, the 1940 Act or the Rules and
            Regulations or such as may be required under state securities laws;
            and to the best of their knowledge and information, the execution
            and delivery of this Agreement, the Pricing Agreement, the Advisory
            Agreement, the Custodian Agreement, the Auction Agreement and the
            Depository Agreement and the consummation of the transactions
            contemplated herein and therein will not conflict with or constitute
            a breach of, or default under, or result in the creation or
            imposition of any lien, charge or encumbrance upon any property or
            assets of the Fund pursuant to any contract, indenture, mortgage,
            loan agreement, note, lease or other instrument to which the Fund is
            a party or by which it may be bound or to which any of the property
            or assets of the Fund is subject, nor will such action result in any
            violation of the provisions of the Charter or By-Laws of the Fund,
            or any law, administrative regulation or administrative or court
            decree.

                  (12) The Advisory Agreement and the Custodian Agreement have
            each been duly authorized, executed and delivered by the Fund and
            each complies with all applicable provisions of the 1940 Act.

                  (13) The Fund is registered with the Commission under the 1940
            Act as a closed-end non-diversified management investment company,
            and all required action has been taken by the Fund under the 1933
            Act, the 1940 Act and the Rules and Regulations to make the public
            offering and consummate the sale of the Shares pursuant to this
            Agreement; the provisions of the Charter and By-Laws of the Fund
            comply as to form in all material respects with the requirements of
            the 1940 Act; and, to the best of their knowledge and information,
            no order of suspension or revocation of such registration under the
            1940 Act, pursuant to Section 8(e) thereof, has been issued or
            proceedings therefor initiated or threatened by the Commission.

                  (14) The information in the Prospectus under the caption
            "Taxes" to the extent that it constitutes matters of law or legal
            conclusions, has been reviewed by them and is correct in all
            material respects.

                  (15) The Auction Agreement and the Depository Agreement each
            have been duly authorized, executed and delivered by the Fund and
            each constitutes a valid and binding obligation of the Fund,
            enforceable in accordance with its terms, subject, as to
            enforcement, to bankruptcy, insolvency, reorganization or other laws
            relating to or affecting creditors' rights and to general equity
            principles.

            (ii) The favorable opinion, dated as of Closing Time, of Philip L.
      Kirstein, Esq., General Counsel to the Adviser, in form and substance
      satisfactory to counsel for the Underwriter, to the effect that:


                                       11
<PAGE>

                  (1) The Adviser has been duly organized as a corporation under
            the laws of the State of Delaware with corporate power and authority
            to conduct its business as described in the Registration Statement
            and the Prospectus.

                  (2) The Adviser is duly registered as an investment adviser
            under the Advisers Act and is not prohibited by the Advisers Act or
            the 1940 Act or the rules and regulations under such Acts from
            acting under the Advisory Agreement for the Fund as contemplated by
            the Prospectus.

                  (3) This Agreement has been duly authorized, executed and
            delivered by the Adviser; the Advisory Agreement is in full force
            and effect and constitutes a valid and binding obligation of the
            Adviser, enforceable in accordance with its terms, subject, as to
            enforcement, to bankruptcy, insolvency, reorganization or other laws
            relating to or affecting creditors' rights and to general equity
            principles; and to the best of his knowledge and information,
            neither the execution and delivery of this Agreement or the Advisory
            Agreement nor the performance by the Adviser of its obligations
            hereunder or thereunder will conflict with, or result in a breach
            of, any of the terms and provisions of, or constitute, with or
            without giving notice or lapse of time or both, a default under, any
            agreement or instrument to which it is a party or by which the
            Adviser is bound, or any law, order, rule or regulation applicable
            to the Adviser of any jurisdiction, court, Federal or state
            regulatory body, administrative agency or the governmental body,
            stock exchange or securities association have jurisdiction over the
            Adviser or its respective properties or operations.

                  (4) To the best of his knowledge and information, the
            description of the Adviser in the Registration Statement and the
            Prospectus does not contain any untrue statement of a material fact
            or omit to state any material fact required to be stated therein or
            necessary to make the statements therein not misleading.

            (iii) In giving their opinion required by subsection (b)(i) of this
      Section, Brown & Wood shall additionally state that nothing has come to
      their attention that would lead them to believe that the Registration
      Statement (excluding the financial statements and financial schedules
      included therein, as to which such counsel need express no belief), at the
      time it became effective or at the Representation Date, contained an
      untrue statement of a material fact or omitted to state a material fact
      required to be stated therein or necessary to make the statements therein
      not misleading or that the Prospectus (except for the financial statements
      and financial schedules included therein as to which such counsel need
      express no belief), at the Representation Date (unless the term
      "Prospectus" refers to a prospectus which has been provided to the
      Underwriter by the Fund for use in connection with the offering of the
      Shares which differs from the Prospectus on file at the Commission at the
      time the Registration Statement becomes effective, in which case at the
      time it is first provided to the Underwriter for such use) or at Closing
      Time, included an untrue statement of a material fact or omitted to state
      a material fact necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading. In
      giving their opinion, Brown & Wood may rely, as to all matters governed by
      the law of the State of Maryland, upon the opinion of Venable, Baetjer and
      Howard and Brown & Wood may rely, as to matters of fact upon certificates
      and written


                                       12
<PAGE>

      statements of officers and employees of and accountants of the Fund and
      the Adviser and of public officials.

      (c) At Closing Time (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the 1933 Act, the 1940 Act and the Rules and Regulations and in
all material respects shall conform to the requirements of the 1933 Act, the
1940 Act and the Rules and Regulations and the Prospectus shall not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein in the light of the circumstances under which
they were made, not misleading and no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Fund or the Adviser,
threatened against the Fund or the Adviser which would be required to be set
forth in the Prospectus other than as set forth therein, (ii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Fund or in its earnings, business
affairs or business prospects, whether or not arising in the ordinary course of
business, from that set forth in the Registration Statement and Prospectus,
(iii) the Adviser shall have the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Registration Statement and the Prospectus, (iv) no proceedings shall be pending
or, to the knowledge of the Fund or the Adviser, threatened against the Fund or
the Adviser before or by any Federal, state or other commission, board or
administrative agency wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business, property, financial condition or
income of either the Fund or the Adviser other than as set forth in the
Registration Statement and the Prospectus and (v) Moody's Investors Service,
Inc. ("Moody's") and Standard & Poor's corporation ("S&P") shall have confirmed
that the Shares have been rated "aaa" and AAA respectively, by such agencies;
and the Underwriter shall have received, at Closing Time, a certificate of the
President or Treasurer of the Fund and of the President or a Vice President of
the Adviser dated as of Closing Time, evidencing compliance with the appropriate
provisions of this subsection (c), together with true and correct copies of
letters from Moody's and S&P confirming their rating.

      (d) At Closing Time, the Underwriter shall have received certificates,
dated as of Closing Time, (i) of the President or Treasurer of the Fund to the
effect that the representations and warranties of the Fund contained in Section
1(a) are true and correct with the same force and effect as though expressly
made at and as of Closing Time and (ii) of the President or a Vice President of
the Adviser contained in Sections 1(a) and (b) are true and correct with the
same force and effect as though expressly made at and as of Closing Time.

      (e) At the time of execution of this Agreement, the Underwriters shall
have received from Deloitte & Touche a letter, dated the date hereof, in form
and substance satisfactory to the Underwriter, to the effect that:

            (i) they are independent accountants with respects to the Fund
      within the meaning of the 1933 Act and the Rules and Regulations;

            (ii) in their opinion, the statement of assets and liabilities
      examined by them and included in the Registration Statement complies as to
      form in all material respects with the applicable accounting requirements
      of the 1933 Act and 1940 Act and the Rules and Regulations;


                                       13
<PAGE>

            (iii) they have performed specified procedures, not constituting an
      audit, including a reading of the latest available interim financial
      statements of the Fund, a reading of the minute books of the Fund,
      inquiries of officials of the Fund responsible for financial accounting
      matters and such other inquiries and procedures as may be specified in
      such letter, and on the basis of such inquiries and procedures nothing
      came to their attention that caused them to believe that (A) the unaudited
      financial statements as of December 3, 1991 and for the period from
      November 29, 1991 to December 3, 1991 included in the Registration
      Statement do not comply as to form in all material respects with the
      applicable accounting requirements of the 1933 Act and the 1933 Act
      Regulations applicable to unaudited interim financial statements included
      in registration statements or are not in conformity with generally
      accepted accounting principles applied on a basis substantially consistent
      with that of the audited financed statements included in the Registration
      Statement and (B) at the date of the latest available financial statements
      read by such accountants, or at a subsequent specified date not more than
      five days prior to the date of this Agreement, there was any change in the
      capital stock or net assets of the Fund as compared with amounts shown on
      the statement of net assets included in the Prospectus; and

            (iv) in addition to the procedures referred to in clause (iii)
      above, they have performed other specified procedures, not constituting an
      audit, with respect to certain amounts, percentages, numerical data,
      financial information and financial statements appearing in the
      Registration Statement, which have previously been specified by you and
      which shall be specified in such letter, and have compared certain of such
      items with, and have found such items to be in agreement with, the
      accounting and financial records of the Fund.

      (f) At Closing Time, the Underwriter shall have received from Deloitte &
Touche a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (e) of this
Section, except that the "specified date" referred to shall be a date not more
than five days prior to Closing Time.

      (g) At Closing Time, counsel for the Underwriter shall have been furnished
with such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Shares as herein
contemplated and to pass upon related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Fund and
the Adviser in connection with the organization and registration of the Fund
under the 1940 Act and the issuance and sale of the Shares as herein
contemplated shall be satisfactory in form and substance to the Underwriter and
counsel for the Underwriter.

      If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriter by notice to the Fund at any time at or prior to Closing Time, and
such termination shall be without liability of any party to any other party
except as provided in Section 5.


                                       14
<PAGE>

      SECTION 7. Indemnification. (a) The Fund and the Adviser, jointly and
severally, agree to indemnify and hold harmless the Underwriter and each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
1933 Act as follows:

            (i) against any and all loss, liability, claim, damage and expense
      whatsoever, as incurred, arising out of any untrue statement or alleged
      untrue statement of a material fact contained in the Registration
      Statement (or any amendment thereto), including the information deemed to
      be part of the Registration Statement pursuant to Rule 430A of the Rules
      and Regulations, if applicable, or the omission or alleged omission
      therefrom of a material fact required to be stated therein or necessary to
      make the statements therein not misleading or arising out of any untrue
      statement or alleged untrue statement of a material fact contained in any
      preliminary prospectus or the Prospectus (or any amendment or supplement
      thereto) or the omission or alleged omission therefrom of a material fact
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading;

            (ii) against any and all loss, liability claim, damage and expense
      whatsoever as incurred to the extent of the aggregate amount paid in
      settlement of any litigation, or investigation or proceeding by any
      governmental agency or body, commenced or threatened or of any claim
      whatsoever based upon any such untrue statement or omission, or any such
      alleged untrue statement or omission, if such settlement is effected with
      the written consent of the Fund; and

            (iii) against any and all expense whatsoever (including the fees and
      disbursements of counsel chosen by the Underwriter) reasonably incurred in
      investigating, preparing or defending against any litigation or
      investigation or proceeding by any governmental agency or body, commenced
      or threatened, or any claim whatsoever based upon any such untrue
      statement or omission, to the extent such alleged untrue statement or
      omission, to the extent that any such expense is not paid under (i) or
      (ii) above;

provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Fund by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).

      (b) The Underwriter severally agrees to indemnify and hold harmless the
Fund and the Adviser, their respective directors, each of the Fund's officers
who signed the Registration Statement, and each person, if any, who controls the
Fund or the Adviser within the meaning of Section 15 of the 1933 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment or supplement
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Fund by the Underwriter expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).


                                       15
<PAGE>

      (c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of such action. In no event shall
the indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.

      SECTION 8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 7 is for any reason held to be enforceable by the indemnified parties
although applicable in accordance with its terms, the Fund and the Underwriter
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement as incurred by
the Fund and the Underwriter, as incurred, in such proportions that the
Underwriter is responsible for that portion represented by the percentage that
the underwriting compensation payable pursuant to Section 2 hereof bears to the
initial public offering price appearing on the cover page of the Prospectus and
the Fund is responsible for the balance; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding provisions of this
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay in respect
of such losses, liabilities, claims, damages and expenses. For purposes of this
Section, each person, if any, who controls the Underwriter within the meaning of
Section 15, of the 1933 Act shall have the same rights to contribution as the
Underwriter, and each director of the Fund, each officer of the Fund who signed
the Registration Statement, and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Underwriter, and each director of the Fund, each officer of
the Fund who signed the Registration Statement, and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Fund.

      SECTION 9. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement and
the Pricing Agreement, or contained in certificates of officers of the Fund or
the Adviser submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling person, or by or on behalf of the Fund or the Adviser
and shall survive delivery of the Shares to the Underwriter.

      SECTION 10. Termination of Agreement. (a) The Underwriter, by notice to
the Fund, may terminate this Agreement at any time or prior to Closing Time (i)
if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Registration Statement, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Fund or the Adviser,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation thereof or other calamity or
crisis the effect of which is such as to make it, in the Underwriter's


                                       16
<PAGE>

judgment, impracticable to market the Shares or enforce contracts for the sale
of the Shares, or (iii) if trading in the Common Shares has been suspended by
the Commission or if trading generally on either the American Stock Exchange or
the New York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by Federal
or New York authorities.

      (b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 5.

      SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of written telecommunication. Notices to the
Underwriter shall be directed to Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated at Merrill Lynch World Headquarters, North Tower,
World Financial Center, New York, New York 10281-1201, Attention: Theresa Lang,
Director; notices to the Fund or the Adviser shall be directed to each of them
at 800 Scudders Mill Road, Plainsboro, New Jersey, 08536, Attention: Arthur
Zeikel.

      SECTION 12. Parties. This Agreement and the Pricing Agreement shall inure
to the benefit of and be binding upon the Underwriter, the Fund, the Adviser and
their respective successors. Nothing expressed or mentioned in this Agreement or
the Pricing agreement is intended or shall be construed to give any person, firm
or corporation, other than the parties hereto and their respective successors
and the controlling persons and officers and directors referred to in Sections 7
and 8 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and the Pricing Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and thereto and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Shares from the Underwriter shall be deemed to be a successor by reason merely
of such purchase.

      SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by the laws of the State of New York applicable to
agreements made and to be performed in said State. Specified times of day refer
to New York City time.


                                       17
<PAGE>

      If the foregoing is in accordance with your understanding of our
Agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriter, the Fund and the Adviser in accordance with its terms.

                                     Very truly yours,

                                     MUNIYIELD FUND, INC.

                                     By:________________________________________
                                                  Authorized Officer

                                     FUND ASSET MANAGEMENT, INC.

                                     By:________________________________________
                                                  Authorized Officer

CONFIRMED AND ACCEPTED,
  as of the date first above written:

By: Merrill Lynch, Pierce, Fenner & Smith
                         Incorporated

By: ______________________________________
               Vice President
             Investment Banking


                                       18
<PAGE>

                                                                       EXHIBIT A

                                  $250,000,000

                              MUNIYIELD FUND, INC.
                            (a Maryland corporation)

                    AUCTION MARKET PREFERRED STOCK [AMPS(R)]

                    900 Shares Series A   900 Shares Series C
                    900 Shares Series B   900 Shares Series D
                              1,400 Shares Series E

                    Liquidation Preference $50,000 Per Share

                               PURCHASE AGREEMENT

                                                               December 18, 1991

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
           Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1201

Dear Sirs:

      Reference is made to the Purchase Agreement, dated December 18, 1991 (the
"Purchase Agreement"), relating to the purchase by Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") of 900 shares of
auction market preferred stock, Series A, of MuniYield Fund, Inc. (the "Fund")
(the "Series A AMPS"), 900 shares of auction market preferred stock, Series B,
of the Fund (the "Series B AMPS"), 900 shares of auction market preferred stock,
Series C, of the Fund (the "Series C AMPS"), 900 shares of auction market
preferred stock, Series D, of the Fund (the "Series D AMPS") and 1,400 shares of
auction market preferred stock, Series E (the "Series E AMPS") of the Fund, all
with a par value of $.10 per share and a liquidation preference of $50,000 per
share plus an amount equal to accumulated but unpaid dividends (whether or not
earned or declared). The Series A AMPS, Series B AMPS, Series C AMPS, Series D
AMPS and Series E AMPS are collectively referred to as the "Shares."

- ----------
(R) Registered trademark of Merrill Lynch & Co., Inc.
<PAGE>

      Pursuant to Section 2 of the Purchase Agreement, the Fund agrees with the
Underwriter as follows:

            1. The initial public offering price per share for the Shares,
      determined as provided in said Section 2, shall be $50,000.

            2. The purchase price per share for the Shares to be paid by the
      Underwriter shall be $49,125, being an amount equal to the initial public
      offering price set forth above less $875 per share.

            3. The dividend rate for the Series A AMPS for the Initial Dividend
      Period ending January 7, 1992 will be 5.000%, the dividend rate for the
      Series B AMPS for the Initial Dividend Period ending January 14, 1992 will
      be 4.900%, the dividend rate for the Series C AMPS for the Initial
      Dividend Period ending January 21, 1992 will be 4.900%, the dividend rate
      for the Series D AMPS for the Initial Dividend Period ending January 28,
      1992 will be 4.875% and the dividend rate for the Series E AMPS for the
      Initial Dividend Period ending January 7, 1992 will be 5.000%.


                                      A-2
<PAGE>

      If the foregoing is in accordance with your understanding of our
Agreement, please sign and return to us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriter, the Fund and the Adviser in accordance with its terms.

                                     Very truly yours,

                                     MUNIYIELD FUND, INC.

                                     By:________________________________________
                                                  Authorized Officer

CONFIRMED AND ACCEPTED,
  as of the date first above written:

By: Merrill Lynch, Pierce, Fenner & Smith
                         Incorporated

By: ______________________________________
               Vice President
             Investment Banking


                                      A-3


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-7.C
<SEQUENCE>9
<FILENAME>file008.txt
<DESCRIPTION>FORM OF BROKER-DEALER AGREEMENT
<TEXT>

                                                                    Exhibit 7(c)

[LOGO]

                               MERRILL LYNCH & CO.
               MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

                        MERRILL LYNCH WORLD HEADQUARTERS
                       NORTH TOWER WORLD FINANCIAL CENTER
                            NEW YORK, N.Y. 10281-1305

                            STANDARD DEALER AGREEMENT

Dear Sirs:

      In connection with public offerings of securities underwritten by us, or
by a group of underwriters (the "Underwriters") represented by us, you may be
offered the opportunity to purchase a portion of such securities, as principal,
at a discount from the offering price representing a selling concession or
reallowance granted as consideration for services rendered by you in the sale of
such securities. We request that you agree to the following terms and
provisions, and make the following representations, which, together with any
additional terms and provisions set forth in any wire or letter sent to you in
connection with a particular offering, will govern all such purchases of
securities and the reoffering thereof by you.

      Your subscription to, or purchase of, such securities will constitute your
reaffirmation of this Agreement.

      1. When we are acting as representative (the "Representative") of the
Underwriters in offering securities to you, it should be understood that all
offers are made subject to prior sale of the subject securities, when, as and if
such securities are delivered to and accepted by the Underwriters and subject to
the approval of legal matters by their counsel. In such cases, any order from
you for securities will be strictly subject to confirmation and we reserve the
right in our uncontrolled discretion to reject any order in whole or in part.
Upon release by us, you may reoffer such securities at the offering price fixed
by us. With our consent, you may allow a discount, not in excess of the
reallowance fixed by us, in selling such securities to other dealers, provided
that in doing so you comply with the Conduct Rules of the National Association
of Securities Dealers, Inc. (the "NASD"). Upon our request, you will advise us
of the identity of any dealer to whom you allow such a discount and any
Underwriter or dealer from whom you receive such a discount. After the
securities are released for sale to the public, we may vary the offering price
and other selling terms.

      2. You represent that you are a dealer actually engaged in the investment
banking or securities business and that you are either (i) a member in good
standing of the NASD or (ii) a dealer with its principal place of business
located outside the United States, its territories or possessions and not
registered under the Securities Exchange Act of 1934 (a "non-member foreign
dealer") or (iii) a bank not eligible for membership in the NASD. If you are a
non-member foreign dealer, you agree to make no sales of securities within the
United States, its
<PAGE>

territories or its possessions or to persons who are nationals thereof or
residents therein. Non-member foreign dealers and banks agree, in making any
sales, to comply with the NASD's interpretation with respect to free-riding and
withholding. In accepting a selling concession where we are acting as
Representative of the Underwriters, in accepting a reallowance from us whether
or not we are acting as such Representative, and in allowing a discount to any
other person, you agree to comply with the provisions of Rule 2740 of the
Conduct Rules of the NASD, and, in addition, if you are a non-member foreign
dealer or bank, you agree to comply, as though you were a member of the NASD,
with the provisions of Rules 2730 and 2750 of of such Conduct Rules and to
comply with Rule 2420 thereof as that Rule applies to a non-member foreign
dealer or bank. You represent that you are fully familiar with the above
provisions of the Conduct Rules of the NASD.

      3. If the securities have been registered under the Securities Act of 1933
(the "1933 Act"), in offering and selling such securities, you are not
authorized to give any information or make any representation not contained in
the prospectus relating thereto. You confirm that you are familiar with the
rules and policies of the Securities and Exchange Commission relating to the
distribution of preliminary and final prospectuses, and you agree that you will
comply therewith in any offering covered by this Agreement. If we are acting as
Representative of the Underwriters, we will make available to you, to the extent
made available to us by the issuer of the securities, such number of copies of
the prospectus or offering documents, for securities not registered under the
1933 Act, as you may reasonably request.

      4. If we are acting as Representative of the Underwriters of securities of
an issuer that is not required to file reports under the Securities Exchange Act
of 1934 (the "1934 Act"), you agree that you will not sell any of the securities
to any account over which you have discretionary authority.

      5. Payment for securities purchased by you is to be made at our office,
One Liberty Plaza, 165 Broadway, New York, N.Y. 10006 (or at such other place as
we may advise), at the offering price less the concession allowed to you, on
such date as we may advise, by certified or official bank check in New York
Clearing House funds (or such other funds as we may advise), payable to our
order, against delivery of the securities to be purchased by you. We shall have
authority to make appropriate arrangements for payment for and/or delivery
through the facility of The Depository Trust Company or any such other
depository or similar facility for the securities.

      6. In the event that, prior to the completion of the distribution of
securities covered by this Agreement, we purchase in the open market or
otherwise any securities delivered to you, if we are acting as Representative of
the Underwriters, you agree to repay to us for the accounts of the Underwriters
the amount of the concession allowed to you plus brokerage commissions and any
transfer taxes paid in connection with such purchase.

      7. At any time prior to the completion of the distribution of securities
covered by this Agreement you will, upon our request as Representative of the
Underwriters, report to us the amount of securities purchased by you which then
remains unsold and will, upon our request, sell to us for the account of one or
more of the Underwriters such amount of such unsold


                                       2
<PAGE>

securities as we may designate, at the offering price less an amount to be
determined by us not in excess of the concession allowed to you.

      8. If we are acting as Representative of the Underwriters, upon
application to us, we will inform you of the states and other jurisdictions of
the United States in which it is believed that the securities being offered are
qualified for sale under, or are exempt from the requirements of, their
respective securities laws, but we assume no responsibility with respect to your
right to sell securities in any jurisdiction. We shall have authority to file
with the Department of State of the State of New York a Further State Notice
with respect to the securities, if necessary.

      9. You agree that in connection with any offering of securities covered by
this Agreement you will comply with the applicable provisions of the 1933 Act
and the 1934 Act and the applicable rules and regulations of the Securities and
Exchange Commission thereunder, the applicable rules and regulations of the
NASD, and the applicable rules of any securities exchange having jurisdiction
over the offering.

      10. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to any offering covered by this
Agreement. We shall be under no liability to you except for our lack of good
faith and for obligations assumed by us in this Agreement, except that you do
not waive any rights that you may have under the 1933 Act or the rules and
regulations thereunder.

      11. Any notice from us shall be deemed to have been duly given if mailed
or transmitted by any standard form of written telecommunications to you at the
above address or at such other address as you shall specify to us in writing.

      12. With respect to any offering of securities covered by this Agreement,
the price restrictions contained in Paragraph 1 hereof and the provisions of
Paragraphs 6 and 7 hereof shall terminate as to such offering at the close of
business on the 45th day after the securities are released for sale or, as to
any or all such provisions, at such earlier time as we may advise. All other
provisions of this Agreement shall remain operative and in full force and effect
with respect to such offering.

      13. This Agreement shall be governed by the laws of the State of New York.


                                       3
<PAGE>

      Please confirm your agreement hereto by signing the enclosed duplicate
copy hereof in the place provided below and returning such signed duplicate copy
to us at World Headquarters, North Tower, World Financial Center, New York, N.Y.
10281-1305, Attention: Corporate Syndicate. Upon receipt thereof, this
instrument and such signed duplicate copy will evidence the agreement between
us.

                                          Very truly yours,

                                          MERRILL LYNCH, PIERCE, FENNER & SMITH
                                                      INCORPORATED

                                          By:___________________________________
                                          Name:

Confirmed and accepted as of the
     day of        , 19

_________________________________
         Name of Dealer

_________________________________
  Authorized Officer or Partner

(if not Officer or Partner, attach
copy of Instrument of Authorization)


                                       4


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-9
<SEQUENCE>10
<FILENAME>file009.txt
<DESCRIPTION>FORM OF CUSTODY AGREEMENT
<TEXT>

                                                                       Exhibit 9

                                CUSTODY AGREEMENT

      Agreement made as of this 11th day of November,  1991,  between  MUNIYIELD
FUND, INC., a Massachusetts business trust organized and existing under the laws
of the Commonwealth of  Massachusetts,  having its principal office and place of
business at 800 Scudders Mill Road,  Plainsboro,  New Jersey 08536  (hereinafter
called the "Fund"), and THE BANK OF NEW YORK, a New York corporation  authorized
to do a banking  business,  having its principal office and place of business at
48 Wall Street, New York, New York 10286 (hereinafter called the "Custodian").

                              W I T N E S S E T H :

that for and in consideration of the mutual promises  hereinafter set forth, the
Fund and the Custodian agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

      Whenever used in this Agreement,  the following words and phrases,  unless
the context otherwise requires, shall have the following meanings:

      1. "Authorized  Person" shall be deemed to include any person,  whether or
not such  person is an Officer  or employ of the Fund,  duly  authorized  by the
Board of Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate annexed hereto as Appendix A
or such other Certificate as may be received by the Custodian from time to time.

      2. "Book-Entry System" shall mean the Federal Reserve/Treasury  book-entry
system for  United  States and  federal  agency  securities,  its  successor  or
successors and its nominee or nominees.

      3. "Call  Option"  shall mean an exchange  traded  option with  respect to
Securities  other than Stock  Index  Options,  Futures  Contracts,  and  Futures
Contract Options  entitling the holder,  upon timely exercise and payment of the
exercise  price, as specified  therein,  to purchase from the writer thereof the
specified underlying Securities.

      4. "Certificate" shall mean any notice,  instruction,  or other instrument
in  writing,  authorized  or  required  by this  Agreement  to be  given  to the
Custodian  which is actually  received by the  Custodian and signed on behalf of
the Fund by any two Officers.

      5.  "Clearing  Member"  shall mean a registered  broker-dealer  which is a
clearing member under the rules of O.C.C. and a member of a national  securities
exchange  qualified  to act as a custodian  for an  investment  company,  or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.

      6.  "Collateral  Account"  shall mean a segregated  account so denominated
which is  specifically  allocated  to a Series and pledged to the  Custodian  as
security for, and in consideration  of, the Custodian's  issuance of (a) any Put
Option guarantee letter or similar
<PAGE>

document  described  in  paragraph  8 of  Article V herein,  or (b) any  receipt
described in Article V or VIII herein.

      7. "Covered Call Option"  shall mean an exchange  traded option  entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding  Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.

      8.  "Depository"  shall  mean The  Depository  Trust  Company  ("DTC"),  a
clearing  agency  registered  with the Securities and Exchange  Commission,  its
successor or successors and its nominee or nominees. The term "Depository" shall
further  mean and include any other  person  authorized  to act as a  depository
under the  Investment  Company Act of 1940,  its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Trustees  specifically  approving deposits therein by the
Custodian.

      9. "Financial  Futures  Contract" shall mean the firm commitment to buy or
sell fixed income securities including, without limitation, U.S. Treasury Bills,
U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit,
and Eurodollar  certificates  of deposit,  during a specified month at an agreed
upon price.

      10.  "Futures  Contract"  shall mean a Financial  Futures  Contract and/or
Stock Index Futures Contracts.

      11.  "Futures  Contract  Option"  shall mean an option  with  respect to a
Futures Contract.

      12.  "Margin  Account"  shall mean a  segregated  account in the name of a
broker,  dealer,  futures commission  merchant,  or a Clearing Member, or in the
name of the  Fund  for the  benefit  of a  broker,  dealer,  futures  commission
merchant,  or Clearing  Member,  or otherwise,  in accordance  with an agreement
between  the Fund,  the  Custodian  and a  broker,  dealer,  futures  commission
merchant  or a Clearing  Member (a "Margin  Account  Agreement"),  separate  and
distinct from the custody account,  in which certain  Securities and/or money of
the Fund shall be deposited and withdrawn  from time to time in connection  with
such  transactions as the Fund may from time to time determine.  Securities held
in the  Book-Entry  System  or the  Depository  shall  be  deemed  to have  been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.

      13.  "Money  Market   Security"  shall  be  deemed  to  include,   without
limitation,  certain Reverse Repurchase  Agreements,  debt obligations issued or
guaranteed as to interest and  principal by the  government of the United States
or agencies or instrumentalities  thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper,  certificates of deposit and bankers' acceptances,  repurchase agreements
with respect to the same and bank time deposits,  where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.

      14.  "O.C.C."  shall mean the  Options  Clearing  Corporation,  a clearing
agency registered under Section 17A of the Securities  Exchange Act of 1934, its
successor or successors, and its nominee or nominees.


                                       2
<PAGE>

      15.  "Officers"  shall  be  deemed  to  include  the  President,  any Vice
President,  the  Secretary,  the  Clerk,  the  Treasurer,  the  Controller,  any
Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any other
person or  persons,  whether or not any such  other  person is an officer of the
Fund,  duly  authorized  by the Board of  Trustees  of the Fund to  execute  any
Certificate,  instruction,  notice or other instrument on behalf of the Fund and
listed in the Certificate annexed hereto as Appendix B or such other Certificate
as may be received by the Custodian from time to time.

      16.  "Option" shall mean a Call Option,  Covered Call Option,  Stock Index
Option and/or a Put Option.

      17. "Oral Instructions"  shall mean verbal instructions  actually received
by the Custodian from an Authorized Person or from a person reasonably  believed
by the Custodian to be an Authorized Person.

      18. "Put  Option"  shall mean an exchange  traded  option with  respect to
Securities  other than Stock  Index  Options,  Futures  Contracts,  and  Futures
Contract  options  entitling the holder,  upon timely exercise and tender of the
specified underlying  Securities,  to sell such Securities to the writer thereof
for the exercise price.

      19. "Reverse  Repurchase  Agreement"  shall mean an agreement  pursuant to
which the Fund sells  Securities and agrees to repurchase  such  Securities at a
described or specified date and price.

      20.  "Security"  shall be deemed to  include,  without  limitation,  Money
Market Securities,  Call Options, Put Options,  Stock Index Options, Stock Index
Futures  Contracts,  Stock Index Futures  Contract  Options,  Financial  Futures
Contracts,  Financial Futures Contract Options,  Reverse Repurchase  Agreements,
common  stocks and other  securities  having  characteristics  similar to common
stocks,  preferred  stocks,  debt  obligations  issued  by  state  or  municipal
governments and by public authorities,  (including,  without limitation, general
obligation  bonds,  revenue bonds,  industrial bonds and industrial  development
bonds),  bonds,  debentures,  notes,  mortgages  or other  obligations,  and any
certificates,  receipts,  warrants or other instruments  representing  rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.

      21.  "Senior  Security  Account"  shall  mean an  account  maintained  and
specifically  allocated  to a Series  under  the  terms of this  Agreement  as a
segregated account,  by recordation or otherwise,  within the custody account in
which certain Securities and/or other assets of the Fund specifically  allocated
to such Series shall be deposited and withdrawn  from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.

      22.  "Series"  shall mean the various  portfolios,  if any, of the Fund as
described  from time to time in the current  and  effective  prospectus  for the
Fund.

      23.  "Shares"  shall mean the shares of  beneficial  interest of the Fund,
each of which is, in the case of a Fund having Series, allocated to a particular
Series.

      24.  "Stock  Index  Futures  Contract"  shall mean a  bilateral  agreement
pursuant  to which the  parties  agree to take or make  delivery of an amount of
cash equal to a specified dollar


                                       3
<PAGE>

amount times the difference between the value of a particular stock index at the
close  of the last  business  day of the  contract  and the  price at which  the
futures contract is originally struck.

      25. "Stock Index Option"  shall mean an exchange  traded option  entitling
the holder,  upon timely  exercise,  to receive an amount of cash  determined by
reference  to the  difference  between the  exercise  price and the value of the
index on the date of exercise.

      26.  "Written  Instructions"  shall mean written  communications  actually
received by the Custodian from an Authorized  Person or from a person reasonably
believed by the Custodian to be an Authorized  Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes or
otherwise  with a reasonable  degree of certainty  the identity of the sender of
such communication.

                                   ARTICLE II

                            APPOINTMENT OF CUSTODIAN

      1. The Fund hereby  constitutes and appoints the Custodian as custodian of
the  Securities  and moneys at any time  owned by the Fund  during the period of
this Agreement.

      2. The Custodian  hereby accepts  appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.

                                  ARTICLE III

                         CUSTODY OF CASH AND SECURITIES

      1.  Except as  otherwise  provided in  paragraph 7 of this  Article and in
Article  VIII,  the Fund will deliver or cause to be delivered to the  Custodian
all Securities and all moneys owned by it, at any time during the period of this
Agreement,  and shall  specify  with  respect to such  Securities  and money the
Series  to which  the same  are  specifically  allocated.  The  Custodian  shall
segregate,  keep and maintain the assets of the Series  separate and apart.  The
Custodian  will not be  responsible  for any  Securities and moneys not actually
received by it. The  Custodian  will be entitled to reverse any credits  made on
the Funds behalf where such credits have been previously made and moneys are not
finally  collected.  The  Fund  shall  deliver  to  the  Custodian  a  certified
resolution  of the Board of Trustees of the Fund,  substantially  in the form of
Exhibit A hereto,  approving,  authorizing  and  instructing  the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System all Securities
eligible  for deposit  therein,  regardless  of the Series to which the same are
specifically  allocated  and to  utilize  the  Book-Entry  System to the  extent
possible  in  connection  with its  performance  hereunder,  including,  without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities  collateral.  Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the  Custodian a certified  resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit B hereto,  approving,
authorizing  and  instructing  the  Custodian on a continuous  and ongoing basis
until  instructed  to the  contrary by a  Certificate  actually  received by the
Custodian to deposit in the Depository all Securities  specifically allocated to
such Series eligible for deposit  therein,  and to utilize the Depository to the
extent  possible  with  respect  to  such  Securities  in  connection  with  its
performance  hereunder,   including,  without  limitation,  in  connection  with
settlements of


                                       4
<PAGE>

purchases and sales of  Securities,  loans of  Securities,  and  deliveries  and
returns of Securities collateral.  Securities and moneys deposited in either the
Book-Entry  System or the  Depository  will be  represented  in  accounts  which
include only assets held by the  Custodian  for  customers,  including,  but not
limited  to,   accounts  in  which  the   Custodian   acts  in  a  fiduciary  or
representative  capacity and will be  specifically  allocated on the Custodian's
books  to  the  separate  account  for  the  applicable  Series.  Prior  to  the
Custodian's  accepting,  utilizing  and acting with  respect to Clearing  Member
confirmations  for Options and  transactions in options for a Series as provided
in this Agreement,  the Custodian shall have received a certified  resolution of
the Fund's  Board of  Trustees,  substantially  in the form of Exhibit C hereto,
approving,  authorizing  and  instructing  the  Custodian  on a  continuous  and
on-going  basis,  until  instructed  to the contrary by a  Certificate  actually
received by the Custodian,  to accept,  utilize and act in accordance  with such
confirmations as provided in this Agreement with respect to such Series.

      2. The Custodian shall establish and maintain  separate  accounts,  in the
name of each Series,  and shall  credit to the separate  account for each Series
all  moneys  received  by it for the  account  of the Fund with  respect to such
Series.  Money credited to a separate account for a Series shall be disbursed by
the Custodian only:

            (a) As hereinafter provided;

            (b) Pursuant to  Certificates  setting forth the name and address of
the person to whom the  payment is to be made,  the  Series  account  from which
payment is to be made and the purpose for which payment is to be made; or

            (c) In payment of the fees and in  reimbursement of the expenses and
liabilities of the Custodian attributable to such Series.

      3. Promptly  after the close of business on each day, the Custodian  shall
furnish the Fund with confirmations and a summary, on a per Series basis, of all
transfers to or from the account of the Fund for a Series,  either  hereunder or
with any  co-custodian  or  sub-custodian  appointed  in  accordance  with  this
Agreement  during said day. Where  Securities are  transferred to the account of
the Fund for a Series,  the  Custodian  shall also by  book-entry  or  otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities  registered in the name of the Custodian (or its nominee) or shown
on  the  Custodian's  account  on the  books  of the  Book-Entry  System  or the
Depository.  At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement, on a per series basis, of the Securities and
moneys held by the Custodian for the Fund.

      4.  Except as  otherwise  provided in  paragraph 7 of this  Article and in
Article VIII, all Securities held by the Custodian  hereunder,  which are issued
or  issuable  only in bearer  form,  except such  Securities  as are held in the
Book-Entry  System,  shall be held by the  Custodian  in that  form;  all  other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed  registered  nominee of the Custodian as the Custodian may
from  time to time  determine,  or in the name of the  Book-Entry  System or the
Depository or their successor or successors,  or their nominee or nominees.  The
Fund agrees to furnish to the Custodian  appropriate  instruments  to enable the
Custodian to hold or deliver in proper form for transfer,  or to register in the
name of its registered  nominee or in the name of the  Book-Entry  System or the
Depository any Securities which it may hold hereunder and which may from time to
time be  registered in the name of the Fund.  The Custodian  shall hold all such
Securities  specifically


                                       5
<PAGE>

allocated  to a Series  which  are not held in the  Book-Entry  System or in the
Depository  in a  separate  account  in  the  name  of  such  Series  physically
segregated at all times from those of any other person or persons.

      5. Except as otherwise  provided in this  Agreement  and unless  otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry  System or the  Depository  with respect to Securities
held hereunder and therein deposited,  shall with respect to all Securities held
for the Fund hereunder in accordance with preceding paragraph 4:

            (a) Collect all income due or payable;

            (b) Present for  payment  and collect the amount  payable  upon such
Securities  which are called,  but only if either (i) the  Custodian  receives a
written  notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended at
any time by the Custodian without the prior notification or consent of the Fund;

            (c) Present for  payment  and  collect the amount  payable  upon all
Securities which mature;

            (d)   Surrender   Securities  in  temporary   form  for   definitive
Securities;

            (e)  Execute,   as   custodian,   any  necessary   declarations   or
certificates  of  ownership  under the  Federal  Income  Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and

            (f)  Hold  directly,   or  through  the  Book-Entry  System  or  the
Depository with respect to Securities  therein  deposited,  for the account of a
Series,  all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder.

      6.  Upon  receipt  of a  Certificate  and not  otherwise,  the  Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:

            (a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the  authority  of the  Fund as owner of any  Securities  held by the  Custodian
hereunder for the Series specified in such Certificate may be exercised;

            (b) Deliver any Securities  held by the Custodian  hereunder for the
Series  specified in such  Certificate in exchange for other  Securities or cash
issued or paid in connection with the liquidation, reorganization,  refinancing,
merger, consolidation or recapitalization of any corporation, or the exercise of
any conversion privilege and receive and hold hereunder  specifically  allocated
to such Series any cash or other Securities received in exchange;

            (c) Deliver any Securities  held by the Custodian  hereunder for the
Series specified in such Certificate to any protective committee, reorganization
committee or other person in connection  with the  reorganization,  refinancing,
merger,  consolidation,  recapitalization  or sale of assets of any corporation,
and  receive  and hold  hereunder  specifically  allocated  to such


                                       6
<PAGE>

Series such  certificates of deposit,  interim receipts or other  instruments or
documents as may be issued to it to evidence such delivery;

            (d) Make such  transfers  or  exchanges  of the assets of the Series
specified in such  Certificate,  and take such other steps as shall be stated in
such  Certificate to be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or recapitalization of the
Fund; and

            (e)  Present  for  payment  and  collect  the  amount  payable  upon
Securities  not described in preceding  paragraph 5(b) of this Article which may
be called as specified in the Certificate.

      7. Notwithstanding any provision elsewhere contained herein, the Custodian
shall not be required to obtain  possession  of any  instrument  or  certificate
representing any Futures  Contract,  any Option,  or any Futures Contract Option
until after it shall have determined,  or shall have received a Certificate from
the Fund stating,  that any such instruments or certificates are available.  The
Fund  shall  deliver  to the  Custodian  such a  Certificate  no later  than the
business day preceding the  availability  of any such instrument or certificate.
Prior to such availability, the Custodian shall comply with Section 17(f) of the
Investment  Company Act of 1940, as amended,  in  connection  with the purchase,
sale,  settlement,  closing  out or writing of Futures  Contracts,  Options,  or
Futures  Contract  Options  by  making  payments  or  deliveries   specified  in
Certificates  received by the  Custodian in connection  with any such  purchase,
sale, writing, settlement or closing out upon its receipt from a broker, dealer,
or  futures  commission  merchant  of a  statement  or  confirmation  reasonably
believed  by the  Custodian  to be in the  form  customarily  used  by  brokers,
dealers, or future commission  merchants with respect to such Futures Contracts,
Options,  or Futures Contract Options,  as the case may be, confirming that such
Security  is held by such  broker,  dealer or futures  commission  merchant,  in
book-entry  form or  otherwise,  in the name of the Custodian (or any nominee of
the   Custodian)   as  custodian   for  the  Fund,   provided,   however,   that
notwithstanding the foregoing, payments to or deliveries from the Margin Account
and payments with respect to Securities to which a Margin Account relates, shall
be made in  accordance  with the  terms and  conditions  of the  Margin  Account
Agreement.  Whenever any such  instruments or  certificates  are available,  the
Custodian  shall,  notwithstanding  any  provision  in  this  Agreement  to  the
contrary,  make payment for any Futures  Contract,  Option,  or Futures Contract
Option  for which such  instruments  or such  certificates  are  available  only
against the delivery to the Custodian of such  instrument  or such  certificate,
and deliver any Futures  Contract,  Option or Futures  Contract Option for which
such instruments or such  certificates are available only against receipt by the
Custodian of payment therefor.  Any such instrument or certificate  delivered to
the Custodian shall be held by the Custodian  hereunder in accordance  with, and
subject to, the provisions of this Agreement.

                                   ARTICLE IV

                  PURCHASE AND SALE OF INVESTMENTS OF THE FUND
                    OTHER THAN OPTIONS, FUTURES CONTRACTS AND
                            FUTURES CONTRACT OPTIONS

      1. Promptly  after each  purchase of Securities by the Fund,  other than a
purchase of an Option, a Futures  Contract,  or a Futures  Contract Option,  the
Fund shall  deliver  to the  Custodian  (i) with  respect  to each  purchase  of
Securities which are not Money Market Securities,  a Certificate,  and (ii) with
respect  to each  purchase  of Money  Market  Securities,


                                       7
<PAGE>

a  Certificate,  Oral  Instructions  or Written  Instructions,  specifying  with
respect to each such purchase: (a) the Series to which such Securities are to be
specifically  allocated;  (b)  the  name of the  issuer  and  the  title  of the
Securities;  (c) the  number of shares or the  principal  amount  purchased  and
accrued  interest,  if any;  (d) the date of purchase  and  settlement;  (e) the
purchase price per unit;  (f) the total amount  payable upon such purchase;  (g)
the name of the person from whom or the broker  through  whom the  purchase  was
made,  and the  name of the  clearing  broker,  if any;  and (h) the name of the
broker to whom  payment is to be made.  The  Custodian  shall,  upon  receipt of
Securities  purchased  by or for the Fund,  pay to the broker  specified  in the
Certificate  out of the moneys  held for the  account  of such  Series the total
amount payable upon such purchase,  provided that the same conforms to the total
amount payable as set forth in such  Certificate,  Oral  Instructions or Written
Instructions.

      2. Promptly  after each sale of Securities by the Fund,  other than a sale
of any  Option,  Futures  Contract,  Futures  Contract  Option,  or any  Reverse
Repurchase  Agreement,  the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market  Securities,  a  Certificate,
Oral Instructions or Written Instructions,  specifying with respect to each such
sale: (a) the Series to which such Securities were specifically  allocated;  (b)
the name of the issuer and the title of the  Security;  (c) the number of shares
or principal  amount sold, and accrued  interest,  if any; (d) the date of sale;
(e) the sale price per unit;  (f) the total amount payable to the Fund upon such
sale; (g) the name of the broker through whom or the person to whom the sale was
made,  and the  name of the  clearing  broker,  if any;  and (h) the name of the
broker to whom the Securities are to be delivered.  The Custodian  shall deliver
the Securities  specifically allocated to such Series to the broker specified in
the Certificate  against payment upon receipt of the total amount payable to the
Fund upon such sale, provided that the same conforms to the total amount payable
as set forth in such Certificate, Oral Instructions or Written Instructions.

                                   ARTICLE V

                                     OPTIONS

      1. Promptly  after the purchase of any Option by the Fund,  the Fund shall
deliver to the  Custodian a Certificate  specifying  with respect to each Option
purchased:  (a) the Series to which such Option is specifically  allocated;  (b)
the type of Option  (put or call);  (c) the name of the issuer and the title and
number of shares subject to such Option or, in the case of a Stock Index Option,
the stock  index to which such  Option  relates  and the  number of Stock  Index
Options  purchased;  (d) the expiration  date; (e) the exercise  price;  (f) the
dates of purchase and  settlement;  (g) the total amount  payable by the Fund in
connection with such purchase;  (h) the name of the Clearing Member through whom
such Option was purchased;  and (i) the name of the broker to whom payment is to
be made. The Custodian shall pay, upon receipt of a Clearing Member's  statement
confirming  the  purchase of such Option  held by such  Clearing  Member for the
account of the Custodian (or any duly  appointed and  registered  nominee of the
Custodian) as custodian for the Fund,  out of moneys held for the account of the
Series to which such Option is to be  specifically  allocated,  the total amount
payable upon such purchase to the Clearing  Member through whom the purchase was
made,  provided that the same conforms to the total amount  payable as set forth
in such Certificate.


                                       8
<PAGE>

      2. Promptly after the sale of any Option purchased by the Fund pursuant to
paragraph  1 hereof,  the Fund shall  deliver  to the  Custodian  a  Certificate
specifying  with respect to each such sale:  (a) the Series to which such Option
was specifically  allocated;  (b) the type of Option (put or call); (c) the name
of the issuer and the title and number of shares  subject to such  Option or, in
the case of a Stock Index Option,  the stock index to which such Option  relates
and the number of Stock Index Options sold;  (d) the date of sale;  (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale;  and (h) the name of the  Clearing  Member  through whom the sale was
made.  The  Custodian  shall  consent to the  delivery of the option sold by the
Clearing  Member  which  previously  supplied  the  confirmation   described  in
preceding  paragraph  1 of this  Article  with  respect to such  option  against
payment to the Custodian of the total amount payable to the Fund,  provided that
the same conforms to the total amount payable as set forth in such Certificate.

      3. Promptly after the exercise by the Fund of any Call Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a  Certificate  specifying  with respect to such Call Option:  (a) the Series to
which such Call Option was  specifically  allocated;  (b) the name of the issuer
and the  title  and  number  of  shares  subject  to the  Call  Option;  (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share;  (f) the total amount to be paid by the Fund upon such exercise;  and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall,  upon receipt of the Securities  underlying the Call Option
which was exercised, pay out of the moneys held for the account of the Series to
which such Call Option was  specifically  allocated the total amount  payable to
the Clearing  Member through whom the Call Option was  exercised,  provided that
the same conforms to the total amount payable as set forth in such Certificate.

      4. Promptly after the exercise by the Fund of any Put Option  purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a  Certificate  specifying  with  respect to such Put Option:  (a) the Series to
which such Put Option was specifically allocated; (b) the name of the issuer and
the title and number of shares  subject to the Put  Option;  (c) the  expiration
date; (d) the date of exercise and settlement; (e) the exercise price per share;
(f) the total amount to be paid to the Fund upon such exercise; and (g) the name
of the Clearing Member through whom such Put Option was exercised. The Custodian
shall,  upon receipt of the amount  payable upon the exercise of the Put Option,
deliver  or  direct  the  Depository  to  deliver  the  Securities  specifically
allocated to such Series,  provided the same  conforms to the amount  payable to
the Fund as set forth in such Certificate.

      5.  Promptly  after the  exercise  by the Fund of any Stock  Index  Option
purchased by the Fund pursuant to paragraph 1 hereof,  the Fund shall deliver to
the Custodian a Certificate  specifying with respect to such Stock Index Option:
(a) the Series to which such Stock Index Option was specifically allocated;  (b)
the type of Stock Index  Option (put or call);  (c) the number of Options  being
exercised;  (d) the stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the total amount to be received by the Fund in
connection  with  such  exercise;  and (h) the  Clearing  Member  from whom such
payment is to be received.

      6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly
deliver to the Custodian a Certificate  specifying  with respect to such Covered
Call Option: (a) the Series for which such Covered Call Option was written;  (b)
the name of the issuer and the title and number of shares for which the  Covered
Call Option was written and which underlie the same;  (c) the  expiration  date;
(d) the exercise price; (e) the premium to be received by the Fund; (f) the


                                       9
<PAGE>

date such  Covered  Call Option was  written;  and (g) the name of the  Clearing
Member through whom the premium is to be received.  The Custodian  shall deliver
or cause to be  delivered,  in exchange for receipt of the premium  specified in
the Certificate  with respect to such Covered Call Option,  such receipts as are
required  in  accordance  with the customs  prevailing  among  Clearing  Members
dealing in Covered Call options and shall  impose,  or direct the  Depository to
impose, upon the underlying Securities specified in the Certificate specifically
allocated to such Series such  restrictions as may be required by such receipts.
Notwithstanding  the foregoing,  the Custodian has the right, upon prior written
notification  to the  Fund,  at any time to refuse  to issue  any  receipts  for
Securities  in the  possession  of the  Custodian  and not  deposited  with  the
Depository underlying a Covered Call Option.

      7. Whenever a Covered Call Option written by the Fund and described in the
preceding  paragraph  of this  Article is  exercised,  the Fund  shall  promptly
deliver to the Custodian a Certificate  instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and  specifying:  (a) the Series for which such  Covered  Call Option was
written;  (b) the name of the issuer and the title and number of shares  subject
to the Covered  Call  Option;  (c) the  Clearing  Member to whom the  underlying
Securities  are to be  delivered;  and (d) the total amount  payable to the Fund
upon  such  delivery.  Upon  the  return  and/or  cancellation  of any  receipts
delivered pursuant to paragraph 6 of this Article,  the Custodian shall deliver,
or direct the Depository to deliver,  the underlying  Securities as specified in
the  Certificate  against  payment of the amount to be  received as set forth in
such Certificate.

      8. Whenever the Fund writes a Put Option,  the Fund shall promptly deliver
to the Custodian a Certificate  specifying with respect to such Put Option:  (a)
the Series for which such Put Option was written; (b) the name of the issuer and
the title and number of shares  for which the Put  Option is  written  and which
underlie the same; (c) the  expiration  date;  (d) the exercise  price;  (e) the
premium to be received by the Fund; (f) the date such Put Option is written; (g)
the name of the Clearing  Member  through whom the premium is to be received and
to whom a Put  Option  guarantee  letter is to be  delivered;  (h) the amount of
cash, and/or the amount and kind of Securities,  if any, specifically  allocated
to such Series to be deposited in the Senior  Security  Account for such Series;
and (i) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited  into the  Collateral  Account for such
Series.  The  Custodian  shall,  after making the deposits  into the  Collateral
Account  specified  in the  Certificate,  issue a Put  Option  guarantee  letter
substantially  in the form  utilized by the  Custodian on the date  hereof,  and
deliver the same to the Clearing  Member  specified in the  Certificate  against
receipt  of the  premium  specified  in said  Certificate.  Notwithstanding  the
foregoing,  the  Custodian  shall be under no obligation to issue any Put Option
guarantee  letter  or  similar  document  if it is  unable  to  make  any of the
representations contained therein.

      9.  Whenever  a Put  Option  written  by the  Fund  and  described  in the
preceding  paragraph  is  exercised,  the Fund  shall  promptly  deliver  to the
Custodian a Certificate specifying:  (a) the Series to which such Put Option was
written;  (b) the name of the issuer  and title and number of shares  subject to
the Put Option; (c) the Clearing Member from whom the underlying  Securities are
to be received; (d) the total amount payable by the Fund upon such delivery; (e)
the  amount  of cash  and/or  the  amount  and kind of  Securities  specifically
allocated to such Series to be withdrawn  from the  Collateral  Account for such
Series  and (f) the amount of cash  and/or  the  amount and kind of  Securities,
specifically  allocated to such Series,  if any, to be withdrawn from the Senior
Security  Account.  Upon  the  return  and/or  cancellation  of any  Put  Option
guarantee  letter or similar document issued by the Custodian in connection with
such Put


                                       10
<PAGE>

Option,  the  Custodian  shall pay out of the moneys held for the account of the
Series to which such Put  Option was  specifically  allocated  the total  amount
payable to the Clearing Member specified in the Certificate as set forth in such
Certificate against delivery of such Securities,  and shall make the withdrawals
specified in such Certificate.

      10. Whenever the Fund writes a Stock Index Option, the Fund shall promptly
deliver to the  Custodian a  Certificate  specifying  with respect to such Stock
Index Option: (a) the Series for which such Stock Index Option was written;  (b)
whether  such Stock Index  Option is a put or a call;  (c) the number of Options
written;  (d) the stock index to which such Option  relates;  (e) the expiration
date; (f) the exercise  price;  (g) the Clearing Member through whom such Option
was written;  (h) the premium to be received by the Fund; (i) the amount of cash
and/or the amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Senior Security  Account for such Series;  (j) the
amount of cash and/or the amount and kind of  Securities,  if any,  specifically
allocated  to such Series to be  deposited  in the  Collateral  Account for such
Series; and (k) the amount of cash and/or the amount and kind of Securities,  if
any, specifically  allocated to such Series to be deposited in a Margin Account,
and the  name in  which  such  account  is to be or has  been  established.  The
Custodian shall, upon receipt of the premium specified in the Certificate,  make
the  deposits,  if any,  into  the  Senior  Security  Account  specified  in the
Certificate,  and either (1) deliver such receipts,  if any, which the Custodian
has  specifically  agreed to issue,  which are in  accordance  with the  customs
prevailing  among Clearing  Members in Stock Index Options and make the deposits
into  the  Collateral  Account  specified  in the  Certificate,  or (2) make the
deposits into the Margin Account specified in the Certificate.

      11. Whenever a Stock Index Option written by the Fund and described in the
preceding  paragraph  of this  Article is  exercised,  the Fund  shall  promptly
deliver to the  Custodian a  Certificate  specifying  with respect to such Stock
Index Option: (a) the Series for which such Stock Index Option was written;  (b)
such  information  as may be  necessary to identify the Stock Index Option being
exercised; (c) the Clearing Member through whom such Stock Index Option is being
exercised;  (d) the total amount  payable upon such  exercise,  and whether such
amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and
kind of Securities, if any, to be withdrawn from the Margin Account; and (f) the
amount of cash and/or  amount and kind of  Securities,  if any, to be  withdrawn
from the Senior Security Account for such Series;  and the amount of cash and/or
the amount and kind of  Securities,  if any, to be withdrawn from the Collateral
Account for such Series.  Upon the return and/or cancellation of the receipt, if
any,  delivered  pursuant  to the  preceding  paragraph  of  this  Article,  the
Custodian  shall pay out of the  moneys  held for the  account  of the Series to
which such Stock Index Option was specifically  allocated to the Clearing Member
specified  in the  Certificate  the total amount  payable,  if any, as specified
therein.

      12.  Whenever  the Fund  purchases  any option  identical  to a previously
written  Option  described  in  paragraphs,  6,  8 or 10 of  this  Article  in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the  Custodian a  Certificate  specifying  with  respect to the Option  being
purchased:  (a) that the transaction is a Closing Purchase Transaction;  (b) the
Series  for which the  Option  was  written;  (c) the name of the issuer and the
title and  number of shares  subject to the  Option,  or, in the case of a Stock
Index  Option,  the stock index to which such  Option  relates and the number of
Options held;  (d) the exercise  price;  (e) the premium to be paid by the Fund;
(f) the expiration  date; (g) the type of Option (put or call);  (h) the date of
such purchase;  (i) the name of the Clearing Member to whom the premium is to be
paid;  and (j) the


                                       11
<PAGE>

amount of cash and/or the amount and kind of Securities, if any, to be withdrawn
from the Collateral  Account, a specified Margin Account, or the Senior Security
Account for such  Series.  Upon the  Custodian's  payment of the premium and the
return and/or  cancellation of any receipt issued pursuant to paragraphs 6, 8 or
10 of this  Article  with  respect to the Option  being  liquidated  through the
Closing  Purchase  Transaction,  the  Custodian  shall  remove,  or  direct  the
Depository to remove,  the  previously  imposed  restrictions  on the Securities
underlying the Call Option.

      13. Upon the expiration,  exercise or  consummation of a Closing  Purchase
Transaction  with  respect  to any Option  purchased  or written by the Fund and
described  in this  Article,  the  Custodian  shall  delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 Article III herein, and
upon the return and/or  cancellation  of any receipts  issued by the  Custodian,
shall make such withdrawals from the Collateral Account,  and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.

                                   ARTICLE VI

                                FUTURES CONTRACTS

      1. Whenever the Fund shall enter into a Futures  Contract,  the Fund shall
deliver to the Custodian a Certificate  specifying  with respect to such Futures
Contract, (or with respect to any number of identical Futures Contract(s)):  (a)
the Series for which the Futures Contract is being entered;  (b) the category of
Futures   Contract  (the  name  of  the  underlying  stock  index  or  financial
instrument); (c) the number of identical Futures Contracts entered into; (d) the
delivery or settlement date of the Futures Contract(s); (e) the date the Futures
Contract(s)  was (were) entered into and the maturity date; (f) whether the Fund
is buying (going long) or selling (going short) on such Futures Contract(s); (g)
the  amount of cash  and/or the amount  and kind of  Securities,  if any,  to be
deposited in the Senior  Security  Account for such Series;  (h) the name of the
broker, dealer, or futures commission merchant through whom the Futures Contract
was entered into;  and (i) the amount of fee or  commission,  if any, to be paid
and the name of the broker,  dealer, or futures commission merchant to whom such
amount is to be paid.  The  Custodian  shall make the  deposits,  if any, to the
Margin Account in accordance with the terms and conditions of the Margin Account
Agreement.  The  Custodian  shall make  payment  out of the moneys  specifically
allocated  to such Series of the fee or  commission,  if any,  specified  in the
Certificate  and  deposit in the Senior  Security  Account  for such  Series the
amount of cash  and/or  the  amount  and kind of  Securities  specified  in said
Certificate.

      2. (a) Any variation margin payment or similar payment required to be made
by the Fund to a broker,  dealer, or futures commission merchant with respect to
an outstanding  Futures  Contract,  shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.

            (b) Any variation  margin payment or similar  payment from a broker,
dealer,  or  futures  commission  merchant  to  the  Fund  with  respect  to  an
outstanding Futures Contract,  shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.


                                       12
<PAGE>

      3. Whenever a Futures Contract held by the Custodian hereunder is retained
by the Fund until delivery or settlement is made on such Futures  Contract,  the
Fund shall deliver to the Custodian a  Certificate  specifying:  (a) the Futures
Contract and the Series to which the same  relates;  (b) with respect to a Stock
Index Futures Contract, the total cash settlement amount to be paid or received,
and with respect to a Financial Futures  Contract,  the Securities and/or amount
of cash  to be  delivered  or  received;  (c) the  broker,  dealer,  or  futures
commission  merchant  to or  from  whom  payment  or  delivery  is to be made or
received;  and (d) the amount of cash and/or Securities to be withdrawn from the
Senior Security Account for such Series. The Custodian shall make the payment or
delivery specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.

      4.  Whenever  the Fund  shall  enter into a Futures  Contract  to offset a
Futures Contract held by the Custodian hereunder,  the Fund shall deliver to the
Custodian a Certificate  specifying:  (a) the items of information required in a
Certificate  described  in  paragraph  1 of this  Article,  and (b) the  Futures
Contract  being  offset.  The  Custodian  shall  make  payment  out of the money
specifically  allocated  to  such  Series  of the  fee or  commission,  if  any,
specified in the Certificate  and delete the Futures  Contract being offset from
the  statements  delivered  to the Fund  pursuant to  paragraph 3 of Article III
herein,  and make such  withdrawals  from the Senior  Security  Account for such
Series as may be specified in such Certificate.  The withdrawals,  if any, to be
made from the Margin  Account shall be made by the Custodian in accordance  with
the terms and conditions of the Margin Account Agreement.

                                  ARTICLE VII

                            FUTURES C0NTRACT OPTIONS

      1. Promptly after the purchase of any Futures Contract Option by the Fund,
the Fund shall promptly  deliver to the Custodian a Certificate  specifying with
respect to such Futures Contract Option:  (a) the Series to which such Option is
specifically  allocated;  (b) the type of Futures Contract Option (put or call);
(c) the type of Futures Contract and such other  information as may be necessary
to  identify  the  Futures  Contract  underlying  the  Futures  Contract  option
purchased;  (d) the expiration  date; (e) the exercise  price;  (f) the dates of
purchase and  settlement;  (g) the amount of premium to be paid by the Fund upon
such purchase; (h) the name of the broker or futures commission merchant through
whom such  option  was  purchased;  and (i) the name of the  broker,  or futures
commission merchant,  to whom payment is to be made. The Custodian shall pay out
of the moneys specifically allocated to such Series, the total amount to be paid
upon such purchase to the broker or futures  commissions  merchant  through whom
the purchase was made,  provided  that the same conforms to the amount set forth
in such Certificate.

      2. Promptly after the sale of any Futures Contract Option purchased by the
Fund  pursuant to  paragraph 1 hereof,  the Fund shall  promptly  deliver to the
Custodian a Certificate specifying with respect to each such sale: (a) Series to
which such Futures Contract Option was specifically  allocated;  (b) the type of
Futures Contract Option (put or call); (c) the type of Futures Contract and such
other  information  as  may  be  necessary  to  identify  the  Futures  Contract
underlying  the  Futures  Contract  Option;  (d) the date of sale;  (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker or futures commission merchant through
whom the sale was made. The Custodian  shall consent to the  cancellation of the
Futures  Contract  Option being closed  against  payment to the


                                       13
<PAGE>

Custodian of the total amount payable to the Fund, provided the same conforms to
the total amount payable as set forth in such Certificate.

      3. Whenever a Futures  Contract  option  purchased by the Fund pursuant to
paragraph 1 is exercised  by the Fund,  the Fund shall  promptly  deliver to the
Custodian  a  Certificate  specifying:  (a) the  Series  to which  such  Futures
Contract Option was specifically allocated;  (b) the particular Futures Contract
Option  (put or  call)  being  exercised;  (c)  the  type  of  Futures  Contract
underlying the Futures Contract Option;  (d) the date of exercise;  (e) the name
of the broker or futures  commission  merchant through whom the Futures Contract
Option is exercised;  (f) the net total amount, if any, payable by the Fund; (g)
the  amount,  if any,  to be  received  by the Fund;  and (h) the amount of cash
and/or the amount and kind of Securities to be deposited in the Senior  Security
Account  for such  Series.  The  Custodian  shall  make,  out of the  moneys and
Securities  specifically allocated to such Series, the payments, if any, and the
deposits,  if  any,  into  the  Senior  Security  Account  as  specified  in the
Certificate.  The  deposits,  if any, to be made to the Margin  Account shall be
made by the Custodian in accordance  with the terms and conditions of the Margin
Account Agreement.

      4.  Whenever  the Fund writes a Futures  Contract  Option,  the Fund shall
promptly deliver to the Custodian a Certificate  specifying with respect to such
Futures Contract  Option:  (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures  Contract and such other  information as may be necessary to identify
the Futures Contract  underlying the Futures Contract Option; (d) the expiration
date;  (e) the exercise  price;  (f) the premium to be received by the Fund; (g)
the name of the broker or futures  commission  merchant through whom the premium
is to be  received;  and (h) the  amount of cash  and/or  the amount and kind of
Securities,  if any, to be  deposited  in the Senior  Security  Account for such
Series.  The  Custodian  shall,  upon  receipt of the premium  specified  in the
Certificate,  make out of the moneys and  Securities  specifically  allocated to
such Series the deposits into the Senior Security Account,  if any, as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the  Custodian in  accordance  with the terms and  conditions  of the
Margin Account Agreement.

      5. Whenever a Futures  Contract Option written by the Fund which is a call
is  exercised,  the Fund shall  promptly  deliver to the Custodian a Certificate
specifying:   (a)  the  Series  to  which  such  Futures   Contract  option  was
specifically  allocated;  (b) the particular  Futures Contract option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures  commission  merchant  through  whom such  Futures
Contract Option was exercised;  (e) the net total amount, if any, payable to the
Fund upon such exercise;  (f) the net total amount,  if any, payable by the Fund
upon such  exercise;  and (g) the  amount of cash  and/or the amount and kind of
Securities to be deposited in the Senior Security  Account for such Series.  The
Custodian  shall,  upon its receipt of the net total amount payable to the Fund,
if any,  specified  in such  Certificate  make  the  payments,  if any,  and the
deposits,  if  any,  into  the  Senior  Security  Account  as  specified  in the
Certificate.  The  deposits,  if any, to be made to the Margin  Account shall be
made by the Custodian in accordance  with the terms and conditions of the Margin
Account Agreement.

      6.  Whenever a Futures  Contract  Option  which is written by the Fund and
which is a put is exercised,  the Fund shall promptly deliver to the Custodian a
Certificate  specifying:  (a) the Series to which such  Option was  specifically
allocated; (b) the particular Futures Contract Option exercised; (c) the type of
Futures Contract  underlying such Futures  Contract Option;


                                       14
<PAGE>

(d) the name of the  broker or futures  commission  merchant  through  whom such
Futures Contract option is exercised;  (e) the net total amount, if any, payable
to the Fund upon such exercise; (f) the net total amount, if any, payable by the
Fund upon such exercise;  and (g) the amount and kind of Securities  and/or cash
to be  withdrawn  from or  deposited  in, the Senior  Security  Account for such
Series,  if any. The Custodian  shall,  upon its receipt of the net total amount
payable  to the Fund,  if any,  specified  in the  Certificate,  make out of the
moneys and Securities  specifically  allocated to such Series, the payments,  if
any, and the deposits,  if any, into the Senior Security Account as specified in
the Certificate.  The deposits to and/or withdrawals from the Margin Account, if
any, shall be made by the Custodian in accordance  with the terms and conditions
of the Margin Account Agreement.

      7. Whenever the Fund purchases any Futures  Contract option identical to a
previously written Futures Contract option described in this Article in order to
liquidate  its position as a writer of such Futures  Contract  Option,  the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to which such option
is specifically  allocated;  (b) that the transaction is a closing  transaction;
(c) the type of Future  Contract and such other  information as may be necessary
to identify the Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the expiration date;
(g) the name of the broker or futures commission merchant to whom the premium is
to be paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior  Security  Account for such Series.  The
Custodian  shall  effect  the  withdrawals  from  the  Senior  Security  Account
specified  in the  Certificate.  The  withdrawals,  if any,  to be made from the
Margin  Account shall be made by the Custodian in accordance  with the terms and
conditions of the Margin Account Agreement.

      8. Upon the expiration, exercise, or consummation of a closing transaction
with respect to, any Futures  Contract  Option  written or purchased by the Fund
and  described  in this  Article,  the  Custodian  shall (a) delete such Futures
Contract Option from the statements  delivered to the Fund pursuant to paragraph
3 of Article III herein and, (b) make such  withdrawals  from and/or in the case
of an  exercise  such  deposits  into  the  Senior  Security  Account  as may be
specified in a Certificate.  The deposits to and/or  withdrawals from the Margin
Account, if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.

      9.  Futures  Contracts  acquired  by the Fund  through  the  exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.

                                  ARTICLE VIII

                                   SHORT SALES

      1.  Promptly  after any short  sales by any  Series of the Fund,  the Fund
shall promptly deliver to the Custodian a Certificate specifying: (a) the Series
for which such short sale was made;  (b) the name of the issuer and the title of
the  Security;  (c) the number of shares or principal  amount sold,  and accrued
interest or dividends, if any; (d) the dates of the sale and settlement; (e) the
sale price per unit;  (f) the total amount  credited to the Fund upon such sale,
if any, (g) the amount of cash and/or the amount and kind of Securities, if any,
which are to be deposited in a Margin  Account and the name in which such Margin
Account  has been or is to be


                                       15
<PAGE>

established; (h) the amount of cash and/or the amount and kind of Securities, if
any,  to be  deposited  in a senior  security  Account,  and (i) the name of the
broker  through  whom such short  sale was made.  The  Custodian  shall upon its
receipt of a statement from such broker  confirming such sale and that the total
amount  credited  to the Fund  upon  such  sale,  if any,  as  specified  in the
Certificate  is held by such  broker for the  account of the  Custodian  (or any
nominee of the Custodian) as custodian of the Fund,  issue a receipt or make the
deposits into the Margin Account and the Senior  Security  Account  specified in
the Certificate.

      2. In connection  with the  closing-out  of any short sale, the Fund shall
promptly deliver to the Custodian a Certificate  specifying with respect to each
such closing out: (a) the Series for which such  transaction  is being made; (b)
the name of the issuer and the title of the  Security;  (c) the number of shares
or the principal amount, and accrued interest or dividends,  if any, required to
effect  such  closing-out  to be  delivered  to the  broker;  (d) the  dates  of
closing-out and  settlement;  (e) the purchase price per unit; (f) the net total
amount  payable  to the Fund upon  such  closing-out;  (g) the net total  amount
payable  to the  broker  upon such  closing-out;  (h) the amount of cash and the
amount and kind of Securities to be withdrawn,  if any, from the Margin Account;
(i) the amount of cash and/or the amount and kind of  Securities,  if any, to be
withdrawn  from the  Senior  Security  Account;  and (j) the name of the  broker
through whom the Fund is effecting such  closing-out.  The Custodian shall, upon
receipt of the net total amount payable to the Fund upon such  closing-out,  and
the return and/ or cancellation of the receipts, if any, issued by the Custodian
with respect to the short sale being closed-out,  pay out of the moneys held for
the  account  of the Fund to the  broker  the net total  amount  payable  to the
broker, and make the withdrawals from the Margin Account and the Senior Security
Account, as the same are specified in the Certificate.

                                   ARTICLE IX

                          REVERSE REPURCHASE AGREEMENTS

      1.  Promptly  after the Fund enters a Reverse  Repurchase  Agreement  with
respect to Securities and money held by the Custodian hereunder,  the Fund shall
deliver to the Custodian a Certificate,  or in the event such Reverse Repurchase
Agreement is a Money Market  Security,  a  Certificate,  Oral  Instructions,  or
Written Instructions specifying: (a) the Series for which the Reverse Repurchase
Agreement  is entered;  (b) the total amount  payable to the Fund in  connection
with such  Reverse  Repurchase  Agreement  and  specifically  allocated  to such
Series;  (c) the broker or dealer  through or with whom the  Reverse  Repurchase
Agreement is entered;  (d) the amount and kind of  Securities to be delivered by
the Fund to such  broker  or  dealer;  (e) the date of such  Reverse  Repurchase
Agreement;  and (f) the amount of cash and/or the amount and kind of Securities,
if any,  specifically  allocated  to such  Series  to be  deposited  in a Senior
Security  Account for such Series in  connection  with such  Reverse  Repurchase
Agreement.  The Custodian shall, upon receipt of the total amount payable to the
Fund specified in the certificate,  Oral Instructions,  or Written  Instructions
make the  delivery  to the broker or dealer,  and the  deposits,  if any, to the
Senior Security Account,  specified in such Certificate,  Oral Instructions,  or
Written Instructions.

      2. Upon the  termination of a Reverse  Repurchase  Agreement  described in
preceding  paragraph  1 of this  Article,  the Fund  shall  promptly  deliver  a
Certificate or, in the event such Reverse Repurchase Agreement is a Money Market
Security,  a Certificate,  Oral  Instructions,  or Written  Instructions  to the
Custodian specifying:  (a) the Reverse Repurchase Agreement being


                                       16
<PAGE>

terminated  and the  Series  for which same was  entered;  (b) the total  amount
payable by the Fund in connection with such termination; (c) the amount and kind
of  Securities  to be received by the Fund and  specifically  allocated  to such
Series in connection with such termination; (d) the date of termination; (e) the
name of the  broker  or  dealer  with or  through  whom the  Reverse  Repurchase
Agreement is to be terminated;  and (f) the amount of cash and/or the amount and
kind of Securities to be withdrawn from the Senior  Securities  Account for such
Series.  The Custodian shall,  upon receipt of the amount and kind of Securities
to be received by the Fund specified in the Certificate,  Oral Instructions,  or
Written  Instructions,  make  the  payment  to the  broker  or  dealer,  and the
withdrawals,  if any,  from  the  Senior  Security  Account,  specified  in such
Certificate, Oral Instructions, or Written Instructions.

                                   ARTICLE X

                    LOAN OF PORTFOLIO SECURITIES OF THE FUND

      1. Promptly after each loan of portfolio Securities specifically allocated
to a Series held by the Custodian hereunder,  the Fund shall deliver or cause to
be delivered to the Custodian a Certificate specifying with respect to each such
loan: (a) the Series to which the loaned securities are specifically  allocated;
(b) the name of the  issuer and the title of the  Securities,  (c) the number of
shares or the principal  amount loaned;  (d) the date of loan and delivery;  (e)
the total  amount  to be  delivered  to the  Custodian  against  the loan of the
Securities,  including the amount of cash  collateral  and the premium,  if any,
separately  identified;  and (f) the name of the broker,  dealer,  or  financial
institution  to  which  the loan was  made.  The  Custodian  shall  deliver  the
Securities  thus  designated to the broker,  dealer or financial  institution to
which the loan was made upon  receipt of the total  amount  designated  as to be
delivered  against the loan of  Securities.  The Custodian may accept payment in
connection  with a delivery  otherwise  than  through the  Book-Entry  System or
Depository  only in the form of a certified or bank  cashier's  check payable to
the order of the Fund or the Custodian  drawn on New York  Clearing  House funds
and may deliver  securities  in  accordance  with the customs  prevailing  among
dealers in securities.

      2. Promptly after each  termination of the loan of Securities by the Fund,
the Fund shall  deliver or cause to be delivered to the  Custodian a Certificate
specifying with respect to each such loan  termination and return of Securities:
(a) the Series to which the loaned  Securities are specifically  allocated;  (b)
the name of the issuer and the title of the  Securities to be returned;  (c) the
number  of  shares  or the  principal  amount  to be  returned;  (d) the date of
termination;  (e) the total amount to be delivered by the  Custodian  (including
the  cash  collateral  for such  Securities  minus  any  offsetting  credits  as
described  in said  Certificate);  and (f) the name of the  broker,  dealer,  or
financial institution from which the Securities will be returned.  The Custodian
shall  receive all  Securities  returned from the broker,  dealer,  or financial
institution to which such  Securities were loaned and upon receipt thereof shall
pay,  out of the  moneys  held for the  account  of the Fund,  the total  amount
payable upon such return of Securities as set forth in the Certificate.


                                       17
<PAGE>

                                   ARTICLE XI

                   CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
                        ACCOUNTS, AND COLLATERAL ACCOUNTS

      1. The  Custodian  shall,  from time to time,  make such  deposits  to, or
withdrawals  from,  a Senior  Security  Account as  specified  in a  Certificate
received by the Custodian.  Such Certificate  shall specify the Series for which
such  deposit  or  withdrawal  is to be made and the  amount of cash  and/or the
amount  and kind of  Securities  specifically  allocated  to such  Series  to be
deposited in, or withdrawn from,  such Senior Security  Account for such Series.
In the event that the Fund fails to specify in a  Certificate  the  Series,  the
name of the issuer,  the title and the number of shares or the principal  amount
of any particular Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under no obligation to
make any such deposit or withdrawal and shall so notify the Fund.

      2. The Custodian  shall make  deliveries or payments from a Margin Account
to the broker,  dealer,  futures commission merchant or Clearing Member in whose
name,  or for whose  benefit,  the account was  established  as specified in the
Margin Account Agreement.

      3. Amounts  received by the  Custodian as payments or  distributions  with
respect to  Securities  deposited in any Margin  Account  shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.

      4. The Custodian shall have a continuing lien and security interest in and
to any  property at any time held by the  Custodian  in any  Collateral  Account
described  herein.  In accordance  with applicable law the Custodian may enforce
its lien and  realize  on any such  property  whenever  the  Custodian  has made
payment  or  delivery  pursuant  to any Put Option  guarantee  letter or similar
document or any receipt  issued  hereunder  by the  Custodian.  In the event the
Custodian  should  realize on any such property net proceeds which are less than
the Custodian's  obligations  under any Put Option  guarantee  letter or similar
document or any receipt,  such deficiency  shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.

      5. On each  business  day the  Custodian  shall  furnish  the Fund  with a
statement  with respect to each Margin  Account in which money or Securities are
held  specifying  as of the close of business on the previous  business day: (a)
the name of the  Margin  Account;  (b) the amount  and kind of  Securities  held
therein;  and (c) the amount of money held  therein.  The  Custodian  shall make
available upon request to any broker,  dealer,  or futures  commission  merchant
specified in the name of a Margin Account a copy of the statement  furnished the
Fund with respect to such Margin Account.

      6. Promptly after the close of business on each business day in which cash
and/or  Securities  are maintained in a Collateral  Account for any Series,  the
Custodian  shall  furnish  the  Fund  with a  statement  with  respect  to  such
Collateral  Account  specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding the
delivery to the Fund of such statement,  the Fund shall furnish to the Custodian
a Certificate  or Written  Instructions  specifying the then market value of the
Securities  described in such statement.  In the event such then market value is
indicated  to be less  than  the  Custodian's  obligation  with  respect  to any
outstanding  Put option  guarantee  letter or similar  document,  the


                                       18
<PAGE>

Fund  shall  promptly  specify  in a  Certificate  the  additional  cash  and/or
Securities  to be  deposited  in  such  Collateral  Account  to  eliminate  such
deficiency.

                                  ARTICLE XII

                      PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

      1. The Fund shall furnish to the Custodian a copy of the resolution of the
Board of  Trustees  of the Fund,  certified  by the  Secretary,  the Clerk,  any
Assistant  Secretary  or any  Assistant  Clerk,  either (i)  setting  forth with
respect  to the  Series  specified  therein  the  date of the  declaration  of a
dividend or  distribution,  the date of payment  thereof,  the record date as of
which shareholders  entitled to payment shall be determined,  the amount payable
per Share of such Series to the  shareholders  of record as of that date and the
total  amount  payable  to the  Dividend  Agent  and any  sub-dividend  agent or
co-dividend  agent of the Fund on the payment  date,  or (ii)  authorizing  with
respect to the  Series  specified  therein  the  declaration  of  dividends  and
distributions  on a daily basis and  authorizing  the  Custodian to rely on Oral
Instructions,  Written  Instructions or a Certificate  setting forth the date of
the declaration of such dividend or  distribution,  the date of payment thereof,
the  record  date  as  of  which  shareholders  entitled  to  payment  shall  be
determined,  the amount payable per Share of such Series to the  shareholders of
record as of that date and the total amount payable to the Dividend Agent on the
payment date.

      2. Upon the payment date specified in such resolution,  Oral Instructions,
Written Instructions or Certificate, as the case may be, the Custodian shall pay
out of the moneys held for the account of each Series the total  amount  payable
to the Dividend Agent and any  sub-dividend  agent or  co-dividend  agent of the
Fund with respect to such Series.

                                  ARTICLE XIII

                          SALE AND REDEMPTION OF SHARES

      1.  Whenever  the Fund  shall  sell any  Shares,  it shall  deliver to the
Custodian a Certificate duly specifying:

            (a) The Series,  the number of Shares sold,  trade date,  and price;
and

            (b) The amount of money to be received by the Custodian for the sale
of such Shares and specifically allocated to the separate account in the name of
such Series.

      2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit  such money to the  separate  account in the name of the Series for which
such money was received.

      3. Upon  issuance of any Shares of any Series  described in the  foregoing
provisions of this Article,  the Custodian  shall pay, out of the money held for
the account of such  Series,  all original  issue or other taxes  required to be
paid by the  Fund in  connection  with  such  issuance  upon  the  receipt  of a
Certificate specifying the amount to be paid.

      4. Except as provided hereinafter, whenever the Fund desires the Custodian
to make payment out of the money held by the  Custodian  hereunder in connection
with a redemption of any Shares, it shall furnish to the Custodian a Certificate
specifying:


                                       19
<PAGE>

            (a) The number and Series of Shares redeemed; and

            (b) The amount to be paid for such Shares.

      5. Upon  receipt from the Transfer  Agent of an advice  setting  forth the
Series and number of Shares  received by the Transfer  Agent for  redemption and
that such  Shares  are in good form for  redemption,  the  Custodian  shall make
payment to the Transfer Agent out of the moneys held in the separate  account in
the name of the Series the total  amount  specified  in the  Certificate  issued
pursuant to the foregoing paragraph 4 of this Article:

      6.  Notwithstanding  the above provisions  regarding the redemption of any
Shares,  whenever  any  Shares are  redeemed  pursuant  to any check  redemption
privilege  which may from time to time be  offered by the Fund,  the  Custodian,
unless otherwise  instructed by a Certificate,  shall, upon receipt of an advice
from the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check  redemption  procedure,  honor the check
presented as part of such check  redemption  privilege out of the moneys held in
the separate account of the Series of the Shares being redeemed.

                                  ARTICLE XIV

                           OVERDRAFTS OR INDEBTEDNESS

      1. If the Custodian, should in its sole discretion advance funds on behalf
of any Series  which  results in an  overdraft  because  the moneys  held by the
Custodian in the separate  account for such Series shall be  insufficient to pay
the total amount payable upon a purchase of securities specifically allocated to
such  Series,  as set forth in a  Certificate,  Oral  Instructions,  or  Written
Instructions  or which  results in an overdraft in the separate  account of such
Series for some other reason, or if the Fund is for any other reason indebted to
the Custodian with respect to a Series,  including any  indebtedness to The Bank
of New York under the Fund's Cash  Management  and Related  Services  Agreement,
(except a borrowing for investment or for temporary or emergency  purposes using
Securities  as  collateral  pursuant to a separate  agreement and subject to the
provisions of paragraph 2 of this Article), such overdraft or indebtedness shall
be deemed to be a loan made by the Custodian to the Fund for such Series payable
on demand and shall bear  interest  from the date  incurred  at a rate per annum
(based on a  360-day  year for the  actual  number  of days  involved)  equal to
Federal Fund Rate at 1% over Custodian's prime commercial lending rate in effect
from time to time,  such rate to be adjusted on the effective date of any change
in such  prime  commercial  lending  rate but in no event to be less than 6% per
annum.  In  addition,  the Fund hereby  agrees that the  Custodian  shall have a
continuing  lien  and  security  interest  in and to any  property  specifically
allocated  to such  Series at any time held by it for the benefit of such series
or in  which  the Fund may  have an  interest  which is then in the  Custodian's
possession  or control or in  possession or control of any third party acting in
the  Custodian's  behalf.  The  Fund  authorizes  the  Custodian,  in  its  sole
discretion,  at any time to charge any such overdraft or  indebtedness  together
with  interest  due  thereon  against  any  balance of account  standing to such
Series' credit on the Custodian's books. In addition,  the Fund hereby covenants
that on each  Business  Day on  which  either  it  intends  to  enter a  Reverse
Repurchase  Agreement  and/or otherwise borrow from a third party, or which next
succeeds  a  Business  Day on  which  at the  close  of  business  the  Fund had
outstanding a Reverse Repurchase  Agreement or such a borrowing,  it shall prior
to 9 a.m., New York City time,  advise the


                                       20
<PAGE>

Custodian, in writing, of each such borrowing, shall specify the Series to which
the same relates,  and shall not incur any  indebtedness  not so specified other
than from the Custodian.

      2. The  Fund  will  cause to be  delivered  to the  Custodian  by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from  which it  borrows  money for  investment  or for  temporary  or  emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings,  a notice or undertaking in the form currently  employed by any such
bank  setting  forth the amount  which  such bank will loan to the Fund  against
delivery of a stated amount of collateral.  The Fund shall  promptly  deliver to
the Custodian a Certificate specifying with respect to each such borrowing:  (a)
the Series to which such  borrowing  relates;  (b) the name of the bank; (c) the
amount and terms of the borrowing,  which may be set forth by  incorporating  by
reference an attached  promissory note, duly endorsed by the Fund, or other loan
agreement;  (d) the time and date, if known,  on which the loan is to be entered
into;  (e) the date on which the loan  becomes  due and  payable;  (f) the total
amount  payable  to the Fund on the  borrowing  date;  (g) the  market  value of
Securities  to be delivered as collateral  for such loan,  including the name of
the issuer,  the title and the number of shares or the  principal  amount of any
particular  Securities;  and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in  conformance  with  the  Investment  Company  Act  of  1940  and  the  Fund's
prospectus.  The Custodian  shall deliver on the borrowing  date  specified in a
Certificate the specified  collateral and the executed  promissory note, if any,
against  delivery by the lending bank of the total  amount of the loan  payable,
provided that the same conforms to the total amount  payable as set forth in the
Certificate.  The Custodian  may, at the option of the lending  bank,  keep such
collateral in its possession, but such collateral shall be subject to all rights
therein  given  the  lending  bank  by  virtue  of any  promissory  note or loan
agreement.  The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to  collateralize  further any  transaction
described in this paragraph.  The Fund shall cause all Securities  released from
collateral  status to be returned  directly to the Custodian,  and the Custodian
shall  receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer,  the title and number of shares or the  principal  amount of
any particular  Securities to be delivered as collateral by the  Custodian,  the
Custodian shall not be under any obligation to deliver any Securities.

                                   ARTICLE XV

                            CONCERNING THE CUSTODIAN

      1. Except as hereinafter  provided,  neither the Custodian nor its nominee
shall be liable for any loss or damage,  including counsel fees,  resulting from
its action or omission to act or otherwise; either hereunder or under any Margin
Account  Agreement,  except for any such loss or damage  arising  out of its own
negligence or willful  misconduct.  In no event shall the Custodian be liable to
the Fund or any third party for special,  indirect or  consequential  damages or
lost  profits or loss of  business,  arising  under or in  connection  with this
Agreement,  even if previously  informed of the  possibility of such damages and
regardless of the form of action.  The Custodian  may, with respect to questions
of law arising  hereunder or under any Margin Account  Agreement,  apply for and
obtain the advice and opinion of counsel to the Fund or of its own  counsel,  at
the expense of the Fund,  and shall be fully  protected with respect to anything
done or omitted by it in good faith in  conformity  with such advice or opinion.
The Custodian shall be liable to the Fund for any loss or damage  resulting from
the use of the  Book-Entry  System or any


                                       21
<PAGE>

Depository arising by reason of any negligence or willful misconduct on the part
of the Custodian or any of its employees or agents.

      2. Without  limiting the generality of the foregoing,  the Custodian shall
be under no obligation to inquire into, and shall not be liable for:

            (a) The validity of the issue of any Securities purchased,  sold, or
written  by or for the Fund,  the  legality  of the  purchase,  sale or  writing
thereof, or the propriety of the amount paid or received therefor;

            (b) The  legality of the sale or  redemption  of any Shares,  or the
propriety of the amount to be received or paid therefor;

            (c) The  legality of the  declaration  or payment of any dividend by
the Fund;

            (d) The legality of any  borrowing by the Fund using  Securities  as
collateral;

            (e) The legality of any loan of portfolio Securities,  nor shall the
Custodian be under any duty or obligation to see to it that any cash  collateral
delivered to it by a broker,  dealer, or financial  institution or held by it at
any  time as a  result  of such  loan of  portfolio  Securities  of the  Fund is
adequate  collateral  for the Fund against any loss it might sustain as a result
of such loan. The Custodian  specifically,  but not by way of limitation,  shall
not be under any duty or  obligation  periodically  to check or notify  the Fund
that the amount of such cash  collateral  held by it for the Fund is  sufficient
collateral  for  the  Fund,  but  such  duty or  obligation  shall  be the  sole
responsibility of the Fund. In addition, the Custodian shall be under no duty or
obligation  to see that any broker,  dealer or  financial  institution  to which
portfolio  Securities  of the Fund  are lent  pursuant  to  Article  XIV of this
Agreement  makes payment to it of any dividends or interest which are payable to
or for the  account  of the  Fund  during  the  period  of  such  loan or at the
termination of such loan, provided,  however,  that the Custodian shall promptly
notify the Fund in the event that such  dividends  or interest  are not paid and
received when due; or

            (f)  The  sufficiency  or  value  of any  amounts  of  money  and/or
Securities  held in any Margin Account,  Senior  Security  Account or Collateral
Account in connection with transactions by the Fund. In addition,  the Custodian
shall be under no duty or  obligation  to see that any broker,  dealer,  futures
commission  merchant  or  Clearing  Member  makes  payment  to the  Fund  of any
variation  margin  payment or similar  payment which the Fund may be entitled to
receive  from such  broker,  dealer,  futures  commission  merchant  or Clearing
Member,  to see that any  payment  received  by the  Custodian  from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled  to  receive,  or to  notify  the Fund of the  Custodian's  receipt  or
non-receipt of any such payment.

      3.  The  Custodian  shall  not be  liable  for,  or  considered  to be the
Custodian of, any money,  whether or not  represented  by any check,  draft,  or
other instrument for the payment of money,  received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final  crediting  of  the  account  representing  the  Fund's  interest  at  the
Book-Entry System or the Depository.

      4. The Custodian shall have no responsibility  and shall not be liable for
ascertaining or acting upon any calls,  conversions,  exchange offers,  tenders,
interest  rate changes or similar


                                       22
<PAGE>

matters  relating to  Securities  held in the  Depository,  unless the Custodian
shall have  actually  received  timely notice from the  Depository.  In no event
shall the Custodian have any  responsibility or liability for the failure of the
Depository  to collect,  or for the late  collection  or late  crediting  by the
Depository of any amount  payable upon  Securities  deposited in the  Depository
which may mature or be redeemed,  retired,  called or otherwise  become payable.
However,  upon receipt of a  Certificate  from the Fund of an overdue  amount on
Securities  held in the Depository the Custodian  shall make a claim against the
Depository on behalf of the Fund,  except that the Custodian  shall not be under
any  obligation to appear in,  prosecute or defend any action suit or proceeding
in respect to any  Securities  held by the  Depository  which in its opinion may
involve it in expense or liability,  unless indemnity satisfactory to it against
all expense and liability be furnished as often as may be required.

      5. The Custodian  shall not be under any duty or obligation to take action
to effect  collection  of any amount due to the Fund from the Transfer  Agent of
the Fund  nor to take any  action  to  effect  payment  or  distribution  by the
Transfer  Agent of the Fund of any amount paid by the  Custodian to the Transfer
Agent of the Fund in accordance with this Agreement

      6. The Custodian  shall not be under any duty or obligation to take action
to effect  collection of any amount if the Securities  upon which such amount is
payable  are  in  default,  or  if  payment  is  refused  after  due  demand  or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.

      7.  The  Custodian  may  appoint  one  or  more  banking  institutions  as
Depository  or  Depositories,   as  Sub-Custodian  or   Sub-Custodians,   or  as
Co-Custodian   or   Co-Custodians   including,   but  not  limited  to,  banking
institutions located in foreign countries,  of Securities and moneys at any time
owned by the  Fund,  upon such  terms and  conditions  as may be  approved  in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.

      8.  The  Custodian  shall  not be  under  any  duty or  obligation  (a) to
ascertain  whether any  Securities at any time  delivered to, or held by it, for
the  account  of the Fund and  specifically  allocated  to a Series  are such as
properly may be held by the Fund or such Series under the provisions of its then
current  prospectus,  or (b) to ascertain  whether any transactions by the Fund,
whether or not involving the custodian, are such transactions as may properly be
engaged in by the Fund.

      9. The  Custodian  shall be entitled to receive and the Fund agrees to pay
to the  Custodian all  out-of-pocket  expenses and such  compensation  as may be
agreed upon from time to time between the Custodian and the Fund.  The Custodian
may charge such  compensation and any expenses with respect to a Series incurred
by the Custodian in the  performance  of its duties  pursuant to such  agreement
against any money specifically located to such Series. Unless and until the Fund
instructs  the  Custodian  by a  Certificate  to  apportion  any  loss,  damage,
liability or expense among the Series in a specified manner, the Custodian shall
also be  entitled  to charge  against  any money held by it for the account of a
Series such  Series' pro rata share (based on such Series net asset value at the
time of the charge to the  aggregate net asset value of all Series at that time)
of the amount of any loss, damage, liability or expense, including counsel fees,
for which it shall be entitled to  reimbursement  under the  provisions  of this
Agreement.   The  expenses  for  which  the  Custodian   shall  be  entitled  to
reimbursement  hereunder shall include,  but


                                       23
<PAGE>

are not limited to, the expenses of  sub-custodians  and foreign branches of the
custodian  incurred in settling outside of New York City transactions  involving
the purchase and sale of Securities of the Fund.

      10. The Custodian shall be entitled to rely upon any  Certificate,  notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a  Certificate.  The Custodian  shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian  hereinabove provided for. The Fund agrees to forward to the Custodian
a Certificate or facsimile thereof  confirming such Oral Instructions or Written
Instructions  in such manner so that such  Certificate  or facsimile  thereof is
received by the Custodian, whether by hand delivery, telecopier or other similar
device,  or  otherwise,  by the close of business of the same day that such Oral
Instructions or Written Instructions are given to the Custodian. The Fund agrees
that  the  fact  that  such  confirming  instructions  are not  received  by the
Custodian  shall  in  no  way  affect  the  validity  of  the   transactions  or
enforceability  of the  transactions  hereby  authorized  by the Fund.  The Fund
agrees that the  Custodian  shall incur no  liability to the Fund in acting upon
Oral  Instructions  or Written  Instructions  given to the  Custodian  hereunder
concerning such  transactions  provided such  instructions  reasonably appear to
have been received from an Authorized Person.

      11.  The  Custodian  shall  be  entitled  to  rely  upon  any  instrument,
instruction or notice  received by the Custodian and reasonably  believed by the
Custodian to be given in accordance  with the terms and conditions of any Margin
Account  Agreement.  Without  limiting  the  generality  of the  foregoing,  the
Custodian  shall be under no duty to inquire into,  and shall not be liable for,
the  accuracy  of any  statements  or  representations  contained  in  any  such
instrument or other notice including,  without limitation,  any specification of
any  amount to be paid to a  broker,  dealer,  futures  commission  merchant  or
Clearing Member.

      12.  The  books  and  records  pertaining  to the  Fund  which  are in the
possession  of the Custodian  shall be the property of the Fund.  Such books and
records shall be prepared and maintained as required by the  Investment  Company
Act of 1940,  as amended,  and other  applicable  securities  laws and rules and
regulations.  The Fund,  or the Fund's  authorized  representatives,  shall have
access to such books and records during the  Custodian's  normal business hours.
Upon the  reasonable  request of the Fund,  copies of any such books and records
shall  be  provided  by the  Custodian  to the  Fund  or the  Fund's  authorized
representative,  and the Fund shall  reimburse  the  Custodian  its  expenses of
providing such copies.  Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on  micro-film,  whichever  the  Custodian  elects,  any
records included in any such delivery which are maintained by the Custodian on a
computer  disc, or are similarly  maintained,  and the Fund shall  reimburse the
Custodian for its expenses of providing such hard copy or micro-film.

      13. The Custodian  shall provide the Fund with any report  obtained by the
Custodian on the system of internal accounting control of the Book-Entry System,
the  Depository or O.C.C.,  and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.

      14.  The Fund  agrees to  indemnify  the  Custodian  against  and save the
Custodian harmless from all liability,  claims,  losses and demands  whatsoever,
including  attorney's  fees,  howsoever  arising  or  incurred  because of or in
connection with this Agreement, including the Custodian's payment or non-payment
of checks pursuant to paragraph 6 of Article XIII as part of


                                       24
<PAGE>

any  check  redemption  privilege  program  of the  Fund,  except  for any  such
liability,  claim, loss and demand arising out of the Custodian's own negligence
or willful misconduct.

      15. Subject to the foregoing  provisions of this Agreement,  the Custodian
may  deliver  and  receive  Securities,   and  receipts  with  respect  to  such
Securities, and arrange for payments to be made and received by the Custodian in
accordance  with the  customs  prevailing  from time to time  among  brokers  or
dealers  in such  Securities.  When  the  Custodian  is  instructed  to  deliver
Securities  against payment,  delivery of such Securities and receipt of payment
therefor   may  not  be   completed   simultaneously.   The  Fund   assumes  all
responsibility  and liability for all credit risks  involved in connection  with
the  Custodian's  delivery of securities  pursuant to  instructions of the Fund,
which  responsibility  and liability  shall continue until final payment in full
has been received by the Custodian.

      16.  The  Custodian  shall have no duties or  responsibilities  whatsoever
except such duties and  responsibilities  as are  specifically set forth in this
Agreement,  and no covenant  or  obligation  shall be implied in this  Agreement
against the Custodian.

                                  ARTICLE XVI

                                   TERMINATION

      1. Either of the parties  hereto may terminate this Agreement by giving to
the other  party a notice in writing  specifying  the date of such  termination,
which  shall be not less than  ninety (90) days after the date of giving of such
notice.  In the event such notice is given by the Fund, it shall be  accompanied
by a copy of a resolution of the Board of Trustees of the Fund, certified by the
Secretary,  the Clerk, any Assistant Secretary or any Assistant Clerk,  electing
to terminate this Agreement and designating a successor custodian or custodians,
each of which shall be a bank or trust company  having not less than  $2,000,000
aggregate capital,  surplus and undivided  profits.  In the event such notice is
given by the  Custodian,  the Fund  shall,  on or before the  termination  date,
deliver to the  Custodian a copy of a resolution of the Board of Trustees of the
Fund,  certified by the  Secretary,  the Clerk,  any Assistant  Secretary or any
Assistant Clerk, designating a successor custodian or custodians. In the absence
of such  designation  by the Fund,  the  Custodian  may  designate  a  successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate  capital,  surplus and undivided  profits.  Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian shall upon receipt
of a notice of  acceptance  by the  successor  custodian  on that  date  deliver
directly to the successor  custodian all Securities and moneys then owned by the
Fund and held by it as Custodian,  after deducting all fees,  expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.

      2. If a successor custodian is not designated by the Fund or the Custodian
in  accordance  with  the  preceding  paragraph,  the Fund  shall  upon the date
specified in the notice of  termination  of this Agreement and upon the delivery
by the Custodian of all Securities (other than securities held in the Book-Entry
System  which cannot be delivered to the Fund) and moneys then owned by the Fund
be deemed to be its own custodian and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement,  other than the duty
with  respect  to  Securities  held in the  Book-Entry  System  which  cannot be
delivered to the Fund to hold such Securities  hereunder in accordance with this
Agreement.


                                       25
<PAGE>

                                  ARTICLE XVII

                                  MISCELLANEOUS

      1.  Annexed  hereto as  Appendix A is a  Certificate  signed by two of the
present  officers  of the Fund under its seal,  setting  forth the names and the
signatures of the present Authorized Persons.  The Fund agrees to furnish to the
Custodian a new  Certificate  in similar form in the event that any such present
Authorized  Person ceases to be an Authorized  Person or in the event that other
or  additional  Authorized  Persons  are  elected or  appointed.  Until such new
Certificate shall be received,  the Custodian shall be fully protected in acting
under the provisions of this Agreement upon Oral  Instructions  or signatures of
the present Authorized Persons as set forth in the last delivered Certificate.

      2.  Annexed  hereto as  Appendix B is a  Certificate  signed by two of the
present  Officers  of the Fund under its seal,  setting  forth the names and the
signatures  of the present  Officers of the Fund.  The Fund agrees to furnish to
the  Custodian a new  Certificate  in similar form in the event any such present
Officer  ceases to be an  Officer  of the Fund,  or in the event  that  other or
additional  officers are elected or appointed.  Until such new Certificate shall
be  received,  the  Custodian  shall be fully  protected  in  acting  under  the
provisions of this Agreement upon the signatures of the officers as set forth in
the last delivered Certificate.

      3. Any notice or other  instrument  in writing,  authorized or required by
this  Agreement to be given to the  Custodian,  shall be  sufficiently  given if
addressed  to the  Custodian  and mailed or delivered to it at its offices at 90
Washington  Street,  New York,  New York  10286,  or at such other  place as the
Custodian may from time to time designate in writing.

      4. Any notice or other  instrument  in writing,  authorized or required by
this Agreement to be given to the Fund shall be sufficiently  given if addressed
to the Fund and mailed or  delivered  to it at its office at the address for the
Fund first  above  written,  or at such other place as the Fund may from time to
time designate in writing.

      5. This Agreement may not be amended or modified in any manner except by a
written  agreement  executed by both  parties  with the same  formality  as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.

      6. This  Agreement  shall  extend to and shall be binding upon the parties
hereto, and their respective  successors and assigns;  provided,  however,  that
this Agreement  shall not be assignable by the Fund without the written  consent
of the Custodian,  or by the Custodian  without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.

      7. This  Agreement  shall be construed in accordance  with the laws of the
State of New York without giving effect to conflict of laws principles  thereof.
Each party  hereby  consents  to the  jurisdiction  of a state or federal  court
situated  in New York City,  New York in  connection  with any  dispute  arising
hereunder and hereby waives its right to trial by jury.

      8. This Agreement may be executed in any number of  counterparts,  each of
which shall be deemed to be an original,  but such counterparts shall, together,
constitute only one instrument.


                                       26
<PAGE>

      9. A copy of the  Declaration  of Trust  of the  Fund is on file  with the
Secretary of The Commonwealth of Massachusetts,  and notice is hereby given that
this  instrument  is  executed on behalf of the Board of Trustees of the Fund as
Trustees and not  individually  and that the  obligations of this instrument are
not  binding  upon any of the  Trustees  or  shareholders  individually  but are
binding only upon the assets and property of the Fund; provided,  however,  that
the  Declaration  of Trust of the Fund  provides that the assets of a particular
Series of the Fund shall  under no  circumstances  be charged  with  liabilities
attributable  to any  other  Series of the Fund and that all  persons  extending
credit to, or contracting  with or having any claim against a particular  Series
of the Fund shall look only to the assets of that particular  Series for payment
of such credit, contract or claim.


                                       27
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
executed by their  respective  Officers,  thereunto  duly  authorized  and their
respective  seals to be  hereunto  affixed,  as of the day and year first  above
written.

                                       MUNIYIELD FUND, INC.

[SEAL]                                 By:______________________________________

Attests:

__________________________________

                                       THE BANK OF NEW YORK

[SEAL]                                 By:______________________________________

Attest:

__________________________________


                                       28
<PAGE>

                                   APPENDIX A

      I,                               , President and I,
,                        of MuniYield Fund, Inc., a Massachusetts business trust
(the "Fund"), do hereby certify that:

      The  following  individuals  have  been  duly  authorized  by the Board of
Trustees  of the Fund in  conformity  with the Fund's  Declaration  of Trust and
By-Laws to give Oral  Instructions  and  Written  Instructions  on behalf of the
Fund, and the signatures  set forth  opposite their  respective  names are their
true and correct signatures:

Name                                   Signature

_______________________________        ___________________________________
<PAGE>

                                   APPENDIX B

      I,                               , President and I,
,                        of MuniYield Fund, Inc., a Massachusetts business trust
(the "Fund"), do hereby certify that:

      The following  individuals serve in the following  positions with the Fund
and each has been duly elected or appointed by the Board of Trustees of the Fund
to each such  position  and  qualified  therefor in  conformity  with the Fund's
Declaration  of Trust and By-Laws,  and the  signatures set forth opposite their
respective names are their true and correct signatures:

          Name                       Position                 Signature

_________________________   ________________________   _________________________
<PAGE>

                                   APPENDIX C

         I, Marjorie  McLaughlin,  an Assistant  Vice President with THE BANK OF
NEW YORK do hereby designate the following publications:

The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>

                                    EXHIBIT A

                                  CERTIFICATION

      The undersigned,                                   , hereby certifies that
he  or  she  is  the  duly  elected  and  acting  of  MuniYield  Fund,  Inc.,  a
Massachusetts  business  trust (the  "Fund"),  and  further  certifies  that the
following  resolution  was  adopted  by the Board of  Trustees  of the Fund at a
meeting duly held on  ______________,  1991,  at which a quorum was at all times
present and that such  resolution  has not been  modified or rescinded and is in
full force and effect as of the date hereof.

            RESOLVED,  that The Bank of New York, as Custodian pursuant to
      a Custody  Agreement between The Bank of New York and the Fund dated
      as of  ____________,  1991, (the "Custody  Agreement") is authorized
      and  instructed on a continuous  and ongoing basis to deposit in the
      Book-Entry  System,  as  defined  in  the  Custody  Agreement,   all
      securities eligible for deposit therein, regardless of the Series to
      which  the same  are  specifically  allocated,  and to  utilize  the
      Book-Entry  System to the extent  possible  in  connection  with its
      performance thereunder, including, without limitation, in connection
      with  settlements  of purchases  and sales of  securities,  loans of
      securities, and deliveries and returns of securities collateral.

IN WITNESS WHEREOF,  I have hereunto set my hand and the seal of MuniYield Fund,
Inc., as of the day     of               , 1991.

                                         _______________________________________
[SEAL]
<PAGE>

                                    EXHIBIT B

                                  CERTIFICATION

         The undersigned,                                , hereby certifies that
he or she is the duly elected and acting                      of MuniYield Fund,
Inc., a Massachusetts  business trust (the "Fund"),  and further  certifies that
the following  resolution  was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 1991, at which a quorum was at all times present and that
such  resolution  has not been  modified or  rescinded  and is in full force and
effect as of the date hereof.

            RESOLVED,  that The Bank of New York, as Custodian pursuant to
      a Custody  Agreement between The Bank of New York and the Fund dated
      as of                , 1991, (the "Custody Agreement") is authorized
      and  instructed on a continuous and ongoing basis until such time as
      it receives a Certificate,  as defined in the Custody Agreement,  to
      the contrary to deposit in the Depository, as defined in the Custody
      Agreement,  all securities eligible for deposit therein,  regardless
      of the Series to which the same are specifically  allocated,  and to
      utilize the Depository to the extent possible in connection with its
      performance thereunder, including, without limitation, in connection
      with  settlements  of purchases  and sales of  securities,  loans of
      securities, and deliveries and returns of securities collateral.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand  and  the  seal of
MuniYield Fund, Inc., as of the    day of              , 1991.

                                         _______________________________________
[SEAL]

<PAGE>

                                   EXHIBIT B-1

                                  CERTIFICATION

      The undersigned,                                   , hereby certifies that
he or she is the duly elected                            and acting of MuniYield
Fund, Inc., a Massachusetts  business trust (the "Fund"),  and further certifies
that the following  resolution  was adopted by the Board of Trustees of the Fund
at a meeting duly held on ___________,  1991, at which a quorum was at all times
present and that such  resolution  has not been  modified or rescinded and is in
full force and effect as of the date hereof.

            RESOLVED,  that The Bank of New York, as Custodian pursuant to
      a Custody  Agreement between The Bank of New York and the Fund dated
      as of                , 1991, (the "Custody Agreement") is authorized
      and  instructed on a continuous and ongoing basis until such time as
      it receives a Certificate,  as defined in the Custody Agreement,  to
      the  contrary  to  deposit  in the  Participants  Trust  Company  as
      Depository,  as defined in the  Custody  Agreement,  all  securities
      eligible for deposit therein,  regardless of the Series to which the
      same are  specifically  allocated,  and to utilize the  Participants
      Trust  Company  to  the  extent  possible  in  connection  with  its
      performance thereunder, including, without limitation, in connection
      with  settlements  of purchases  and sales of  securities,  loans of
      securities, and deliveries and returns of securities collateral.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand  and  the  seal of
MuniYield Fund, Inc., as of the    day of               , 1991.

                                         _______________________________________
[SEAL]
<PAGE>

                                    EXHIBIT C

                                  CERTIFICATION

      The undersigned,                                   , hereby certifies that
he or she is the duly elected                            and acting of MuniYield
Fund, Inc., a Massachusetts  business trust (the "Fund"),  and further certifies
that the following  resolution  was adopted by the Board of Trustees of the Fund
at a meeting  duly held on  ______________,  1991,  at which a quorum was at all
times present and that such resolution has not been modified or rescinded and is
in full force and effect as of the date hereof.

            RESOLVED,  that The Bank of New York, as Custodian pursuant to
      a Custody  Agreement between The Bank of New York and the Fund dated
      as of  ____________,  1991, (the "Custody  Agreement") is authorized
      and  instructed on a continuous and ongoing basis until such time as
      it receives a Certificate,  as defined in the Custody Agreement,  to
      the  contrary,  to accept,  utilize and act with respect to Clearing
      Member   confirmations  for  Options  and  transaction  in  Options,
      regardless  of  the  Series  to  which  the  same  are  specifically
      allocated,  as such terms are defined in the Custody  Agreement,  as
      provided in the Custody Agreement.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand  and  the  seal of
MuniYield Fund, Inc., as of the    day of              , 1991.

                                         _______________________________________
[SEAL]
<PAGE>

                         DOMESTIC CUSTODIAN FEE SCHEDULE
                                       FOR
                              MUNIYIELD FUND, INC.

Safekeepinq/Income Collection/Reporting via LASER
DTC/ID Affirmations

      5/8ths  of a basis  point  per annum on the  aggregate  net  assets of the
portfolio's securities.

Security Transaction Charges

         $ 8    -   Book-Entry settlement - DTC/FRB

         $25    -   Physicals, options, and futures

         $ 5    -   Futures maintenance margins

Other Transaction Charges

         $ 8.50     Bank official checks and money transfers in/out-
                    not related to securities transactions.

Out-of-Pocket Expenses

These  expenses  are in  addition  to  quoted  fees and are  billed  as they are
incurred.  These expenses traditionally include, but are not limited to, postage
and handling on physical  transfer items,  telephone  charges,  Fed Wire charges
relating to security settlements, etc.

MuniYield Fund, Inc.                     The Bank of New York

Approved by:_________________________    Submitted by:__________________________

       Date:_________________________            Date:__________________________


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>11
<FILENAME>file010.txt
<DESCRIPTION>OPINION AND CONSENT OF COUNSEL
<TEXT>

                                                                      Exhibit 11

                         Sidley Austin Brown & Wood LLP
                                875 Third Avenue
                            New York, New York 10022
                           Telephone: (212) 906-2000
                              Fax: (212) 906-2021

                                                              September 14, 2001

MuniYield Fund, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey  08536

Ladies and Gentlemen:

      We have acted as counsel for MuniYield Fund, Inc. (the "Fund") in
connection with the proposed acquisition by the Fund of substantially all of the
assets and the assumption by the Fund of substantially all of the liabilities of
Merrill Lynch Municipal Strategy Fund, Inc. ("Municipal Strategy"), in return
solely for newly issued shares of common stock and shares of a newly created
series of auction market preferred stock of the Fund (collectively the
"Reorganization"). This opinion is furnished in connection with the Fund's
Registration Statement on Form N-14 under the Securities Act of 1933, as amended
(File No. 333-65242) (the "Registration Statement"), relating to shares of
common stocks and auction market preferred stock of the Fund, each par value
$0.10 per share (the "Stocks"), to be issued in the Reorganization.

      As counsel for the Fund, we are familiar with the proceedings taken by it
and to be taken by it in connection with the authorization, issuance and sale of
the Stocks. In addition, we have examined and are familiar with the Articles of
Incorporation of the Fund, as amended and supplemented, the By-Laws of the Fund,
as amended, and such other documents as we have deemed relevant to the matters
referred to in this opinion.

      Based upon the foregoing, we are of the opinion that subsequent to the
approval of the Agreement and Plan of Reorganization among the Fund and
Municipal Strategy set forth in the proxy statement and prospectus constituting
a part of the Registration Statement (the "Proxy Statement and Prospectus"), the
Stocks, upon issuance in the manner referred to in the Registration Statement,
for consideration not less than the par value thereof, will be legally issued,
fully paid and non-assessable shares of common stocks or auction market
preferred stock, as the case may be, of the Fund.


<PAGE>

      We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Proxy Statement and
Prospectus constituting a part thereof.

                                               Very truly yours,

                                               /s/Sidley Austin Brown & Wood LLP


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.A
<SEQUENCE>12
<FILENAME>file011.txt
<DESCRIPTION>FORM OF SERVICE AGREEMENT
<TEXT>

                                                                   Exhibit 13(a)

AGREEMENT, made as of November 11, 1991, between MuniYield Fund, Inc. a
corporation organized and existing under the laws of the state of Massachusetts
(hereinafter referred to as the "Customer"), and The Bank of New York, a New
York trust company (hereinafter referred to as the "Bank").

                              W I T N E S S E T H:

That for and in consideration of the mutual promises hereinafter set forth, the
parties hereto covenant and agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

Whenever used in this Agreement, the following words and phrases shall have the
following meanings:

1. "Business Day" shall be deemed to be each day on which the Bank is open for
business.

2. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to the Bank by the
Customer which is signed by any Officer, as hereinafter defined, and actually
received by the Bank.

3. "Officer" shall be deemed to be the Customer's Chief Executive' Officer,
President, any Vice President, the Secretary, the Treasurer, the Controller, any
Assistant Treasurer and any Assistant Secretary duly authorized by the Board of
Directors of the Customer to execute any Certificate, instruction, notice or
other instrument on behalf of the Customer and named in a Certificate, as such
Certificate may be amended from time to time.

4. "Prospectus" shall mean the last Customer prospectus actually received by the
Bank from the Customer with respect to which the Customer has indicated a
registration statement under the Securities Act of 1933, as amended, has become
effective, including the statement of Additional Information incorporated by
reference therein.

5. "Shares" shall mean all or any part of each class of the shares of capital
stock of the Customer which from time to time are authorized and/or issued by
the Customer and identified in a Certificate of the Secretary of the Customer
under corporate seal, as such Certificate may be amended from time to time.

                                   ARTICLE II
                               APPOINTMENT OF BANK

1. The Customer hereby constitutes and appoints the Bank as its agent to perform
the services described herein and as more particularly described in Schedule I
attached hereto (the "Services"), and the Bank hereby accepts appointment as
such agent and agrees to perform the Services in accordance with the terms
hereinafter set forth.

2. In connection with such appointment, the Customer shall deliver the following
documents to the Bank on or about the closing date of the initial public
offering:
<PAGE>

      (a) A certified copy of the Certificate of Incorporation or other document
evidencing the Customer's form of organization (the "Charter") and all
amendments thereto;

      (b) A certified copy of the By-Laws of the Customer;

      (c) A certified copy of a resolution of the Board of Directors of the
Customer appointing the Bank to perform the Services and authorizing the
execution and delivery of this Agreement;

      (d) A Certificate signed by the Secretary of the Customer specifying: the
number of authorized Shares, the number of such authorized Shares issued and
currently outstanding, and the names and specimen signatures of all persons duly
authorized by the Board of Directors of the Customer to execute any Certificate
on behalf of the Customer, which Certificate may be amended from time to time;

      (e) A Specimen Share certificate for each class of Shares in the form
approved by the Board of Directors of the Customer, together with a Certificate
signed by the Secretary of the Customer as to such approval;

      (f) A copy of the Customer's Registration Statement, filed by the Customer
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended; and

      (g) An opinion of counsel for the Customer with respect to the validity of
the authorized and outstanding Shares, whether such Shares are fully paid and
non-assessable and the status of such Shares under the Securities Act of 1933,
as amended, and any other applicable law or regulation (i.e., if subject to
registration, that they have been registered and that the Registration Statement
has become effective or, if exempt, the specific grounds therefor).

3. The Customer shall furnish the Bank with a sufficient supply of blank Share
certificates and from time to time will renew such supply upon request of the
Bank. Such blank Share certificates shall be properly signed, by facsimile or
otherwise, by officers of the Customer authorized by law or by the By-Laws to
sign Share certificates, and, if required, shall bear the corporate seal or a
facsimile thereof.

                                  ARTICLE III
                      AUTHORIZATION AND ISSUANCE OF SHARES

1. The Customer shall deliver to the Bank a certified copy of the amendment to
the Charter giving effect to such increase, decrease or change, on or before the
effective date of any increase, decrease or other change in the total number of
Shares authorized to be issued.

      (a) A certified copy of the amendment to the Charter giving effect to such
increase, decrease or change;

      (b) An opinion of counsel for the Customer with respect to the validity of
the Shares and the status of such Shares under the Securities Act of 1933, as
amended; and any other applicable federal law or regulations (i.e.,if subject to
registration, that they have been registered and that the Registration Statement
has become effective or, if exempt, the specific grounds therefor); and


                                       2
<PAGE>

      (c) In the case of an increase, if the appointment of the Bank was
theretofore expressly limited, a certified copy of a resolution of the Board of
Directors of the Customer increasing the authority of the Bank.

2. Prior to the issuance of any additional Shares pursuant to stock dividends,
stock splits or otherwise, and prior to any reduction in the number of Shares
outstanding, the Customer shall deliver the following documents to the Bank:

      (a) A certified copy of the resolutions adopted by the Board of Directors
and/or the shareholders of the Customer authorizing such issuance of additional
Shares of the Customer or such reduction, as the case may be;

      (b) A certified copy of the order or consent, if applicable, of each
governmental or regulatory authority required by law as a prerequisite to the
issuance or reduction of such Shares; and

      (c) An opinion of counsel for the Customer with respect to the validity of
the Shares and the status of such the Shares under the Securities Act of 1933,
as amended, and any other applicable law or regulation (i.e., if subject to
registration, that they have been registered and that the Registration Statement
has become effective, or, if exempt, the specific grounds therefor).

                                   ARTICLE IV
                     RECAPITALIZATION OR CAPITAL ADJUSTMENT

1. In the case of any negative stock split, recapitalization or other capital
adjustment requiring a change in the form of Share certificates, the Bank will
issue Share certificates in the new form in exchange for, or upon transfer of,
outstanding Share certificates in the old form, upon receiving:

      (a) A Certificate authorizing the issuance of Share certificates in the
new form;

      (b) A certified copy of any amendment to the Charter with respect to the
change;

      (c) Specimen Share certificates for each class of Shares in the new form
approved by the Board of Directors of the Customer, with a Certificate signed by
the Secretary of the Customer as to such approval;

      (d) A certified copy of the order or consent of each governmental or
regulatory authority required by law as a prerequisite to the issuance of the
Shares in the new form, and an opinion of counsel for the Customer that the
order or consent of no other governmental or regulatory authority is required;
and

      (e) An opinion of counsel for the Customer with respect to the validity of
the Shares in the new form and the status of such Shares under the Securities
Act of 1933, as amended, and any other applicable law or regulation (i.e., if
subject to registration that the Shares have been registered and that the
Registration Statement has become effective or, if exempt, the specific grounds
therefor).

2. The Customer shall furnish the Bank with a sufficient supply of blank Share
certificates in the new form, and from time to time will replenish such supply
upon the request of the Bank.


                                       3
<PAGE>

Such blank Share certificates shall be properly signed, by facsimile or
otherwise, by Officers of the Customer authorized by law or by the By-Laws to
sign Share Certificates and, if required, shall bear the corporate seal or a
facsimile thereof.

                                   ARTICLE V
                         ISSUANCE AND TRANSFER OF SHARES

1. (a) The Bank will issue Share certificates upon receipt of a Certificate from
an Officer, but shall not be required to issue Share certificates after it has
received from an appropriate federal or state authority written notification
that the sale of Shares has been suspended or discontinued, and the Bank shall
be entitled to rely upon such written notification. The Bank shall not be
responsible for the payment of any original issue or other taxes required to be
paid by the Customer in connection with the issuance of any shares.

      (b) Shares will be transferred upon presentation to the Bank of Share
certificates in form deemed by the Bank properly endorsed for transfer,
accompanied by such documents as the Bank deems necessary to evidence the
authority of the person making such transfer, and bearing satisfactory evidence
of the payment of applicable stock transfer taxes. In the case of small estates
where no administration is contemplated, the Bank may, when furnished with an
appropriate surety bond, and without further approval of the Customer, transfer
Shares registered in the name of the decedent where the current market value of
the Shares being transferred does not exceed such amount as may from time to
time be prescribed by the various states. The Bank reserves the right to refuse
to transfer Shares until it is satisfied that the endorsements on Share
certificates are valid and genuine, and for that purpose it may require, unless
otherwise instructed by an Officer of the Customer, a guaranty of signature by a
member firm of the New York Stock Exchange or by a bank or trust company
acceptable to the Bank. The Bank also reserves the right to refuse to transfer
Shares until it is satisfied that the requested transfer is legally authorized,
and it shall incur no liability for the refusal in good faith to make transfers
which the Bank, in its judgment, deems improper or unauthorized, or until it is
satisfied that there is no basis to any claims adverse to such transfer. The
Bank may, in effecting transfers of Shares, rely upon those provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers or the
Uniform Commercial Code, as the same may be amended from time to time,
applicable to the transfer of securities, and the Customer shall indemnify the
Bank for any act done or omitted by it in good faith in reliance upon such laws.

      (c) All certificates representing Shares that are subject to restrictions
on transfer (e.g., securities acquired pursuant to an investment representation,
securities held by controlling persons, securities subject to stockholders'
agreements, etc.), other than the general restrictions on the transferability of
the Shares described in the Prospectus, shall be stamped with a legend
describing the extent and conditions of the restrictions or referring to the
source of such restrictions. The Bank assumes no responsibility with respect to
the transfer of restricted securities where counsel for the Customer advises
that such transfer may be properly effected.

      (d) Notwithstanding the foregoing or any other provision contained in this
Agreement to the contrary, the Bank shall be fully protected by the Customer in
not requiring any instruments, documents, assurances, endorsements or
guarantees, including, without limitation, any signature guarantees, in
connection with a transfer of Shares whenever the Bank reasonably believes that
requiring the same would be inconsistent with the transfer procedures as
described in the Prospectus.


                                       4
<PAGE>

                                   ARTICLE VI
                           DIVIDENDS AND DISTRIBUTIONS

1. The Customer shall furnish to the Bank a copy of a resolution of its Board of
Directors, certified by the Secretary or any Assistant Secretary, either (i)
setting forth the date of the declaration of a dividend or distribution, the
date of accrual or payment, as the case may be, the record date as of which
shareholders entitled to payment, or accrual, as the case may be, shall be
determined, the amount per Share of such dividend or distribution, the payment
date on which all previously accrued and unpaid dividends are to be paid, and
the total amount, if any, payable to the Bank on such payment date, or (ii)
authorizing the declaration of dividends and distributions on a periodic basis
and authorizing the Bank to rely on a Certificate setting forth the information
described in subsection (i) of this paragraph.

2. Prior to the payment date specified in such Certificate or resolution, as the
case may be, the Customer shall, in the case of a cash dividend or distribution,
pay to the Bank an amount of cash, sufficient for the Bank to make the payment,
specified in such Certificate or resolution, to the shareholders of record as of
such payment date. The Bank will, upon receipt of any such cash, (i) in the case
of shareholders who are participants in a dividend reinvestment and/or cash
purchase plan of the Customer, reinvest such cash dividends or distributions in
accordance with the terms of such plan, and (ii) in the case of shareholders who
are not participants in any such plan, make payment of such cash dividends or
distributions to the shareholders of record as of the record date by mailing a
check, payable to the registered shareholder, to the address of record or
dividend mailing address. The Bank shall not be liable for any improper payment
made in accordance with a Certificate or resolution described in the preceding
paragraph. If the Bank shall not receive sufficient cash prior to the payment
date to make payments of any cash dividend or distribution pursuant to
subsections (i) and (ii) above to all shareholders of the Customer as of the
record date, the Bank shall, upon notifying the Customer, withhold payment to
all shareholders of the Customer as of the record date until sufficient cash is
provided to the Bank.

3. It is understood that the Bank shall in no way be responsible for the
determination of the rate or form of dividends or distributions due to the
shareholders.

4. It is understood that the Bank shall file such appropriate information
returns concerning the payment of dividends and distributions with the proper
federal, state and local authorities as are required by law to be filed by the
Customer but shall in no way be responsible for the collection or withholding of
taxes due on such dividends or distributions due to shareholders, except and
only to the extent required of it by applicable law.

                                  ARTICLE VII
                             CONCERNING THE CUSTOMER

1. The Customer shall promptly deliver to the Bank written notice of any change
in the Officers authorized to sign Share certificates, Certificates,
notifications or requests, together with a specimen signature of each new
Officer. In the event any Officer who shall have signed manually or whose
facsimile signature shall have been affixed to blank Share certificates shall
die, resign or be removed prior to issuance of such Share certificates, the Bank
may issue such Share certificates as the Share certificates of the Customer
notwithstanding such death, resignation or removal, and the Customer shall
promptly deliver to the Bank such approvals, adoptions or ratifications as may
be required by law.


                                       5
<PAGE>

2. Each copy of the Charter of the Customer and copies of all amendments thereto
shall be certified by the Secretary of State (or other appropriate official) of
the state of incorporation, and if such Charter and/or amendments are required
by law also to be filed with a county or other officer or official body, a
certificate of such filing shall be filed with a certified copy submitted to the
Bank. Each copy of the By-Laws and copies of all amendments thereto, and copies
of resolutions of the Board of Directors of the Customer, shall be certified by
the Secretary or an Assistant Secretary of the Customer under the corporate
seal.

3. It shall be the sole responsibility of the Customer to deliver to the Bank
the Customer's currently effective Prospectus and, for purposes of this
Agreement, the Bank shall not be deemed to have notice of any information
contained in such Prospectus until it is actually received by the Bank.

                                  ARTICLE VIII
                               CONCERNING THE BANK

1. The Bank shall not be liable and shall be fully protected in acting upon any
oral instruction, writing or document reasonably believed by it to be genuine
and to have been given, signed or made by the proper person or persons and shall
not be held to have any notice of any change of authority of any person until
receipt of written notice thereof from an Officer of the Customer. It shall also
be protected in processing Share certificates which it reasonably believes to
bear the proper manual or facsimile signatures of the duly authorized officers
of the Customer and the proper countersignature of the Bank.

2. The Bank may establish such additional procedures, rules and regulations
governing the transfer or registration of Share certificates as it may deem
advisable and consistent with such rules and regulations generally adopted by
bank transfer agents.

3. The Bank may keep such records as it deems advisable but not inconsistent
with resolutions adopted by the Board of Directors of the Customer. The Bank may
deliver to the Customer from time to time at its discretion, for safekeeping or
disposition by the Customer in accordance with law, such records, papers, Share
certificates which have been cancelled in transfer or exchange and other
documents accumulated in the execution of its duties hereunder as the Bank may
deem expedient, other than those which the Bank is itself required to maintain
pursuant to applicable laws and regulations, and the Customer shall assume all
responsibility for any failure thereafter to produce any record, paper,
cancelled Share certificate or other document so returned, if and when required.
The records maintained by the Bank pursuant to this paragraph which have not
been previously delivered to the Customer pursuant to the foregoing provisions
of this paragraph shall be considered to be the property of the Customer, shall
be made available upon request for inspection by the Officers, employees and
auditors of the Customer, and shall be delivered to the Customer upon request
and in any event upon the date of termination of this Agreement, as specified in
Article IX of this Agreement, in the form and manner kept by the Bank on such
date of termination or such earlier date as may be requested by the Customer.

4. The Bank may employ agents or attorneys-in-fact at the reasonable expense of
the Customer, and shall not be liable for any loss or expense arising out of or
in connection with, the actions or omissions to act of its agents or
attorneys-in-fact, so long as the Bank acts in good


                                       6
<PAGE>

faith and without negligence or willful misconduct in connection with the
selection of such agents or attorneys-in-fact.

5. The Bank shall not be liable for any loss or damage, -including reasonable
attorney's fees, resulting from its actions or omissions to act or otherwise,
except for any loss or damage arising out of its own negligence or willful
misconduct.

6. The Customer shall indemnify and hold harmless the Bank from and against any
and all claims (whether with or without basis in fact or law), costs, demands,
expenses and liabilities, including reasonable attorney's fees, which the Bank
may sustain or incur or which may be asserted against the Bank by reason of or
as a result of any action taken or omitted to be taken by the Bank without its
own negligence or willful misconduct in reliance upon (i) any provision of this
agreement, (ii) the Prospectus, (iii) any instrument, order or Share certificate
reasonably believed by it to be genuine and to be signed, countersigned or
executed by any duly authorized Officer of the Customer, (iv) any Certificate or
other instructions of an Officer, (v) any opinion of legal counsel for the
Customer or the Bank, or (vi) any law, act, regulation or any interpretation of
the same even though such law, act or regulation may thereafter have been
altered, changed, amended or repealed.

7. Specifically, but not by way of limitation, the Customer shall indemnify and
hold harmless the Bank from and against any and all claims (whether with or
without basis in fact or law), costs, demands, expenses and liabilities,
including reasonable attorney's fees, of any and every nature which the Bank may
sustain or incur or which may be asserted against the Bank in connection with
the genuineness of a Share certificate, the Bank's capacity and authorization to
issue Shares and the form and amount of authorized Shares.

8. At any time the Bank may apply to an Officer of the Customer for written
instructions with respect to any matter arising in connection with the Bank's
duties and obligations under this Agreement, and the Bank shall not be liable
for any action taken or omitted to be taken by the Bank in good faith in
accordance with such instructions. Such application by the Bank for instructions
from an Officer of the Customer may, at the option of the Bank, set forth in
writing any action proposed to be taken or omitted to be taken by the Bank with
respect to its duties or obligations under this Agreement and the date on and/or
after which such action shall be taken, and the Bank shall not be liable for any
action taken or omitted to be taken in accordance with a proposal included in
any such application on or after the date specified therein unless, prior to
taking or omitting to take any such action, the Bank has received written
instructions in response to such application specifying the action to be taken
or omitted. The Bank may consult counsel to the Customer or its own counsel, at
the expense of the Customer, and shall be fully protected with respect to
anything done or omitted by it in good faith in accordance with the advice or
opinion of such counsel.

9. When mail is used for delivery of non-negotiable Share certificates, the
value of which does not exceed the limits of the Bank's Blanket Bond, the Bank
shall send such non-negotiable Share certificates by first class mail, and such
deliveries will be covered while in transit by the Bank's Blanket Bond.
Non-negotiable Share certificates, the value of which exceed the limits of the
Bank's Blanket Bond, will be sent by insured registered mail. Negotiable Share
certificates will be sent by insured registered mail. The Bank shall advise the
Customer of any Share certificates returned as undeliverable after being mailed
as herein provided for.


                                       7
<PAGE>

10. The Bank may issue new Share certificates in place of Share certificates
represented to have been lost, stolen or destroyed upon receiving instructions
in writing from an Officer and indemnity satisfactory to the Bank. Such
instructions from the Customer shall be in such form as approved by the Board of
Directors of the Customer in accordance with applicable law or the By-Laws of
the Customer governing such matters. If the Bank receives written notification
from the owner of the lost, stolen or destroyed Share certificate within a
reasonable time after he has notice of it, the Bank shall promptly notify the
Customer and shall act pursuant to written instructions signed by an Officer. If
the Customer receives such written notification from the owner of the lost,
stolen or destroyed Share certificate within a reasonable time after he has
notice of it, the Customer shall promptly notify the Bank and the Bank shall act
pursuant to written instructions signed by an Officer. The Bank shall not be
liable for any act done or omitted by it pursuant to the written instructions
described herein. The Bank may issue new Share certificates in exchange for, and
upon surrender of, mutilated Share certificates.

11. The Bank will issue and mail subscription warrants for Shares, Shares
representing stock dividends, exchanges or splits, or act as conversion agent
upon receiving written instructions from an Officer and such other documents as
the Bank may deem necessary.

12. The Bank will supply shareholder lists to the Customer from time to time
upon receiving a request therefor from an Officer of the Customer.

13. In case of any requests or demands for the inspection of the shareholder
records of the Customer, the Bank will notify the Customer and endeavor to
secure instructions from an officer as to such inspection. The Bank reserves the
right, however, to exhibit the shareholder records to any person whenever it is
advised by its counsel that there is a reasonable likelihood that the Bank will
be held liable for the failure to exhibit the shareholder records to such
person.

14. At the request of an Officer, the Bank will address and mail such
appropriate notices to shareholders as the Customer may direct.

15. Notwithstanding any provisions of this Agreement to the contrary, the Bank
shall be under no duty or obligation to inquire into, and shall not be liable
for:

      (a) The legality of the issue, sale or transfer of any Shares, the
sufficiency of the amount to be received in connection therewith, or the
authority of the Customer to request such issuance, sale or transfer;

      (b) The legality of the purchase of any Shares, the sufficiency of the
amount to be paid in connection therewith, or the authority of the Customer to
request such purchase;

      (c) The legality of the declaration of any dividend by the Customer, or
the legality of the issue of any Shares in payment of any stock dividend; or

      (d) The legality of any recapitalization or readjustment of the Shares.

16. The Bank shall be entitled to receive and the Customer hereby agrees to pay
to the Bank for its performance hereunder (i) out-of-pocket expenses (including
reasonable attorney's fees and expenses) incurred in connection with this
Agreement and its performance hereunder, and (ii) the compensation for services
as set forth in Schedule L


                                       8
<PAGE>

17. The Bank shall not be responsible for any money, whether or not represented
by any check, draft or other instrument for the payment of money, received by it
on behalf of the Customer, until the Bank actually receives and collects such
funds.

18. The Bank shall have no duties or responsibilities whatsoever except such
duties and responsibilities as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied against the Bank in connection with
this Agreement.

                                   ARTICLE IX
                                   TERMINATION

Either of the parties hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than 60 days after the date of receipt of such notice. In the event
such notice is given by the Customer, it shall be accompanied by a copy of a
resolution of the Board of Directors of the Customer, certified by the Secretary
electing to terminate this Agreement and designating a successor transfer agent
or transfer agents. In the event such notice is given by the Bank, the Customer
shall, on or before the termination date, deliver to the Bank a copy of a
resolution of its Board of Directors certified by the Secretary designating a
successor transfer agent or transfer agents. In the absence of such designation
by the Customer, the Bank may designate a successor transfer agent. If the
Customer fails to designate a successor transfer agent and if the Bank is unable
to find a successor transfer agent, the Customer shall, upon the date specified
in the notice of termination of this Agreement and delivery of the records
maintained hereunder, be deemed to be its own transfer agent and the Bank shall
thereafter be relieved of all duties and responsibilities hereunder. Upon
termination hereof, the Customer shall pay to the Bank such compensation as may
be due to the Bank as of the date of such termination, and shall reimburse the
Bank for any disbursements and expenses made or incurred by the Bank and payable
or reimbursable hereunder.

                                   ARTICLE X
                                  MISCELLANEOUS

1. The Customer agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties and obligations of the Bank hereunder,
it shall advise the Bank of such proposed change at least ten business days
prior to the intended date of the same, and shall proceed with such change only
if it shall have received the written consent of the Bank thereto.

2. The indemnities contained herein shall be continuing obligations of the
Customer, its successors and assigns, notwithstanding the termination of this
Agreement.

3. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Customer shall be sufficiently given if addressed
to the Customer and mailed or delivered to it at 800 Scudders Mill Road,
Plainsboro, NJ 08536 or at such place as the Customer may from time to time
designate in writing.

4. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Bank shall be sufficiently given if addressed to
the Bank and mailed or delivered to it at its office at 101 Barclay Street
(22W), New York, New York 10286 or at such other place as the Bank may from time
to time designate in writing.


                                       9
<PAGE>

5. This Agreement may not be amended or modified in any manner except by a
written agreement duly authorized and executed by both parties. Any duly
authorized Officer may amend any Certificate naming Officers authorized to
execute and deliver Certificates, instructions, notices or other instruments,
and the Secretary or any Assistant Secretary may amend any Certificate listing
the shares of capital stock of the Customer for which the Bank performs Services
hereunder.


                                       10
<PAGE>

6. This Agreement shall extend to and shall be binding upon the parties hereto
and their respective successors and assigns; provided however, that this
Agreement shall not be assignable by either party without the prior written
consent of the other party.

7. This Agreement shall be governed by and construed in accordance with the laws
of the State of New York.

8. This Agreement may be executed in any number of counterparts each of which
shall be deemed to be an original; but such counterparts, together, shall
constitute only one instrument.

9. The provisions of this Agreement are intended to benefit only the Bank and
the Customer, and no rights shall be granted to any other person, by virtue of
this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective corporate officer, thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year first
above written.

Attest:

_____________________________                  BY:_____________________________

                                               Title:__________________________


Attest:                                        THE BANK OF NEW YORK

_____________________________                  BY:_____________________________

                                               Title:__________________________
<PAGE>


                              MUNIYIELD FUND, INC.

                           STOCK TRANSFER FEE SCHEDULE

                                November 22, 1991

    Account Maintenance Fee, (per account)....................$2.64
    Certificate Issuance (per certificate)....................$1.20
    Check Issuance Fee, (per check)...........................$0.25


Fees will be billed monthly and include all services, as illustrated below. Fees
will remain in effect for a period of 2 years from the date of our appointment.

                              Account Maintenance:

      We will:

      o     Maintain all shareholders name and address records and process all
            changes.

      o     Issue and register all certificates.

      o     Record all certificate transactions.

      o     Answer shareholders inquiries, including written correspondence.

      o     Provide hard-copy or microfiche reports of daily transfer activity.

      o     Address, insert and mail up to three quarterly reports and one
            annual report. (The material must be adaptable to automatic
            equipment.)

      o     Address, insert and mail proxy cards and standard proxy material for
            annual meeting. (The material must be adaptable to automatic
            equipment.)

      o     Tabulate proxies and provide terminal access to our database for
            your annual meeting.

      o     Provide a secondary proxy mailing to shareholders who have not
            voted.

      o     Provide a shareholder list and a final voted and unvoted list as of
            the annual meeting date.

      o     Mail W-9 certifications.

      o     Solicit taxpayer identification numbers on new accounts.

      o     Issue, enclose and reconcile each dividend check.

      o     File IRS Forms 1099 and 1096 covering dividends paid, plus Forms
            1042S and 1042 NRA Tax (for foreign holders).

      o     Initiate mailings to shareholders with uncashed dividend checks over
            one year old.
<PAGE>

      o     Cease delivery of checks to undeliverable accounts.

      o     Provide escheatment reporting.

      o     Provide arrangements for handling restricted stock.

      o     Process all stock options.

      o     Place, remove and maintain all stop transfers.

      o     Process all legal transfers.

      o     Replace all lost, stolen or destroyed checks and certificates.

      o     Provide three analytical reports as follows:

               1 Geographical Analysis
               1 Class Code Analysis
               1 Share Range Analysis

      o     Install and provide access via company terminal to The Bank of New
            York database. Training will be completed on site at your offices by
            personnel from by The Bank of New York.

                           Dividend Reinvestment Plan

            Account Maintenance Fee...........................$3.00


      This account maintenance fee will be billed monthly at a rate of $0.25 per
      dividend reinvestment account record.

      We will:

      o     Reinvest each dividend

      o     Process terminations

      o     Process optional cash payments and send acknowledgements

      o     Provide an efficient way of purchasing and selling shares through
            our Discount Brokerage services. This service is affiliated with our
            Trust Sector and will be provided at a discounted rate.
<PAGE>

                                TERMS OF PROPOSAL

o     The Bank of New York does not levy a conversion charge or setup fee for
      assumption of records in an automated tape format in connection with our
      appointment as Transfer Agent and Registrar. Any charges made by your
      existing agent in connection with our assumption of your shareholder
      records in an automated tape format would be passed through to your
      account.

o     Out-of-pocket expenses are defined as costs paid by The Bank of New York
      for the purchase of goods or services required to fulfill our obligations
      under our agreement. These expenses may include, but not be limited to,
      postage, insurance on physical transfer items, and costs for obtaining
      prices for security valuations. These expenses are billed at our cost, on
      a pro-rata basis for goods and services received.

o     There will not be a usage charge applied for utilizing the Bank's Stock
      Transfer Inquiry System. Connect time will be billed at cost, based on a
      dedicated line or dial-up expense.

o     For issuing purchase warrants, stock dividends and splits, the handling of
      tenders and exchanges of stock, subscriptions, preparing state information
      returns, and any other services not covered by this fee schedule, charges
      will be based on an analysis and appraisal of the services rendered.

o     All fees are based upon the use of automatic equipment. Any services
      requiring manual processing and/or overtime, will result in a special or
      higher charge.

o     The Bank of New York's minimum charge is $10,000. If at the end of each
      year (12 months from appointment date) the total fees are less than the
      minimum, the difference will be billed to your account. The fees are
      charged on a monthly basis.

o     In the event that we do not enter into a written agreement within three
      months of the date of this proposal, this offer will be subject to
      revision.

MuniYield Fund, Inc.

By:_________________________________

The Bank of New York

By:_________________________________


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.B
<SEQUENCE>13
<FILENAME>file012.txt
<DESCRIPTION>FORM OF AUCTION AGENT AGREEMENT
<TEXT>

                                                                   Exhibit 13(b)

================================================================================

                            AUCTION AGENT AGREEMENT

                                     between

                              MUNIYIELD FUND, INC.

                                       and

                        IBJ SCHRODER BANK & TRUST COMPANY

                          Dated as of December 23, 1991

                                   Relating to

                        Auction Market Preferred Stock(R)

                                   ("AMPS"(R))

               Series A, Series B, Series C, Series D and Series E

                                       of

                              MUNIYIELD FUND, INC.

================================================================================

(R) Registered trademark of Merrill Lynch & Co., Inc.


<PAGE>

      THIS AUCTION AGENT AGREEMENT dated as of December 23, 1991, between
MUNIYIELD FUND, INC., a Maryland corporation (the "Company"), and IBJ SCHRODER
BANK & TRUST COMPANY, a New York banking corporation.

      The Company proposes to duly authorize and issue 900 shares of Auction
Market Preferred Stock(R), Series A ("Series A AMPS"), 900 shares of Auction
Market Preferred Stock, Series B ("Series B AMPS"), 900 shares of Auction Market
Preferred Stock, Series C ("Series C AMPS"), 900 shares of Auction Market
Preferred Stock, Series D ("Series D AMPS") and 1,400 shares of Auction Market
Preferred Stock, Series E ("Series E AMPS"), all with a par value of $.10 per
share and a liquidation preference of $50,000 per share plus an amount equal to
accumulated but unpaid dividends (whether or not earned or declared) pursuant to
the Company's Articles Supplementary (as defined below). The Series A AMPS,
Series B AMPS, Series C AMPS, Series D AMPS and Series E AMPS are sometimes
referred to together herein as "AMPS". A separate Auction (as defined below)
will be conducted for each series of AMPS. The Company desires that IBJ Schroder
Bank & Trust Company perform certain duties as agent in connection with each
Auction of shares of AMPS (the "Auction Agent") and as the transfer agent,
registrar, dividend disbursing agent and redemption agent with respect to the
shares of AMPS (the "Paying Agent") upon the terms and conditions of this
Agreement, and hereby appoints IBJ Schroder Bank & Trust Company as said Auction
Agent and Paying Agent in accordance with those terms and conditions
(hereinafter generally referred to as the "Auction Agent" except in Sections 3
and 4 below).

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Company and the Auction Agent agree as follows:

- --------------------
(R) Registered trademark of Merrill Lynch & Co., Inc.


                                       1
<PAGE>

1. Definitions and Rules of Construction.

      1.1   Terms Defined by Reference to Articles Supplementary

      Capitalized terms not defined herein shall have the respective meanings
specified in the Articles Supplementary.

      1.2   Terms Defined Herein.

      As used herein and in the Settlement Procedures (as defined below), the
following terms shall have the following meanings, unless the context otherwise
requires:

            (a) "Affiliate" shall mean any Person, other than Merrill Lynch,
      Pierce, Fenner & Smith Incorporated, made known to the Auction Agent to be
      controlled by, in control of or under common control with, the Company, or
      its successors.

            (b) "Agent Member" of any Person shall mean such Person's agent
      member of the Securities Depository who is identified as such in such
      Person's Purchaser's Letter.

            (c) "Articles Supplementary" shall mean the Articles Supplementary
      of the Company, establishing the powers, preferences and rights of the
      AMPS, filed on December 20, 1991, in the Office of the State Department of
      Assessments and Taxation of the State of Maryland.

            (d) "Auction" shall have the meaning specified in Section 2.1
      hereof.

            (e) "Auction Procedures" shall mean the Auction Procedures that are
      set forth in Paragraph 11 of the Articles Supplementary.

            (f) "Authorized Officer" shall mean each Senior Vice President, Vice
      President, Assistant Vice President, Trust Officer and Assistant Secretary
      and Assistant Treasurer of the Auction Agent assigned to its Corporate
      Trust and Agency Group and every other officer or employee of the Auction
      Agent designated as an "Authorized Officer" for purposes hereof in a
      communication to the Company.

            (g) "Broker-Dealer Agreement" shall mean each agreement between the
      Auction Agent and a Broker-Dealer substantially in the form attached
      hereto as Exhibit A.


                                       2
<PAGE>

            (h) "Company Officer" shall mean the Chairman and Chief Executive
      Officer, the President, each Vice President (whether or not designated by
      a number or word or words added before or after the title "Vice
      President"), the Secretary, the Treasurer, each Assistant Secretary and
      each Assistant Treasurer of the Company and every other officer or
      employee of the Company designated as a "Company Officer" for purposes
      hereof in a notice from the Company to the Auction Agent.

            (i) "Holder" shall be a holder of record of one or more shares of
      AMPS, listed as such in the stock register maintained by the Paying Agent
      pursuant to Section 4.6.

            (j) "Purchaser's Letter" shall mean a letter addressed to the
      Company, the Auction Agent and a Broker-Dealer, substantially in the form
      attached to the Broker-Dealer Agreement as Exhibit A.

            (k) "Settlement Procedures" shall mean the Settlement Procedures
      attached to the Broker-Dealer Agreement as Exhibit B.

      1.3   Rules of Construction.

      Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:

            (a) Words importing the singular number shall include the plural
      number and vice versa.

            (b) The captions and headings herein are solely for convenience of
      reference and shall not constitute a part of this Agreement nor shall they
      affect its meaning, construction or effect.

            (c) The words "hereof," "herein," "hereto," and other words of
      similar import refer to this Agreement as a whole.

            (d) All references herein to a particular time of day shall be to
      New York City time.


                                       3
<PAGE>

2. The Auction.

      2.1   Purpose; Incorporation by Reference of Auction Procedures and
            Settlement Procedures.

            (a) The Articles Supplementary provide that the Applicable Rate on
      shares of Series A AMPS, Series B AMPS, Series C AMPS, Series D AMPS or
      Series E AMPS, as the case may be, for each Dividend Period therefor after
      the Initial Dividend Period shall be the rate per annum that a commercial
      bank, trust company, or other financial institution appointed by the
      Company advises results from implementation of the Auction Procedures. The
      Board of Directors of the Company has adopted a resolution appointing IBJ
      Schroder Bank & Trust Company as Auction Agent for purposes of the Auction
      Procedures. The Auction Agent hereby accepts such appointment and agrees
      that, on each Auction Date, it shall follow the procedures set forth in
      this Section 2 and the Auction Procedures for the purpose of determining
      the Applicable Rate for the AMPS, for the next Dividend Period therefor.
      Each periodic operation of such procedures is hereinafter referred to as
      an "Auction."

            (b) All of the provisions contained in the Auction Procedures and
      the Settlement Procedures are incorporated herein by reference in their
      entirety and shall be deemed to be a part hereof to the same extent as if
      such provisions were fully set forth herein.

      2.2   Preparation for Each Auction; Maintenance of Registry of Beneficial
            Owners.

            (a) Pursuant to Section 2.5 hereof, the Company shall not designate
      any Person to act as a Broker-Dealer without prior written approval of the
      Auction Agent (which approval shall not be withheld unreasonably). At the
      time of closing of the initial issuance and sale of the AMPS (the
      "Closing"), the Company shall provide the Auction Agent with a list of the
      Broker-Dealers previously approved by the Auction Agent and shall cause to
      be delivered to the Auction Agent for execution by the Auction Agent a
      Broker-Dealer Agreement signed by each such Broker-Dealer. The Auction
      Agent shall keep such list current and accurate, and shall indicate
      thereon, or on a separate list, the identity of each Existing Holder, if
      any, whose most recent Order was submitted by a Broker-Dealer on such list
      and resulted in such Existing Holder continuing to hold or purchasing
      shares of AMPS. Not later than five days prior to any Auction Date for
      which any change in such list of Broker-Dealers is to be effective, the
      Company shall notify the Auction Agent in


                                       4
<PAGE>

      writing of such change and, if any such change is the addition of a
      Broker-Dealer to such list, the Company shall cause to be delivered to the
      Auction Agent for execution by the Auction Agent a Broker-Dealer Agreement
      signed by such Broker-Dealer. The Auction Agent shall have entered into a
      Broker-Dealer Agreement with each Broker-Dealer prior to the participation
      of any such Broker-Dealer in any Auction.

            (b) In the event that the Auction Date for any Auction shall be
      changed after the Auction Agent shall have given the notice referred to in
      clause (vii) of Paragraph (a) of the Settlement Procedures, the Auction
      Agent, by such means as the Auction Agent deems practicable, shall give
      notice of such change to the Broker-Dealers not later than the earlier of
      9:15 A.M. on the new Auction Date or 9:15 A.M. on the old Auction Date.

            (c) With respect to each Dividend Period that is a Special Dividend
      Period, the Company may, at its sole option and to the extent permitted by
      law, by telephonic and written notice (a "Request for Special Dividend
      Period") to the Auction Agent and to each Broker-Dealer, request that the
      next succeeding Dividend Period for a series of AMPS will be a number of
      days (other than 28 in the case of Series A AMPS, Series B AMPS, Series C
      AMPS and Series D AMPS and other than 7 in the case of Series E AMPS),
      evenly divisible by seven, and not fewer than seven nor more than 364 in
      the case of a Short Term Dividend Period or a number of whole years not
      greater than five years in the case of a Long Term Dividend Period,
      specified in such notice, provided that for any Auction occurring after
      the initial Auction, the Company may not give a Request for Special
      Dividend Period (and any such request shall be null and void) unless the
      Company has received written confirmation from S&P that such action would
      not impair the rating then assigned to the AMPS by S&P and unless
      sufficient Clearing Bids were made in the last occurring Auction and
      unless full cumulative dividends, any amounts due with respect to
      mandatory redemptions and any Additional Dividends payable prior to such
      date have been paid in full. Such Request for Special Dividend Period, in
      the case of a Short Term Dividend Period, shall be given on or prior to
      the fourth day but not more than seven days prior to an Auction Date for a
      series of AMPS and, in the case of a Long Term Dividend Period, shall be
      given on or prior to the 14th day but not more than 28 days prior to the
      Auction Date for a series of AMPS. Upon receiving such Request for Special
      Dividend Period, the Broker-Dealers(s) shall jointly determine whether
      given the factors set forth in paragraph 2(c)(iii) of the Articles
      Supplementary it is advisable that


                                       5
<PAGE>

      the Company issue a Notice of Special Dividend Period for the series of
      AMPS as contemplated by such Request for Special Dividend Period and the
      Optional Redemption Price of the AMPS during such Special Dividend Period
      and the Specific Redemption Provisions and shall give the Company and the
      Auction Agent written notice (a "Response") of such determination by no
      later than the third day prior to such Auction Date. If the
      Broker-Dealer(s) shall not give the Company and the Auction Agent a
      Response by such third day or if the Response states that given the
      factors referred to above it is not advisable that the Company give a
      Notice of Special Dividend Period (as defined below) for the series of
      AMPS, the Company may not give a Notice of Special Dividend Period in
      respect of such Request for Special Dividend Period. In the event the
      Response indicates that it is advisable that the Company give a Notice of
      Special Dividend Period for the series of AMPS, the Company may by no
      later than the second day prior to such Auction Date give a notice (a
      "Notice of Special Dividend Period") to the Auction Agent, the Securities
      Depository and each Broker-Dealer, which notice will specify (i) the
      duration of the Special Dividend Period, (ii) the Optional Redemption
      Price as specified in the related Response and (iii) the Specific
      Redemption Provisions, if any, as specified in the related Response. The
      Company shall not give a Notice of Special Dividend Period, or, if such
      Notice of Special Dividend Period shall have already been given, shall
      give telephonic and written notice (a "Notice of Revocation") to the
      Auction Agent, each Broker-Dealer, and the Securities Depository on or
      prior to the Business Day prior to the relevant Auction Date if (x) either
      the 1940 Act AMPS Coverage is not satisfied or the Company shall fail to
      maintain S&P Eligible Assets and Moody's Eligible Assets each with an
      aggregate Discounted Value at least equal to the AMPS Basic Maintenance
      Amount in each case on each of the two Valuation Dates immediately
      preceding the Business Day prior to the relevant Auction Date on an actual
      basis and on a pro forma basis giving effect to the proposed Special
      Dividend Period (using as a pro forma dividend rate with respect to such
      Special Dividend Period the dividend rate which the Broker-Dealers shall
      advise the Company is an approximately equal rate for securities similar
      to the AMPS with an equal dividend period), provided that in calculating
      the aggregate Discounted Value of Moody's Eligible Assets for this
      purpose, the Moody's Exposure Period shall be deemed to be one week
      longer, (y) sufficient funds for the payment of dividends payable on the
      immediately succeeding Dividend Payment Date have not been irrevocably
      deposited with the Auction Agent by the close of business on the third
      Business Day preceding the related Auction Date or (z) the


                                       6
<PAGE>

      Broker-Dealer(s) jointly advise the Company that after consideration of
      the factors referred to above they have concluded that it is advisable to
      give a Notice of Revocation. If the Company is prohibited from giving a
      Notice of Special Dividend Period as a result of the factors enumerated in
      clause (x), (y) or (z) of the preceding sentence or if the Company gives a
      Notice of Revocation with respect to a Notice of Special Dividend Period,
      the next succeeding Dividend Period will be a 28-day Dividend Period in
      the case of Series A AMPS, Series B AMPS, Series C AMPS and Series D AMPS
      and a 7-day Dividend Period in the case of Series E AMPS, provided that if
      the then-current Dividend Period for Series A AMPS, Series B AMPS, Series
      C AMPS or Series D AMPS is a Special Dividend Period of less than 28 days,
      the next succeeding Dividend Period for such Series of AMPS will be the
      same length as the current Dividend Period. In addition, in the event
      sufficient Clearing Bids are not made in any Auction or an Auction is not
      held for any reason, the next succeeding Dividend Period will be a 28-day
      Dividend Period (in the case of Series A AMPS, Series B AMPS, Series C
      AMPS and Series D AMPS) or a 7-day Dividend Period (in the case of Series
      E AMPS) and the Company may not again give a Notice of Special Dividend
      Period (and any such attempted notice shall be null and void) until
      sufficient Clearing Bids have been made in an Auction with respect to a
      28-day Dividend Period (in the case of Series A AMPS, Series B AMPS,
      Series C AMPS and Series D AMPS) or a 7-day Dividend Period (in the case
      of Series E AMPS).

            (d) (i) Whenever the Company intends to include any net capital
      gains or other taxable income in any dividend on shares of AMPS, the
      Company will notify the Auction Agent of the amount to be so included at
      least five Business Days prior to the Auction Date on which the Applicable
      Rate for such dividend is to be established. Whenever the Auction Agent
      receives such notice from the Company, it will in turn notify each Broker-
      Dealer, who, on or prior to such Auction Date, in accordance with its
      Broker-Dealer Agreement, will notify its Existing Holders and Potential
      Holders believed to be interested in submitting an Order in the Auction to
      be held on such Auction Date.

            (ii) If the Company makes a Retroactive Taxable Allocation, the
      Company will, within 90 days (and generally within 60 days) after the end
      of its fiscal year for which a Retroactive Taxable Allocation is made
      provide notice thereof to the Auction Agent and to each holder of shares
      (initially the Securities Depository) during such fiscal year at such
      holder's address as the same appears or last appeared on the stock books
      of the Company. The Company


                                       7
<PAGE>

      will, within 30 days after such notice is given to the Auction Agent, pay
      to the Auction Agent (who will then distribute to such holders of shares
      of AMPS), out of funds legally available therefor, a cash amount equal to
      the aggregate Additional Dividend with respect to all Retroactive Taxable
      Allocations made to such holders during the fiscal year in question.

            (e) (i) On each Auction Date, the Auction Agent shall determine the
      Reference Rate and the Maximum Applicable Rate. If the Reference Rate is
      not quoted on an interest basis but is quoted on a discount basis, the
      Auction Agent shall convert the quoted rate to an Interest Equivalent, as
      set forth in Paragraph 1 of the Articles Supplementary; or, if the rate
      obtained by the Auction Agent is not quoted on an interest or discount
      basis, the Auction Agent shall convert the quoted rate to an interest rate
      after consultation with the Company as to the method of such conversion.
      Not later than 9:30 A.M. on each Auction Date, the Auction Agent shall
      notify the Company and the Broker-Dealers of the Reference Rate so
      determined and the Maximum Applicable Rate.

            (ii) If the Reference Rate is the applicable "AA" Composite
      Commercial Paper Rate and such rate is to be based on rates supplied by
      Commercial Paper Dealers and one or more of the Commercial Paper Dealers
      shall not provide a quotation for the determination of the applicable "AA"
      Composite Commercial Paper Rate, the Auction Agent shall immediately
      notify the Company so that the Company can determine whether to select a
      Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers
      to provide the quotation or quotations not being supplied by any
      Commercial Paper Dealer or Commercial Paper Dealers. The Company shall
      promptly advise the Auction Agent of any such selection. If the Company
      does not select any such Substitute Commercial Paper Dealer or Substitute
      Commercial Paper Dealers, then the rates shall be supplied by the
      remaining Commercial Paper Dealer or Commercial Paper Dealers.

            (iii) If, after the date of this Agreement, there is any change in
      the prevailing rating of AMPS by either of the rating agencies (or
      substitute or successor rating agencies) referred to in the definition of
      the Maximum Applicable Rate, thereby resulting in any change in the
      corresponding applicable percentage for the AMPS, as set forth in said
      definition (the "Percentage"), the Company shall notify the Auction Agent
      in writing of such change in the Percentage prior to 9:00 A.M. on the
      Auction Date for AMPS next succeeding such change. The Percentage for the
      AMPS on the


                                       8
<PAGE>

      date of this Agreement is as specified in paragraph 11(a)(vii) of the
      Articles Supplementary. The Auction Agent shall be entitled to rely on the
      last Percentage of which it has received notice from the Company (or, in
      the absence of such notice, the Percentage set forth in the preceding
      sentence) in determining the Maximum Applicable Rate as set forth in
      Section 2.2(e)(i) hereof.

            (f)(i) The Auction Agent shall maintain by series a current
      registry of the beneficial owners of the shares of each series of AMPS who
      shall constitute the Existing Holders for purposes of each Auction. The
      Company shall use its best efforts to provide or cause to be provided to
      the Auction Agent within ten days following the date of Closing a list of
      the initial Existing Holders of each series of AMPS, and the Broker-Dealer
      of each such Existing Holder through which such Existing Holder purchased
      such shares. The Auction Agent may rely upon, as evidence of the
      identities of the Existing Holders, such list, the results of each Auction
      and notices from any Existing Holder, the Agent Member of any Existing
      Holder or the Broker-Dealer of any Existing Holder with respect to such
      Existing Holder's transfer of any shares of AMPS to another Person.

            (ii) In the event of any partial redemption of any series of AMPS,
      upon notice by the Company to the Auction Agent of such partial
      redemption, the Auction Agent shall promptly request the Securities
      Depository to notify the Auction Agent of the identities of the Agent
      Members (and the respective numbers of shares) from the accounts of which
      shares have been called for redemption and the person or department at
      such Agent Member to contact regarding such redemption and, at least two
      Business Days prior to the Auction preceding the date of redemption with
      respect to shares of the series being partially redeemed, the Auction
      Agent shall request each Agent Member so identified to disclose to the
      Auction Agent (upon selection by such Agent Member of the Existing Holders
      whose shares are to be redeemed) the number of shares of such series of
      AMPS of each such Existing Holder, if any, to be redeemed by the Company;
      provided the Auction Agent has been furnished with the name and telephone
      number of a person or department at such Agent Member from which it is to
      request such information. If necessary to procure such information, the
      Auction Agent shall deliver to each Agent Member a facsimile copy of the
      Purchaser's Letter of each Existing Holder represented by such Agent
      Member, which authorizes and instructs such Agent Member to release such
      information to the Auction Agent. In the absence of receiving any such
      information with respect to an Existing Holder, from such Existing
      Holder's Agent


                                       9
<PAGE>

      Member or otherwise, the Auction Agent may continue to treat such Existing
      Holder as the beneficial owner of the number of shares of the series of
      AMPS shown in the Auction Agent's registry of beneficial owners.

            (iii) The Auction Agent shall register a transfer of the beneficial
      ownership of shares of a series of AMPS from an Existing Holder to another
      Person only if such transfer is made to a Person that has delivered a
      signed Purchaser's Letter to the Auction Agent and only if (A) such
      transfer is pursuant to an Auction or (B) if such transfer is made other
      than pursuant to an Auction, the Auction Agent has been notified in
      writing in a notice substantially in the form of Exhibit D to the
      Broker-Dealer Agreements, by such Existing Holder, the Agent Member of
      such Existing Holder, or the Broker-Dealer of such Existing Holder of such
      transfer. The Auction Agent is not required to accept any notice of
      transfer delivered for an Auction unless it is received by the Auction
      Agent by 3:00 P.M. on the Business Day next preceding the applicable
      Auction Date. The Auction Agent shall rescind a transfer made on the
      registry of the beneficial owners of any shares of AMPS if the Auction
      Agent has been notified in writing in a notice substantially in the form
      of Exhibit E to the Broker-Dealer Agreement by the Agent Member or the
      Broker-Dealer of any Person that (i) purchased any shares of AMPS and the
      seller failed to deliver such shares or (ii) sold any shares of AMPS and
      the purchaser failed to make payment to such Person upon delivery to the
      purchaser of such shares.

            (g) The Auction Agent may request that the Broker-Dealers, as set
      forth in Section 3.2(c) of the Broker-Dealer Agreements, provide the
      Auction Agent with a list of their respective customers that such
      Broker-Dealers believe are Existing Holders of shares of any series of
      AMPS. The Auction Agent shall keep confidential any such information and
      shall not disclose any such information so provided to any Person other
      than the relevant Broker-Dealer and the Company, provided that the Auction
      Agent reserves the right to disclose any such information if it is advised
      by its counsel that its failure to do so would be unlawful.


                                       10
<PAGE>

      2.3   Auction Schedule.

      The Auction Agent shall conduct Auctions in accordance with the schedule
set forth below. Such schedule may be changed by the Auction Agent with the
consent of the Company, which consent shall not be unreasonably withheld. The
Auction Agent shall give notice of any such change to each Broker-Dealer. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.

       Time                                          Event
       ----                                          -----

By 9:30 A.M.                                 Auction Agent advises the Company
                                             and the Broker-Dealers of the
                                             Reference Rate and the Maximum
                                             Applicable Rate as set forth in
                                             Section 2.2(e)(i) hereof.

9:30 A.M. - 1:00 P.M.                        Auction Agent assembles information
                                             communicated to it by Broker-
                                             Dealers as provided in Paragraph
                                             11(c)(i) of the Articles
                                             Supplementary. Submission deadline
                                             is 1:00 P.M.

Not earlier than                             Auction Agent makes determination
1:00 P.M.                                    pursuant to Paragraph 11(d)(i) of
                                             the Articles Supplementary.

By approximately                             Auction Agent advises Company of
3:00 P.M.                                    results of Auction as provided in
                                             Paragraph 11(d)(ii) of the
                                             Articles Supplementary.

                                             Submitted Bids and Submitted Sell
                                             Orders are accepted and rejected
                                             in whole or in part and shares of
                                             AMPS allocated as provided in
                                             Paragraph 11(e) of the Articles
                                             Supplementary.

By approximately 10:00 A.M.                  Auction Agent gives notice of
on the next succeeding                       Auction results as set forth in
Business Day                                 Section 2.4 hereof.

      2.4   Notice of Auction Results.

      On each Auction Date, the Auction Agent shall notify Broker-Dealers of the
results of the Auction held on such date by telephone or through the Auction
Agent's Auction Processing


                                       11
<PAGE>

System as set forth in Paragraph (a) of the Settlement Procedures.

      2.5   Broker-Dealers.

            (a) Not later than 12:00 noon on each Auction Date, the Company
      shall pay to the Auction Agent in New York Clearing House or similar
      next-day funds an amount in cash equal to (i) in the case of any Auction
      Date immediately preceding a 7-day Dividend Period, 28-day Dividend Period
      or Short-Term Dividend Period, the product of (A) a fraction the numerator
      of which is the number of days in such Dividend Period (calculated by
      counting the first day of such Dividend Period but excluding the last day
      thereof) and the denominator of which is 360, times (B) 1/4 of 1%, times
      (C) $50,000, times (D) the sum of the aggregate number of Outstanding
      shares of the series of AMPS for which the Auction is conducted and (ii)
      in the case of any Long Term Dividend Period, the amount determined by
      mutual consent of the Company and the Broker-Dealers pursuant to Section
      3.5 of the Broker-Dealer Agreements. The Auction Agent shall apply such
      moneys as set forth in Section 3.5 of the Broker-Dealer Agreements and
      shall thereafter remit to the Company any remaining funds paid to the
      Auction Agent pursuant to this Section 2.5(a).

            (b) The Company shall not designate any Person to act as a
      Broker-Dealer without the prior written approval of the Auction Agent,
      which written approval shall not be unreasonably withheld. The Company may
      designate an Affiliate and Merrill Lynch, Pierce, Fenner & Smith
      Incorporated to act as a Broker-Dealer.

            (c) The Auction Agent shall terminate any Broker-Dealer Agreement as
      set forth therein if so directed by the Company.

            (d) Subject to Section 2.5(b) hereof, the Auction Agent shall from
      time to time enter into such Broker-Dealer Agreements as the Company shall
      request.

            (e) The Auction Agent shall maintain a list of Broker-Dealers.

      2.6   Ownership of Shares of AMPS and Submission of Bids by Company and
            Affiliates.

      Neither the Company nor any Affiliate of the Company may submit any Sell
Order or Bid, directly or indirectly, in any Auction, except that an Affiliate
of the Company that is a


                                       12
<PAGE>

Broker-Dealer may submit a Sell Order or Bid on behalf of an Existing Holder or
Potential Holder. The Company shall notify the Auction Agent if the Company or,
to the best of the Company's knowledge, any Affiliate of the Company becomes an
Existing Holder of any shares of AMPS. Any shares of AMPS redeemed, purchased or
otherwise acquired (i) by the Company shall not be reissued or (ii) by its
Affiliates shall not be transferred (other than to the Company). The Auction
Agent shall have no duty or liability with respect to enforcement of this
Section 2.6.

      2.7   Access to and Maintenance of Auction Records.

      The Auction Agent shall afford to the Company, its agents, independent
public accountants and counsel, access at reasonable times during normal
business hours to review and make extracts or copies (at the Company's sole cost
and expense) of all books, records, documents and other information concerning
the conduct and results of Auctions, provided that any such agent, accountant,
or counsel shall furnish the Auction Agent with a letter from the Company
requesting that the Auction Agent afford such person access. The Auction Agent
shall maintain records relating to any Auction for a period of two years after
such Auction (unless requested by the Company to maintain such records for such
longer period not in excess of four years, then for such longer period), and
such records shall, in reasonable detail, accurately and fairly reflect the
actions taken by the Auction Agent hereunder. The Company agrees to keep any
information regarding the customers of any Broker-Dealer received from the
Auction Agent in connection with this Agreement or any Auction confidential and
shall not disclose such information or permit the disclosure of such information
without the prior written consent of the applicable Broker-Dealer to anyone
except such agent, accountant or counsel engaged to audit or review the results
of Auctions as permitted by this Section 2.7. Any such agent, accountant or
counsel, before having access to such information, shall agree to keep such
information confidential and not to disclose such information or permit
disclosure of such information without the prior written consent of the
applicable Broker-Dealer.

3. The Auction Agent as Paying Agent.

      3.1   Paying Agent.

      The Board of Directors of the Company has adopted a resolution appointing
IBJ Schroder Bank & Trust Company as transfer agent, registrar, dividend
disbursing agent and redemption agent for the company in connection with any
shares of AMPS (the "Paying Agent"). The Paying Agent hereby accepts such


                                       13
<PAGE>

appointment and agrees to act in accordance with its standard procedures and the
provisions of the Articles Supplementary which are specified herein as Paying
Agent with respect to the shares of AMPS and as set forth in this Section 3.

      3.2   The Company's Notices to Paying Agent.

      Whenever any shares of AMPS are to be redeemed, the Company shall promptly
deliver to the Paying Agent the Notice of Redemption, which will be mailed by
the Company to each Holder, at least five days prior to the date such Notice of
Redemption is required to be mailed by the Articles Supplementary. The Paying
Agent shall have no responsibility to confirm or verify the accuracy of any such
notice.

      3.3   Company to Provide Funds for Dividends, Redemptions and Additional
            Dividends.

            (a) Not later than noon, on the Business Day immediately preceding
      each Dividend Payment Date, the Company shall deposit with the Paying
      Agent an aggregate amount of New York Clearing House or similar next-day
      funds equal to the declared dividends to be paid to Holders on such
      Dividend Payment Date and shall give the Paying Agent irrevocable
      instructions to apply such funds to the payment of such dividends on such
      Dividend Payment Date.

            (b) If the Company shall give the Notice of Redemption then, by noon
      of the Business Day immediately preceding the date fixed for redemption,
      the Company shall deposit in trust with the Paying Agent an aggregate
      amount of New York Clearing House or similar next day funds sufficient to
      redeem such shares of AMPS called for redemption and shall give the Paying
      Agent irrevocable instructions and authority to pay the redemption price
      to the Holders of shares of AMPS called for redemption upon surrender of
      the certificate or certificates therefor.

            (c) If the Company provides notice to the Auction Agent of a
      Retroactive Taxable Allocation, the Company shall, within 30 days after
      such notice is given and by noon of the Business Day immediately preceding
      the date fixed for payment of an Additional Dividend, deposit in trust
      with the Paying Agent an aggregate amount of New York Clearing House or
      similar next-day funds equal to such Additional Dividend and shall give
      the Paying Agent irrevocable instructions and authority to pay the
      Additional Dividends to Holders (or former Holders) of AMPS entitled
      thereto.


                                       14
<PAGE>

      3.4   Disbursing Dividends, Redemption Price and Additional Dividends.

      After receipt of the New York Clearing House or similar next-day funds and
instructions from the Company described in Sections 3.3(a), (b) and (c) above,
the Paying Agent shall pay to the Holders (or former Holders) entitled thereto
(i) on each corresponding Dividend Payment Date, dividends on the Series A AMPS,
Series B AMPS, Series C AMPS, Series D AMPS or Series E AMPS, as the case may
be, (ii) on any date fixed for redemption, the redemption price of any shares of
AMPS called for redemption and (iii) on the date fixed for payment of an
Additional Dividend, such Additional Dividend. The amount of dividends for any
Dividend Period to be paid by the Paying Agent to Holders will be determined by
the Company as set forth in Paragraph 2 of the Articles Supplementary. The
redemption price to be paid by the Paying Agent to the Holders of any shares of
AMPS called for redemption will be determined as set forth in Paragraph 4 of the
Articles Supplementary. The amount of Additional Dividends to be paid by the
Paying Agent in the event of a Retroactive Taxable Allocation to Holders will be
determined by the Company pursuant to paragraph 2(e) of the Articles
Supplementary. The Company shall notify the Paying Agent in writing of a
decision to redeem any shares of AMPS on or prior to the date specified in
Section 3.2 above, and such notice by the Company to the Paying Agent shall
contain the information required to be stated in the Notice of Redemption
required to be mailed by the Company to such Holders. The Paying Agent shall
have no duty to determine the redemption price and may rely on the amount
thereof set forth in the Notice of Redemption.

4. The Paying Agent as Transfer Agent and Registrar.

      4.1   Original Issue of Stock Certificates.

      On the Date of Original Issue, one certificate for each series of AMPS
shall be issued by the Company and registered in the name of Cede & Co., as
nominee of the Securities Depository, and countersigned by the Paying Agent.

      4.2   Registration of Transfer or Exchange of Shares.

      Except as provided in this Section 4.2, the shares of each series of AMPS
shall be registered solely in the name of the Securities Depository or its
nominee. If the Securities Depository shall give notice of its intention to
resign as such, and if the Company shall not have selected a substitute
Securities Depository acceptable to the Paying Agent prior to such resignation,
then upon such resignation, the shares of each series of AMPS may, at the
Company's request, be registered for


                                       15
<PAGE>

transfer or exchange, and new certificates thereupon shall be issued in the name
of the designated transferee or transferees, upon surrender of the old
certificates in form deemed by the Paying Agent properly endorsed for transfer
with (a) all necessary endorsers' signatures guaranteed in such manner and form
as the Paying Agent may require by a guarantor reasonably believed by the Paying
Agent to be responsible, (b) such assurances as the Paying Agent shall deem
necessary or appropriate to evidence the genuineness and effectiveness of each
necessary endorsement and (c) satisfactory evidence of compliance with all
applicable laws relating to the collection of taxes in connection with any
registration of transfer and exchange or funds necessary for the payment of such
taxes. If the certificates for shares of AMPS are not held by the Securities
Depository or its nominee, payments upon transfer of shares in an Auction shall
be made in same day funds to the Auction Agent against delivery of certificates
therefor.

      4.3   Removal of Legend.

      Any request for removal of a legend indicating a restriction on transfer
from certificates evidencing shares of a series of AMPS shall be accompanied by
an opinion of counsel stating that such legend may be removed and such shares
transferred free of the restriction described in such legend, said opinion to be
delivered under cover of a letter from a Company Officer authorizing the Paying
Agent to remove the legend on the basis of said opinion.

      4.4   Lost Stock Certificates.

      The Paying Agent shall issue and register replacement certificates for
certificates represented to have been lost, stolen or destroyed, upon the
fulfillment of such requirements as shall be deemed appropriate by the Company
and the Paying Agent, subject at all times to provisions of law, the By-Laws of
the Company governing such matters and resolutions adopted by the Company with
respect to lost securities. The Paying Agent may issue new certificates in
exchange for and upon the cancellation of mutilated certificates. Any request by
the Company to the Paying Agent to issue a replacement or new certificate
pursuant to this Section 4.4 shall be deemed to be a representation and warranty
by the Company to the Paying Agent that such issuance will comply with such
provisions of applicable law and the By-Laws and resolutions of the Company.


                                       16
<PAGE>

      4.5   Disposition of Cancelled Certificates; Record Retention.

      The Paying Agent shall retain stock certificates which have been cancelled
in transfer or in exchange and accompanying documentation in accordance with
applicable rules and regulations of the Securities and Exchange Commission for
two calendar years from the date of such cancellation. The Paying Agent shall,
upon written request from the Company, afford to the Company, its agents and
counsel access at reasonable times during normal business hours to review and
make extracts or copies (at the Company's sole cost and expense) of such
certificates and accompanying documentation. Upon the expiration of this
two-year period, the Paying Agent shall deliver to the Company the cancelled
certificates and accompanying documentation. The Company shall, at its expense,
retain such records for a minimum additional period of four calendar years from
the date of delivery of the records to the Company and shall make such records
available during this period at any time, or from time to time, for reasonable
periodic, special, or other examinations by representatives of the Securities
and Exchange Commission. The Company shall also undertake to furnish to the
Securities and Exchange Commission, upon demand, at either the principal office
or at any regional office, complete, correct and current hard copies of any and
all such records. Thereafter such records shall not be destroyed by the Company
without the approval of the Paying Agent, which shall not be unreasonably
withheld, but will be safely stored for possible future reference.

      4.6   Stock Register.

      The Paying Agent shall maintain the stock register, which shall contain a
list of the Holders, the number of shares held by each Holder and the address of
each Holder. The Paying Agent shall record in the stock register any change of
address of a Holder upon notice by such Holder. In case of any written request
or demand for the inspection of the stock register or any other books of the
Company in the possession of the Paying Agent, the Paying Agent will notify the
Company and secure instructions as to permitting or refusing such inspection.
The Paying Agent reserves the right, however, to exhibit the stock register or
other records to any person in case it is advised by its counsel that its
failure to do so would (i) be unlawful or (ii) expose it to liability, unless
the Company shall have offered indemnification satisfactory to the Paying Agent.


                                       17
<PAGE>

      4.7   Return of Funds.

      Any funds deposited with the Paying Agent by the Company for any reason
under this Agreement, including for the payment of dividends or the redemption
of shares of any series of AMPS, that remain with the Paying Agent after 12
months shall be repaid to the Company upon the written request of the Company.

5. Representations and Warranties.

      (a) The Company represents and warrants to the Auction Agent that:

            (i) the Company is a duly incorporated and validly existing
      corporation in good standing under the laws of the State of Maryland and
      has full power to execute and deliver this Agreement and to authorize,
      create and issue the shares of each series of AMPS;

            (ii) the Company is registered with the Securities and Exchange
      Commission under the Investment Company Act of 1940, as amended, as a
      closed-end non-diversified management investment company;

            (iii) this Agreement has been duly and validly authorized, executed
      and delivered by the Company and constitutes the legal, valid and binding
      obligation of the Company, enforceable against the Company in accordance
      with its terms, subject as to such enforceability to bankruptcy,
      insolvency, reorganization and other laws of general applicability
      relating to or affecting creditors' rights and to general equitable
      principles;

            (iv) the forms of certificate evidencing the shares of each series
      of AMPS comply with all applicable laws of the State of Maryland;

            (v) the shares of each series of AMPS have been duly and validly
      authorized by the Company and, upon completion of the initial sale of the
      shares of such series of AMPS and receipt of payment therefor, will be
      validly issued, fully paid and nonassessable;

            (vi) the offering of the shares of each series of AMPS has been
      registered under the Securities Act of 1933, as amended, and no further
      action by or before any governmental body or authority of the United
      States or of any state thereof is required in connection with the
      execution and delivery of this Agreement or the issuance of the shares of


                                       18
<PAGE>

      each series of AMPS except as required by applicable state securities or
      insurance laws, all of which have been taken;

            (vii) the execution and delivery of this Agreement and the issuance
      and delivery of the shares of each series of AMPS do not and will not
      conflict with, violate, or result in a breach of, the terms, conditions or
      provisions of, or constitute a default under, the Charter or the By-Laws
      of the Company, any law or regulation applicable to the Company, any order
      or decree of any court or public authority having jurisdiction over the
      Company, or any mortgage, indenture, contract, agreement or undertaking to
      which the Company is a party or by which it is bound; and

            (viii) no taxes are payable upon or in respect of the execution of
      this Agreement or the issuance of the shares of each series of AMPS.

            (b) The Auction Agent represents and warrants to the Company that
      the Auction Agent is duly organized and is validly existing as a banking
      corporation in good standing under the laws of the State of New York and
      has the corporate power to enter into and perform its obligations under
      this Agreement.

6. The Auction Agent.

      6.1   Duties and Responsibilities.

            (a) The Auction Agent is acting solely as agent for the Company
      hereunder and owes no fiduciary duties to any Person except as provided by
      this Agreement.

            (b) The Auction Agent undertakes to perform such duties and only
      such duties as are specifically set forth in this Agreement, and no
      implied covenants or obligations shall be read into this Agreement against
      the Auction Agent.

            (c) In the absence of bad faith or negligence on its part, the
      Auction Agent shall not be liable for any action taken, suffered or
      omitted or for any error of judgment made by it in the performance of its
      duties under this Agreement. The Auction Agent shall not be liable for any
      error of judgment made in good faith unless the Auction Agent shall have
      been negligent in ascertaining (or failing to ascertain) the pertinent
      facts.


                                       19
<PAGE>

      6.2   Rights of the Auction Agent.

            (a) The Auction Agent may rely and shall be protected in acting or
      refraining from acting upon any communication authorized hereby and upon
      any written instruction, notice, request, direction, consent, report,
      certificate, share certificate or other instrument, paper or document
      reasonably believed by it to be genuine. The Auction Agent shall not be
      liable for acting upon any telephone communication authorized hereby which
      the Auction Agent believes in good faith to have been given by the Company
      or by a Broker-Dealer. The Auction Agent may record telephone
      communications with the Company or with the Broker-Dealers or both.

            (b) The Auction Agent may consult with counsel of its choice, and
      the written advice of such counsel shall be full and complete
      authorization and protection in respect of any action taken, suffered or
      omitted by it hereunder in good faith and in reliance thereon.

            (c) The Auction Agent shall not be required to advance, expend or
      risk its own funds or otherwise incur or become exposed to financial
      liability in the performance of its duties hereunder.

            (d) The Auction Agent may perform its duties and exercise its rights
      hereunder either directly or by or through agents or attorneys.

      6.3   Auction Agent's Disclaimer.

      The Auction Agent makes no representation as to the validity or adequacy
of this Agreement, the Broker-Dealer Agreements or the AMPS.

      6.4   Compensation. Expenses and Indemnification.

            (a) The Company shall pay the Auction Agent from time to time
      reasonable compensation for all services rendered by it under this
      Agreement and the Broker-Dealer Agreements.

            (b) The Company shall reimburse the Auction Agent upon its request
      for all reasonable expenses, disbursements and advances incurred or made
      by the Auction Agent in accordance with any provision of this Agreement
      and the Broker-Dealer Agreements (including the reasonable compensation,
      expenses and disbursements of its agents and counsel), except any expense,
      disbursement and advances attributable to its negligence or bad faith.


                                       20
<PAGE>

            (c) The Company shall indemnify the Auction Agent for, and hold it
      harmless against, any loss, liability or expense incurred without
      negligence or bad faith on its part, arising out of or in connection with
      its agency under this Agreement and the Broker-Dealer Agreements,
      including the costs and expenses of defending itself against any claim or
      liability in connection with its exercise or performance of any of its
      duties hereunder and thereunder, except such as may result from its
      negligence or bad faith.

7. Miscellaneous.

      7.1   Term of Agreement.

            (a) The term of this Agreement is unlimited unless it shall be
      terminated as provided in this Section 7.1. The Company may terminate this
      Agreement at any time by so notifying the Auction Agent, provided that if
      any AMPS remain outstanding the Company has entered into an agreement in
      substantially the form of this Agreement with a successor auction agent.
      The Auction Agent may terminate this Agreement upon prior notice to the
      Company on the date specified in such notice, which shall be no earlier
      than 60 days after delivery of such notice. If the Auction Agent resigns
      while any shares of AMPS remain outstanding, the Company shall use its
      best efforts to enter into an agreement with a successor auction agent
      containing substantially the same terms and conditions as this Agreement.

            (b) Except as otherwise provided in this Section 7.1(b), the
      respective rights and duties of the Company and the Auction Agent under
      this Agreement shall cease upon termination of this Agreement. The
      Company's representations, warranties, covenants and obligations to the
      Auction Agent under Sections 5 and 6.4 hereof shall survive the
      termination hereof. Upon termination of this Agreement, the Auction Agent
      shall (i) resign as Auction Agent under the Broker-Dealer Agreements,
      (ii) at the Company's request, promptly deliver to the Company copies of
      all books and records maintained by it in connection with its duties
      hereunder, and (iii) at the request of the Company, promptly transfer to
      the Company or any successor auction agent any funds deposited by the
      Company with the Auction Agent (whether in its capacity as Auction Agent
      or Paying Agent) pursuant to this Agreement which have not previously been
      distributed by the Auction Agent in accordance with this Agreement.


                                       21
<PAGE>

      7.2   Communications.

      Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party addressed to it at its address, or telecopy number set forth below:

If to the Company,                            MuniYield Fund, Inc.
addressed:                                    800 Scudders Mill Road
                                              Plainsboro, New Jersey 08536
                                              Attention: Treasurer
                                              Telephone No.: (609) 282-2800
                                              Telecopier No.: (609) 282-3472

If to the Auction Agent,                      IBJ Schroder Bank & Trust Company
addressed:                                    One State Street
                                              New York, New York 10004
                                              Attention: Auction Window
                                                         Subcellar 1
                                              Telephone No.: (212) 858-2272
                                              Telecopier No.: (212) 797-1148

or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Company by a Company Officer and
on behalf of the Auction Agent by an Authorized Officer.

      7.3   Entire Agreement.

      This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or inferred
between the parties relating to the subject matter hereof except for agreements
relating to the compensation of the Auction Agent.

      7.4   Benefits.

      Nothing herein, express or implied, shall give to any Person, other than
the Company, the Auction Agent and their respective successors and assigns, any
benefit of any legal or equitable right, remedy or claim hereunder.


                                       22
<PAGE>

      7.5   Amendment; Waiver.

            (a) This Agreement shall not be deemed or construed to be modified,
      amended, rescinded, cancelled or waived, in whole or in part, except by a
      written instrument signed by a duly authorized representative of the party
      to be charged. The Company shall notify the Auction Agent of any change in
      the Articles Supplementary prior to the effective date of any such change.

            (b) Failure of either party hereto to exercise any right or remedy
      hereunder in the event of a breach hereof by the other party shall not
      constitute a waiver of any such right or remedy with respect to any
      subsequent breach.

      7.6   Successor and Assigns.

      This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the respective successors and permitted assigns of each of the
Company and the Auction Agent. This Agreement may not be assigned by either
party hereto absent the prior written consent of the other party, which consent
shall not be unreasonably withheld.

      7.7   Severability.

      If any clause, provision or section hereof shall be ruled invalid or
unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.

      7.8   Execution in Counterparts.

      This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

      7.9   Governing Law.

      This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.


                                       23
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                       MUNIYIELD FUND, INC.

                                       By:
                                             -----------------------------------
                                       Title: Vice President

                                       IBJ SCHRODER BANK & TRUST COMPANY

                                       By:
                                             -----------------------------------
                                       Title: Assistant Vice President


                                       24


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.D
<SEQUENCE>14
<FILENAME>file013.txt
<DESCRIPTION>BROKER DEALER AGREEMENT
<TEXT>

                                                                  Exhhibit 13(d)

================================================================================


                             BROKER-DEALER AGREEMENT

                                     between

                        IBJ SCHRODER BANK & TRUST COMPANY

                                       and

               MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED


                          Dated as of December 23, 1991

                                   Relating to

                        AUCTION MARKET PREFERRED STOCK(R)

                                   ("AMPS"(R))

               Series A, Series B, Series C, Series D and Series E

                                       of

                              MUNIYIELD FUND, INC.


================================================================================

(R)   Registered trademark of Merrill Lynch & Co., Inc.


<PAGE>


      BROKER-DEALER AGREEMENT dated as of December 23, 1991 between IBJ Schroder
Bank & Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity but solely as agent of MuniYield Fund, Inc., a
Maryland corporation (the "Company"), pursuant to authority granted to it in the
Auction Agent Agreement dated as of December 23, 1991, between the Company and
the Auction Agent (the "Auction Agent Agreement")) and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (together with its successors and assigns
hereinafter referred to as "BD").

      The Company has duly authorized and issued 900 shares of Auction Market
Preferred Stock(R), Series A ("Series A AMPS"), 900 shares of Auction Market
Preferred Stock, Series B ("Series B AMPS"), 900 shares of Auction Market
Preferred Stock, Series C ("Series C AMPS"), 900 shares of Auction Market
Preferred Stock, Series D ("Series D AMPS") and 1,400 shares of Auction Market
Preferred Stock, Series E ("Series E AMPS"), all with a par value of $.10 per
share and a liquidation preference of $50,000 per share plus accumulated but
unpaid dividends (whether or not earned or declared), each pursuant to the
Company's Articles Supplementary (as defined below). The Series A AMPS, Series B
AMPS, Series C AMPS, Series D AMPS and Series E AMPS are sometimes referred to
together herein as "AMPS".

      The Company's Articles Supplementary provide that the dividend rate on
each series of AMPS for each Dividend Period therefor after the Initial Dividend
Period shall be the Applicable Rate therefor, which in each case, in general,
shall be the rate per annum that a commercial bank, trust company or other
financial institution appointed by the Company advises results from
implementation of the Auction Procedures (as defined below). The Board of
Directors of the Company has adopted a resolution appointing IBJ Schroder Bank &
Trust Company as Auction Agent for purposes of the Auction Procedures, and
pursuant to Section 2.5(d) of the Auction Agent Agreement, the Company has
requested and directed the Auction Agent to execute and deliver this Agreement.

      The Auction Procedures require the participation of one or more
Broker-Dealers.

- ----------
(R)   Registered trademark of Merrill Lynch & Co., Inc.


<PAGE>


      NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Auction Agent and BD agree as follows:

      1. Definitions and Rules of Construction.

      1.1 Terms Defined by Reference to the Articles Supplementary. Capitalized
terms not defined herein shall have the respective meanings specified in the
Articles Supplementary of the Company.

      1.2 Terms Defined Herein. As used herein and in the Settlement Procedures
(as defined below), the following terms shall have the following meanings,
unless the context otherwise requires:

            (a) "Articles Supplementary" shall mean the Articles Supplementary,
      as amended, of the Company, establishing the powers, preferences and
      rights of the AMPS filed on December 20, 1991 in the office of the State
      Department of Assessments and Taxation of the State of Maryland.

            (b) "Auction" shall have the meaning specified in Section 2 .1
      hereof.

            (c) "Auction Procedures" shall mean the Auction Procedures that are
      set forth in Paragraph 11 of the Articles Supplementary.

            (d) "Authorized Officer" shall mean each Senior Vice President, Vice
      President, Assistant Vice President, Trust Officer, Assistant Secretary
      and Assistant Treasurer of the Auction Agent assigned to its Corporate
      Trust and Agency Group and every other officer or employee of the Auction
      Agent designated as an "Authorized Officer" for purposes of this Agreement
      in a communication to BD:

            (e) "BD Officer" shall mean each officer or employee of BD
      designated as a "BD Officer" for purposes of this Agreement in a
      communication to the Auction Agent.

            (f) "Broker-Dealer Agreement" shall mean this Agreement and any
      substantially similar agreement between the Auction Agent and a
      Broker-Dealer.

            (g) "Purchaser's Letter" shall mean a letter addressed to the
      Company, the Auction Agent and a Broker-Dealer, substantially in the form
      attached hereto as Exhibit A.

            (h) "Settlement Procedures" shall mean the Settlement Procedures
      attached hereto as Exhibit B.

      1.3 Rules of Construction. Unless the context or use indicates another or
different meaning or intent, the following rules shall apply to the construction
of this Agreement:

            (a) Words importing the singular number shall include the plural
      number and vice versa.

            (b) The captions and headings herein are solely for convenience of
      reference and shall not constitute a part of this Agreement nor shall they
      affect its meaning, construction or effect.


                                       2
<PAGE>

            (c) The words "hereof," "herein," "hereto," and other words of
      similar import refer to this Agreement as a whole.

            (d) All references herein to a particular time of day shall be to
      New York City time.

      2. Notification of Dividend Period and Advance Notice of Allocation of
Taxable Income.

            (a) The provisions contained in paragraph 2 of the Articles
      Supplementary concerning the notification of a Special Dividend Period
      will be followed by the Auction Agent and BD and the provisions contained
      therein are incorporated herein by reference in their entirety and shall
      be deemed to be a part of this Agreement to the same extent as if such
      provisions were fully set forth herein.

            (b) Whenever the Company intends to include any net capital gains or
      other taxable income in any dividend on shares of any series of AMPS, the
      Company will notify the Auction Agent of the amount to be so included at
      least five Business Days prior to the Auction Date on which the Applicable
      Rate for such dividend is to be established. Whenever the Auction Agent
      receives such notice from the Company, it will in turn notify BD, who, on
      or prior to such Auction Date, will notify its Existing Holders and
      Potential Holders believed to be interested in submitting an Order in the
      Auction to be held on such Auction Date.

      3.    The Auction.

      3.1 Purpose; Incorporation by Reference of Auction Procedures and
Settlement Procedures.

            (a) On each Auction Date, the provisions of the Auction Procedures
      will be followed by the Auction Agent for the purpose of determining the
      Applicable Rate for each series of AMPS, for the next Dividend Period
      therefor. Each periodic operation of such procedures is hereinafter
      referred to as an "Auction."

            (b) All of the provisions contained in the Auction Procedures and
      the Settlement Procedures are incorporated herein by reference in their
      entirety and shall be deemed to be a part of this Agreement to the same
      extent as if such provisions were fully set forth herein.

            (c) BD is delivering herewith a Purchaser's Letter executed by BD
      and, in the case of Merrill Lynch, Pierce, Fenner & Smith Incorporated, a
      list of persons to whom BD will initially sell the shares of each series
      of AMPS, the number of shares of each series of AMPS BD will sell to each
      such person and the number of shares of each series of AMPS BD will hold
      for its own account. BD agrees to act as, and assumes the obligations of
      and limitations and restrictions placed upon, a Broker-Dealer under this
      Agreement. BD understands that other Persons meeting the requirements
      specified in the definition of "Broker-Dealer" contained in Paragraph 1 of
      the Articles Supplementary may execute a Broker-Dealer Agreement and a
      Purchaser's Letter and participate as Broker-Dealers in Auctions.

            (d) BD and other Broker-Dealers may participate in Auctions for
      their own accounts, provided that BD or such other Broker-Dealers, as the
      case may be, has executed a Purchaser's Letter. However, the Company may
      by notice to BD and all other Broker-Dealers prohibit all


                                       3
<PAGE>

      Broker-Dealers from submitting Bids in Auctions for their own accounts,
      provided that Broker-Dealers may continue to submit Hold Orders and Sell
      Orders.

      3.2 Preparation for Each Auction.

            (a) Not later than 9:30 A.M. on each Auction Date for each series of
      AMPS, the Auction Agent shall advise BD by telephone of the Reference Rate
      and the Maximum Applicable Rate in effect on such Auction Date.

            (b) In the event that the Auction Date for any Auction shall be
      changed after the Auction Agent has given the notice referred to in clause
      (vii) of paragraph (a) of the Settlement Procedures, the Auction Agent, by
      such means as the Auction Agent deems practicable, shall give notice of
      such change to BD not later than the earlier of 9:15 A.M. on the new
      Auction Date or 9:15 A.M. on the old Auction Date. Thereafter, BD shall
      promptly notify customers of BD that BD believes are Existing Holders of
      shares of Series A AMPS, Series B AMPS, Series C AMPS, Series D AMPS or
      Series E AMPS, as the case may be, of such change in the Auction Date.

            (c) The Auction Agent from time to time may request BD to provide it
      with a list of the respective customers BD believes are Existing Holders
      of shares of each series of AMPS. BD shall comply with any such request,
      and the Auction Agent shall keep confidential any such information,
      including information received as to the identity of Bidders in any
      Auction, and shall not disclose any such information so provided to any
      Person other than the Company; and such information shall not be used by
      the Auction Agent or its officers, employees, agents or representatives
      for any purpose other than such purposes as are described herein. The
      Auction Agent shall transmit any list of customers BD believes are
      Existing Holders of shares of each series of AMPS and information related
      thereto only to its officers, employees, agents or representatives in the
      Corporate Trust and Agency Group who need to know such information for the
      purposes of acting in accordance with this Agreement and shall prevent the
      transmission of such information to others and shall cause its officers,
      employees, agents and representatives to abide by the foregoing
      confidentiality restrictions; provided, however, that the Auction Agent
      shall have no responsibility or liability for the actions of any of its
      officers, employees, agents or representatives after they have left the
      employ of the Auction Agent.

            (d) The Auction Agent is not required to accept the Purchaser's
      Letter for any Potential Holder for an Auction unless it is received by
      the Auction Agent by 3:00 P.M. on the Business Day next preceding such
      Auction.

      3.3   Auction Schedule; Method of Submission of Orders.

            (a) The Company and the Auction Agent shall conduct Auctions for
      each series of AMPS in accordance with the schedule set forth below. Such
      schedule may be changed at any time by the Auction Agent with the consent
      of the Company, which consent shall not be unreasonably withheld. The
      Auction Agent shall give notice of any such change to BD. Such notice
      shall be received prior to the first Auction Date on which any such change
      shall be effective.


                                       4
<PAGE>

         Time                                       Event
         ----                                       -----

By 9:30 A.M.                        Auction Agent advises the Company and
                                    Broker-Dealers of Reference Rate and the
                                    Maximum Applicable Rate as set forth in
                                    section 3.2(a) hereof.

9:30 A.M. - 1:00 P.M.               Auction Agent assembles information
                                    communicated to it by Broker-Dealers as
                                    provided in Paragraph 11(c)(i) of the
                                    Articles Supplementary. Submission Deadline
                                    is 1:00 P.M.

Not earlier than 1:00 P.M.          Auction Agent makes determinations pursuant
                                    to Paragraph 11(d)(i) of the Articles
                                    Supplementary.

By approximately 3:00 P.M.          Auction Agent advises Company of results of
                                    Auction as provided in Paragraph 11(d)(ii)
                                    of the Articles Supplementary.

                                    Submitted Bids and Submitted Sell Orders are
                                    accepted and rejected in whole or in part
                                    and shares of AMPS are allocated as provided
                                    in Paragraph 11(e) of the Articles
                                    Supplementary.

By approximately 10:00 A.M. on      Auction Agent gives notice of Auction
the next succeeding Business Day    results as set forth in Section 3.4(a)
                                    hereof.


            (b) BD agrees to maintain a list of Potential Holders and to contact
      the Potential Holders on such list on or prior to each Auction Date for
      the purposes set forth in Paragraph 11 of the Articles Supplementary.

            (c) BD agrees not to sell, assign or dispose of any shares of any
      series of AMPS, to any Person who has not delivered a signed Purchaser's
      Letter to the Auction Agent.

            (d) BD shall submit Orders to the Auction Agent in writing in
      substantially the form attached hereto as Exhibit C. BD shall submit
      separate Orders to the Auction Agent for each Potential Holder or Existing
      Holder on whose behalf BD is submitting an Order and shall not net or
      aggregate the orders of Potential Holders or Existing Holders on whose
      behalf BD is submitting orders.

            (e) BD shall deliver to the Auction Agent (i) a written notice,
      substantially in the form attached hereto as Exhibit D, of transfers of
      shares of any series of AMPS, made through BD by an Existing Holder to
      another Person other than pursuant to an Auction, and (ii) a written
      notice, substantially in the form attached hereto as Exhibit E, of the
      failure of shares of any series of AMPS to be transferred to or by any
      Person that purchased or sold shares of any series of AMPS or through BD
      pursuant to an Auction. The Auction Agent is not required to accept any
      notice delivered pursuant to the terms of the foregoing sentence with
      respect to an Auction


                                       5
<PAGE>

      unless it is received by the Auction Agent by 3:00 P.M. on the Business
      Day next preceding the applicable Auction Date.

      3.4 Notice of Auction Results.

            (a) On each Auction Date, the Auction Agent shall notify BD by
      telephone as set forth in paragraph (a) of the Settlement Procedures. On
      the Business Day next succeeding such Auction Date, the Auction Agent
      shall notify BD in writing of the disposition of all Orders submitted by
      BD in the Auction held on such Auction Date.

            (b) BD shall notify each Existing Holder or Potential Holder on
      whose behalf BD has submitted an Order as set forth in paragraph (b) of
      the Settlement Procedures and take such other action as is required of BD
      pursuant to the Settlement Procedures.

      If any Existing Holder selling shares of any series of AMPS in an Auction
fails to deliver such shares, the BD of any Person that was to have purchased
shares of such series of AMPS in such Auction may deliver to such Person a
number of whole shares of such series of AMPS that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of shares of such series of AMPS to be so delivered shall be determined
by such BD. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such BD
shall deliver to the Auction Agent the notice required by Section 3.3(e)(ii)
hereof. Notwithstanding the foregoing terms of this Section 3.4(b), any delivery
or non-delivery of shares of any series of AMPS which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3 (e) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

      3.5 Service Charge to Be Paid to BD. On the Business Day next succeeding
each Auction Date, the Auction Agent shall pay to BD from moneys received from
the Company an amount equal to: (a) in the case of any Auction Date immediately
preceding a 7-day Dividend Period, 28-day Dividend Period or Short Term Dividend
Period, the product of (i) a fraction the numerator of which is the number of
days in such Dividend Period (calculated by counting the first day of such
Dividend Period but excluding the last day thereof) and the denominator of which
is 360, times (ii) 1/4 of 1%, times (iii) $50,000, times (iv) the sum of (A) the
aggregate number of AMPS placed by BD in the applicable Auction that were (x)
the subject of a Submitted Bid of an Existing Holder submitted by BD and
continued to be held as a result of such submission and (y) the subject of a
Submitted Bid of a Potential Holder submitted by BD and were purchased as a
result of such submission plus (B) the aggregate number of AMPS subject to valid
Hold Orders (determined in accordance with Paragraph 11 of the Articles
Supplementary) submitted to the Auction Agent by BD plus (C) the number of AMPS
deemed to be subject to Hold Orders by Existing Holders pursuant to Paragraph 11
of the Articles Supplementary that were acquired by such Existing Holders
through BD and (b) in the case of any Auction Date immediately preceding a Long
Term Dividend Period, that amount as mutually agreed upon by the Company and BD,
based on the selling concession that would be applicable to an underwriting of
fixed or variable rate preferred shares with a similar final maturity or
variable rate dividend period, at the commencement of such Long Term Dividend
Period.


                                       6
<PAGE>

      For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Existing Holder who acquired shares of any series of AMPS through BD transfers
those shares to another Person other than pursuant to an Auction, then the
Broker-Dealer for the shares so transferred shall continue to be BD, provided,
however, that if the transfer was effected by, or if the transferee is, a
Broker-Dealer other than BD, then such Broker-Dealer shall be the Broker-Dealer
for such shares.

      4. The Auction Agent.

      4.1 Duties and Responsibilities.

            (a) The Auction Agent is acting solely as agent for the Company
      hereunder and owes no fiduciary duties to any other Person by reason of
      this Agreement.

            (b) The Auction Agent undertakes to perform such duties and only
      such duties as are specifically set forth in this Agreement, and no
      implied covenants or obligations shall be read into this Agreement against
      the Auction Agent.

            (c) In the absence of bad faith or negligence on its part, the
      Auction Agent shall not be liable for any action taken, suffered, or
      omitted or for any error of judgment made by it in the performance of its
      duties under this Agreement. The Auction Agent shall not be liable for any
      error of judgment made in good faith unless the Auction Agent shall have
      been negligent in ascertaining (or failing to ascertain) the pertinent
      facts.

      4.2 Rights of the Auction Agent.

            (a) The Auction Agent may rely and shall be protected in acting or
      refraining from acting upon any communication authorized by this Agreement
      and upon any written instruction, notice, request, direction, consent,
      report, certificate, share certificate or other instrument, paper or
      document believed by it to be genuine. The Auction Agent shall not be
      liable for acting upon any telephone communication authorized by this
      Agreement which the Auction Agent believes in good faith to have been
      given by the Company or by a Broker-Dealer. The Auction Agent may record
      telephone communications with the Broker-Dealers.

            (b) The Auction Agent may consult with counsel of its own choice,
      and the advice of such counsel shall be full and complete authorization
      and protection in respect of any action taken, suffered or omitted by it
      hereunder in good faith and in reliance thereon.

            (c) The Auction Agent shall not be required to advance, expend or
      risk its own funds or otherwise incur or become exposed to financial
      liability in the performance of its duties hereunder.

            (d) The Auction Agent may perform its duties and exercise its rights
      hereunder either directly or by or through agents or attorneys.

      4.3 Auction Agent's Disclaimer. The Auction Agent makes no representation
as to the validity or adequacy of this Agreement or the AMPS.
- -----------------------------------


                                       7
<PAGE>

      5. Miscellaneous.

      5.1 Termination. Any party may terminate this Agreement at any time upon
five days' prior notice to the other party; provided, however, that if BD is
Merrill Lynch, Pierce, Fenner & Smith Incorporated, neither BD nor the Auction
Agent may terminate this Agreement without first obtaining prior written consent
of the Company of such termination, which consent shall not be unreasonably
withheld.

      5.2 Participant in Securities Depository; Payment of Dividends in Same-Day
Funds.

            (a) BD is, and shall remain for the term of this Agreement, a member
      of, or participant in, the Securities Depository (or an affiliate of such
      a member or participant).

            (b) BD represents that it (or if such BD does not act as Agent
      Member, one of its affiliates) shall make all dividend payments on the
      AMPS available in same-day funds on each Dividend Payment Date to
      customers that use such BD or affiliate as Agent Member.

      5.3 Agent Member. At the date hereof, BD is a participant of the
Securities Depository.

      5.4 Communications. Except for (i) communications authorized to be made by
telephone pursuant to this Agreement or the Auction Procedures and (ii)
communications in connection with the Auctions (other than those expressly
required to be in writing), all notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:

If to BD                     Merrill Lynch, Pierce, Fenner & Smith Incorporated
addressed:                   Merrill Lynch World Headquarters
                             World Financial Center - North Tower
                             New York, New York 10281-1205

                             Attention:
                             Telecopier No.:  (212) 449-2760
                             Telephone No.:  (212) 449-4940

If to the Auction            IBJ Schroder Bank & Trust Company
Agent, addressed:            One State Street
                             New York, New York 10004

                             Attention: Auction Window Subcellar 1
                             Telecopier No.: (212) 797-1148
                             Telephone No.:  (212) 858-2272

or such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the other party.

Each such notice, request or communication shall be effective when delivered at
the address specified herein. Communications shall be given on behalf of BD by a
BD Officer and on behalf


                                       8
<PAGE>

of the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

      5.5 Entire Agreement. This Agreement contains the entire agreement between
the parties relating to the subject matter hereof, and there are no other
representations, endorsements, promises, agreements or understandings, oral,
written or inferred, between the parties relating to the subject matter hereof.

      5.6 Benefits. Nothing in this Agreement, express or implied, shall give to
any person, other than the Company, the Auction Agent and BD and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim under this Agreement.

      5.7 Amendments; Waiver.

            (a) This Agreement shall not be deemed or construed to be modified,
      amended, rescinded, cancelled or waived, in whole or in part, except by a
      written instrument signed by a duly authorized representative of the party
      to be charged.

            (b) Failure of either party to this Agreement to exercise any right
      or remedy hereunder in the event of a breach of this Agreement by the
      other party shall not constitute a waiver of any such right or remedy with
      respect to any subsequent breach.

      5.8 Successors and Assigns. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the respective successors and permitted
assigns of each of BD and the Auction Agent. This Agreement may not be assigned
by either party hereto absent the prior written consent of the other party;
provided, however, that this Agreement may be assigned by the Auction Agent to a
successor Auction Agent selected by the Company without the consent of BD.

      5.9 Severability. If any clause, provision or section of this Agreement
shall be ruled invalid or unenforceable by any court of competent jurisdiction,
the invalidity or unenforceability of such clause, provision or section shall
not affect any remaining clause, provision or section hereof.

      5.10 Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

      6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in said State.


                                       9
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                      IBJ SCHRODER BANK & TRUST COMPANY


                                      By:  _____________________________________
                                            Title:  Assistant Vice President


                                      MERRILL LYNCH, PIERCE, FENNER & SMITH
                                                            INCORPORATED


                                      By:  _____________________________________
                                            Title:  Vice President


                                       10
<PAGE>

                                                                       EXHIBIT A

TO BE  SUBMITTED TO YOUR  BROKER-DEALER  WHO WILL THEN DELIVER
COPIES  ON YOUR  BEHALF TO THE  RESPECTIVE  TRUST  COMPANY  OR
REMARKETING AGENT. MASTER PURCHASER'S LETTER

                                   Relating to
                       Securities Involving Rate Settings
                        Through Auctions or Remarketings


THE COMPANY
A REMARKETING AGENT
THE TRUST COMPANY
A BROKER-DEALER
AN AGENT MEMBER
OTHER PERSONS

Dear Sirs:

      1. This letter is designed to apply to publicly or privately  offered debt
or  equity  securities  ("Securities")  of  any  issuer  ("Company")  which  are
described in any final prospectus or other offering  materials  relating to such
Securities  as the same  may be  amended  or  supplemented  (collectively,  with
respect to the particular  Securities  concerned,  the  "Prospectus")  and which
involve  periodic rate settings  through  auctions  ("Auctions")  or remarketing
procedures ("Remarketings"). This letter shall be for the benefit of any Company
and of any trust company,  auction  agent,  paying agent  (collectively,  "trust
company"), remarketing agent, broker-dealer, agent member, securities depository
or other  interested  person  in  connection  with any  Securities  and  related
Auctions or Remarketings  (it being understood that such persons may be required
to  execute   specified   agreements   and  nothing   herein  shall  alter  such
requirements).  The  terminology  used  herein is  intended to be general in its
application  and not to  exclude  any  Securities  in  respect  of which (in the
Prospectus or otherwise) alternative terminology is used.

      2. We may from time to time  offer to  purchase,  purchase,  offer to sell
and/or sell  Securities of any Company as described in the  Prospectus  relating
thereto. We agree that this letter shall apply to all such purchases,  sales and
offers and to Securities  owned by us. We understand that the  dividend/interest
rate on Securities  may be based from time to time on the results of Auctions or
Remarketings as set forth in the Prospectus.

      3. We agree  that any bid or sell  order  placed by us in an  Auction or a
Remarketing shall constitute an irrevocable offer (except as otherwise described
in the Prospectus) by us to purchase or sell the Securities  subject to such bid
or sell order,  or such lesser  amount of  Securities as we shall be required to
sell or purchase as a result of such Auction or  Remarketing,  at the applicable
price, all as set forth in the Prospectus, and that if we fail to place a bid or
sell order with respect to Securities  owned by us with a  broker-dealer  on any
Auction or Remarketing date, or a broker-dealer to which we communicate a bid or
sell  order  fails to  submit  such bid or sell  order to the trust  company  or
remarketing agent concerned, we shall be deemed to have placed a hold order with
respect to such  Securities  as described in the  Prospectus.  We


                                      A-1
<PAGE>

authorize  any  broker-dealer  that  submits a bid or sell order as our agent in
Auctions or Remarketing to execute contracts for the sale of Securities  covered
by such bid or sell order.  We recognize that the payment by such  broker-dealer
for Securities  purchased on our behalf shall not relieve us of any liability to
such broker-dealer for payment for such Securities.

      4. We understand  that in a Remarketing,  the dividend or interest rate or
rates on the  Securities  and the  allocation  of  Securities  tendered for sale
between  dividend or interest  periods of  different  lengths will be based from
time to time on the  determinations  of one or more remarketing  agents,  and we
agree to be conclusively bound by such  determinations.  We further agree to the
payment  of  different  dividend  or  interest  races  to  different  holder  of
Securities depending on the length of the dividend or interest period elected by
such holders. We agree that any notice given by us to a remarketing agent (or to
a broker-dealer for transmission to a remarketing agent) of our desire to tender
Securities  in a Remarketing  shall  constitute  an  irrevocable  (except to the
limited extent set forth in the  Prospectus)  offer by us to sell the Securities
specified in such notice,  or such lesser  number of  Securities  as we shall be
required to sell as a result of such  Remarketing  in accordance  with the terms
set forth in the  Prospectus,  and we authorize the  remarketing  agent to sell,
transfer or otherwise dispose of such Securities as set forth in the Prospectus.

      5. We agree  that,  during  the  applicable  period  as  described  in the
Prospectus, dispositions of Securities can be made only in the denominations set
forth in the Prospectus and we will sell,  transfer or otherwise  dispose of any
Securities  held by us from time to time only  pursuant  to a bid or sell  order
placed in an Auction,  in a Remarketing.  to or through a broker-dealer or, when
permitted in the  Prospectus,  to a person that has signed and  delivered to the
applicable  trust company or a remarketing  agent a letter  substantially in the
form of this letter (or other applicable  purchaser's,  letter) provided that in
the case of all transfers  other than pursuant to Auctions or Remarketings we or
our  broker-dealer  or our agent  member  shall  advise such trust  company or a
remarketing agent of such transfer. We understand that a restrictive legend will
be  placed  on  certificates   representing  the  Securities  and  stop-transfer
instructions  will be issued to the transfer  agent and or registrar  all as set
forth in the Prospectus.

      6. We agree  that,  during  the  applicable  period  as  described  in the
Prospectus,  ownership of Securities  shall be represented by one or more global
certificates  registered in the name of the applicable  securities depository or
its nominee that we will not be entitled to receive any certificate representing
the Securities  and that our ownership of any  Securities  will be maintained in
book  entry  form by the  securities  depository  for the  account  of our agent
member,  which in turn will maintain  records of our  beneficial  ownership.  We
authorize  and  instruct our agent  member to disclose to the  applicable  trust
company  or  remarketing  agent  such  information   concerning  our  beneficial
ownership  of  Securities  as such trust  company  or  remarketing  agent  shall
request.

      7. We  acknowledge  that partial  deliveries  of  Securities  purchased in
Auctions or Remarketings  may be made to us and such deliveries shall constitute
good delivery as set forth in the Prospectus.

      8. This letter is not a commitment by us to purchase any Securities.


                                      A-2
<PAGE>

      9.  This  letter  supersedes  any  prior-dated   version  of  this  master
purchaser's  letter, and supplements any prior or post-dated  purchaser's letter
specific  to  particular  Securities,  and this  letter may only be revoked by a
signed writing delivered to the original recipients hereof.

      10. The  descriptions  of Auction or  Remarketing  procedures set forth in
each applicable  Prospectus are  incorporated by reference herein and in case of
any conflict between this letter,  any purchaser's letter specific to particular
Securities and any such description, such description shall control.

      11. Any  xerographic or other copy of this letter shall be deemed of equal
effect as a signed original.

      12.  Our  agent  member  of The  Depository  Trust  Company  currently  is
____________.

      13. Our personnel  authorized to place orders with  broker-dealers for the
purposes  set forth in the  Prospectus  in  Auctions or  Remarketings  currently
is/are , telephone number ( ) .

      14. Our taxpayer identification number is __________.

      15. In the case of each offer to purchase, purchase, offer to sell or sale
by us of Securities not registered  under the Securities Act of 1933, as amended
(the "Act"), we represent and agree as follows:

            A. We understand and expressly  acknowledge that the Securities have
      not been and will not be registered under the Act and,  accordingly,  that
      the  Securities  may  not  be  reoffered,  resold  or  otherwise  pledged,
      hypothecated  or  transferred  unless  an  applicable  exemption  from the
      registration requirements of the Act is available.

            B. We hereby confirm that any purchase of Securities made by us will
      be for our own  account,  or for the  account of one or more  parties  for
      which  we  are  acting  as  trustee  or  agent  with  complete  investment
      discretion and with authority to bind such parties, and not with a view to
      any public  resale or  distribution  thereof.  We and each other party for
      which we are acting  which will  acquire  Securities  will be  "accredited
      investors"  within the meaning of  Regulation D under the Act with respect
      to the Securities to be purchased by us or such party, as the case may be,
      will have previously  invested in similar types of instruments and will be
      able and  prepared to bear the  economic  risk of investing in and holding
      such Securities.

            C. We  acknowledge  that prior to purchasing any Securities we shall
      have received a Prospectus (or private placement  memorandum) with respect
      thereto and acknowledge that we will have had access to such financial and
      other  information,  and have been  afforded the  opportunity  to ask such
      questions of  representatives  of the Company and receive answers thereto,
      as  we  deem  necessary  in  connection  with  our  decision  to  purchase
      Securities.


                                      A-3
<PAGE>

            D. We recognize that the Company and  broker-dealers  will rely upon
      the truth and accuracy of the  foregoing  investment  representations  and
      agreements,  and we agree that each of our purchases of Securities  now or
      in the future shall be deemed to constitute our  concurrence in all of the
      foregoing  which  shall be  binding  on us and each party for which we are
      acting as set forth in Subparagraph B above.


                                     -------------------------------------------
                                                (Name of Purchaser)


                                    By
                                      ------------------------------------------
                                                  Name:
                                                  Title:


Dated:
      ----------------------
Mailing Address of Purchaser

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

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

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


                                      A-4
<PAGE>

                                                                       EXHIBIT B

SETTLEMENT PROCEDURES

      Capitalized terms used herein shall have the respective meanings specified
in the Articles Supplementary.

      (a) On each Auction  Date,  the Auction Agent shall notify by telephone or
through  the  Auction  Agent's   Processing  System  the   Broker-Dealers   that
participated  in the Auction held on such Auction Date and submitted an Order on
behalf of any Existing Holder or Potential Holder of:

            (i) the  Applicable  Rate  fixed  for the next  succeeding  Dividend
      Period;

            (ii) whether Sufficient  Clearing Bids existed for the determination
      of the Applicable Rate;

            (iii) if such Broker-Dealer (a "Seller's Broker-Dealer") submitted a
      Bid or Sell Order on behalf of an Existing  Holder,  the number of shares,
      if any, of Preferred Shares to be sold by such Existing Holder;

            (iv) if such Broker-Dealer (a "Buyer's  Broker-Dealer")  submitted a
      Bid on behalf of a  Potential  Holder,  the number of shares,  if any,  of
      Preferred Shares to be purchased by such Potential Holder;

            (v) if the  aggregate  number of Preferred  Shares to be sold by all
      Existing  Holder on whose behalf such  Broker-Dealer  submitted a Bid or a
      Sell  Order  exceeds  the  aggregate  number  of  Preferred  Shares  to be
      purchased  by all  potential  Holders on whose  behalf such  Broker-Dealer
      submitted a Bid,  the name or names of one or more  Buyer's  Broker-Dealer
      (and  the  name  of the  Agent  Member,  if  any,  of  each  such  Buyer's
      Broker-Dealer)  acting for one or more purchasers of such excess number of
      Preferred Shares and the number of such shares to he purchased from one or
      more Existing Holders on whose behalf such  Broker-Dealer  acted by one or
      more Potential Holders on whose behalf each of such Buyer's  Broker-Dealer
      acted;

            (vi) if the aggregate  number of Preferred Shares to be purchased by
      all Potential Holders on whose behalf such  Broker-Dealer  submitted a Bid
      exceeds  the  aggregate  number  of  Preferred  Shares  to be  sold by all
      Existing Holders on whose behalf such  Broker-Dealer  submitted a Bid or a
      Sell Order, the name or names of one or more Seller's  Broker-Dealers (and
      the name of the Agent Member, if any, of each such Seller's Broker-Dealer)
      acting for one or more sellers of such excess  number of Preferred  Shares
      and the number of such shares to be sold to one or more Potential  Holders
      on whose behalf such  Broker-Dealer  acted by one or more Existing Holders
      on whose behalf each of such Seller's Broker-Dealer acted; and

            (vii) the Auction Date of the next  succeeding  Auction with respect
      to the Preferred Shares;


                                      B-1
<PAGE>

      (b) On each Auction Date,  each  Broker-Dealer  that submitted an Order on
behalf of any Existing Holder or Potential Holder shall:

            (i) in the case of a Broker-Dealer that is a Buyer's  Broker-Dealer,
      instruct  each  Potential  Holder  on  whose  behalf  such   Broker-Dealer
      submitted a Bid that was  accepted,  in whole or in part, to instruct such
      Potential Holder's Agent Member to pay to such Broker-Dealer (or its Agent
      Member) through the Securities Depository the amount necessary to purchase
      the  number of  Preferred  Shares  to be  purchased  pursuant  to such Bid
      against  receipt of such  shares and advise such  Potential  Holder of the
      Applicable Rate for the next succeeding Dividend Period;

            (ii)  in  the   case  of  a   Broker-Dealer   that  is  a   Seller's
      Broker-Dealer,   instruct  each  Existing  Holder  on  whose  behalf  such
      Broker-Dealer  submitted  a Sell Order that was  accepted,  in whole or in
      part,  or a Bid that was  accepted,  in whole or in part, to instruct such
      Existing  Holder's Agent Member to deliver to such  Broker-Dealer  (or its
      Agent Member)  through the  Securities  Depository the number of Preferred
      Shares to be sold  pursuant to such Order  against  payment  therefor  and
      advise any such  Existing  Holder  that will  continue  to hold  Preferred
      Shares of the Applicable Rate for the next succeeding Dividend Period;

            (iii) advise each Existing Holder on whose behalf such Broker-Dealer
      submitted  a Hold  Order of the  Applicable  Rate for the next  succeeding
      Dividend Period;

            (iv) advise each Existing Holder on whose behalf such  Broker-Dealer
      submitted  an Order of the Auction Date for the next  succeeding  Auction;
      and

            (v) advise each Potential Holder on whose behalf such  Broker-Dealer
      submitted  a Bid that was  accepted,  in whole or in part,  of the Auction
      Date for the next succeeding Auction.

      (c) On the basis of the information  provided to it pursuant to (a) above,
each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a Potential
Holder or an Existing  Holder shall, in such manner and at such time or times as
in its sole  discretion it may  determine,  allocated  any funds  received by it
pursuant to (b)(i)  above and any  Preferred  Shares  received by it pursuant to
(b)(ii)  above  among  the  Potential  Holders,  if any,  on whose  behalf  such
Broker-Dealer submitted Bids, the Existing Holders, if any, on whose behalf such
Broker-Dealer  submitted  Bids  that  were  accepted  or  Sell  Orders,  and any
Broker-Dealer or  Broker-Dealers  identified to it by the Auction Agent pursuant
to (a)(v) or (a)(vi) above.

      (d) On each Auction Date:

            (i) each  Potential  Holder and Existing  Holder shall  instruct its
      Agent Member as provided in (b)(i) or (ii) above, as the case may be.

            (ii) each Seller's Broker-Dealer which is not an Agent Member of the
      Securities  Depository  shall instruct its Agent Member to (A) pay through
      the  Securities  Depository  to the Agent  Member of the  Existing  Holder
      delivering  shares to such  Broker-Dealer  pursuant  to (b)(ii)  above the
      amount  necessary to purchase such shares against  receipt of such shares,
      and (B) deliver such shares through the Securities Depository to a Buyer's
      Broker-Dealer   (or  its  Agent   Member)   identified   to  such  Sellers
      Broker-Dealer pursuant to (a)(v) above against payment therefor; and

            (iii) each Buyers  Broker-Dealer which is not an Agent Member of the
      Securities Depository,  shall instruct its Agent Member to (A) pay through
      the  Securities  Depository  to a  Seller's  Broker-Dealer  (or its  Agent
      Member)  identified  pursuant  to (a)(vi)  above the amount  necessary  to
      purchase  the shares to be  purchased  pursuant  to (b)(i)  above  against
      receipt of such shares, and (B) deliver such shares through the Securities


                                      B-2
<PAGE>

      Depository to the Agent Member of the purchaser  thereof  against  payment
      therefor.

      (e) On the day after the Auction Date:

            (i) each  Bidder's  Agent  Member  referred to in (d)(i) above shall
      instruct the Securities  Depository to execute the transactions  described
      under (b)(i) or (ii) above,  and the Securities  Depository  shall execute
      such transactions:

            (ii) each Seller's  Broker-Dealer or its Agent Member shall instruct
      the Securities Depository to execute the transactions described in (d)(ii)
      above, and the Securities Depository shall execute such transactions; and

            (iii) each Buyer's Broker-Dealer or its Agent Member shall, instruct
      the  Securities  Depository  to  execute  the  transactions  described  in
      (d)(iii)  above,   and  the  Securities   Depository  shall  execute  such
      transactions.

      (f) If an Existing Holder selling  Preferred Shares in an Auction fails to
deliver such shares (by authorized  book-entry),  a Broker-Dealer may deliver to
the  Potential  Holder on behalf of which it submitted a Bid that was accepted a
number of whole  Preferred  Shares  that is less than the number of shares  that
otherwise  was to be  purchased by such  Potential  Holder.  In such event,  the
number of Preferred Shares to be so delivered shall be determined solely by such
Broker-Dealer.  Delivery of such lesser number of shares shall  constitute  good
delivery.  Notwithstanding  the  foregoing  terms  of this  paragraph  (f),  any
delivery or  non-delivery of shares which shall represent any departure from the
results of an Auction, as determined by the Auction Agent, shall be of no effect
unless and until the Auction  Agent shall have been notified of such delivery or
non-delivery  in accordance  with the provisions of the Auction Agent  Agreement
and the Broker-Dealer Agreements.


                                      B-3
<PAGE>

                                                                       EXHIBIT C

                        IBJ SCHRODER BANK & TRUST COMPANY
                                AUCTION BID FORM

Submit To:  IBJ Schroder Bank & Trust Co.         Issue________________________
            Securities Transfer Department        Series_______________________
            One State Street                      Auction Date_________________
            New York, New York 10004

                                                  Telephone (212) 858-2272
Attention:  Auction Window                        Facsimile (212) 797-1148

The  undersigned  Broker-Dealer  submits  the  following  Order on behalf of the
Bidder listed below:

Name of Bidder:_____________________

                                         EXISTING HOLDER

Shares now held                                   HOLD_________________________
                                                  BID at rate of ______________
                                                  SELL ________________________

                                         POTENTIAL HOLDER

                                                  # of shares bid _____________
                                                  BID at rate of ______________

Notes:

(1)   If submitting more than one Bid for one Bidder, use additional Auction Bid
      Forms.

(2)   If one or more Bids  covering  in the  aggregate  more than the  number of
      outstanding  shares held by any Existing  Holder are submitted,  such Bids
      shall be  considered  valid  in the  order of  priority  set  forth in the
      Auction Procedures on the above issue.

(3)   A Hold or Sell may be placed only by an Existing  Holder covering a number
      of shares not greater than the number of shares currently held.

(4)   Potential  Holders may make only Bids,  each of which must specify a rate.
      If more than one Bid is submitted on behalf of any Potential Holder,  each
      Bid submitted shall be a separate Bid with the rate specified.

(5)   Bids may  contain no more than three  figures to the right of the  decimal
      point (.001 of 1%). Fractions will not accepted.

NAME OF BROKER-DEALER  __________________________

Authorized Signature   __________________________


<PAGE>

                                                                       EXHIBIT D

    (To be used only for transfers made other than pursuant to an Auction).

                                  TRANSFER FORM

      Re:   MuniYield Fund, Inc.
            Auction Market Preferred Stock, Series ______ ("AMPS")


      We are (check one):

|_|   the Existing Holder named below;

|_|   the Broker-Dealer for such Existing Holder; or

|_|   the Agent Member for such Existing Holder.

      We hereby notify you that such Existing Holder has transferred

      _____ shares of Series _____ AMPS to ____________________.


                                       ------------------------------------
                                       (Name of Existing Holder)


                                       ------------------------------------
                                       (Name of Broker-Dealer)


                                       ------------------------------------
                                       (Name of Agent Member)


                                    By:
                                       ------------------------------------
                                       Name:
                                       Title:


<PAGE>

                                                                       EXHIBIT E

                    (To be used only for failures to deliver
                       AMPS sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER


Complete either I or II


      I.    We  are  a  Broker-Dealer  for  ______________________________  (the
            "Purchaser"), which purchased _____ shares of Series _______ AMPS of
            MuniYield Fund, Inc. in the Auction held on  _______________________
            from the seller of such shares.

      II.   We  are  a  Broker-Dealer   for   ___________________________   (the
            "Seller"),  which sold ____ shares of Series _____ AMPS of MuniYield
            Fund, Inc. in the Auction held on  _____________________________  to
            the Purchaser of such shares.

            We hereby notify you that (check one) --

            ____________  the  Seller  failed  to  deliver  such  shares  to the
            Purchaser

            ____________ the Purchaser failed to make payment to the Seller upon
            delivery of such shares

                                       Name:
                                            -----------------------------------
                                            Name of Broker-Dealer)

                                       By:
                                          -------------------------------------
                                          Name:
                                          Title:



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.E
<SEQUENCE>15
<FILENAME>file014.txt
<DESCRIPTION>FORM OF LETTER OF REPRESENTATION
<TEXT>

                                                                   Exhibit 13(e)

                            LETTER OF REPRESENTATION

                              MUNIYIELD FUND, INC.

                                       and

                        IBJ SCHRODER BANK & TRUST COMPANY

                                                               December 23, 1991

The Depository Trust Company
55 Water Street
New York, New York 10041

Attention: General Counsel's Office

    Re: MuniYield Fund, Inc. Issuance
        of Auction Market Preferred Stock ["AMPS"](R)

Ladies and Gentlemen:

      The purpose of this letter is to set forth certain matters relating to the
issuance and sales by MuniYield Fund, Inc., a Maryland corporation (the
"Issuer"), of 900 shares of Auction Market Preferred Stock, Series A (the
"Series A AMPS"), 900 shares of Auction Market Preferred Stock, Series B (the
"Series B AMPS"), 900 shares of Auction Market Preferred Stock, Series C (the
"Series C AMPS"), 900 shares of Auction Market Preferred Stock, Series D (the
"Series D AMPS"), 1,400 shares of Auction Market Preferred Stock, Series E (the
"Series E AMPS"). The Series A AMPS, Series B AMPS, Series C AMPS, Series D AMPS
and Series E AMPS are sometimes herein together called the "AMPS". A description
of the AMPS and the related offering are contained in a Prospectus, dated
December 18, 1991 (the "Prospectus"), a copy of which is attached hereto as
Exhibit A. IBJ Schroder Bank & Trust Company in its capacity as Auction Agent
(as defined in the Prospectus), will act as the transfer agent, registrar,
dividend disbursing agent and redemption agent with respect to the shares of
AMPS. The shares of AMPS are being distributed through The Depository Trust
Company ("DTC") by Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriters").

      To induce DTC to accept the shares of AMPS as eligible for deposit at DTC
and to act in accordance with its rules (the "DTC Rules") with respect to the
shares of AMPS, the Issuer and the Auction Agent make the following
representations to DTC:

- ----------
(R) Registered Trademark of Merrill Lynch & Co., Inc.
<PAGE>

1.    Subsequent to the issuance of the shares of AMPS on December 23, 1991 the
      Issuer shall cause the Underwriter to deposit with DTC one share
      certificate representing each series of AMPS, registered in the name of
      DTC's nominee, CEDE & CO., which will respectively represent the total
      number of shares of AMPS of such series, and said certificates shall
      remain in DTC's custody.

2.    The Prospectus describes provisions for the solicitation of consents from,
      and voting by, holders of the shares of AMPS under certain circumstances.
      The Issuer shall establish a record date or record dates for such purposes
      and give DTC notice of such record date or dates not less than 15 calendar
      days in advance of such record date or dates to the extent practicable.

3.    In the event of a full or partial redemption of outstanding shares of AMPS
      the Issuer or the Auction Agent shall give DTC notice of such event not
      less than 10 days nor more than 30 days prior to the redemption date.

4.    In the event of a partial redemption of shares of any series of AMPS
      outstanding, the Issuer or the Auction Agent shall send DTC a notice
      specifying: the number of shares of AMPS of such series to be redeemed and
      the date such notice is to be mailed to shareholders of the Issuer or
      published by the Issuer ("Publication Date"). Such notice shall be sent to
      DTC by a secure means (e.g., legible facsimile transmission, registered or
      certified mail, overnight express delivery or hand delivery) in a timely
      manner designed to assure that such notice is in DTC's possession no later
      than the close of business on the Business Day (as defined in the
      Prospectus) before the Publication Date. (The Issuer or the Auction Agent
      sending such notice shall have a method to verify subsequently the use of
      such means and timeliness of the notice.) In the event of a partial
      redemption, the Publication Date shall not be less than 10 days nor more
      than 30 days prior to the redemption date.

5.    The Prospectus indicates that the dividend rate for the shares of AMPS of
      each series may vary from time to time. Absent other existing arrangements
      with DTC, the Issuer or the Auction Agent shall give DTC notice of each
      such change in the dividend rate on the same day the new rate is
      determined by telephone to the Supervisor of the Dividend Announcement
      Section at (212) 709-1270 and such notice shall be followed by prompt
      written confirmation sent by a secure means as described in paragraph 4
      above to:

            Manager, Announcements, Dividend Department
            The Depository Trust Company
            7 Hanover Square, 22nd Floor
            New York, New York 10004

6.    The Prospectus indicates that each purchaser of shares of AMPS of any
      series will be required to sign a Purchaser's Letter (as defined in the
      Prospectus) that contains provisions restricting transfer of the shares of
      AMPS purchased. The Issuer and the Auction Agent acknowledge that as long
      as CEDE & CO. is the


                                       2
<PAGE>

      sole record owner of the shares of AMPS, CEDE & CO. shall be entitled to
      all voting rights applicable to the shares of AMPS and to receive the full
      amount of all dividends, Additional Dividends, liquidation proceeds and
      redemption proceeds payable with respect to the shares of AMPS. The Issuer
      and the Auction Agent acknowledge that DTC shall treat any DTC Participant
      (defined in the DTC Rules to mean, generally, securities brokers and
      dealers, banks, trust companies, clearing corporations and certain other
      organizations for whom DTC, directly or indirectly, holds securities)
      having shares of AMPS credited to its DTC account as entitled to the full
      benefits of ownership of such shares even if the credits of shares of AMPS
      to the DTC account of such DTC Participant result from transfers or
      failures to transfer in violation of the provisions of the Purchaser's
      Letter. Without limiting the generality of the preceding sentence, the
      Issuer and the Auction Agent acknowledge that DTC shall treat any DTC
      Participant having shares of AMPS credited to its account as entitled to
      receive dividends, distributions and voting rights, if any, in respect of
      such shares and, subject to Section 13 hereof, to receive certificates
      evidencing such shares of AMPS if such certificates are to be issued in
      accordance with the Issuer's Charter (as defined in the Prospectus). (The
      treatment by DTC of the effects of the crediting by it of shares of AMPS
      to the accounts of DTC Participants described in the preceding two
      sentences shall not affect the rights of the Issuer, participants in
      Auctions (as defined in the Prospectus) relating to the shares of AMPS,
      purchasers, sellers or holders of shares of AMPS against any DTC
      Participant.) DTC shall have no responsibility to ascertain that any
      transfer of shares of AMPS is made in accordance with the provisions of
      the Purchaser's Letter. Notwithstanding anything to the contrary, the
      parties acknowledge and agree that the Issuer and the Auction Agent shall
      have no responsibility or liability whatsoever for DTC's actions or
      omissions to act in respect of the shares of AMPS.

7.    The Prospectus indicates that in the event the Issuer retroactively
      allocates any net capital gains or other taxable income to shares of any
      series of AMPS without having given advance notice thereof to the Auction
      Agent as described in the Prospectus solely by reason of the fact that
      such allocation is made as a result of the redemption of all or a portion
      of the outstanding shares of AMPS or the liquidation of the Issuer (the
      amount of such allocation referred to herein as a "Retroactive Taxable
      Allocation"), the Issuer will, within 90 days (and generally within 60
      days) after the end of the Issuer's fiscal year for which a Retroactive
      Taxable Allocation is made, provide notice thereof to the Auction Agent
      and to each holder of shares of such series (initially Cede & Co. as
      nominee of DTC) during such fiscal year at such holder's address as the
      same appears or last appeared on the stock books of the Issuer. The Issuer
      will, within 30 days after such notice is given to the Auction Agent, pay
      to the Auction Agent (who will then distribute to such holders of such
      shares of AMPS), out of funds legally available therefor, an amount equal
      to the aggregate Additional Dividend (as defined in the Prospectus) with
      respect to all Retroactive Taxable Allocations made to such holders during
      the fiscal year in question.


                                       3
<PAGE>

8.    The Issuer will notify DTC, at least 10 business days prior to the payment
      date for any Additional Dividends, of (i) the record date for holders of
      shares of each series of AMPS entitled to receive Additional Dividends,
      (ii) the amount of Additional Dividends payable on a per share basis to
      such holders and (iii) the CUSIP number set forth on the share certificate
      representing such shares of AMPS.

9.    The Prospectus indicates that in the event a Response (as defined in the
      Prospectus) indicates that it is advisable that the Issuer give a Notice
      of Special Dividend Period (as defined in the Prospectus) for the AMPS,
      the Issuer may by no later than the second day prior to such Auction Date
      give a Notice of Special Dividend (as defined in the Prospectus) to the
      Auction Agent, DTC and each Broker-Dealer, which notice will specify (i)
      the duration of the Special Dividend Period, (ii) the Optional Redemption
      Price as specified in the Related Response and (iii) the Specific
      Redemption Provisions, if any, as specified in the related response. The
      Issuer is required to give telephonic and written notice (a "Notice of
      Revocation") to the Auction Agent, each Broker-Dealer, and DTC on or prior
      to the Business Day prior to the relevant Auction Date under the
      circumstances specified in the Prospectus.

10.   All notices and payment advices sent to DTC shall contain the CUSIP number
      set forth on the share certificate representing the applicable series of
      AMPS.

11.   Notices to DTC by facsimile transmission shall be sent to (212) 709-1093
      or (212) 709-1094. Except as provided in paragraph 5 hereof, notices to
      DTC by any other means shall be sent to:

             Manager, Reorganization Department
             Reorganization Window
             The Depository Trust Company
             7 Hanover Square, 23rd Floor
             New York, New York 10004

12.   Dividend payments shall be received by CEDE & CO., as nominee of DTC, or
      its registered assigns in same-day funds on each payment date or the
      equivalent as agreed between the Issuer or the Auction Agent and DTC
      ("Fed-Funds"). Such payment shall be made payable to the order of "CEDE &
      CO." Absent any other agreement between the Issuer or the Auction Agent
      and DTC such payments shall be addressed as follows:

             Manager, Cash Receipts, Dividends
             The Depository Trust Company
             7 Hanover Square, 24th Floor
             New York, New York 10004


                                       4
<PAGE>

13.   Redemption payments shall be made in Fed-Funds in the manner set forth in
      the SDFS Paying Agent Operating Procedures, a copy of which is attached
      hereto as Exhibit B.

14.   DTC may direct the Issuer or the Auction Agent to use any other telephone
      number for facsimile transmission, address, or department of DTC as the
      number, address or department to which payments of dividends, redemption
      proceeds or notices may be sent.

15.   In the event of a redemption necessitating a reduction in the number of
      shares of AMPS of any series outstanding, the Issuer will cause to be
      executed and delivered a new share certificate representing the remaining
      outstanding shares of AMPS of such series. Under such circumstances, DTC
      agrees to submit the original certificate to the Auction Agent for
      cancellation.

16.   In the event the Issuer determines that beneficial owners of the shares of
      AMPS of any series (generally, the Existing Holders as defined in the
      Issuer's Charter) shall be able to obtain certificates representing such
      shares of AMPS (as provided for in the Issuer's Charter), the Issuer or
      the Auction Agent shall notify DTC of the availability of share
      certificates representing such shares of AMPS, as the case may be, and
      shall issue, transfer and exchange such certificates as required by DTC
      and others in appropriate amounts.

17.   DTC may determine to discontinue providing its services as securities
      depository with respect to the shares of AMPS at any time by giving
      reasonable notice to the Issuer or the Auction Agent (at which time DTC
      will confirm with the Auction Agent the aggregate amount of the respective
      shares of AMPS outstanding). Under such circumstances the Issuer or the
      Auction Agent will cooperate with DTC in taking appropriate action to
      provide for a substitute or successor securities depository or to make
      available one or more separate certificates evidencing the shares of AMPS,
      to any DTC Participant having such shares credited to its DTC account.

18.   The Issuer hereby authorizes DTC to provide to the Auction Agent position
      listings of its DTC Participants with respect to the shares of AMPS from
      time to time at the request of the Auction Agent, and also authorizes DTC,
      in the event of a partial redemption of shares of AMPS, to provide, and
      DTC hereby agrees to provide, upon receipt of its customary fee, the
      Auction Agent, upon request, with the names of those DTC Participants
      whose positions in such shares of AMPS have been selected for redemption
      by DTC. DTC agrees to use its best efforts to notify the Auction Agent of
      those DTC Participants whose positions in the shares of AMPS have been
      selected for redemption by DTC. The Issuer authorizes the Auction Agent to
      provide DTC with such signatures, exemplars of signatures and
      authorizations to act as may be deemed necessary by DTC to permit DTC to
      discharge its obligations to its DTC Participants and appropriate
      regulatory authorities.


                                       5
<PAGE>

      This authorization, unless revoked by the Issuer, shall continue with
      respect to the shares of AMPS while any such shares are on deposit at DTC,
      until and unless the Auction Agent shall no longer be acting. In such
      event, the Issuer shall provide DTC with similar evidence of the
      authorization of any successor thereto so to act.

19.   Requests for securities position listings shall be transmitted as follows:
      Facsimile transmissions of such requests shall be sent to DTC's
      Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt
      of such notices shall be confirmed by telephoning (212) 709-6870.

      Delivery of such requests by mail or other memo shall be sent to the
      following address:

             Supervisor - Proxy Reorganization Department
             The Depository Trust Company
             7 Hanover Square - 23rd Floor
             New York, New York 10004-2695

20.   Nothing herein shall be deemed to require the Auction Agent to advance
      funds on behalf of the Issuer.

                                        Very truly yours,

                                        MUNIYIELD FUND, INC.
                                           as Issuer

                                        By:_________________________________
                                           Title: Vice President

                                        IBJ SCHRODER BANK & TRUST COMPANY
                                           as Auction Agent

                                        By:_________________________________
                                           Title: Assistant Vice President

Received and Accepted:

THE DEPOSITORY TRUST COMPANY

By:__________________________________
   Title: Assistant Vice President

cc: Merrill Lynch & Co.
    Merrill Lynch, Pierce, Fenner & Smith
                Incorporated


                                       6


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.A
<SEQUENCE>16
<FILENAME>file015.htm
<DESCRIPTION>CONSENT OF INDEPENDENT AUDITORS
<TEXT>


<HTML>
<HEAD>
<TITLE>EXHIBIT 14</TITLE>
</HEAD>
<BODY>




<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 1, page: 1" -->


<p>
<p>&nbsp;</p><table width=600><tr>
    <td align=right><font size=2><B>Exhibit 14(a)</B></font></td>
  </tr></table>
<p><table width=600><tr><td><font size=2><B>INDEPENDENT AUDITORS&#146; CONSENT</B></font></td></tr></table>
<p>
<p><table width=600><tr>
    <td><font size=2>We consent to the use in Pre-Effective Amendment No. 1 to
      Registration Statement No. 333-65242 on Form N-14 of MuniYield Fund, Inc.
      (the &#147;Fund&#148;) of our report dated December 7, 2000 appearing in
      the October 31, 2000 Annual Report of the Fund, and to the references to
      us under the captions &#147;COMPARISON OF THE FUNDS - Financial Highlights
      - <i>MuniYield</i>&#148; and &#147;EXPERTS&#148; appearing in the Proxy
      Statement and Prospectus, which is a part of such Registration Statement.</font></td>
  </tr></table>
<p>
<table width=600>
  <tr valign="top" align="left">
    <td><font size="2">/s/ Deloitte &amp; Touche <font size="1">LLP</font>
      <br>
      <br>
      New York, New York<br>
      September 7, 2001</font></td>
  </tr>
</table>
<p>&nbsp;
<hr size=5 noshade width=600 align=LEFT><p>&nbsp;
</BODY>
</HTML>





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-14.B
<SEQUENCE>17
<FILENAME>file016.htm
<DESCRIPTION>CONSENT OF INDEPENDENT AUDITORS
<TEXT>


<HTML>
<HEAD>
<TITLE>EXHIBIT 14</TITLE>
</HEAD>
<BODY>




<!-- *************************************************************************** -->
<!-- MARKER LABEL="sheet: 1, page: 1" -->


<p>
<p>&nbsp;</p><table width=600><tr>
    <td align=right><font size=2><B>Exhibit 14(b)</B></font></td>
  </tr></table>
<p><table width=600><tr><td><font size=2><B>INDEPENDENT AUDITORS&#146; CONSENT</B></font></td></tr></table>
<p>
<p><table width=600><tr>
    <td><font size=2>We consent to the use in Pre-Effective Amendment No. 1 to
      Registration Statement No. 333-65242 on Form N-14 of MuniYield Fund, Inc.
      of our report dated December 5, 2000 for Merrill Lynch Municipal Strategy
      Fund, Inc. (the &#147;Fund&#148;) appearing in the October 31, 2000 Annual
      Report of the Fund, and to the references to us under the captions &#147;COMPARISON
      OF THE FUNDS - Financial Highlights - <i>Municipal Strategy </i>&#148; and
      &#147;EXPERTS&#148; appearing in the Proxy Statement and Prospectus, which
      is a part of such Registration Statement.</font></td>
  </tr></table>
<p>
<table width=600>
  <tr valign="top" align="left">
    <td><font size="2">/s/ Deloitte &amp; Touche <font size="1">LLP</font>
      <br>
      <br>
      New York, New York<br>
      September 7, 2001</font></td>
  </tr>
</table>
<p>&nbsp;
<hr size=5 noshade width=600 align=LEFT><p>&nbsp;
</BODY>
</HTML>





</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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