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<SEC-DOCUMENT>0000905148-04-003184.txt : 20040709
<SEC-HEADER>0000905148-04-003184.hdr.sgml : 20040709
<ACCEPTANCE-DATETIME>20040709162327
ACCESSION NUMBER:		0000905148-04-003184
CONFORMED SUBMISSION TYPE:	N-2
PUBLIC DOCUMENT COUNT:		18
FILED AS OF DATE:		20040709

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MUNIVEST FUND INC
		CENTRAL INDEX KEY:			0000835948
		IRS NUMBER:				222919170
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		N-2
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05611
		FILM NUMBER:		04908339

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 9011
		CITY:			PRINCETON
		STATE:			NJ
		ZIP:			08543-9011
		BUSINESS PHONE:		6092822467

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MUNIPLUS FUND INC
		DATE OF NAME CHANGE:	19880913

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MUNIVEST FUND INC
		CENTRAL INDEX KEY:			0000835948
		IRS NUMBER:				222919170
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		N-2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-117267
		FILM NUMBER:		04908340

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 9011
		CITY:			PRINCETON
		STATE:			NJ
		ZIP:			08543-9011
		BUSINESS PHONE:		6092822467

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MUNIPLUS FUND INC
		DATE OF NAME CHANGE:	19880913
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2
<SEQUENCE>1
<FILENAME>efc4-1273_5562899frmn2.txt
<DESCRIPTION>FRM N-2
<TEXT>
     As filed with the Securities and Exchange Commission on July 9, 2004

                                                  Securities Act File No. 333-
                                     Investment Company Act File No. 811-05611
  ==========================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                               -----------------
                                   FORM N-2
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933          [X]
                       Pre-Effective Amendment No.                        [ ]
                      Post-Effective Amendment No.                        [ ]
                                   and/or
                      REGISTRATION STATEMENT UNDER THE
                     INVESTMENT COMPANY ACT OF 1940                       [X]
                             Amendment No. 9                              [X]
                      (Check appropriate box or boxes)

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

                              MUNIVEST FUND, INC.
              (Exact Name of Registrant as Specified in Charter)

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

             800 Scudders Mill Road, Plainsboro, New Jersey 08536
                   (Address of Principal Executive Offices)


      (Registrant's Telephone Number, Including Area Code) (609) 282-2800

                               -----------------
                                Terry K. Glenn
                              MuniVest Fund, Inc.
             800 Scudders Mill Road, Plainsboro, New Jersey 08536
       Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011
                    (Name and Address of Agent for Service)

                               -----------------
                                  Copies to:
         Andrew J. Donohue, Esq.                     Frank P. Bruno, Esq.
      FUND ASSET MANAGEMENT, L.P.              SIDLEY AUSTIN BROWN & WOOD LLP
             P.O. Box 9011                            787 Seventh Avenue
    Princeton, New Jersey 08543-9011              New York, New York 10019-6018


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

         Approximate date of proposed public offering: As soon as practicable
after the effective date of this Registration Statement.

         If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than
securities offered only in connection with dividend or interest reinvestment
plans, check the following box. [_]

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


       CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>

                                                                     Proposed Maximum       Proposed Maximum        Amount of
            Title of Securities                 Amount being        Offering Price Per     Aggregate Offering    Registration Fee
             Being Registered                  Registered (1)            Unit (1)               Price (1)              (2)
- -------------------------------------------- -------------------- ------------------------ -------------------- -------------------
<S>                                             <C>                       <C>                  <C>                    <C>
Auction Market Preferred Stock...........       3,000 shares              $25,000              $75,000,000            $9,503
</TABLE>

(1)  Estimated solely for the purpose of calculating the registration fee.
(2)  Transmitted prior to the filing date to the designated lockbox of the
     Securities and Exchange Commission at Mellon Bank in Pittsburgh, PA.

         The Registrant hereby amends this Registration Statement on such date
or dates as may become 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.


<PAGE>


The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.



                             Subject to Completion
                   Preliminary Prospectus dated July 9, 2004
PROSPECTUS
                                  $75,000,000
                              MuniVest Fund, Inc.
                    Auction Market Preferred Stock ("AMPS")

                            3,000 Shares, Series F
                   Liquidation Preference $25,000 Per Share
                                  -----------

         MuniVest Fund, Inc. is a non-diversified, closed-end fund. The
investment objective of the Fund is to provide shareholders with as high a
level of current income exempt from Federal income taxes as is consistent with
its investment policies and prudent investment management. The Fund seeks to
achieve its objective by investing, as a fundamental policy, at least 80% of
an aggregate of the Fund's net assets (including proceeds from the issuance of
any preferred stock) and the proceeds of any borrowings for investment
purposes, in a portfolio of municipal obligations the interest on which, in
the opinion of bond counsel to the issuer, is excludable from gross income for
Federal income tax purposes (except that the interest may be includable in
taxable income for purposes of the Federal alternative minimum tax). Under
normal market conditions, the Fund invests primarily in long term municipal
obligations that are rated investment grade or, if unrated, are considered by
the Fund's investment adviser to be of comparable quality. The Fund may invest
in certain tax exempt securities classified as "private activity bonds," as
discussed within, that may subject certain investors in the Fund to an
alternative minimum tax. There can be no assurance that the Fund's investment
objective will be realized.

         This prospectus contains information you should know before
investing, including information about risks. Please read it before you invest
and keep it for future reference. The Fund's statement of additional
information, dated __, 2004, contains further information about the Fund and
is incorporated by reference (legally considered to be part of this
prospectus) and the table of contents of the statement of additional
information appears on page 46 of this prospectus. You may request a free copy
by writing or calling the Fund at (800) 543-6217.

         Certain capitalized terms used herein not otherwise defined in this
prospectus have the meaning provided in the Glossary at the back of this
prospectus.

         Investing in the AMPS involves certain risks that are described in
the "Risk Factors and Special Considerations" section beginning on page 7 of
this prospectus. The minimum purchase amount for the AMPS is $25,000.

                                  -----------
<TABLE>
<CAPTION>
                                                                  Per Share             Total
<S>                                                                <C>              <C>
        Public offering price...............................       $25,000          $75,000,000
        Underwriting discount...............................          $250             $750,000
        Proceeds, before expenses, to the Fund (1)..........       $24,750          $74,250,000
</TABLE>

         (1) The estimated offering expenses payable by the Fund are $165,000.

         The public offering price per share will be increased by the amount
of accumulated dividends, if any, from the date the shares are first issued.

         Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

         One certificate for the AMPS will be ready for delivery to the
nominee of The Depository Trust Company on or about , 2004.
                                  -----------
                              Merrill Lynch & Co.
                                  -----------

               The date of this prospectus is          , 2004.


<PAGE>


                               TABLE OF CONTENTS

                                                                     Page

PROSPECTUS SUMMARY......................................................3
RISK FACTORS AND SPECIAL CONSIDERATIONS.................................3
FINANCIAL HIGHLIGHTS....................................................3
THE FUND................................................................3
USE OF PROCEEDS.........................................................3
CAPITALIZATION..........................................................3
PORTFOLIO COMPOSITION...................................................3
INVESTMENT OBJECTIVE AND POLICIES.......................................3
OTHER INVESTMENT POLICIES...............................................3
DESCRIPTION OF AMPS.....................................................3
THE AUCTION.............................................................3
RATING AGENCY GUIDELINES................................................3
INVESTMENT ADVISORY AND MANAGEMENT ARRANGEMENTS.........................3
TAXES...................................................................3
DESCRIPTION OF CAPITAL STOCK............................................3
CUSTODIAN...............................................................3
UNDERWRITING............................................................3
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR.................3
ACCOUNTING SERVICES PROVIDER............................................3
LEGAL OPINIONS..........................................................3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND EXPERTS...............3
ADDITIONAL INFORMATION..................................................3
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION................3
GLOSSARY................................................................3

                                  -----------
         Information about the Fund can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Call 1-202-942-8090 for information
on the operation of the public reference room. This information is also
available on the SEC's Internet site at http://www.sec.gov and copies may be
obtained upon payment of a duplicating fee by writing to the Public Reference
Section of the SEC, Washington, D.C. 20549-0102.

                                  -----------
         You should rely only on the information contained in this prospectus.
We have not, and the underwriters have not, authorized any other person to
provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date
on the front cover of this prospectus. Our business, financial condition,
results of operations and prospects may have changed since that date.





                                      2

<PAGE>


                              PROSPECTUS SUMMARY

         This summary is qualified in its entirety by reference to the
detailed information included in this prospectus and the statement of
additional information.

The Fund                      MuniVest Fund, Inc. is a non-diversified, closed-
                              end management investment company.

The Offering                  The Fund is offering a total of 3,000 shares of
                              Auction Market Preferred Stock, Series F, at a
                              purchase price of $25,000 per share plus
                              accumulated dividends, if any, from the date the
                              shares are first issued. The shares of AMPS are
                              being offered by Merrill Lynch, Pierce, Fenner &
                              Smith Incorporated ("Merrill Lynch"), as
                              underwriter.

                              The Series F AMPS will be shares of preferred
                              stock of the Fund that entitle their holders to
                              receive cash dividends at an annual rate that
                              may vary for the successive dividend periods. In
                              general, except as described below, each
                              dividend period following the initial dividend
                              period will be seven days. The applicable
                              dividend for a particular dividend period will
                              be determined by an auction conducted on the
                              business day next preceding the start of that
                              dividend period.

                              Investors and potential investors in shares of
                              Series F AMPS may participate in auctions for
                              the AMPS through their broker-dealers.

                              Generally, AMPS investors will not receive
                              certificates representing ownership of their
                              shares. Ownership of AMPS will be maintained in
                              book-entry form by the securities depository
                              (The Depository Trust Company) or its nominee
                              for the account of the investor's agent member
                              (generally the investor's broker-dealer). The
                              investor's agent member, in turn, will maintain
                              records of such investor's beneficial ownership
                              of AMPS.

Investment Objective          The investment objective of the Fund is to
and Policies                  provide shareholders with as high a level of
                              current income exempt from Federal income taxes
                              as is consistent with its investment policies
                              and prudent investment management. The Fund
                              seeks to achieve its objective by investing, as
                              a fundamental policy, at least 80% of an
                              aggregate of the Fund's net assets (including
                              proceeds from the issuance of any preferred
                              stock) and the proceeds of any borrowings for
                              investment purposes, in a portfolio of municipal
                              obligations issued by or on behalf of states,
                              territories and possessions of the United States
                              and their political subdivisions, agencies or
                              instrumentalities, each of which pays interest
                              that, in the opinion of bond counsel to the
                              issuer, is excludable from gross income for
                              Federal income tax purposes ("Municipal Bonds").
                              In general, the Fund does not intend for its
                              investments to earn a large amount of interest
                              income that is not exempt from Federal income
                              tax, except that the interest may be includable
                              in taxable income for purposes of the Federal
                              alternative minimum tax. There can be no
                              assurance that the Fund's investment objective
                              will be realized.

                              Investment Grade Municipal Bonds. Under normal
                              market conditions, the Fund invests primarily in
                              a portfolio of long term Municipal Bonds that
                              are rated investment grade by one or more
                              nationally recognized statistical rating
                              organizations ("NRSROs") or in unrated
                              bonds considered by Fund Asset Management, L.P.,
                              the Fund's investment adviser (the "Investment
                              Adviser"), to be of comparable quality.

                              Indexed and Inverse Floating Rate Securities.
                              The 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. The 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


                                      3

<PAGE>


                              short term interest rates increase and increase
                              when short term interest rates decrease.
                              Investments in inverse floaters may subject the
                              Fund to the risks of reduced or eliminated
                              interest payments and loss 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 the Fund'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.

                              Hedging Transactions. The Fund may seek to hedge
                              its portfolio against changes in interest rates
                              using options and financial futures contracts or
                              swap transactions. The Fund's hedging
                              transactions are designed to reduce volatility,
                              but come at some cost. For example, the Fund may
                              try to limit its risk of loss from a decline in
                              price of a portfolio security by purchasing a
                              put option. However, the Fund must pay for the
                              option, and the price of the security may not in
                              fact drop. In large part, the success of the
                              Fund's hedging activities depends on its ability
                              to forecast movements in securities prices and
                              interest rates. The Fund is not required to
                              hedge its portfolio and may choose not to do so.
                              The Fund cannot guarantee that any hedging
                              strategies it uses will work.

                              Swap Agreements. The Fund is authorized to enter
                              into swap agreements, which are over-the-counter
                              contracts in which one party agrees to make
                              periodic payments based on the change in the
                              market value of a specific bond, basket of bonds
                              or index in return for periodic payments based
                              on a fixed or variable interest rate or the
                              change in market value of a different bond,
                              basket of bonds or index. Swap agreements may be
                              used to obtain exposure to a bond or market
                              without owning or taking physical custody of
                              securities. Tax Considerations. While
                              exempt-interest dividends are excluded from
                              gross income for Federal income tax purposes,
                              they may be subject to the Federal alternative
                              minimum tax in certain circumstances.
                              Distributions of any capital gain or other
                              taxable income will be taxable to stockholders.
                              The Fund may not be a suitable investment for
                              investors subject to the Federal alternative
                              minimum tax or who would become subject to such
                              tax by investing in the Fund. See "Taxes."

Investment Adviser            The Investment Adviser provides investment
                              advisory and administrative services to the
                              Fund. For its services, the Fund pays the
                              Investment Adviser a monthly fee at the annual
                              rate of 0.50% of the Fund's average weekly net
                              assets (including any proceeds from the issuance
                              of preferred stock). Dividends and Dividend
                              Dividends on the Series F AMPS will be
                              cumulative from the date the shares are first
                              Periods issued and payable at the annualized
                              cash dividend rate for the initial dividend
                              period on the initial dividend payment date as
                              follows:


<TABLE>
<CAPTION>
                                                                           Initial         Initial
                                                        Initial           Dividend        Dividend
                                                       Dividend            Period          Payment
                                AMPS Series              Rate              Ending            Date
                                --------------------  ---------------  --------------- ---------------
                                <S>                    <C>             <C>              <C>
                                Series F............       %                    , 2004          , 2004
</TABLE>

                             After the initial dividend period, each dividend
                             period for the Series F AMPS will generally
                             consist of seven days; provided however, that,
                             before any auction, the Fund may decide, subject
                             to certain limitations and only if it gives
                             notice to holders, to declare a special dividend
                             period of up to five years.

<PAGE>


                             After the initial dividend period, in the case of
                             dividend periods that are not special dividend
                             periods, dividends generally will be payable on
                             each succeeding Wednesday in the case of the
                             Series F AMPS.

                             Dividends for the Series F AMPS will be paid
                             through the securities depository (The Depository
                             Trust Company) on each dividend payment date for
                             the AMPS.

                              For each subsequent dividend period, the auction
                              agent (The Bank of New York) will hold an
                              auction to determine the cash dividend rate on
                              the shares of Series F AMPS.

Determination of Maximum      Generally, the applicable dividend rate for any
Dividend Rates                dividend period for the Series F AMPS will not be
                              more than the maximum applicable rate
                              attributable to such shares. The maximum
                              applicable rate will be the higher of (A) the
                              applicable percentage of the reference rate on
                              the auction date or (B) the applicable spread
                              plus the reference rate on the auction date. The
                              reference rate is (A) the higher of the
                              applicable LIBOR Rate (as defined in the
                              Glossary) and the Taxable Equivalent of the
                              Short Term Municipal Bond Rate (as defined in
                              the Glossary) (for a dividend period or special
                              dividend period of 364 or fewer days), or (B)
                              the applicable Treasury Index Rate (as defined
                              in the Glossary) (for a special dividend period
                              of 365 days or more). The maximum applicable
                              rate for the Series F AMPS will depend on the
                              credit rating assigned to the shares, the length
                              of the dividend period and whether or not the
                              Fund has given notification prior to the auction
                              for the dividend period that any taxable income
                              will be included in the dividend on the AMPS for
                              that dividend period. The applicable percentage
                              and applicable spread are as follows:
<TABLE>
<CAPTION>
                                                              Applicable       Applicable    Applicable      Applicable
                                       Credit Ratings         Percentage       Percentage    Spread Over     Spread Over
                            --------------------------------  of Reference    of Reference   Reference       Reference
                                                              Rate--No           Rate--       Rate--No         Rate--
                              Moody's                S&P      Notification    Notification   Notification    Notification
                            -------------        -----------  ------------    ------------   ------------    ------------
<S>                          <C>                  <C>             <C>             <C>           <C>            <C>
                                Aaa                  AAA           110%           125%          1.10%          1.25%
                             Aa3 to Aa1           AA- to AA+       125%           150%          1.25%          1.50%
                              A3 to A1             A- to A+        150%           200%          1.50%          2.00%
                             Baa3 to Baa1        BBB- to BBB+      175%           250%          1.75%          2.50%
                              Below Baa3          Below BBB-       200%           300%          2.00%          3.00%
</TABLE>

                              The applicable percentage and the applicable
                              spread as so determined may be subject to upward
                              but not downward adjustment in the discretion of
                              the Board of Directors of the Fund after
                              consultation with the broker-dealers
                              participating in the auction for the AMPS.

                              There is no minimum applicable dividend rate for
                              any dividend period.

Other AMPS                    The Fund has outstanding 11,000 shares of five
                              other series of Auction Market Preferred Stock,
                              each with a liquidation preference of $25,000
                              per share, plus accumulated but unpaid
                              dividends, for an aggregate initial liquidation
                              preference of $275,000,000 (the "Other AMPS").
                              The Other AMPS are as follows: 2,000 shares of
                              Auction Market Preferred Stock, Series A; 2,000
                              shares of Auction Market Preferred Stock, Series
                              B; 2,000 shares of Auction Market Preferred
                              Stock, Series C; 2,000 shares of Auction Market
                              Preferred Stock, Series D; and 3,000 shares of
                              Auction Market Preferred Stock, Series E. The
                              Series F AMPS offered hereby rank on a parity
                              with the Other AMPS with respect to dividends
                              and liquidation preference.


                                      5

<PAGE>



Asset Maintenance             Under the Fund's Articles Supplementary creating
                              the Series F AMPS (the "Articles
                              Supplementary"), the Fund must maintain:

                              o  asset coverage of the AMPS and Other AMPS as
                                 required by the rating agencies rating the
                                 AMPS, and

                              o  asset coverage of the AMPS and Other AMPS of
                                 at least 200% as required by the Investment
                                 Company Act of 1940 (the "1940 Act").

                              The Fund estimates that, based on the
                              composition of its portfolio at February 29,
                              2004, asset coverage of the AMPS and Other AMPS
                              as required by the 1940 Act would be
                              approximately 279% immediately after the Fund
                              issues the shares of AMPS offered by this
                              prospectus representing approximately 36% of the
                              Fund's capital, or approximately 56% of the
                              Fund's common stock equity, immediately after
                              the issuance of such AMPS.

Mandatory                     If the required asset coverage is not maintained
Redemption                    or, when necessary, restored, the Fund must
                              redeem shares of AMPS at the price of $25,000
                              per share plus accumulated but unpaid dividends
                              thereon (whether or not earned or declared). The
                              provisions of the 1940 Act may restrict the
                              Fund's ability to make such a mandatory
                              redemption.

Optional Redemption           The Fund may, at its option, choose to redeem all
                              or a portion of the shares of AMPS on any
                              dividend payment date at the price of $25,000
                              per share, plus accumulated but unpaid dividends
                              thereon (whether or not earned or declared),
                              plus any applicable premium.

Liquidation                   The liquidation preference (that is, the amount
Preference                    the Fund must pay to holders of AMPS if the Fund
                              is liquidated) of each share of AMPS will be
                              $25,000, plus an amount equal to accumulated but
                              unpaid dividends (whether or not earned or
                              declared).

Ratings                       The AMPS will be issued with a rating of Aaa
                              from Moody's Investors Service, Inc. ("Moody's")
                              and AAA from Standard & Poor's ("S&P").

Voting Rights                 The 1940 Act requires that the holders of AMPS
                              and any other preferred stock, including the
                              Other AMPS, voting as a separate class, have the
                              right to elect at least two directors at all
                              times and to elect a majority of the directors
                              at any time when dividends on the AMPS or any
                              other preferred stock, including the Other AMPS,
                              are unpaid for two full years. The Fund's
                              Charter, the 1940 Act and the General
                              Corporation Laws of the State of Maryland
                              require holders of AMPS and any other preferred
                              stock, including the Other AMPS, to vote as a
                              separate class on certain other matters.



                                      6


<PAGE>


                    RISK FACTORS AND SPECIAL CONSIDERATIONS

         An investment in the Fund's AMPS should not constitute a complete
investment program.

         Investment Considerations.  Investors in AMPS should consider the
following factors:

         o    The credit ratings of the AMPS could be reduced or terminated
              while an investor holds the AMPS.

         o    Neither broker-dealers nor the Fund are obligated to purchase
              shares of AMPS in an auction or otherwise, nor is the Fund
              required to redeem shares of AMPS in the event of a failed
              auction.

         o    If sufficient bids do not exist in an auction, the applicable
              dividend rate will be the maximum applicable dividend rate, and
              in such event, owners of AMPS wishing to sell will not be able
              to sell all, and may not be able to sell any, AMPS in the
              auction. As a result, investors may not have liquidity of
              investment.

         o    Broker-dealers may submit orders in auctions for the AMPS for
              their own account. If a broker-dealer submits an order for its
              own account in any auction, it may have knowledge of orders
              placed through it in that auction and therefore have an
              advantage over other bidders, but such broker-dealer would not
              have knowledge of orders submitted by other broker-dealers in
              that auction.

         Secondary Market. The broker-dealers intend to maintain a secondary
trading market in the AMPS outside of auctions; however, they have no
obligation to do so and there can be no assurance that a secondary market for
the AMPS will develop or, if it does develop, that it will provide holders
with a liquid trading market. The AMPS will not 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, and a selling stockholder may have to sell AMPS between
auctions at a price per share of less than $25,000.

         Rating Agencies. The Fund will issue the AMPS only if the AMPS have
received a rating of Aaa from Moody's and AAA from S&P. As a result of such
ratings, the Fund will be subject to guidelines of Moody's, S&P or another
substitute NRSRO that may issue ratings for its preferred stock. These
guidelines may impose asset coverage or portfolio composition requirements
that are more stringent than those imposed by the 1940 Act and may prohibit or
limit the use by the Fund of certain portfolio management techniques or
investments. The Fund does not expect these guidelines to prevent the
Investment Adviser from managing the Fund's portfolio in accordance with the
Fund's investment objective and policies. Also, under certain circumstances,
the Fund may voluntarily terminate compliance with Moody's or S&P's
guidelines, or both, in which case the AMPS may no longer be rated by Moody's
or S&P, as applicable, but will be rated by at least one rating agency.

         Interest Rate Risk and AMPS. The Fund issues shares of AMPS, which
generally pay dividends based on short term interest rates. The Fund generally
will purchase Municipal Bonds that pay interest at fixed or adjustable rates.
If short term interest rates rise, dividend rates on the shares of AMPS may
rise so that the amount of dividends paid to the holders of shares of AMPS
exceeds the income from the Fund's portfolio securities. Because income from
the Fund's entire investment portfolio (not just the portion of the portfolio
purchased with the proceeds of the AMPS offering) is available to pay
dividends on the shares of AMPS, dividend rates on the shares of AMPS would
need to greatly exceed the Fund's net portfolio income before the Fund's
ability to pay dividends on the shares of AMPS would be jeopardized. If market
interest rates rise, this could negatively impact the value of the Fund's
investment portfolio, reducing the amount of assets serving as asset coverage
for the AMPS.

         Non-Diversification. The Fund is registered as a "non-diversified"
investment company. This means that the Fund may invest a greater percentage
of its assets in a single issuer than a diversified investment company. Since
the Fund may invest a relatively high percentage of its assets in a limited
number of issuers, the Fund may be more exposed to any single economic,
political or regulatory occurrence than a more widely-diversified fund. Even
as a non-diversified fund, the Fund must still meet the diversification
requirements applicable to regulated investment companies under the Federal
income tax laws.


                                      7


<PAGE>


         Market Risk and Selection Risk. Market risk is the risk that the bond
market will go down in value, including the possibility that the market will
go down sharply and unpredictably. Selection risk is the risk that the
securities that Fund Management selects will underperform the bond
market, the relevant indices, or other funds with similar investment
objectives and investment strategies.

         Tax Exempt Securities Market Risk. The amount of public information
available about Municipal Bonds in the Fund's portfolio is generally less than
that for corporate equities or bonds, and the investment performance of the
Fund may, therefore, be more dependent on the analytical abilities of the
Investment Adviser than the performance of a stock fund or taxable bond fund.

         Interest Rate and Credit Risk. The Fund invests in Municipal Bonds,
which 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 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. The Fund's use of leverage by the issuance
of preferred stock and its investment in inverse floating obligations, as
discussed below, may increase interest rate risk. Because market interest
rates are currently near their lowest levels in many years, there is a greater
risk that the Fund's portfolio will decline in value if interest rates
increase in the future. Credit risk is the risk that the issuer will be unable
to pay the interest or principal when due. Changes in an issuer's credit
rating or the market's perception of an issuer's creditworthiness may affect
the value of the Fund's investment in that issuer. The degree of credit risk
depends on both the financial condition of the issuer and the terms of the
obligation.

         Call and Redemption Risk. A Municipal Bond's issuer may call the bond
for redemption before it matures. If this happens to a Municipal Bond that the
Fund holds, the Fund may lose income and may have to invest the proceeds in
Municipal Bonds with lower yields.

         Rating Categories. The Fund intends to invest in Municipal Bonds that
are rated investment grade by S&P, Moody's or Fitch Ratings, or in unrated
Municipal Bonds that are considered by the Investment Adviser to possess
similar credit characteristics. Obligations rated in the lowest investment
grade category may have certain speculative characteristics. For example,
their prices are more volatile, economic downturns and financial setbacks may
affect their prices more negatively, and their trading market may be more
limited.

         Reinvestment Risk. Reinvestment risk is the risk that income from the
Fund's Municipal Bond portfolio will decline if and when the Fund invests the
proceeds from matured, traded or called bonds at market interest rates that
are below the portfolio's current earnings rate. A decline in income could
negatively affect the Fund's yield, return or the market price of the common
stock.

         Private Activity Bonds. The Fund may invest in certain tax exempt
securities classified as "private activity bonds." These bonds may subject
certain investors in the Fund to the Federal alternative minimum tax.

         Liquidity of Investments. Certain Municipal Bonds in which the Fund
invests may lack an established secondary trading market or may be otherwise
considered illiquid. Liquidity of a security relates to the ability to easily
dispose of the security and the price to be obtained and does not generally
relate to the credit risk or likelihood of receipt of cash at maturity.
Illiquid securities may trade at a discount from comparable, more liquid
investments.

         Portfolio Strategies. The Fund may engage in various portfolio
strategies both to seek to increase the return of the Fund and to seek to
hedge its portfolio against adverse effects from movements in interest rates
and in the securities markets. These portfolio strategies include the use of
derivatives, such as indexed securities, inverse floating rate securities,
options, futures, options on futures, interest rate swap transactions and
credit default swaps. Such strategies subject the Fund to the risk that, if
the Investment Adviser incorrectly forecasts market values, interest rates or
other applicable factors, the Fund's performance could suffer. Certain of
these strategies, such as investments in inverse floating rate securities and
credit default swaps, may provide investment leverage to the Fund's portfolio.
The Fund is not required to use derivatives or other portfolio strategies to
seek to increase return or to seek to hedge its portfolio and may choose not
to do so. There can be no assurance that the Fund's portfolio strategies will
be effective. Some of the derivative strategies that the Fund may use to seek
to increase its return are riskier than its hedging transactions and have
speculative characteristics. Such strategies do not attempt to limit the
Fund's risk of loss.


                                      8

<PAGE>

         General Risks Related to Derivatives. Derivatives are financial
contracts or instruments whose value depends on, or is derived from, the value
of an underlying asset, reference rate or index (or relationship between two
indices). The Fund may invest in a variety of derivative instruments for
investment purposes, hedging purposes or to seek to increase its return, such
as options, futures contracts and swap agreements. The Fund may use
derivatives as a substitute for taking a position in an underlying security or
other asset and/or as part of a strategy designed to reduce exposure to other
risks, such as interest rate risk. The Fund also may use derivatives to add
leverage to the portfolio and/or to hedge against increases in the Fund's
costs associated with the dividend payments on the preferred stock, including
the AMPS. The Fund also may invest in certain derivative products that pay tax
exempt income interest via a trust or partnership through which the Fund holds
interests in one or more underlying long term municipal securities. The Fund's
use of derivative instruments involves risks different from, and possibly
greater than, the risks associated with investing directly in securities and
other traditional investments. Derivatives are subject to a number of risks
such as liquidity risk, interest rate risk, credit risk, leverage risk, the
risk of ambiguous documentation and management risk. They also involve the
risk of mispricing or improper valuation and correlation risk (i.e., the risk
that changes in the value of the derivative may not correlate perfectly with
the underlying asset, rate or index). If the Fund invests in a derivative
instrument it could lose more than the principal amount invested. Moreover,
derivatives raise certain tax, legal, regulatory and accounting issues that
may not be presented by investments in Municipal Bonds, and there is some risk
that certain issues could be resolved in a manner that could adversely impact
the performance of the Fund and/or the tax exempt nature of the dividends paid
by the Fund.

         Also, suitable derivative transactions may not be available in all
circumstances and there can be no assurance that the Fund will engage in these
transactions to reduce exposure to other risks when that would be beneficial.

         Swaps. Swap agreements are types of derivatives. In order to seek to
hedge the value of the Fund's portfolio, to hedge against increases in the
Fund's cost associated with the interest payments on its outstanding
borrowings or to seek to increase the Fund's return, the Fund may enter into
interest rate, credit default or total return swap transactions. In interest
rate swap transactions, there is a risk that yields will move in the direction
opposite of the direction anticipated by the Fund, which would cause the Fund
to make payments to its counterparty in the transaction that could adversely
affect Fund performance. In addition to the risks applicable to swaps
generally, credit default swap transactions involve special risks because they
are difficult to value, are highly susceptible to liquidity and credit risk,
and generally pay a return to the party that has paid the premium only in the
event of an actual default by the issuer of the underlying obligation (as
opposed to a credit downgrade or other indication of financial difficulty).
Total return swap transactions involve the risks that the counterparty will
default on its payment obligation to the Fund in the transaction and that the
Fund will not be able to meet its obligation to the counterparty in the
transaction. The Fund is not required to enter into interest rate, credit
default or total return swap transactions for hedging purposes or to enhance
its return and may choose not to do so.

         Taxability Risk. The Fund intends to minimize the payment of taxable
income to stockholders by investing in Municipal Bonds and other tax exempt
securities in reliance on an opinion of bond counsel to the issuer that the
interest paid on those securities will be excludable from gross income for
Federal income tax purposes. Such securities, however, may be determined to
pay, or to have paid, taxable income subsequent to the Fund's acquisition of
the securities. In that event, the Internal Revenue Service may demand that
the Fund pay taxes on the affected interest income, and, if the Fund agrees to
do so, the Fund's yield on its common stock could be adversely affected. A
determination that interest on a security held by the Fund is includable in
gross income for Federal income tax purposes retroactively to its date of
issue may, likewise, cause a portion of prior distributions received by
stockholders, including holders of AMPS, to be taxable to those stockholders
in the year of receipt. The Fund will not pay an Additional Dividend (as
defined herein) to a holder of AMPS under these circumstances. If a security
acquired based on reliance on such an opinion of counsel is subsequently
determined to pay interest that is includable in gross income for Federal
income tax purposes, the Fund will dispose of that security as soon as
reasonably practicable.

         Antitakeover Provisions. The Fund's Charter, By-laws and the General
Corporation Law of the State of Maryland include provisions that could limit
the ability of other entities or persons to acquire control of the 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.


                                      9


<PAGE>

         Market Disruption. The terrorist attacks in the United States on
September 11, 2001 had a disruptive effect on the securities markets, some of
which were closed for a four-day period. The continued threat of similar
attacks, and related events, including U.S. military actions in Iraq and
continued unrest in the Middle East, have led to increased short term market
volatility and may have long term effects on U.S. and world economies and
markets. Similar disruptions of the financial markets could adversely affect
the market prices of the Fund's portfolio securities, interest rates,
auctions, secondary trading, ratings, credit risk, inflation and other factors
relating to the Fund's AMPS.


                                      10



<PAGE>



                             FINANCIAL HIGHLIGHTS

         The following Financial Highlights table is intended to help you
understand the Fund's financial performance for the periods shown. Certain
information reflects financial results for a single share of common stock or
preferred stock of the Fund. The total returns in the table represent the rate
an investor would have earned or lost on an investment in shares of common
stock of the Fund (assuming reinvestment of all dividends). The information
with respect to the fiscal years ended August 31, 1994 to August 31, 2003 has
been audited by _________________, whose report for the fiscal year ended
August 31, 2003, along with the financial statements of the Fund, is included
in the Fund's 2003 Annual Report, which is incorporated by reference herein.
The information with respect to the six months ended February 29, 2004 is
unaudited and is included in the Fund's 2004 Semi-Annual Report, which is
incorporated by reference herein. You may obtain a copy of the 2003 Annual
Report and the 2004 Semi-Annual Report at no cost by calling (800) 543-6217
between 8:30 a.m. and 5:30 p.m. Eastern time on any business day.

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

<TABLE>
<CAPTION>

                                 For the
                                   Six
                                  Months
                                  Ended
                                February
                                   29,                    For the Year Ended August 31,
                                  2004      -----  -------  ---------  -------   ---------  -------   --------
                               (unaudited)  2003     2002    2001++     2000++     1999++     1998      1997
                               --------------------------------------------------------------------------------
<S>                                  <C>     <C>      <C>      <C>        <C>        <C>       <C>       <C>
Increase (Decrease) in Net
Asset Value: Per Share
Operating Performance
  Net asset value, beginning       $9.54   $9.76    $9.71    $9.07      $9.15     $10.20     $9.89     $9.45
  of period                    --------------------------------------------------------------------------------
  Investment income-- net            .36+    .72+     .69      .69        .70        .73       .76       .77
  Realized and unrealized
    gain (loss) on                   .67    (.26)     .02      .65       (.05)     (1.02)      .30       .45
    investments-- net
  Dividends to Preferred Stock
    shareholders from:
    investment income-- net         (.02)   (.05)    (.07)    (.16)      (.18)      (.15)       --        --
                               --------------------------------------------------------------------------------
  Total from investment             1.01     .41      .64     1.18        .47       (.44)     1.06      1.22
  operations                   --------------------------------------------------------------------------------
  Less dividends to Common
    Stock shareholders from:
    Investment income-- net        (.32)    (.63)    (.59)    (.54)      (.55)      (.58)     (.59)     (.62)
    Realized gain on                  --      --       --       --         --         --        --        --
    investments-- net
    In excess of realized
    gain on                           --      --       --       --         --       (.03)       --        --
      investments-- net        --------------------------------------------------------------------------------
  Total dividends and              (.32)    (.63)    (.59)    (.54)      (.55)      (.61)     (.59)     (.62)
    distributions to
    Common Stock shareholders  --------------------------------------------------------------------------------
  Effect of Preferred Stock
    activity:
    Dividends to Preferred
     Stock shareholders from:
       investment income--net        --       --       --       --         --         --      (.16)    (.16)
                               --------------------------------------------------------------------------------
  Net asset value, end of         10.23    $9.54    $9.76    $9.71      $9.07      $9.15    $10.20     $9.89
    period                     ================================================================================
  Market price per share, end      9.73    $8.80    $9.11    $9.30      $8.25      $8.6875  $10.00     $9.50
    of period                  ================================================================================
Total Investment Return**
  Based on market price per       14.44%++  3.56%    4.55%   19.92%      1.75%     (7.44%)   11.78%    11.25%
    share                      ================================================================================
   Based on net asset value       10.99%++  4.79%    7.28%   13.89%      6.21%     (4.42%)    9.52%    11.84%
    per share                  ================================================================================
Ratios Based on Average Net
  Assets of Common Stock
  Total expenses, net of            .94%*    .95%     .95%     .98%      1.01%       .93%       --        --
    reimbursement***           ================================================================================
  Total expenses***                 .95%*    .96%     .95%     .98%      1.01%       .93%       --        --
                               ================================================================================
  Total investment income--        7.28%*   7.33%    7.33%    7.37%      7.95%      7.26%       --        --
    net***                     ================================================================================
  Amount of dividends to
    Preferred                       .40%*    .50%     .75%    1.70%      2.01%      1.46%       --        --
    Stock shareholders         ================================================================================
  Investment income-- net, to
    Common Stock shareholders      6.88%    6.83%    6.58%    5.67%      5.94%      5.80%       --        --
                               ================================================================================


<CAPTION>
                                  1996      1995       1994
                               ---------  ----------  ------
<S>                                <C>       <C>       <C>
Increase (Decrease) in Net
Asset Value: Per Share
Operating Performance
  Net asset value, beginning      $9.51    $9.57   $10.65
  of period                    -----------------------------
  Investment income-- net           .79      .81      .84
  Realized and unrealized
    gain (loss) on                 (.06)     .10     (.78)
    investments-- net
  Dividends to Preferred Stock
    shareholders from:
    investment income-- net         --       --       --
                               -----------------------------
  Total from investment             .73      .91      .06
  operations                   -----------------------------
  Less dividends to Common
    Stock shareholders from:
    Investment income-- net        (.63)    (.64)    (.70)
    Realized gain on                 --     (.12)    (.32)
    investments-- net
    In excess of realized
    gain on                          --     (.04)     --
      investments-- net        -----------------------------
  Total dividends and              (.63)    (.80)   (1.02)
    distributions to
    Common Stock shareholders  -----------------------------
  Effect of Preferred Stock
    activity:
    Dividends to Preferred
     Stock shareholders from:
       investment income--net      (.16)    (.17)    (.12)
                               -----------------------------
  Net asset value, end of         $9.45    $9.51    $9.57
    period                     =============================
  Market price per share, end     $9.125   $8.563   $8.50
    of period                  =============================
Total Investment Return**
  Based on market price per       14.18%   10.88%  (16.29%)
    share                      =============================
   Based on net asset value        6.46%    9.38%    (.44%)
    per share                  =============================
Ratios Based on Average Net
  Assets of Common Stock
  Total expenses, net of             --      --       --
    reimbursement***           =============================
  Total expenses***                  --      --       --
                               =============================
  Total investment income--          --      --       --
    net***                     =============================
  Amount of dividends to
    Preferred                        --      --       --
    Stock shareholders
                               =============================
  Investment income-- net, to
    Common                           --      --       --
    Stock shareholders
                               =============================
                                      (continued on following page)
</TABLE>

                                      11
<PAGE>

(continued from prior page)

<TABLE>
<CAPTION>

                                 For the
                                   Six
                                  Months
                                  Ended
                                February
                                   29,                      For the Year Ended August 31,
                                  2004      -------------------------------------------------------------------
                               (unaudited)  2003     2002    2001++     2000++     1999++     1998      1997
                               -----------  ------  ------  ---------  --------  ----------  ------   ---------
<S>                                  <C>     <C>      <C>      <C>        <C>        <C>       <C>       <C>
Ratios Based on Average Net
  Assets
  of Common & Preferred
  Stock***
  Total expenses, net of            .65%*    .65%     .65%     .66%       .67%       .64%       --        --
    reimbursement              ==============================================================================
  Total expenses                    .65%*    .66%     .65%     .66%       .67%       .64%      .64%      .64%
                               ==============================================================================
  Total investment income--        5.01%*   5.03%    4.98%    4.98%      5.26%      5.01%     5.19%     5.40%
    net                        ==============================================================================
Ratios Based on Average Net
  Assets of Preferred Stock
  Dividends to Preferred
    Stock shareholders              .88%*   1.11%    1.59%    3.53%      3.93%      3.25%       --        --
                               ==============================================================================
Supplemental Data
  Net assets applicable to
    Common Stock, end of
    period (in thousands)      $627,622 $585,022 $598,816 $595,908   $556,105   $561,373  $623,270  $604,515
  Preferred Stock
    outstanding, end           $275,000 $275,000 $275,000 $275,000   $275,000   $275,000  $275,000  $275,000
    of period (in thousands)   ==============================================================================
  Portfolio turnover              25.00%   44.30%   74.00%   74.80%    121.76%    101.35%   102.77%    78.02%
                               ==============================================================================
Leverage:                      ==============================================================================
Asset coverage per $1,000        $3,282   $3,127   $3,178   $3,167     $3,022     $3,041    $3,266    $3,198
Dividends Per Share on         ==============================================================================
  Preferred
  Stock Outstanding +++
Series A - Investment income       $106     $266     $388     $909     $1,030       $839      $890      $872
  --net                        ==============================================================================
Series B - Investment income       $119     $278     $394     $923       $991       $815      $902      $871
  --net                        ==============================================================================
Series C - Investment income       $114     $269     $391     $906       $952       $820      $886      $860
  --net                        ==============================================================================
Series D - Investment income       $100     $306     $445     $877       $978       $802      $880      $868
  --net                        ==============================================================================
Series E - Investment income       $107     $269     $372     $851       $977       $793      $884      $868
  --net                        ==============================================================================

<CAPTION>

                                  1996      1995       1994
                               --------   --------   --------
<S>                                <C>       <C>       <C>
Ratios Based on Average Net
  Assets
  of Common & Preferred
  Stock***
  Total expenses, net of              --        --        --
    reimbursement              ==============================
  Total expenses                     .64%      .66%      .64%
                               ==============================
  Total investment income--         5.57%     5.91%     5.76%
    net                        ==============================
Ratios Based on Average Net
  Assets of Preferred Stock
  Dividends to Preferred
    Stock                             --        --        --
    shareholders               ==============================
Supplemental Data              ==============================
  Net assets applicable to
    Common Stock, end of
    period (in thousands)       $577,540  $581,211  $584,680
  Preferred Stock
    outstanding, end            $275,000  $275,000  $275,000
    of period (in thousands)   ==============================
  Portfolio turnover               69.87%    71.95%   100.92%
                               ==============================
Leverage:                      ==============================
Asset coverage per $1,000         $3,100    $3,113    $3,126
Dividends Per Share on         ==============================
  Preferred
  Stock Outstanding +++
Series A - Investment income        $895      $922      $633
  --net                        ==============================
Series B - Investment income        $903      $946      $637
  --net                        ==============================
Series C - Investment income        $900      $947      $644
  --net                        ==============================
Series D - Investment income        $901    $1,014      $633
  --net                        ==============================
Series E - Investment income        $895      $968      $626
  --net                        ==============================
</TABLE>

- -----------------
 *  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.
+   Based on average shares outstanding.
++  Certain prior year amounts have been reclassified to conform to current
    year presentation.
+++ Dividends per share have been adjusted to reflect a four-for-one stock
    split on December 1, 1994.
+/+ Aggregate total investment return.



                                   THE FUND

         MuniVest Fund, Inc. (the "Fund") is a non-diversified, closed-end
fund. The Fund was incorporated under the laws of the State of Maryland on
July 7, 1988, and has registered under the Investment Company Act of 1940, as
amended ("1940 Act"). The Fund's principal office is located at 800 Scudders
Mill Road, Plainsboro, New Jersey 08536, and its telephone number is (609)
282-2800.

         The Board of Directors of the Fund may at any time consider a merger,
consolidation or other form of reorganization of the Fund with one or more
other investment companies advised by the Investment Adviser that have similar
investment objectives and policies as the Fund. Any such merger, consolidation
or other form of reorganization would require the prior approval of the Board
of Directors and, if the Fund is the acquired fund, the stockholders of the
Fund. See "Description of Capital Stock--Certain Provisions of the Charter and
By-laws."

                                USE OF PROCEEDS

         The net proceeds of this offering will be approximately $74,085,000
after payment of offering expenses (estimated to be approximately $165,000)
and the deduction of the underwriting discount.

         The net proceeds of the offering will be invested in accordance with
the Fund's investment objective and policies within approximately three months
after completion of this offering, depending on market conditions and


                                      12



<PAGE>


the availability of appropriate securities. Pending such investment, it is
anticipated that the proceeds will be invested in short term, tax exempt
securities. See "Investment Objective and Policies."

                                CAPITALIZATION

         The following table sets forth the unaudited capitalization of the
Fund as of February 29, 2004 and as adjusted to give effect to the issuance of
the shares of AMPS offered hereby.

<TABLE>
<CAPTION>
<S>                                                                               <C>                 <C>
                                                                                   Actual            As Adjusted
Preferred stock (10,000,000 shares authorized; 11,000 shares of Other AMPS      ------------        ------------
     authorized, issued and outstanding at $25,000 per share liquidation
     preference, plus accumulated but unpaid dividends; 14,000 shares of AMPS
     and Other AMPS authorized, issued and outstanding, as adjusted, at
     $25,000 per share liquidation preference, plus accumulated but
     unpaid dividends) ............................................             $275,044,840        $350,044,840
Common Stock, par value $.10 per share (150,000,000 shares authorized,          ============        ============
     61,346,288 shares issued and outstanding)                                    $6,134,629          $6,134,629
   Paid-in capital in excess of par value..........................              565,202,625         564,287,625
   Undistributed investment income--net............................               10,112,493          10,112,493
   Accumulated realized capital losses on investment - net.........              (39,872,880)        (39,872,880)
   Unrealized appreciation on investments--net......................              86,045,283          86,045,283
                                                                                ------------        ------------
   Net assets applicable to outstanding common stock...............             $627,622,150        $626,707,150
                                                                                ============        ============
</TABLE>

                             PORTFOLIO COMPOSITION

         As of February 29, 2004, approximately 97.02% of the market value of
the Fund's portfolio was invested in long term municipal obligations and
approximately 2.98% of the market value of the Fund's portfolio was invested
in short term tax exempt securities. The following table sets forth certain
information with respect to the composition of the Fund's long term municipal
obligation investment portfolio as of February 29, 2004.

<TABLE>
<CAPTION>
                                                                 Number of         Value
      Moody's*             Fitch*               S&P*              Issues       in thousands)             Percent
- -----------------------------------------------------------------------------------------------------------------
<S>                         <C>                 <C>                 <C>         <C>                        <C>
        Aaa                  AAA                AAA                 59          $299,154                   34.39%
         Aa                  AA                  AA                 25           187,177                   21.52%
         A                    A                  A                  17            84,169                    9.67%
        Baa                  BBB                BBB                 55           272,759                   31.35%
         Ba                  BB                  BB                  7            20,115                    2.31%
         NR                  NR                  NR                  3             6,614                     .76%
                                                               -------------    ------------        ------------
Total................................................               166         $869,988                 100%
                                                               =============    ============        ============
</TABLE>

- ------------------
*        Ratings: Using the higher of Moody's, S&P or Fitch Ratings ("Fitch")
         ratings on the Fund's investments. See "Schedule of Investments."
         Moody's rating categories may be modified further by a 1, 2 or 3 in
         Aa, A, Baa, Ba, B and Caa ratings. S&P rating categories may be
         modified further by a plus (+) or minus (-) in AA, A, BBB, BB, B and
         CCC ratings. Fitch rating categories may be modified further by a
         plus (+) or minus (-) in AA, A, BBB, BB, B and CCC.


                       INVESTMENT OBJECTIVE AND POLICIES

         The Fund's investment objective is to provide shareholders with as
high a level of current income exempt from Federal income taxes as is
consistent with its investment policies and prudent investment management. The
Fund seeks to achieve its objective by investing at least 80% of an aggregate
of the Fund's net assets (including proceeds from the issuance of any
preferred stock) and the proceeds of any borrowings for investment purposes,
in a portfolio of municipal obligations issued by or on behalf of states,
territories and possessions of the United States and their political
subdivisions, agencies or instrumentalities, each of which pays interest that,
in the opinion of bond counsel to the issuer, is excludable from gross income
for Federal income tax purposes (except that the interest may


                                      13

<PAGE>

be includable in taxable income for purposes of the Federal alternative
minimum tax) ("Municipal Bonds"). The Fund's investment objective and its
policy of investing at least 80% of an aggregate of the Fund's net assets
(including proceeds from the issuance of any preferred stock) and the proceeds
of any borrowings for investment purposes, in Municipal Bonds are fundamental
policies that may not be changed without the approval of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act). There
can be no assurance that the Fund's investment objective will be realized.

         The Fund may invest in certain tax exempt securities classified as
"private activity bonds" (or industrial development bonds, under pre-1986 law)
("PABs") (in general, bonds that benefit non-governmental entities) that may
subject certain investors in the Fund to an alternative minimum tax. See
"Taxes." The percentage of the Fund's total assets invested in PABs will vary
from time to time. The Fund also will not invest more than 25% of its total
assets (taken at market value at the time of each investment) in Municipal
Bonds whose issuers are located in the same state.

         Under normal market conditions, the Fund expects to invest primarily
in a portfolio of long term Municipal Bonds that are commonly referred to as
"investment grade" securities, which are obligations rated at the time of
purchase within the four highest quality ratings as determined by either
Moody's Investors Service, Inc. ("Moody's") (currently Aaa, Aa, A and Baa),
Standard & Poor's ("S&P") (currently AAA, AA, A and BBB) or Fitch Ratings
("Fitch") (currently AAA, AA, A and BBB). In the case of short term notes, the
investment grade rating categories are SP-1+ through SP-2 for S&P, MIG-1
through MIG-3 for Moody's 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&P, Prime-1 through Prime-3 for Moody's and F-1+ through F-3
for Fitch. Obligations ranked in the lowest investment grade rating category
(BBB, SP-2 and A-3 for S&P; Baa, MIG-3 and Prime-3 for Moody's and BBB and F-3
for Fitch), while considered "investment grade," may have certain speculative
characteristics. There may be sub-categories or gradations indicating relative
standing within the rating categories set forth above. In assessing the
quality of Municipal Bonds with respect to the foregoing requirements, the
Investment Adviser takes into account the nature of any letters of credit or
similar credit enhancement to which particular Municipal Bonds are entitled
and the creditworthiness of the financial institution which provided such
credit enhancement. See Appendix A--"Description of Municipal Bond Ratings" to
the statement of additional information. If unrated, such securities will
possess creditworthiness comparable, in the opinion of the Investment Adviser,
to other obligations in which the Fund may invest.

         All percentage and ratings limitations on securities in which the
Fund may invest apply at the time of making an investment and shall not be
considered violated if an investment rating is subsequently downgraded to a
rating that would have precluded the Fund's initial investment in such
security. In the event that the Fund disposes of a portfolio security
subsequent to its being downgraded, the Fund may experience a greater risk of
loss than if such security had been sold prior to such downgrade.

         The average maturity of the Fund's portfolio securities will vary
based upon the Investment Adviser's assessment of economic and market
conditions. The net asset value of the shares of common stock of a closed-end
investment company, such as the Fund, which invests 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 can be expected
to rise. Conversely, when interest rates rise, the value of a fixed income
portfolio can be expected to decline. Prices of longer term securities
generally fluctuate more in response to interest rate changes than do shorter
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 the Fund.

         For temporary periods or to provide liquidity, the Fund has the
authority to invest as much as 20% of its total assets in tax exempt and
taxable money market obligations with a maturity of one year or less (such
short term obligations being referred to herein as "Temporary Investments").
In addition, the Fund reserves the right as a defensive measure to invest
temporarily a greater portion of its assets in Temporary Investments, when, in
the opinion of the Investment Adviser, prevailing market or financial
conditions warrant. Taxable money market obligations will yield taxable
income. The Fund also may invest in variable rate demand obligations ("VRDOs")
and VRDOs in the form of participation interests ("Participating VRDOs") in
variable rate tax exempt obligations held by a financial institution. See
"Other Investment Policies -- Temporary Investments." The Fund's hedging
strategies, which are described in more detail under "Hedging Transactions --
Financial Futures Transactions and


                                      14

<PAGE>

Options," are not fundamental policies and may be modified by the Board of
Directors of the Fund without the approval of the Fund's stockholders. The
Fund is also authorized to invest in indexed and inverse floating rate
obligations for hedging purposes and to seek to enhance return.

         The Fund may invest in securities not issued by or on behalf of a
state or territory or by an agency or instrumentality thereof, if the Fund
receives an opinion of counsel to the issuer that such securities pay interest
that is excludable from gross income for Federal income tax purposes
("Non-Municipal Tax Exempt Securities"). Non-Municipal Tax Exempt Securities
could include trust certificates, partnership interests or other instruments
evidencing interest in one or more long term municipal securities.
Non-Municipal Tax Exempt Securities also may include securities issued by
other investment companies that invest in Municipal Bonds, to the extent such
investments are permitted by the Fund's investment restrictions and applicable
law. Non-Municipal Tax Exempt Securities are subject to the same risks
associated with an investment in Municipal Bonds as well as many of the risks
associated with investments in derivatives. While the Fund receives opinions
of legal counsel to the effect that the income from the Non-Municipal Tax
Exempt Securities in which the Fund invests is excludable from gross income
for Federal income tax purposes to the same extent as the underlying municipal
securities, the Internal Revenue Service ("IRS") has not issued a ruling on
this subject. Were the IRS to issue an adverse ruling or take an adverse
position with respect to the taxation of these types of securities, there is a
risk that the interest paid on such securities would be deemed taxable at the
Federal level.

         The Fund ordinarily does not intend to realize significant investment
income not exempt from Federal income tax. From time to time, the Fund may
realize taxable capital gains.

          Federal tax legislation has limited the types and volume of bonds
the interest on which qualifies for a Federal income tax exemption. 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 Fund.

Risk Factors and Special Considerations Relating to Municipal Bonds

         The risks and special considerations involved in investment in
Municipal Bonds vary with the types of instruments being acquired. Investments
in Non-Municipal Tax Exempt Securities may present similar risks, depending on
the particular product. Certain instruments in which the Fund may invest may
be characterized as derivative instruments. See "-- Description of Municipal
Bonds" and "-- Hedging Transactions -- Financial Futures Transactions and
Options."

         The value of Municipal Bonds generally may be affected by
uncertainties in the municipal markets as a result of legislation or
litigation, including legislation or litigation that changes the taxation of
Municipal Bonds or the rights of Municipal Bond holders in the event of a
bankruptcy. Municipal bankruptcies are rare, and certain provisions of the
U.S. Bankruptcy Code governing such bankruptcies are unclear. Further, the
application of state law to Municipal Bond issuers could produce varying
results among the states or among Municipal Bond issuers within a state. These
uncertainties could have a significant impact on the prices of the Municipal
Bonds in which the Fund invests.

Description of Municipal Bonds

         Set forth below is a detailed description of the Municipal Bonds and
Temporary Investments in which the Fund may invest. Information with respect
to ratings assigned to tax exempt obligations that the Fund may purchase is
set forth in Appendix A--"Description of Municipal Bond Ratings" to the
statement of additional information. Obligations are included within the term
Municipal Bonds if the interest paid thereon is excluded from gross income for
Federal income tax purposes in the opinion of bond counsel to the issuer.

         Municipal Bonds include debt obligations issued to obtain funds for
various public purposes, including the 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 bonds are issued by or on behalf of
public authorities to finance various privately owned or operated facilities,
including certain facilities for the local furnishing of electric energy or
gas, sewage facilities, solid waste disposal facilities and other


                                      15


<PAGE>


specialized facilities. Other types of PABs, the proceeds of which are used
for the construction, equipment or improvement of privately operated
industrial or commercial facilities, may constitute Municipal Bonds, although
the current Federal tax laws place substantial limitations on the size of such
issues. The interest on Municipal Bonds may bear a fixed rate or be payable at
a variable or floating rate. The two principal classifications of Municipal
Bonds are "general obligation" and "revenue" bonds, which latter category
includes PABs.

         The Fund has not established any limit on the percentage of its
portfolio that may be invested PABs. The Fund may not be a suitable investment
for investors who are already subject to the Federal alternative minimum tax
or who would become subject to the Federal alternative minimum tax as a result
of an investment in the Fund's common stock. See "Taxes."

         General Obligation Bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. The taxing power of any governmental entity may be
limited, however, by provisions of its state constitution or laws, and an
entity's creditworthiness will depend on many factors, including potential
erosion of its tax base due to population declines, natural disasters,
declines in the state's industrial base or inability to attract new
industries, economic limits on the ability to tax without eroding the tax
base, state legislative proposals or voter initiatives to limit ad valorem
real property taxes and the extent to which the entity relies on Federal or
state aid, access to capital markets or other factors beyond the state's or
entity's control. Accordingly, the capacity of the issuer of a general
obligation bond as to the timely payment of interest and the repayment of
principal when due is affected by the issuer's maintenance of its tax base.

         Revenue Bonds. Revenue 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 sources
such as payments from the user of the facility being financed. Accordingly,
the timely payment of interest and the repayment of principal in accordance
with the terms of the revenue or special obligation bond is a function of the
economic viability of such facility or such revenue source.

         PABs. The Fund may purchase PABs. PABs are, in most cases, tax exempt
securities issued by states, municipalities or public authorities to provide
funds, usually through a loan or lease arrangement, to a private entity for
the purpose of financing construction or improvement of a facility to be used
by the entity. Such bonds are secured primarily by revenues derived from loan
repayments or lease payments due from the entity which may or may not be
guaranteed by a parent company or otherwise secured. PABs generally are not
secured by a pledge of the taxing power of the issuer of such bonds.
Therefore, an investor should be aware that repayment of such bonds generally
depends on the revenues of a private entity and be aware of the risks that
such an investment may entail. Continued ability of an entity to generate
sufficient revenues for the payment of principal and interest on such bonds
will be affected by many factors including the size of the entity, capital
structure, demand for its products or services, competition, general economic
conditions, government regulation and the entity's dependence on revenues for
the operation of the particular facility being financed.

         Moral Obligation Bonds. The Fund also may invest in "moral
obligation" 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.

         Municipal Lease Obligations. Also included within the general
category of Municipal Bonds are certificates of participation ("COPs") issued
by government authorities or entities to finance the acquisition or
construction of equipment, land and/or facilities. COPs represent
participations in a lease, an installment purchase contract or a conditional
sales contract (hereinafter collectively called "lease obligations") relating
to such equipment, land or facilities. Although lease obligations do not
constitute general obligations of the issuer for which the issuer's unlimited
taxing power is pledged, a lease obligation is frequently backed by the
issuer's covenant to budget for, appropriate and make the payments due under
the lease obligation. However, certain lease obligations contain
"non-appropriation" 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 "non-appropriation"
lease obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult and the value of
the property may be insufficient to issue lease obligations. Certain
investments in lease obligations may be illiquid.


                                      16



<PAGE>

         Indexed and Inverse Floating Rate Securities. The Fund may invest in
Municipal Bonds (and Non- Municipal Tax Exempt Securities) that yield a return
based on a particular index of value or interest rates. For example, the Fund
may invest in Municipal Bonds that pay interest based on an index of Municipal
Bond interest rates. The principal amount payable upon maturity of certain
Municipal Bonds also may be based on the value of the index. To the extent the
Fund invests in these types of Municipal Bonds, the Fund's return on such
Municipal Bonds will be subject to risk with respect to the value of the
particular index. Interest and principal payable on the Municipal Bonds may
also be based on relative changes among particular indices. Also, the Fund may
invest in so-called "inverse floating obligations" or "residual interest
bonds" on which the interest rates 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). The 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 which 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 will generally be
more volatile than the market values of fixed rate tax exempt securities. To
seek to limit the volatility of these securities, the Fund may purchase
inverse floating obligations with shorter-term maturities or which contain
limitations on the extent to which the interest rate may vary. Certain
investments in such obligations may be illiquid.

         When Issued Securities, Delayed Delivery Securities and Forward
Commitments. The Fund may purchase or sell securities that it is entitled to
receive on a when issued basis. The Fund may also purchase or sell securities
on a delayed delivery basis. The Fund may also purchase or sell securities
through a forward commitment. These transactions involve the purchase or sale
of securities by the Fund at an established price with payment and delivery
taking place in the future. The purchase will be recorded on the date the Fund
enters into the commitment and the value of the securities will thereafter be
reflected in the Fund's net asset value. The Fund enters into these
transactions to obtain what is considered an advantageous price to the Fund at
the time of entering into the transaction. The Fund has not established any
limit on the percentage of its assets that may be committed in connection with
these transactions. When the Fund purchases securities in these transactions,
the Fund segregates liquid securities in an amount equal to the amount of its
purchase commitments.

         There can be no assurance that a security purchased on a when issued
basis will be issued or that a security purchased or sold through a forward
commitment will be delivered. A default by a counterparty may result in the
Fund missing the opportunity of obtaining a price considered to be
advantageous. The value of securities in these transactions on the delivery
date may be more or less than the Fund's purchase price. The Fund may bear the
risk of a decline in the value of the security in these transactions and may
not benefit from an appreciation in the value of the security during the
commitment period.

         Call Rights. The Fund may purchase a Municipal Bond issuer's right to
call all or a portion of such Municipal Bond for mandatory tender for purchase
(a "Call Right"). 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 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. Certain investments in
such obligations may be illiquid.

         Yields. Yields on Municipal Bonds are dependent on a variety of
factors, including the general condition of the money market and of the
municipal bond market, the size of a particular offering, the financial
condition of the issuer, the maturity of the obligation and the rating of the
issue. The ability of the Fund to achieve its investment objective is also
dependent on the continuing ability of the issuers of the securities in which
the Fund invests to meet their obligations for the payment of interest and
principal when due. There are variations in the risks involved in holding
Municipal Bonds, both within a particular classification and between
classifications, depending on numerous factors. Furthermore, the rights of
owners of Municipal Bonds and the obligations of the issuer of such Municipal
Bonds may be subject to applicable bankruptcy, insolvency and similar laws and
court decisions affecting the rights of creditors generally and to general
equitable principles, which may limit the enforcement of certain remedies.


                                      17



<PAGE>

Hedging Transactions

         The 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 the Fund's use of
hedging strategies is intended to reduce the volatility of the net asset value
of the Fund's shares of common stock, the net asset value of the Fund's shares
of common stock will fluctuate. No assurance can be given that the Fund's
hedging transactions will be effective. The Fund only may engage in hedging
activities from time to time and may not necessarily be engaging in hedging
activities when movements in interest rates occur. The Fund has no obligation
to enter into hedging transactions and may choose not to do so. Furthermore,
for so long as the AMPS are rated by Moody's and S&P, the Fund's use of
options and certain financial futures and options thereon will be subject to
the limitations described under "Rating Agency Guidelines."

         Financial Futures Transactions and Options. The Fund is authorized to
purchase and sell certain exchange traded financial futures contracts
("financial futures contracts") in order to hedge its investments in Municipal
Bonds against declines in value, and to hedge against increases in the cost of
securities it intends to purchase or to seek to enhance the Fund's return.
However, any transactions involving financial futures or options (including
puts and calls associated therewith) will be in accordance with the Fund's
investment policies and limitations. 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 futures contracts to make and accept a cash
settlement, at a specific future time for a specified price. To hedge its
portfolio, the Fund may take an investment position in a futures contract
which will move in the opposite direction from the portfolio position being
hedged. 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. 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 futures contracts.

         Distributions, if any, of net long term capital gains from certain
transactions in futures or options are taxable at long term capital gains
rates for Federal income tax purposes. See "Taxes."

         Futures Contracts. A futures contract is an agreement between two
parties to buy and sell a security or, in the case of an index-based futures
contract, to make and accept a cash settlement for a set price on a future
date. A majority of transactions in futures contracts, however, do not result
in the actual delivery of the underlying instrument or cash settlement, but
are settled through liquidation, i.e., by entering into an offsetting
transaction. Futures contracts have been designed by boards of trade which
have been designated "contracts markets" by the Commodity Futures Trading
Commission ("CFTC").

         The purchase or sale of a 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 and the
relevant contract market, which varies, but is generally about 5% of the
contract amount, must be deposited with the broker. This amount is known as
"initial margin" and represents a "good faith" deposit assuring the
performance of both the purchaser and seller under the futures contract.
Subsequent payments to and from the broker, called "variation margin," are
required to be made on a daily basis as the price of the futures contract
fluctuates making the long and short positions in the futures contract more or
less valuable, a process known as "marking to the market." At any time prior
to the settlement date of the futures contract, the position may be closed out
by taking an opposite position that will operate to terminate the position in
the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid to or released by the broker and the
purchaser realizes a loss or gain. In addition, a nominal commission is paid
on each completed sale transaction.

         The Fund deals in financial futures contracts based on a long term
municipal bond index developed by the Chicago Board of Trade ("CBT") and The
Bond Buyer (the "Municipal Bond Index"). The Municipal Bond Index is comprised
of 40 tax exempt municipal revenue and general obligation bonds. Each bond
included in the Municipal Bond Index must be rated A or higher by Moody's or
S&P and must have a remaining maturity of 19 years or more. Twice a month new
issues satisfying the eligibility requirements are added to, and an equal
number of old issues are deleted from, the Municipal Bond Index. The value of
the Municipal Bond Index is computed daily according to a formula based on the
price of each bond in the Municipal Bond Index, as evaluated by six
dealer-to-dealer brokers.


                                      18


<PAGE>



         The Municipal Bond Index futures contract is traded only on the CBT.
Like other contract markets, the CBT assures performance under futures
contracts through a clearing corporation, a nonprofit organization managed by
the exchange membership which is also responsible for handling daily
accounting of deposits or withdrawals of margin.

         The Fund may also purchase and sell financial futures contracts on
U.S. Government securities as a hedge against adverse changes in interest
rates as described below. 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, Government National Mortgage Association
("GNMA") Certificates and three-month U.S. Treasury bills. The Fund may
purchase and write call and put options on futures contracts on U.S.
Government securities and purchase and sell Municipal Bond Index futures
contracts in connection with its hedging strategies.

         The Fund also may engage in other futures contracts transactions such
as futures contracts on other municipal bond indices that may become available
if the Investment Adviser should determine that there is normally a sufficient
correlation between the prices of such futures contracts and the Municipal
Bonds in which the Fund invests to make such hedging appropriate.

         Futures Strategies. The Fund may sell a financial futures contract
(i.e., assume a short position) in anticipation of a decline in the value of
its investments in Municipal Bonds resulting from an increase in interest
rates or otherwise. The risk of decline could be reduced without employing
futures as a hedge by selling such Municipal Bonds and either reinvesting the
proceeds in securities with shorter maturities or by holding assets in cash.
This strategy, however, entails increased transaction costs in the form of
dealer spreads and typically would reduce the average yield of the Fund's
portfolio securities as a result of the shortening of maturities. The sale of
futures contracts provides an alternative means of hedging against declines in
the value of its investments in Municipal Bonds. As such values decline, the
value of the Fund's positions in the futures contracts will tend to increase,
thus offsetting all or a portion of the depreciation in the market value of
the Fund's Municipal Bond investments that are being hedged. While the Fund
will incur commission expenses in selling and closing out futures positions,
commissions on futures transactions are lower than transaction costs incurred
in the purchase and sale of Municipal Bonds. In addition, the ability of the
Fund to trade in the standardized contracts available in the futures markets
may offer a more effective defensive position than a program to reduce the
average maturity of the portfolio securities due to the unique and varied
credit and technical characteristics of the municipal debt instruments
available to the Fund. Employing futures as a hedge also may permit the Fund
to assume a defensive posture without reducing the yield on its investments
beyond any amounts required to engage in futures trading.

         When the Fund intends to purchase Municipal Bonds, the Fund may
purchase futures contracts as a hedge against any increase in the cost of such
Municipal Bonds resulting from a decrease in interest rates or otherwise, that
may occur before such purchases can be effected. Subject to the degree of
correlation between the Municipal Bonds and the futures contracts, subsequent
increases in the cost of Municipal Bonds should be reflected in the value of
the futures held by the Fund. As such purchases are made, an equivalent amount
of futures contracts will be closed out. Due to changing market conditions and
interest rate forecasts, however, a futures position may be terminated without
a corresponding purchase of portfolio securities.

         Call Options on Futures Contracts. The Fund may also purchase and
sell exchange traded call and put options on financial futures contracts. The
purchase of a call option on a futures contract is analogous to the purchase
of a call option on an individual security. Depending on the pricing of the
option compared to either the futures contract upon which it is based or the
price of the underlying debt securities, it may or may not be less risky than
ownership of the futures contract or underlying debt securities. Like the
purchase of a futures contract, the Fund will purchase a call option on a
futures contract to hedge against a market advance when the Fund is not fully
invested.

         The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the securities which are deliverable
upon exercise of the futures contract. If the futures price at expiration is
below the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any decline that may have
occurred in the Fund's portfolio holdings.


                                      19


<PAGE>



         Put Options on Futures Contracts. The purchase of a put option on a
futures contract is analogous to the purchase of a protective put option on
portfolio securities. The Fund will purchase a put option on a futures
contract to hedge the Fund's portfolio against the risk of rising interest
rates.

         The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the securities which are
deliverable upon exercise of the futures contract. If the futures price at
expiration is higher than the exercise price, the Fund will retain the full
amount of the option premium which provides a partial hedge against any
increase in the price of Municipal Bonds which the Fund intends to purchase.

         The writer of an option on a futures contract is required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to futures contracts. Premiums received from the writing of an
option will be included in initial margin. The writing of an option on a
futures contract involves risks similar to those relating to futures
contracts.

         Under regulations of the CFTC, the futures trading activity described
herein will not result in the Fund being deemed a "commodity pool" and the
Fund need not be operated by a person registered with the CFTC as a "commodity
pool operator."

         When the Fund purchases a futures contract, or writes a put option or
purchases a call option thereon, an amount of cash, cash equivalents (e.g.,
high grade commercial paper and daily tender adjustable notes) or liquid
securities will be segregated 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 futures contracts, thereby ensuring that the
use of such futures contract is unleveraged. It is not anticipated that
transactions in futures contracts will have the effect of increasing portfolio
turnover.

         Risk Factors in Futures Transactions and Options. Investment in
futures contracts involves the risk of imperfect correlation between movements
in the price of the futures contract and the price of the security being
hedged. The hedge will not be fully effective when there is imperfect
correlation between the movements in the prices of two financial instruments.
For example, if the price of the futures contract moves more or less than the
price of the hedged security, the Fund will experience either a loss or gain
on the futures contract which is not completely offset by movements in the
price of the hedged securities. To compensate for imperfect correlations, the
Fund may purchase or sell futures contracts in a greater dollar amount than
the hedged securities if the volatility of the hedged securities is
historically greater than the volatility of the futures contracts. Conversely,
the Fund may purchase or sell fewer futures contracts if the volatility of the
price of the hedged securities is historically less than that of the futures
contracts.

         The particular municipal bonds comprising the index underlying the
Municipal Bond Index financial futures contract may vary from the bonds held
by the Fund. As a result, the Fund's ability to hedge effectively all or a
portion of the value of its Municipal Bonds through the use of such financial
futures contracts will depend in part on the degree to which price movements
in the index underlying the financial futures contract correlate with the
price movements of the Municipal Bonds held by the Fund. The correlation may
be affected by disparities in the average maturity, ratings, geographical mix
or structure of the Fund's investments as compared to those comprising the
Municipal Bond Index and general economic or political factors. In addition,
the correlation between movements in the value of the Municipal Bond Index may
be subject to change over time as additions to and deletions from the
Municipal Bond Index alter its structure. The correlation between futures
contracts on U.S. Government securities and the Municipal Bonds held by the
Fund may be adversely affected by similar factors and the risk of imperfect
correlation between movements in the prices of such futures contracts and the
prices of Municipal Bonds held by the Fund may be greater. Municipal Bond
Index futures contracts were approved for trading in 1986. Trading in such
futures contracts may tend to be less liquid than trading in other futures
contracts. The trading of futures contracts also is subject to certain market
risks, such as inadequate trading activity, which could at times make it
difficult or impossible to liquidate existing positions.

         The Fund expects to liquidate a majority of the futures contracts it
enters into through offsetting transactions on the applicable contract market.
There can be no assurance, however, that a liquid secondary market


                                      20



<PAGE>

will exist for any particular futures contract at any specific time. Thus, it
may not be possible to close out a futures position. In the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments of variation margin. In such situations, if the Fund has insufficient
cash, it may be required to sell portfolio securities to meet daily variation
margin requirements at a time when it may be disadvantageous to do so. The
inability to close out futures positions also could have an adverse impact on
the Fund's ability to hedge effectively its investments in Municipal Bonds.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a 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. The Fund
will enter into a futures position only if, in the judgment of the Investment
Adviser, there appears to be an actively traded secondary market for such
futures contracts.

         The successful use of transactions in futures and related options
also depends on the ability of the Investment Adviser to forecast correctly
the direction and extent of interest rate movements within a given time frame.
To the extent interest rates remain stable during the period in which a
futures contract or option is held by the Fund or such rates move in a
direction opposite to that anticipated, the Fund may realize a loss on the
hedging transaction which is not fully or partially offset by an increase in
the value of portfolio securities. As a result, the Fund's total return for
such period may be less than if it had not engaged in the hedging transaction.

         Because of low initial margin deposits made upon the opening of a
futures position, futures transactions involve substantial leverage. As a
result, relatively small movements in the price of the futures contracts can
result in substantial unrealized gains or losses. There is also the risk of
loss by the Fund of margin deposits in the event of bankruptcy of a broker
with whom the Fund has an open position in a financial futures contract.
Because the Fund will engage in the purchase and sale of futures contracts for
hedging purposes or to seek to enhance the Fund's return, any losses incurred
in connection therewith should, if the hedging strategy is successful, be
offset in whole or in part by increases in the value of securities held by the
Fund or decreases in the price of securities the Fund intends to acquire.

         The amount of risk the Fund assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of
an option on a futures contract also entails the risk that changes in the
value of the underlying futures contract will not be fully reflected in the
value of the option purchased.

                           OTHER INVESTMENT POLICIES

The Fund has adopted certain other policies as set forth below.

Temporary Investments

         The Fund may invest in short term tax exempt and taxable securities
subject to the limitations set forth above. The tax exempt money market
securities may include municipal notes, municipal commercial paper, municipal
bonds with a remaining maturity of less than one year, variable rate demand
notes and participations therein. Municipal notes include tax anticipation
notes, bond anticipation notes, revenue anticipation notes and grant
anticipation notes. Anticipation notes are sold as interim financing in
anticipation of tax collection, bond sales, government grants or revenue
receipts. Municipal commercial paper refers to short term unsecured promissory
notes generally issued to finance short term credit needs. The taxable money
market securities in which the Fund may invest as Temporary Investments
consist of U.S. Government securities, U.S. Government agency securities,
domestic bank or savings institution certificates of deposit and bankers'
acceptances, short term corporate debt securities such as commercial paper and
repurchase agreements. These Temporary Investments must have a stated maturity
not in excess of one year from the date of purchase. The Fund may not invest
in any security issued by a commercial bank or a savings institution unless
the bank or institution is organized and operating in the United States, has
total assets of at least one billion dollars and is a member of the Federal
Deposit Insurance Corporation ("FDIC"), except that up to 10% of total assets
may be invested in certificates of deposit of smaller institutions if such
certificates are fully insured by the FDIC.


                                      21


<PAGE>


Interest Rate Swap Transactions

         In order to seek to hedge the value of the Fund against interest rate
fluctuations, to hedge against increases in the Fund's costs associated with
the dividend payments on any preferred stock, including the AMPS, or to seek
to increase the Fund's return, the Fund may enter into interest rate swap
transactions such as Municipal Market Data AAA Cash Curve swaps ("MMD Swaps")
or Bond Market Association Municipal Swap Index swaps ("BMA Swaps"). To the
extent that the Fund enters into these transactions, the Fund expects to do so
primarily to preserve a return or spread on a particular investment or portion
of its portfolio as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Fund may enter into these transactions primarily as a hedge or for
duration or risk management rather than as a speculative investment. However,
the Fund also may invest in MMD Swaps and BMA Swaps to seek to enhance return
or gain or to increase the Fund's yield, for example, during periods of steep
interest rate yield curves (i.e., wide differences between short term and long
term interest rates).

         The Fund may purchase and sell BMA Swaps in the BMA swap market. In a
BMA Swap, the Fund exchanges with another party their respective commitments
to pay or receive interest (e.g., an exchange of fixed rate payments for
floating rate payments linked to the Bond Market Association Municipal Swap
Index). Because the underlying index is a tax exempt index, BMA Swaps may
reduce cross-market risks incurred by the Fund and increase the Fund's ability
to hedge effectively. BMA Swaps are typically quoted for the entire yield
curve, beginning with a seven day floating rate index out to 30 years. The
duration of a BMA Swap is approximately equal to the duration of a fixed rate
Municipal Bond with the same attributes as the swap (e.g., coupon, maturity,
call feature).

         The Fund also may purchase and sell MMD Swaps, also known as MMD rate
locks. An MMD Swap permits the Fund to lock in a specified municipal interest
rate for a portion of its portfolio to preserve a return on a particular
investment or a portion of its portfolio as a duration management technique or
to protect against any increase in the price of securities to be purchased at
a later date. By using an MMD Swap, the Fund can create a synthetic long or
short position, allowing the Fund to select the most attractive part of the
yield curve. An MMD Swap is a contract between the Fund and an MMD Swap
provider pursuant to which the parties agree to make payments to each other on
a notional amount, contingent upon whether the Municipal Market Data AAA
General Obligation Scale is above or below a specified level on the expiration
date of the contract. For example, if the Fund buys an MMD Swap and the
Municipal Market Data AAA General Obligation Scale is below the specified
level on the expiration date, the counterparty to the contract will make a
payment to the Fund equal to the specified level minus the actual level,
multiplied by the notional amount of the contract. If the Municipal Market
Data AAA General Obligation Scale is above the specified level on the
expiration date, the Fund will make a payment to the counterparty equal to the
actual level minus the specified level, multiplied by the notional amount of
the contract.

         In connection with investments in BMA and MMD Swaps, there is a risk
that municipal yields will move in the opposite direction than anticipated by
the Fund, which would cause the Fund to make payments to its counterparty in
the transaction that could adversely affect the Fund's performance.

         The Fund has no obligation to enter into BMA or MMD Swaps and may not
do so. The net amount of the excess, if any, of the Fund's obligations over
its entitlements with respect to each interest rate swap will be accrued on a
daily basis, and the Fund will segregate liquid securities having an aggregate
net asset value at least equal to the accrued excess.

Credit Default Swap Agreements

         The Fund may enter into credit default swap agreements for hedging
purposes or to seek to increase its return. The credit default swap agreement
may have as reference obligations one or more securities that are not
currently held by the Fund. The protection "buyer" in a credit default
contract may be obligated to pay the protection "seller" an upfront or a
periodic stream of payments over the term of the contract provided that no
credit event on a reference obligation has occurred. If a credit event occurs,
the seller generally must pay the buyer the "par value" (full notional value)
of the swap in exchange for an equal face amount of deliverable obligations of
the reference entity described in the swap, or the seller may be required to
deliver the related net cash amount, if the swap is cash settled. The Fund may
be either the buyer or seller in the transaction. If the Fund is a buyer and
no credit event


                                      22



<PAGE>

occurs, the Fund may recover nothing if the swap is held
through its termination date. However, if a credit event occurs, the buyer
generally may elect to receive the full notional value of the swap in exchange
for an equal face amount of deliverable obligations of the reference entity
whose value may have significantly decreased. As a seller, the Fund generally
receives an upfront payment or a fixed rate of income throughout the term of
the swap, which typically is between six months and three years, provided that
there is no credit event. If a credit event occurs, generally the seller must
pay the buyer the full notional value of the swap in exchange for an equal
face amount of deliverable obligations of the reference entity whose value may
have significantly decreased. As the seller, the Fund would effectively add
leverage to its portfolio because, in addition to its total net assets, the
Fund would be subject to investment exposure on the notional amount of the
swap.

         Credit default swap agreements involve greater risks than if the Fund
had invested in the reference obligation directly since, in addition to
general market risks, credit default swaps are subject to illiquidity risk,
counterparty risk and credit risks. The Fund will enter into credit default
swap agreements only with counterparties who are rated investment grade
quality by at least one nationally recognized statistical rating organization
at the time of entering into such transaction or whose creditworthiness is
believed by the Investment Adviser to be equivalent to such rating. A buyer
generally also will lose its investment and recover nothing should no credit
event occur and the swap is held to its termination date. If a credit event
were to occur, the value of any deliverable obligation received by the seller,
coupled with the upfront or periodic payments previously received, may be less
than the full notional value it pays to the buyer, resulting in a loss of
value to the seller. The Fund's obligations under a credit default swap
agreement will be accrued daily (offset against any amounts owing to the
Fund). The Fund will at all times segregate with its custodian in connection
with each such transaction liquid securities or cash with a value at least
equal to the Fund's exposure (any accrued but unpaid net amounts owed by the
Fund to any counterparty), on a marked-to-market basis (as calculated pursuant
to requirements of the Commission). Such segregation will ensure that the Fund
has assets available to satisfy its obligations with respect to the
transaction and will avoid any potential leveraging of the Fund's portfolio.
Such segregation will not limit the Fund's exposure to loss.

VRDOs and Participating VRDOs

         VRDOs are tax exempt obligations that contain a floating or variable
interest rate adjustment formula and right of demand on the part of the holder
thereof to receive payment of the unpaid principal balance plus accrued
interest upon a short notice period not to exceed seven days. There is,
however, the possibility that because of default or insolvency the demand
feature of VRDOs and Participating VRDOs may not be honored. The interest
rates are adjustable at intervals (ranging from daily to up to one year) to
some prevailing market rate for similar investments, such adjustment formula
being calculated to maintain the market value of the VRDOs, at approximately
the par value of the VRDOs on the adjustment date. The adjustments typically
are based upon the Public Securities Association Index or some other
appropriate interest rate adjustment index. The Fund may invest in all types
of tax exempt instruments currently outstanding or to be issued in the future
which satisfy its short term maturity and quality standards.

         Participating VRDOs provide the Fund with a specified undivided
interest (up to 100%) of 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 upon a specified number of
days' notice, not to exceed seven days. In addition, the Participating VRDO is
backed by an irrevocable letter of credit or guaranty of the financial
institution. The Fund would have an undivided interest in the underlying
obligation and thus participate on the same basis as the financial institution
in such obligation except that the financial institution typically retains
fees out of the interest paid on the obligation for servicing the obligation,
providing the letter of credit and issuing the repurchase commitment. The Fund
has been advised by its counsel that the Fund should be entitled to treat the
income received on Participating VRDOs as interest from tax exempt obligations
as long as the Fund does not invest more than 20% of its total assets in such
investments and certain other conditions are met. It is contemplated that the
Fund will not invest more than 20% of its assets in Participating VRDOs.

         VRDOs that contain an unconditional right of demand to receive
payment of the unpaid principal balance plus accrued interest on a notice
period exceeding seven days may be deemed to be illiquid securities. The
Directors may adopt guidelines and delegate to the Investment Adviser the
daily function of determining and monitoring liquidity of such VRDOs. The
Directors, however, will retain sufficient oversight and will be ultimately
responsible for such determinations.


                                      23


<PAGE>


         The Temporary Investments, VRDOs and Participating VRDOs in which the
Fund may invest will be in the following rating categories at the time of
purchase: MIG-1/VMIG-1 through MIG-3/VMIG-3 for notes and VRDOs and Prime-1
through Prime-3 for commercial paper (as determined by Moody's), SP-1 through
SP-2 for notes and A-1 through A-3 for VRDOs and commercial paper (as
determined by S&P), or F-1 through F-3 for notes, VRDOs and commercial paper
(as determined by Fitch). Temporary Investments, if not rated, must be of
comparable quality in the opinion of the Investment Adviser. In addition, the
Fund reserves the right to invest temporarily a greater portion of its assets
in Temporary Investments for defensive purposes, when, in the judgment of the
Investment Adviser, market conditions warrant.

Repurchase Agreements

          The Fund may invest in 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 or an affiliate thereof, in U.S.
Government securities. Under such agreements, the bank or primary dealer or an
affiliate thereof 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. This results in a fixed rate of return
insulated from market fluctuations during such period. In repurchase
agreements, the prices at which the trades are conducted do not reflect
accrued interest on the underlying obligations. Such agreements usually cover
short periods, such as under one week. Repurchase agreements may be construed
to be collateralized loans by the purchaser to the seller secured by the
securities transferred to the purchaser. In a repurchase agreement, the Fund
will require the seller to provide additional collateral if the market value
of the securities falls below the repurchase price at any time during the term
of the repurchase agreement. In the event of default by the seller under a
repurchase agreement construed to be a collateralized loan, the underlying
securities are not owned by the Fund but only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, the Fund may
suffer time delays and incur costs or possible losses in connection with the
disposition of the collateral. In the event of a default under such a
repurchase agreement, instead of the contractual fixed rate of return, the
rate of return to the Fund shall be dependent upon intervening fluctuations of
the market value of such security and the accrued interest on the security. In
such event, the Fund would have rights against the seller for breach of
contract with respect to any losses arising from market fluctuations following
the failure of the seller to perform.

         In general, for Federal income tax purposes, repurchase agreements
are treated as collateralized loans secured by the securities "sold."
Therefore, amounts earned under such agreements will not be considered tax
exempt interest. The treatment of purchase and sales contracts is less
certain.

Borrowings

         The 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. Borrowings by the
Fund (commonly known, as with the issuance of preferred stock, as
"leveraging") create an opportunity for greater total return since, for
example, the Fund will not be required to sell portfolio securities to
repurchase or redeem shares but, at the same time, 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.

                              DESCRIPTION OF AMPS

         Certain of the capitalized terms used herein not otherwise defined in
this prospectus have the meaning provided in the Glossary at the back of this
prospectus.

General

         The Series F AMPS will be shares of preferred stock 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. After the Initial Dividend
Period, each Subsequent Dividend Period for the Series F AMPS generally will
be a 7-Day Dividend Period; provided however, that, prior to any Auction, the
Fund may elect, subject to certain limitations described herein, upon giving
notice to holders thereof, a Special Dividend


                                      24


<PAGE>


Period. The Applicable Rate for a particular Dividend Period will be
determined by an Auction conducted on the Business Day before the start of
such Dividend Period. Beneficial Owners and Potential Beneficial Owners of
shares of AMPS may participate in Auctions therefor, although, except in the
case of a Special Dividend Period of more than 28 days, Beneficial Owners
desiring to continue to hold all of their shares of AMPS regardless of the
Applicable Rate resulting from Auctions need not participate. For an
explanation of Auctions and the method of determining the Applicable Rate, see
"The Auction" herein and in the statement of additional information.

         The Fund has outstanding 11,000 shares of five other series of
Auction Market Preferred Stock, each with a liquidation preference of $25,000
per share, plus accumulated but unpaid dividends, for an aggregate initial
liquidation preference of $275,000,000 (the "Other AMPS"). The Other AMPS are
as follows: 2,000 shares of Auction Market Preferred Stock, Series A; 2,000
shares of Auction Market Preferred Stock, Series B; 2,000 shares of Auction
Market Preferred Stock, Series C; 2,000 shares of Auction Market Preferred
Stock, Series D; and 3,000 shares of Auction Market Preferred Stock, Series E.
The Series F AMPS offered hereby rank on a parity with the Other AMPS with
respect to dividends and liquidation preference. The terms of the shares of
Other AMPS are substantially the same as the terms of the shares of AMPS
described below.

         The following is a brief description of the terms of the shares of
AMPS. This description does not purport to be complete and is subject to and
qualified in its entirety by reference to the Fund's Charter and Articles
Supplementary of the AMPS, including the provisions thereof establishing the
AMPS. The Fund's Charter and the form of Articles Supplementary of the AMPS
establishing the terms of the AMPS have been filed as exhibits to the
Registration Statement of which this prospectus is a part.

Dividends

         General. The holders of shares of AMPS will be entitled to receive,
when, as and if declared by the Board of Directors of the Fund, out of funds
legally available therefor, cumulative cash dividends on their shares, at the
Applicable Rate determined as set forth below under "Determination of Dividend
Rate," 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
in priority over any dividends so declared and payable on the Fund's 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 Fund's investments.
Generally, dividends on shares of AMPS, to the extent that they are derived
from interest paid on Municipal Bonds, will be exempt from Federal income
taxes, subject to possible application of the alternative minimum tax. See
"Taxes."

         Dividends on the shares of AMPS will accumulate from the date on
which the Fund originally issues the shares of AMPS (the "Date of Original
Issue") and will be payable on the dates described below. Dividends on shares
of AMPS with respect to the Initial Dividend Period shall be payable on the
Initial Dividend Payment Date. Following the Initial Dividend Payment Date for
the AMPS, dividends on the AMPS will be payable, at the option of the Fund,
either (i) with respect to any 7-Day Dividend Period and any Short Term
Dividend Period of 35 or fewer days, on the day next succeeding the last day
thereof or (ii) with respect to any Short Term Dividend Period of more than 35
days and with respect to any Long Term Dividend Period, monthly on the first
Business Day of each calendar month during such Short Term Dividend Period or
Long Term Dividend Period and on the day next succeeding the last day thereof
(each such date referred to in clause (i) or (ii) being referred to herein as
a "Normal Dividend Payment Date"), except that if such Normal Dividend Payment
Date is not a Business Day, the Dividend Payment Date shall be the first
Business Day next succeeding such Normal Dividend Payment Date. Thus,
following the Initial Dividend Payment Date for AMPS, dividends generally will
be payable (in the case of Dividend Periods which are not Special Dividend
Periods) on each succeeding Wednesday in the case of the Series F AMPS.
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 Board of Directors by resolution prior to
authorization of a dividend by the Board of Directors may change a Dividend
Payment Date if such change does not adversely affect the contract rights of
the holders of shares of AMPS set forth in the Charter. The Initial Dividend
Period, 7-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."


                                      25



<PAGE>

         Prior to each Dividend Payment Date, the Fund is required to deposit
with the Auction Agent sufficient funds for the payment of declared dividends.
The Fund does not intend to establish any reserves for the payment of
dividends.

         Each dividend will be paid to the record holder of the AMPS, which
holder is expected to be the nominee of the Securities Depository. See "The
Auction--Securities Depository." The Securities Depository will credit the
accounts of the Agent Members of the Existing Holders in accordance with the
Securities Depository's normal procedures which provide for payment in
same-day funds. The Agent Member of an Existing Holder will be responsible for
holding or disbursing such payments on the applicable Dividend Payment Date to
such Existing Holder in accordance with the instructions of such Existing
Holder. 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 nominee of the Securities Depository. Any dividend payment made on shares
of AMPS first shall be credited against the earliest declared but unpaid
dividends accumulated with respect to such shares.

         Holders of shares of AMPS will not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends except as described below under "--Additional Dividends" in this
prospectus and under "Description of AMPS--Dividends--Non-Payment Period; Late
Charge" in the statement of additional information. No interest will be
payable in respect of any dividend payment or payments on the shares of AMPS
which may be in arrears.

         The amount of cash dividends per share of the AMPS payable (if
declared) on the Initial Dividend Payment Date, and on each Dividend
Payment Date of each 7-Day Dividend Period and each 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 or part thereof that such share was outstanding and for
which dividends are payable on such Dividend Payment Date and the denominator
of which will be 365, multiplying the amount so obtained by $25,000, and
rounding the amount so obtained to the nearest cent. During any Long Term
Dividend Period, the amount of cash dividends per share of AMPS payable (if
declared) on any Dividend Payment Date shall be computed by multiplying the
Applicable Rate for such Dividend Period by a fraction, the numerator of which
will be such number of days in such part of such Dividend Period that such
share was outstanding and for which dividends are payable on such Dividend
Payment Date and the denominator of which will be 360, multiplying the amount
so obtained by $25,000, and rounding the amount so obtained to the nearest
cent.

         Notification of Dividend Period. With respect to each Dividend Period
that is a Special Dividend Period, the Fund, 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, may
request that the next succeeding Dividend Period for the AMPS will be a number
of days (other than seven), evenly divisible by seven, and not fewer than
seven nor more than 364 in the case of a Short Term Dividend Period or one
whole year or more but not greater than five years in the case of a Long Term
Dividend Period, specified in such notice, provided that the Fund may not give
a Request for Special Dividend Period (and any such request shall be null and
void) unless, for any Auction occurring after the initial Auction, Sufficient
Clearing Bids were made in the last occurring Auction and unless full
cumulative dividends and 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 second Business Day but not more
than seven Business Days prior to an Auction Date for the AMPS and, in the
case of a Long Term Dividend Period, shall be given on or prior to the second
Business 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-Dealers
jointly shall determine whether, given the factors set forth below, it is
advisable that the Fund issue a Notice of Special Dividend Period for the 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 Fund written notice (a
"Response") of such determination by no later than the second Business Day
prior to such Auction Date. In the event the Response indicates that it is
advisable that the Fund give a notice of a Special Dividend Period for the
AMPS, the Fund, by no later than the second Business Day prior to such Auction
Date may give a notice (a "Notice of Special Dividend Period") to the Auction
Agent, the Securities Depository and each Broker-Dealer. See "Description of
AMPS--Dividends--Notification of Dividend Period" in the statement of
additional information for a detailed description of these procedures.


                                      26


<PAGE>



         Determination of Dividend Rate. The dividend rate on shares of the
AMPS during the period from and including the Date of Original Issue for the
Series F AMPS to but excluding the Initial Dividend Payment Date (the "Initial
Dividend Period") with respect to the Series F AMPS will be the rate per annum
set forth above under "Prospectus Summary--Dividends and Dividend Periods."
Commencing on the Initial Dividend Payment Date for the Series F AMPS, the
Applicable Rate on the Series F AMPS for each Subsequent Dividend Period,
which Subsequent Dividend Period shall be a period commencing on and including
a Dividend Payment Date and ending on and including the calendar day prior to
the next Dividend Payment Date (or calendar day prior to the last Dividend
Payment Date in a Dividend Period if there is more than one Dividend Payment
Date), shall be equal to the rate per annum that results from the Auction with
respect to such Subsequent Dividend Period. The Initial Dividend Period and
Subsequent Dividend Period for the AMPS is referred to herein as a "Dividend
Period." Cash dividends shall be calculated as set forth above under
"Dividends--General."

         Restrictions on Dividends and Other Payments. Under the 1940 Act, the
Fund may not declare dividends or make other distributions on shares of common
stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, as applicable (and after giving effect thereto),
asset coverage (as defined in the 1940 Act) with respect to the outstanding
shares of AMPS (and Other AMPS) would be less than 200% (or such other
percentage as in the future may be required by law). The Fund estimates that,
based on the composition of its portfolio at February 29, 2004, asset coverage
with respect to shares of AMPS would be approximately 279% representing
approximately 36% of the Fund's capital and 56% of the Fund's common stock
equity immediately after the issuance of the shares of AMPS offered hereby.
Under the Code, the Fund, among other things, must distribute at least 90% of
its investment company taxable income each year in order to maintain its
qualification for tax treatment as a regulated investment company. The
foregoing limitations on dividends, distributions and purchases under certain
circumstances may impair the Fund's ability to maintain such qualification.
See "Taxes" in the statement of additional information.

         Upon any failure to pay dividends on shares of AMPS for two years or
more, the holders of the shares of AMPS will acquire certain additional voting
rights. See "Voting Rights" below. Such rights shall be the exclusive remedy
of the holders of shares of AMPS upon any failure to pay dividends on shares
of the Fund.

         Additional Dividends. If the Fund retroactively allocates any net
capital gain or other income subject to regular Federal income taxes to shares
of AMPS without having given advance notice thereof to the Auction Agent as
described under "The Auction--Auction Procedures--Auction Date; Advance Notice
of Allocation of Taxable Income; Inclusion of Taxable Income in Dividends"
below, which may only happen when 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 Fund (the amount of such allocation referred to herein as a
"Retroactive Taxable Allocation"), the Fund, within 90 days (and generally
within 60 days) after the end of the Fund's fiscal year for which a
Retroactive Taxable Allocation is made, will provide notice thereof to the
Auction Agent and to each holder of shares (initially Cede as nominee of 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 Fund. The Fund, within
30 days after such notice is given to the Auction Agent, will pay to the
Auction Agent (who then will distribute to such holders of shares of AMPS),
out of funds legally available therefor, an amount equal to the aggregate
Additional Dividend (as defined below) 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
(after Federal income tax consequences) 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 had 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
Fund; and (iii) assuming that each Retroactive Taxable Allocation would be
taxable in the hands of each holder of shares of AMPS at the greater of: (a)
the maximum marginal regular Federal individual income tax rate applicable to
ordinary income or capital gains depending on the taxable character of the
distribution (including any surtax); or (b) the maximum marginal regular
Federal corporate income tax rate applicable to ordinary income or capital
gains depending on the taxable character of the distribution (disregarding in
both (a)


                                      27



<PAGE>

and (b) the effect of any state or local taxes and the phase out of,
or provision limiting, personal exemptions, itemized deductions, or the
benefit of lower tax brackets). Although the Fund generally intends to
designate any Additional Dividend as an exempt-interest dividend to the extent
permitted by applicable law, it is possible that all or a portion of any
Additional Dividend will be taxable to the recipient thereof. See "Taxes" in
the statement of additional information. The Fund will not pay a further
Additional Dividend with respect to any taxable portion of an Additional
Dividend.

         If the Fund does not give advance notice of the amount of taxable
income to be included in a dividend on shares of AMPS in the related Auction,
the Fund may include such taxable income in a dividend on shares of AMPS if it
increases the dividend by an additional amount calculated as if such income
were a Retroactive Taxable Allocation and the additional amount were an
Additional Dividend and notifies the Auction Agent of such inclusion at least
five Business Days prior to the applicable Dividend Payment Date. See "The
Auction--Auction Procedures--Auction Date; Advance Notice of Allocation of
Taxable Income; Inclusion of Taxable Income in Dividends" below.

Asset Maintenance

         The Fund will be required to satisfy two separate asset maintenance
requirements under the terms of the Articles Supplementary. These requirements
are summarized below.

         1940 Act AMPS Asset Coverage. The Fund will be required under the
Articles Supplementary to maintain, with respect to shares of AMPS, as of the
last Business Day of each month in which any shares of AMPS are outstanding,
asset coverage of at least 200% with respect to senior securities that are
stock, including the shares of AMPS and Other AMPS (or such other asset
coverage as in the future may be specified in or under the 1940 Act as the
minimum asset coverage for senior securities that are stock of a closed-end
investment company as a condition of paying dividends on its common stock)
("1940 Act AMPS Asset Coverage"). If the Fund fails to maintain 1940 Act AMPS
Asset Coverage and such failure is not cured as of the last Business Day of
the following month (the "1940 Act Cure Date"), the Fund will be required
under certain circumstances to redeem certain of the shares of AMPS. See
"Redemption" below.

         Based upon the composition of the Fund's portfolio at February 29,
2004, the 1940 Act AMPS Asset Coverage immediately following the issuance of
AMPS offered hereby (after giving effect to the deduction of the underwriting
discount and offering expenses for the shares of AMPS) will be computed as
follows:

    Value of Fund assets less
  liabilities not constituting
        senior securities           =   $976,751,990     =    279%
- --------------------------------        ------------
        Senior securities               $350,044,840
    representing indebtedness
  plus liquidation value of the
         shares of AMPS

         AMPS Basic Maintenance Amount. So long as shares of AMPS are
outstanding, the Fund will be required under the Articles Supplementary to
maintain as of the last Business Day of each week (a "Valuation Date") Moody's
Eligible Assets and S&P Eligible Assets each having in the aggregate a
Discounted Value at least equal to the AMPS Basic Maintenance Amount. The AMPS
Basic Maintenance Amount includes the sum of (i) the aggregate liquidation
value of AMPS and Other AMPS then outstanding and (ii) certain accrued and
projected payment obligations of the Fund. See "Description of AMPS--Asset
Maintenance--AMPS Basic Maintenance Amount" in the statement of additional
information. If the Fund fails to meet such requirement as of any Valuation
Date and such failure is not cured on or before the sixth Business Day after
such Valuation Date (the "AMPS Basic Maintenance Cure Date"), the Fund will be
required under certain circumstances to redeem certain of the shares of AMPS.
Upon any failure to maintain the required Discounted Value, the Fund will use
its best efforts to alter the composition of its portfolio to reattain a
Discounted Value at least equal to the AMPS Basic Maintenance Amount on or
prior to the AMPS Basic Maintenance Cure Date. See "Redemption" herein and in
the statement of additional information.


                                      28

<PAGE>

Redemption

         Optional Redemption. To the extent permitted under the 1940 Act and
under Maryland law, upon giving a Notice of Redemption, as provided in the
statement of additional information, the Fund, 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 Fund
during (a) the Initial Dividend Period with respect to such share or (b) a
Non-Call Period to which such share is subject. "Optional Redemption Price"
means $25,000 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
plus any applicable redemption premium, if any, attributable to the
designation of a Premium Call Period. In addition, holders of AMPS may be
entitled to receive Additional Dividends in the event of redemption of such
AMPS to the extent provided herein. See "Dividends--Additional Dividends." The
Fund has the authority to redeem the AMPS for any reason and may redeem all or
part of the outstanding shares of AMPS if it anticipates that the Fund's
leveraged capital structure will result in a lower rate of return to holders
of common stock for any significant period of time than that obtainable if the
common stock were unleveraged.

         Mandatory Redemption. The Fund will be required to 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 Fund fails to maintain Moody's
Eligible Assets and S&P Eligible Assets each with an aggregate Discounted
Value equal to or greater than the AMPS Basic Maintenance Amount or to satisfy
the 1940 Act AMPS Asset Coverage and such failure is not cured on or before
the AMPS Basic Maintenance Cure Date or the 1940 Act Cure Date (herein
collectively referred to as a "Cure Date"), as the case may be. "Mandatory
Redemption Price" means $25,000 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. In addition, holders of AMPS may be entitled to
receive Additional Dividends in the event of redemption of such AMPS to the
extent provided herein. See "Dividends--Additional Dividends."

         For a discussion of the allocation procedures to be used if fewer
than all of the outstanding shares of AMPS are to be redeemed and for a
discussion of other redemption procedures, see "Description of
AMPS--Redemption" in the statement of additional information.

Liquidation Rights

         Upon any liquidation, dissolution or winding up of the Fund, whether
voluntary or involuntary, the holders of shares of 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
common stock or any other capital stock of the Fund ranking junior in right of
payment upon liquidation of 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 Additional Dividends. If
such assets of the Fund shall be insufficient to make the full liquidation
payment on the outstanding shares of 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, including the Other AMPS,
then such assets will be distributed among the holders of such shares of AMPS
and the holders of shares of such other class or series, including the Other
AMPS, ratably in proportion to the respective preferential amounts to which
they are entitled. After payment of the full amount of liquidation
distribution to which they are entitled, the holders of AMPS will not be
entitled to any further participation in any distribution of assets by the
Fund. A consolidation, merger or share exchange of the 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 the Fund shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Fund.

Voting Rights

         Except as otherwise indicated in this prospectus and the statement of
additional information and except as otherwise required by applicable law,
holders of shares of AMPS will be entitled to one vote per share on each
matter submitted to a vote of stockholders of the Fund and will vote together
with holders of shares of Other AMPS and holders of shares of common stock as
a single class.


                                      29


<PAGE>


         The 1940 Act and the Articles Supplementary require that the holders
of preferred stock, including the AMPS and Other AMPS, voting as a separate
class, have the rights to elect two of the Fund's Directors at all times and
to elect a majority of the Directors at any time that two full years'
dividends on the AMPS (and Other AMPS) are unpaid. The remaining Directors are
elected by holders of shares of common stock, voting as a separate class. The
holders of AMPS (and Other AMPS) will vote as a separate class or classes on
certain other matters as required under the Articles Supplementary, the 1940
Act and Maryland law. In addition, the Series F AMPS (and Other AMPS) may vote
as a separate series under certain circumstances. See "Description of
AMPS--Voting Rights" in the statement of additional information.

                                  THE AUCTION

         Certain of the capitalized terms used herein not otherwise defined in
this prospectus have the meaning provided in the Glossary at the back of this
prospectus.

General

         Holders of the shares of the Series F AMPS will be entitled to
receive cumulative cash dividends on their shares when, as and if declared by
the Board of Directors of the Fund, out of funds legally available therefor,
on the Initial Dividend Payment Date with respect to the Initial Dividend
Period and, thereafter, on each Dividend Payment Date with respect to a
Subsequent Dividend Period (generally a period of seven days, subject to
certain exceptions set forth under "Description of AMPS--Dividends--General")
at the rate per annum equal to the Applicable Rate for each such Dividend
Period.

         The provisions of the Articles Supplementary establishing the terms
of the Series F AMPS offered hereby will provide that the Applicable Rate for
the shares of AMPS for each Dividend Period after the Initial Dividend Period
therefor will be equal to the rate per annum that the Auction Agent advises
has resulted on the Business Day preceding the first day of such Dividend
Period due to implementation of the auction procedures set forth in the
Articles Supplementary (the "Auction Procedures") in which persons determine
to hold or offer to purchase or sell shares of AMPS. The Auction Procedures
are attached as Appendix C to the statement of additional information.

         Each periodic operation of such procedures with respect to the shares
of AMPS is referred to hereinafter as an "Auction." If, however, the Fund
should fail to pay or duly provide for the full amount of any dividend on
shares of AMPS or the redemption price of shares of AMPS called for
redemption, the Applicable Rate for shares of AMPS will be determined as set
forth under "Description of AMPS--Dividends--Non-Payment Period; Late Charge"
in the statement of additional information.

         Auction Agent Agreement. The Fund has entered into an agreement with
The Bank of New York (together with any successor bank or trust company or
other entity entering into a similar agreement with this Fund, the "Auction
Agent") (the "Auction Agent Agreement"), which provides, among other things,
that the Auction Agent will follow the Auction Procedures for the purpose of
determining the Applicable Rate for the AMPS. The Fund will pay the Auction
Agent compensation for its services under the Auction Agent Agreement.

         Broker-Dealer Agreements. The Auction Agent has entered into
agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") and more than twenty other broker-dealers and may enter into similar
agreements (collectively, the "Broker-Dealer Agreements") with one or more
other broker-dealers (collectively, the "Broker-Dealers") selected by the
Fund, which provide for the participation of such Broker-Dealers in Auctions.
Merrill Lynch is an affiliate of the Investment Adviser in that they share a
common parent, Merrill Lynch & Co., Inc.

         Securities Depository. The Depository Trust Company initially will
act as the Securities Depository for the Agent Members with respect to the
shares of Series F AMPS. One or more registered certificates for all of the
shares of the Series F AMPS initially will be registered in the name of Cede,
as nominee of the Securities Depository. The certificate will bear a legend to
the effect that such certificate is issued subject to the provisions
restricting transfers of shares of AMPS to which it relates contained in the
Articles Supplementary. Cede initially will be the holder of record of all
shares of AMPS, and Beneficial Owners will not be entitled to receive
certificates representing their


                                      30


<PAGE>


ownership interest in such shares. The Securities Depository will maintain
lists of its participants and will maintain the positions (ownership
interests) of shares of AMPS held by each Agent Member, whether as the
Beneficial Owner thereof for its own account or as nominee for the Beneficial
Owner thereof. Payments made by the Fund to holders of AMPS will be duly made
by making payments to the nominee of the Securities Depository.

Auction Procedures

         The following is a brief discussion of the procedures to be used in
conducting Auctions. This summary is qualified by reference to the Auction
Procedures set forth in Appendix C to the statement of additional information.
The Settlement Procedures to be used with respect to Auctions are set forth in
Appendix B to the statement of additional information.

         Auction Date; Advance Notice of Allocation of Taxable Income;
Inclusion of Taxable Income in Dividends. An Auction to determine the
Applicable Rate for the shares of the Series F AMPS offered hereby for each
Dividend Period (other than the Initial Dividend Period therefor) will be held
on the first Business Day (as hereinafter defined) preceding the first day of
such Dividend Period, which first day is also a Dividend Payment Date for the
preceding Dividend Period (the date of each Auction being referred to herein
as an "Auction Date"). "Business Day" means a day on which the New York Stock
Exchange (the "NYSE") 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. Auctions for shares of the Series F AMPS for
Dividend Periods after the Initial Dividend Period normally will be held every
Tuesday after the preceding Dividend Payment Date, and each subsequent
Dividend Period normally will begin on the following Wednesday (also a
Dividend Payment Date). The Auction Date and the first day of the related
Dividend Period (both of which must be Business Days) need not be consecutive
calendar days. For example, in most cases, if the Tuesday that normally would
be an Auction Date for the Series F AMPS is not a Business Day, then such
Auction Date will be the preceding Monday and the first day of the related
Dividend Period will continue to be the following Wednesday. See "Description
of AMPS -- Dividends" for information concerning the circumstances under which
a Dividend Payment Date may fall on a date other than the days specified
above, which may affect the Auction Date.

         Except as noted below, whenever the Fund intends to include any net
capital gain or other income subject to regular Federal income taxes in any
dividend on shares of AMPS, the Fund 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 Fund, in turn it will notify
each Broker-Dealer, who, on or prior to such Auction Date, in accordance with
its Broker-Dealer Agreement, will notify its customers who are Beneficial
Owners and Potential Beneficial Owners believed to be interested in submitting
an Order in the Auction to be held on such Auction Date. The Fund also may
include such income in a dividend on shares of AMPS without giving advance
notice thereof if it increases the dividend by an additional amount calculated
as if such income were a Retroactive Taxable Allocation and the additional
amount were an Additional Dividend; provided that the Fund will notify the
Auction Agent of the additional amounts to be included in such dividend at
least five Business Days prior to the applicable Dividend Payment Date. See
"Description of AMPS--Dividends--Additional Dividends" above.

         Orders by Beneficial Owners, Potential Beneficial Owners, Existing
Holders and Potential Holders. On or prior to each Auction Date:

                  (a)   each Beneficial Owner may submit to its Broker-Dealer
          by telephone a:

                        (i)     Hold Order -- indicating the number of
                  outstanding shares, if any, of AMPS that such Beneficial
                  Owner desires to continue to hold without regard to the
                  Applicable Rate for the next Dividend Period for such
                  shares;

                       (ii)     Bid -- indicating the number of outstanding
                  shares, if any, of AMPS that such Beneficial Owner desires
                  to continue to hold, provided that the Applicable Rate for
                  the next Dividend Period for such shares is not less than
                  the rate per annum then specified by such Beneficial Owner;
                  and/or


                                      31

<PAGE>

                      (iii)     Sell Order -- indicating the number of
                  outstanding shares, if any, of AMPS that such Beneficial
                  Owner offers to sell without regard to the Applicable Rate
                  for the next Dividend Period for such shares; and

                  (b)   Broker-Dealers will contact customers who are Potential
         Beneficial Owners of shares of AMPS to determine whether such
         Potential Beneficial Owners desire to submit Bids indicating the
         number of shares of AMPS which they offer to purchase provided that
         the Applicable Rate for the next Dividend Period for such shares is
         not less than the rates per annum specified in such Bids.

         The communication by a Beneficial Owner or Potential Beneficial Owner
to a Broker-Dealer and the communication by a Broker-Dealer, whether or not
acting for its own account, to the Auction Agent of the foregoing information
is hereinafter referred to as an "Order" and collectively as "Orders." A
Beneficial Owner or a Potential Beneficial Owner placing an Order, including a
Broker-Dealer acting in such capacity for its own account, is hereinafter
referred to as a "Bidder" and collectively as "Bidders." Any Order submitted
by a Beneficial Owner or a Potential Beneficial Owner to its Broker-Dealer, or
by a Broker-Dealer to the Auction Agent, prior to the Submission Deadline on
any Auction Date shall be irrevocable.

         In an Auction, a Beneficial Owner may submit different types of
Orders with respect to shares of AMPS then held by such Beneficial Owner, as
well as Bids for additional shares of AMPS. For information concerning the
priority given to different types of Orders placed by Beneficial Owners, see
"Submission of Orders by Broker-Dealers to Auction Agent" below.

         The Maximum Applicable Rate for shares of AMPS will be the higher of
(A) the Applicable Percentage of the Reference Rate or (B) the Applicable
Spread plus the Reference Rate. The Auction Agent will round each applicable
Maximum Applicable Rate to the nearest one-thousandth (0.001) of one percent
per annum, with any such number ending in five ten-thousandths of one percent
being rounded upwards to the nearest one-thousandth (0.001) of one percent.
The Auction Agent will not round the applicable Reference Rate as part of its
calculation of the Maximum Applicable Rate.

         The Maximum Applicable Rate for shares of AMPS will depend on the
credit rating or ratings assigned to such shares. The Applicable Percentage
and the Applicable Spread 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 Fund has provided
notification to the Auction Agent prior to the Auction establishing the
Applicable Rate for any dividend that net capital gain or other taxable income
will be included in such dividend on shares of AMPS as follows:
<TABLE>
<CAPTION>


                                             Applicable                             Applicable         Applicable
                                             Percentage         Applicable         Spread Over         Spread Over
            Credit Ratings                  of Reference        Percentage          Reference           Reference
    ---------------------------------         Rate--No          of Reference          Rate--No              Rate--
      Moody's                S&P            Notification     Rate--Notification     Notification       Notification
    -----------         -------------       ------------     ------------------     ------------       ------------
<S>                     <C>                     <C>                <C>                <C>                 <C>
        Aaa                  AAA                110%               125%               1.10%               1.25%
     Aa3 to Aa1          AA- to AA+             125%               150%               1.25%               1.50%
      A3 to A1            A- to A+              150%               200%               1.50%               2.00%
    Baa3 to Baa1        BBB- to BBB+            175%               250%               1.75%               2.50%
     Below Baa3          Below BBB-             200%               300%               2.00%               3.00%
</TABLE>


There is no minimum Applicable Rate in respect of any Dividend Period.

         The Applicable Percentage and the Applicable Spread as so determined
may be further subject to upward but not downward adjustment in the discretion
of the Board of Directors of the Fund after consultation with the
Broker-Dealers, provided that immediately following any such increase, the
Fund would be in compliance with the AMPS Basic Maintenance Amount. The Fund
will take all reasonable action necessary to enable either S&P or Moody's, or
both to provide a rating for the AMPS, subject to the Fund's ability to
terminate compliance with the

                                      32
<PAGE>

rating agency guidelines as discussed under "Rating Agency Guidelines." If
either S&P or Moody's, or both, shall not make such a rating available, and
subject to the Fund's ability to terminate compliance with the rating agency
guidelines discussed under "Rating Agency Guidelines," Merrill Lynch or its
affiliates and successors, after obtaining the Fund's approval, will select
another NRSRO (a "Substitute Rating Agency") or two other NRSROs ("Substitute
Rating Agencies") to act as a Substitute Rating Agency or Substitute Rating
Agencies, as the case may be.

         Any Bid by a Beneficial Owner specifying a rate per annum higher than
the Maximum Applicable Rate will be treated as a Sell Order, and any Bid by a
Potential Beneficial Owner specifying a rate per annum higher than the Maximum
Applicable Rate will not be considered. See "Determination of Sufficient
Clearing Bids, Winning Bid Rate and Applicable Rate" and "Acceptance and
Rejection of Submitted Bids and Submitted Sell Orders and Allocation of
Shares."

         Neither the Fund nor the Auction Agent will be responsible for a
Broker-Dealer's failure to comply with the foregoing.

         A Broker-Dealer also may hold AMPS in its own account as a Beneficial
Owner. A Broker-Dealer thus may submit Orders to the Auction Agent as a
Beneficial Owner or a Potential Beneficial Owner and therefore participate in
an Auction as an Existing Holder or Potential Holder on behalf of both itself
and its customers. Any Order placed with the Auction Agent by a Broker-Dealer
as or on behalf of a Beneficial Owner or a Potential Beneficial Owner will be
treated in the same manner as an Order placed with a Broker-Dealer by a
Beneficial Owner or a Potential Beneficial Owner. Similarly, any failure by a
Broker-Dealer to submit to the Auction Agent an Order in respect of any AMPS
held by it or its customers who are Beneficial Owners will be treated in the
same manner as a Beneficial Owner's failure to submit to its Broker-Dealer an
Order in respect of AMPS held by it, as described in the next paragraph.
Inasmuch as a Broker-Dealer participates in an Auction as an Existing Holder
or a Potential Holder only to represent the interests of a Beneficial Owner or
Potential Beneficial Owner, whether it be its customers or itself, all
discussion herein relating to the consequences of an Auction for Existing
Holders and Potential Holders also applies to the underlying beneficial
ownership interests represented thereby. For information concerning the
priority given to different types of Orders placed by Existing Holders, see
"Submission of Orders by Broker-Dealers to Auction Agent." Each purchase or
sale in an Auction will be settled on the Business Day next succeeding the
Auction Date at a price per share equal to $25,000. See "Notification of
Results; Settlement" below.

         If one or more Orders covering in the aggregate all of the
outstanding shares of AMPS held by a Beneficial Owner are not submitted to the
Auction Agent prior to the Submission Deadline, either because a Broker-Dealer
failed to contact such Beneficial Owner or otherwise, 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 of more than 28 days) and a Sell Order
(in the case of an Auction relating to a Special Dividend Period of more than
28 days) to have been submitted on behalf of such Beneficial Owner covering
the number of outstanding shares of AMPS held by such Beneficial Owner and not
subject to Orders submitted to the Auction Agent.

         If all of the outstanding shares of AMPS are subject to Submitted
Hold Orders, the Dividend Period next succeeding the Auction automatically
shall be the same length as the immediately preceding Dividend Period, and the
Applicable Rate for the next Dividend Period for all shares of AMPS will be
60% of the Reference Rate on the date of the applicable Auction (or 90% of
such rate if the Fund has provided notification to the Auction Agent prior to
the Auction establishing the Applicable Rate for any dividend that net capital
gain or other taxable income will be included in such dividend on shares of
AMPS).

         For the purposes of an Auction, shares of AMPS for which the Fund
shall have given notice of redemption and deposited moneys therefor with the
Auction Agent in trust or segregated in an account at the Fund's custodian
bank for the benefit of holders of AMPS to be redeemed and for
payment to the Auction Agent, as set forth under "Description of AMPS --
Redemption" in the statement of additional information, will not be considered
as outstanding and will not be included in such Auction. Pursuant to the
Articles Supplementary of the Fund, the Fund will be prohibited from reissuing
and its affiliates (other than Merrill Lynch) will be prohibited from
transferring (other than to the Fund) any shares of AMPS they may acquire.
Neither the Fund nor any affiliate of the Fund may submit an Order in any
Auction, except that an affiliate of the Fund that is a Broker-Dealer (i.e.,
Merrill Lynch) may submit an Order.

                                      33
<PAGE>

         Submission of Orders by Broker-Dealers to Auction Agent. Prior to
1:00 p.m., Eastern time, on each Auction Date, or such other time on the
Auction Date as may be specified by the Auction Agent (the "Submission
Deadline"), each Broker-Dealer will submit to the Auction Agent in writing or
through a mutually acceptable electronic means all Orders obtained by it for
the Auction to be conducted on such Auction Date, designating itself (unless
otherwise permitted by the Fund) as the Existing Holder or Potential Holder in
respect of the shares of AMPS subject to such Orders. Any Order submitted by a
Beneficial Owner or a Potential Beneficial Owner to its Broker-Dealer, or by a
Broker-Dealer to the Auction Agent, prior to the Submission Deadline on any
Auction Date, shall be irrevocable.

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

         If one or more Orders of an Existing Holder are submitted to the
Auction Agent and such Orders cover in the aggregate more than the number of
outstanding shares of AMPS held by such Existing Holder, such Orders will be
considered valid in the following order of priority:

                  (a) any Hold Order will 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 by 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 will 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 will be considered valid, in the ascending
         order of their respective rates per annum if more than one Bid is
         submitted by 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 outstanding shares of AMPS subject to any Hold
         Order referred to in clause (a) above (and if more than one Bid
         submitted by 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 clause (a)
         above and of the foregoing portion of this clause (b) to any Bid or
         Bids specifying a lower rate or rates per annum, the number of shares
         subject to each of such Bids will be reduced pro rata so that such
         Bids, in the aggregate, cover exactly such remaining number of
         outstanding shares); and the number of outstanding shares, if any,
         subject to Bids not valid under this clause (b) shall be treated as
         the subject of a Bid by a Potential Holder; and

                  (c) any Sell Order will be considered valid up to and
         including the excess of the number of outstanding shares of AMPS held
         by such Existing Holder over the sum of the number of shares of AMPS
         subject to Hold Orders referred to in clause (a) above and the number
         of shares of AMPS subject to valid Bids by such Existing Holder
         referred to in clause (b) above; provided that, if more than one Sell
         Order is submitted by 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 will be
         reduced pro rata so that such Sell Orders, in the aggregate, will
         cover exactly the number of shares of AMPS equal to such excess.

         If more than one Bid of any Potential Holder is submitted in any
Auction, each Bid submitted in such Auction will be considered a separate Bid
with the rate per annum and number of shares of AMPS therein specified.

         Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate. Not earlier than the Submission Deadline for each Auction,
the Auction Agent will assemble all Orders submitted or deemed submitted to it
by the Broker-Dealers (each such "Hold Order," "Bid" or "Sell Order" as
submitted or deemed submitted by a Broker-Dealer hereinafter being referred to
as a "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order") and will determine the excess of
the number of outstanding shares of AMPS over the number of outstanding shares
of AMPS subject to Submitted Hold Orders (such excess being referred to as the
"Available AMPS") and whether Sufficient Clearing Bids have been made in such
Auction. Sufficient Clearing Bids will have been made if the number of
outstanding shares of AMPS that are the subject of Submitted Bids of Potential
Holders with rates per annum not higher than the Maximum Applicable Rate
equals or

                                      34
<PAGE>

exceeds the number of outstanding shares that are the subject of Submitted
Sell Orders (including the number of shares subject to Bids of Existing
Holders specifying rates per annum higher than the Maximum Applicable Rate).

         If Sufficient Clearing Bids have been made, the Auction Agent will
determine the lowest rate per annum specified in the Submitted Bids (the
"Winning Bid Rate") which would result in the number of shares subject to
Submitted Bids specifying such rate per annum or a lower rate per annum being
at least equal to the Available AMPS. If Sufficient Clearing Bids have been
made, the Winning Bid Rate will be the Applicable Rate for the next Dividend
Period for all shares of AMPS then outstanding.

         If Sufficient Clearing Bids have not been made (other than because
all outstanding shares of AMPS are the subject of Submitted Hold Orders), the
Dividend Period next following the Auction automatically will be a 7-Day
Dividend Period in the case of the Series F AMPS, and the Applicable Rate for
such Dividend Period will be equal to the Maximum Applicable Rate.

         If Sufficient Clearing Bids have not been made, Beneficial Owners
that have Submitted Sell Orders will not be able to sell in the Auction all,
and may not be able to sell any, shares of AMPS subject to such Submitted Sell
Orders. See "Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares." Thus, under some circumstances, Beneficial
Owners may not have liquidity of investment.

         Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares. Based on the determinations described under
"Determination of Sufficient Clearing Bids, Winning Bid Rate and Applicable
Rate" and subject to the discretion of the Auction Agent to round as described
below, Submitted Bids and Submitted Sell Orders will be accepted or rejected
in the order of priority set forth in the Auction Procedures with the result
that Existing Holders and Potential Holders of AMPS will sell, continue to
hold and/or purchase shares of AMPS as set forth below. Existing Holders that
submit or are deemed to have submitted Hold Orders will continue to hold the
shares of AMPS subject to such Hold Orders.

         If Sufficient Clearing Bids have been made:

                  (a) each Existing Holder that placed a Submitted Bid
         specifying a rate per annum higher than the Winning Bid Rate or a
         Submitted Sell Order will sell the outstanding shares of AMPS subject
         to such Submitted Bid or Submitted Sell Order;

                  (b) each Existing Holder that placed a Submitted Bid
         specifying a rate per annum lower than the Winning Bid Rate will
         continue to hold the outstanding shares of AMPS subject to such
         Submitted Bid;

                  (c) each Potential Holder that placed a Submitted Bid
         specifying a rate per annum lower than the Winning Bid Rate will
         purchase the number of shares of AMPS subject to such Submitted Bid;

                  (d) each Existing Holder that placed a Submitted Bid
         specifying a rate per annum equal to the Winning Bid Rate will
         continue to hold the outstanding shares of AMPS subject to such
         Submitted Bids, unless the number of outstanding shares of AMPS
         subject to all such Submitted Bids of Existing Holders is greater
         than the excess of the Available AMPS over the number of shares of
         AMPS accounted for in clauses (b) and (c) above, in which event each
         Existing Holder with such a Submitted Bid will sell a number of
         outstanding shares of AMPS determined on a pro rata basis based on
         the number of outstanding shares of AMPS subject to all such
         Submitted Bids of such Existing Holders; and

                  (e) each Potential Holder that placed a Submitted Bid
         specifying a rate per annum equal to the Winning Bid Rate will
         purchase any Available AMPS not accounted for in clause (b), (c) or
         (d) above on a pro rata basis based on the shares of AMPS subject to
         all such Submitted Bids of Potential Holders.

         If Sufficient Clearing Bids have not been made (other than because
all outstanding shares of AMPS are the subject of Submitted Hold Orders):

                                      35
<PAGE>

                  (a) each Existing Holder that placed a Submitted Bid
         specifying a rate per annum equal to or lower than the Maximum
         Applicable Rate will continue to hold the outstanding shares of AMPS
         subject to such Submitted Bid;

                  (b) each Potential Holder that placed a Submitted Bid
         specifying a rate per annum equal to or lower than the Maximum
         Applicable Rate will purchase the number of shares of AMPS subject to
         such Submitted Bid; and

                  (c) each Existing Holder that placed a Submitted Bid
         specifying a rate per annum higher than the Maximum Applicable Rate
         or a Submitted Sell Order will sell a number of outstanding shares of
         AMPS determined on a pro rata basis based on the outstanding shares
         of AMPS subject to all such Submitted Bids and Submitted Sell Orders.

         If as a result of the Auction Procedures described above 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, the Auction
Agent, in such manner as, in its sole discretion, it shall determine, will
round up or down the number of shares of AMPS being sold or purchased on such
Auction Date so that each share sold or purchased by each Existing Holder or
Potential Holder will be a whole share of AMPS. If any Potential Holder would
be entitled or required to purchase less than a whole share of AMPS, the
Auction Agent, in such manner as, in its sole discretion, it shall determine,
will allocate shares of AMPS for purchase among Potential Holders so that only
whole shares of AMPS are purchased by any such Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of AMPS.

         Notification of Results; Settlement. The Auction Agent will advise
each Broker-Dealer who submitted a Bid or Sell Order in an Auction whether
such Bid or Sell Order was accepted or rejected in whole or in part and of the
Applicable Rate for the next Dividend Period for the related shares of AMPS by
telephone at approximately 3:00 P.M., Eastern time, on the Auction Date for
such Auction. Each such Broker-Dealer that submitted an Order for the account
of a customer then will advise such customer whether such Bid or Sell Order
was accepted or rejected, will confirm purchases and sales with each customer
purchasing or selling shares of AMPS as a result of the Auction and will
advise each customer purchasing or selling shares of AMPS to give instructions
to its Agent Member of the Securities Depository to pay the purchase price
against delivery of such shares or to deliver such shares against payment
therefor as appropriate. If a customer selling shares of AMPS as a result of
an Auction shall fail to instruct its Agent Member to deliver such shares, the
Broker-Dealer that submitted such customer's Bid or Sell Order will instruct
such Agent Member to deliver such shares against payment therefor. Each
Broker-Dealer that submitted a Hold Order in an Auction on behalf of a
customer also will advise such customer of the Applicable Rate for the next
Dividend Period for the AMPS. The Auction Agent will record each transfer of
shares of AMPS on the record book of Existing Holders to be maintained by the
Auction Agent. In accordance with the Securities Depository's normal
procedures, on the day after each Auction Date, the transactions described
above will be executed through the Securities Depository, and the accounts of
the respective Agent Members at the Securities Depository will be debited and
credited as necessary to effect the purchases and sales of shares of AMPS as
determined in such Auction. Purchasers will make payment through their Agent
Members in same-day funds to the Securities Depository against delivery
through their Agent Members; the Securities Depository will make payment in
accordance with its normal procedures, which now provide for payment in
same-day funds. If the procedures of the Securities Depository applicable to
AMPS shall be changed to provide for payment in next-day funds, then
purchasers may be required to make payment in next day funds. If any Existing
Holder selling shares of AMPS in an Auction fails to deliver such shares, the
Broker-Dealer of any person that was to have purchased shares of AMPS in such
Auction may deliver to such person a number of whole shares 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 AMPS to be so delivered will be
determined by such Broker-Dealer. Delivery of such lesser number of shares
will constitute good delivery. Each Broker-Dealer Agreement also will provide
that neither the Fund nor the Auction Agent will have responsibility or
liability with respect to the failure of a Potential Beneficial Owner,
Beneficial Owner or their respective Agent Members to deliver shares of AMPS
or to pay for shares of AMPS purchased or sold pursuant to an Auction or
otherwise.

                                      36
<PAGE>

Broker-Dealers

         General. The Broker-Dealer Agreements provide that a Broker-Dealer
may submit Orders in Auctions for its own account, unless the Fund notifies
all Broker-Dealers that they no longer may do so; provided that Broker-Dealers
may continue to submit Hold Orders and Sell Orders. If a Broker-Dealer submits
an Order for its own account in any Auction of the AMPS, it may have knowledge
of Orders placed through it in that Auction and therefore have an advantage
over other Bidders, but such Broker-Dealer would not have knowledge of Orders
submitted by other Broker-Dealers in that Auction.

         Merrill Lynch has advised the Fund that they and certain
Broker-Dealers and other participants in the auction rate securities markets,
including both taxable and tax exempt markets, have received a letter from the
Commission requesting that each of them voluntarily conduct an investigation
regarding their respective practices and procedures in those markets. Merrill
Lynch is cooperating fully with the Commission in this process. No assurance
can be given as to whether the results of this process will affect the market
for the AMPS or the Auctions.

         Fees. The Auction Agent after each Auction will pay a service charge
from funds provided by the Fund to each Broker-Dealer on the basis of the
purchase price of shares of AMPS placed by such Broker-Dealer at such Auction.
The service charge (i) for any 7-Day Dividend Period shall be payable at the
annual rate of 0.25% of the purchase price of the shares of AMPS placed by
such Broker-Dealer in any such Auction and (ii) for any Special Dividend
Period shall be determined by mutual consent of the Fund and any such
Broker-Dealer or Broker-Dealers and shall be based upon a 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, respectively, at the commencement of the Dividend Period with respect
to such Auction. For the purposes of the preceding sentence, shares of AMPS
will be placed by a Broker-Dealer if such shares were (i) the subject of Hold
Orders deemed to have been made by Beneficial Owners that were acquired by
such Beneficial Owners through such Broker-Dealer or (ii) the subject of the
following Orders submitted by such Broker-Dealer: (A) a Submitted Bid of a
Beneficial Owner that resulted in such Beneficial Owner continuing to hold
such shares as a result of the Auction, (B) a Submitted Bid of a Potential
Beneficial Owner that resulted in such Potential Beneficial Owner purchasing
such shares as a result of the Auction or (C) a Submitted Hold Order.

         Secondary Trading Market. The Broker-Dealers intend to maintain a
secondary trading market in the AMPS outside of Auctions; however, they have
no obligation to do so and there can be no assurance that a secondary market
for the AMPS will develop or, if it does develop, that it will provide holders
with a liquid trading market (i.e., trading will depend on the presence of
willing buyers and sellers and the trading price is subject to variables to be
determined at the time of the trade by the Broker-Dealers). The AMPS will not
be registered on any stock exchange or on any automated quotation system. An
increase in the level of interest rates, particularly during any Long Term
Dividend Period, likely will have an adverse effect on the secondary market
price of the AMPS, and a selling stockholder may sell AMPS between Auctions at
a price per share of less than $25,000.

                           RATING AGENCY GUIDELINES

         Certain of the capitalized terms used herein not otherwise defined in
this prospectus have the meaning provided in the Glossary at the back of this
prospectus.

         The Fund currently intends that, so long as shares of AMPS are
outstanding and the AMPS are rated by Moody's and S&P, the composition of its
portfolio will reflect guidelines established by Moody's and S&P in connection
with the Fund's receipt of a rating for such shares on or prior to their Date
of Original Issue of at least Aaa from Moody's and AAA from S&P. Moody's and
S&P, which are NRSROs, issue ratings for various securities reflecting the
perceived creditworthiness of such securities. The Board of Directors of the
Fund, however, may determine that it is not in the best interest of the Fund
to continue to comply with the guidelines of Moody's or S&P (described below).
If the Fund voluntarily terminates compliance with Moody's or S&P guidelines,
the Fund will no longer be required to maintain a Moody's Discounted Value or
a S&P Discounted Value, as applicable, at least equal to the AMPS Basic
Maintenance Amount. If the Fund voluntarily terminates compliance with Moody's
or S&P guidelines, or both, at the time of termination, it must continue to be
rated by at least one NRSRO.

         The guidelines described below have been developed by Moody's and S&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 securities.
The guidelines are designed to ensure that assets underlying outstanding debt
or preferred stock will be varied sufficiently and will be of sufficient
quality and amount to justify investment-grade ratings. The guidelines do not
have the force of law but have been adopted by the Fund in order to satisfy
current requirements necessary for Moody's and S&P to issue the
above-described ratings for shares of AMPS, which ratings generally are relied
upon by institutional investors in purchasing such

                                      37
<PAGE>

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 1940 Act. See "Description of AMPS
- -- Asset Maintenance" herein and in the statement of additional information.

         The Fund intends to maintain a Discounted Value for its portfolio at
least equal to the AMPS Basic Maintenance Amount. Moody's and S&P each has
established separate guidelines for determining Discounted Value. To the
extent any particular portfolio holding does not satisfy the applicable rating
agency's guidelines, all or a portion of such holding's value will not be
included in the calculation of Discounted Value (as defined by such rating
agency). The Moody's and S&P guidelines do not impose any limitations on the
percentage of Fund assets that may be invested in holdings not eligible for
inclusion in the calculation of the Discounted Value of the Fund's portfolio.

         Upon any failure to maintain the required Discounted Value, the Fund
will seek to alter the composition of its portfolio to reattain a Discounted
Value at least equal to the AMPS Basic Maintenance Amount on or prior to the
AMPS Basic Maintenance Cure Date, thereby incurring additional transaction
costs and possible losses and/or gains on dispositions of portfolio
securities. To the extent any such failure is not cured in a timely manner,
shares of AMPS will be subject to redemption. See "Description of AMPS --
Asset Maintenance" and "Description of AMPS -- Redemption" herein and in the
statement of additional information.

         The Fund may, but is not required to, adopt any modifications to
these guidelines that hereafter may be established by Moody's or S&P. Failure
to adopt any such modifications, however, may result in a change in the
ratings described above or a withdrawal of 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, the Board of Directors, without stockholder approval, may
modify certain definitions or restrictions that have been adopted by the Fund
pursuant to the rating agency guidelines, provided the Board of Directors has
obtained written confirmation from Moody's and S&P that any such change would
not impair the ratings then assigned by Moody's and S&P to the AMPS.

         As described by Moody's and S&P, a preferred stock rating is an
assessment of the capacity and willingness of an issuer to pay preferred stock
obligations. The ratings on the AMPS are not recommendations to purchase, hold
or sell shares of AMPS, inasmuch as the ratings do not comment as to market
price or suitability for a particular investor, nor do the rating agency
guidelines described above address the likelihood that a holder of shares of
AMPS will be able to sell such shares in an Auction. The ratings are based on
current information furnished to Moody's and S&P by the Fund and the
Investment Adviser and information obtained from other sources. The ratings
may be changed, suspended or withdrawn as a result of changes in, or the
unavailability of, such information. The common stock has not been rated by a
nationally recognized statistical rating organization.

         For additional information concerning the Moody's and S&P ratings
guidelines, see "Rating Agency Guidelines" in the statement of additional
information.

                INVESTMENT ADVISORY AND MANAGEMENT ARRANGEMENTS

         The Investment Adviser, which is owned and controlled by Merrill
Lynch & Co. Inc. ("ML & Co."), a financial services holding company and the
parent of Merrill Lynch, provides the Fund with investment advisory and
administrative services. The Investment Adviser acts as the investment adviser
to more than 100 registered investment companies and offers investment
advisory services to individuals and institutional accounts. As of May 2004,
the Investment Adviser and its affiliates, including Merrill Lynch Investment
Managers, L.P. ("MLIM"), had a total of approximately $491 billion in
investment company and other portfolio assets under management, including
approximately $253 billion in fixed income assets. This amount includes assets
managed by certain affiliates of the Investment Adviser. The Investment
Adviser is a limited partnership, the partners of which are ML & Co. and
Princeton Services. The principal business address of the Investment Adviser
is 800 Scudders Mill Road, Plainsboro, New Jersey 08536.

         The Investment Advisory Agreement provides that, subject to the
direction of the Fund's Board of Directors, the Investment Adviser is
responsible for the actual management of the Fund's portfolio. The

                                      38
<PAGE>

responsibility for making decisions to buy, sell or hold a particular security
rests with the Investment Adviser, subject to review by the Board of
Directors.

         The portfolio manager primarily responsible for the Fund's day-to-day
management is Fred K. Steube. Fred K. Steube has been a Director (Municipal
Tax-Exempt Fund Management) of MLIM since 2000 and has 24 years of experience
investing in Municipal Bonds. The Fund's portfolio manager will consider
analyses from various sources, make the necessary investment decisions, and
place orders for transactions accordingly.

         For its services, the Fund pays the Investment Adviser a monthly fee
at the annual rate of 0.50% of the Fund's average weekly net assets ("average
weekly net assets" means the average weekly value of the total assets of the
Fund, including the proceeds from the issuance of preferred stock, minus the
sum of (i) accrued liabilities of the Fund, (ii) any accrued and unpaid
interest on outstanding borrowings and (iii) accumulated dividends on shares
of preferred stock). For purposes of this calculation, average weekly net
assets is determined at the end of each month on the basis of the average net
assets of the Fund for each week 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
liquidation preference of any outstanding preferred stock (other than
accumulated dividends) is not considered a liability in determining the Fund's
average daily net assets.

         The Investment Advisory Agreement obligates the Investment Adviser to
provide investment advisory services and to pay all compensation of and
furnish office space for officers and employees of the Fund connected with
investment and economic research, trading and investment management of the
Fund, as well as the compensation of all Directors of the Fund who are
affiliated persons of the Investment Adviser or any of its affiliates. The
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
preparing, printing and mailing proxies, listing fees, stock certificates and
stockholder reports, charges of the custodian and the transfer agent, dividend
disbursing agent and registrar, Commission fees, fees and expenses of
non-interested 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. Certain accounting
services are provided to the Fund by State Street Bank and Trust Company
("State Street") pursuant to an agreement between State Street and the Fund.
The Fund will pay the costs of these services. In addition, the Fund will
reimburse the Investment Adviser for certain additional accounting services.

                                     TAXES


         To the extent derived from Municipal Bond interest income, dividends
on the AMPS will be excludable from gross income for Federal income tax
purposes in the hands of holders of such AMPS, subject to the possible
application of the Federal alternative minimum tax and any state or local
income taxes. Interest income from other investments may produce taxable
dividends. The Fund is required to allocate net capital gain and other taxable
income, if any, proportionately among the common stock and the AMPS and Other
AMPS in accordance with the current position of the IRS described under the
heading "Taxes" in the statement of additional information. The Fund may
notify the Auction Agent of the amount of any net capital gain or other
anticipated taxable income to be included in any dividend on the AMPS prior to
the Auction establishing the Applicable Dividend Rate for such dividend. The
Auction Agent will in turn notify holders of the AMPS and prospective
purchasers. The Fund also may include such income in a dividend on shares of
AMPS without giving advance notice thereof if it increases the dividend by an
additional amount calculated as if such income were a Retroactive Taxable
Allocation and the additional amount were an Additional Dividend. See "The
Auction -- Auction Procedures -- Auction Date; Advance Notice of Allocation of
Taxable Income; Inclusion of Taxable Income in Dividends." The amount of
taxable income allocable to the AMPS will depend upon the amount of such
income realized by the Fund and cannot be determined with certainty prior to
the end of the Fund's fiscal year, but it is not generally expected to be
significant.

         If the Fund makes a Retroactive Taxable Allocation, it will pay
Additional Dividends to holders of AMPS who are subject to the Retroactive
Taxable Allocation. See "Description of AMPS - Dividends - Additional
Dividends." The Federal income tax consequences of Additional Dividends under
existing law are uncertain. The

                                      39
<PAGE>

Fund intends to treat a holder as receiving a dividend distribution in the
amount of any Additional Dividend only as and when such Additional Dividend is
paid. An Additional Dividend generally will be designated by the 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 Dividend is a
taxable dividend either in the taxable year for which the Retroactive Taxable
Allocation is made or in the taxable year in which the Additional Dividend is
paid.

         Generally within 60 days after the end of the Fund's taxable year,
the Fund will tell you the amount of exempt-interest dividends and capital
gain dividends you received during that year. Capital gain dividends are
taxable as long-term capital gains to you regardless of how long you have held
your shares.

         The Fund will only purchase a Municipal Bond or Non-Municipal Tax
Exempt Security if it is accompanied by an opinion of counsel to the issuer,
which is delivered on the date of issuance of the security, that the interest
paid on such security is excludable from gross income for Federal income tax
purposes (i.e., "tax exempt"). To the extent that the dividends distributed by
the Fund are from interest income that is excludable from gross income for
Federal income tax purposes, they are exempt from Federal income tax. There is
a possibility that events occurring after the date of issuance of a security,
or after a Fund's acquisition of a security, may result in a determination
that the interest on that security is, in fact, includable in gross income for
Federal income tax purposes retroactively to its date of issue. Such a
determination may cause a portion of prior distributions received by
stockholders, including holders of AMPS, to be taxable to those stockholders
in the year of receipt. The Fund will not pay an Additional Dividend to a
holder of AMPS under these circumstances.

         Because the Fund may from time to time invest a substantial portion
of its portfolio in Municipal Bonds bearing income which could increase an
AMPS holder's tax liability under the Federal alternative minimum tax, the
Fund would not ordinarily be a suitable investment for investors who are
subject to the alternative minimum tax.

         If at any time when AMPS are outstanding the Fund does not meet the
asset coverage requirements of the 1940 Act, the Fund will be required to
suspend distributions to holders of common stock until the asset coverage is
restored. See "Description of AMPS -- Dividends -- Restrictions on Dividends
and Other Payments" herein and in the statement of additional information.
This may prevent the Fund from meeting certain distribution requirements for
qualification as a RIC. Upon any failure to meet the asset coverage
requirements of the 1940 Act, the Fund, in its sole discretion, may, and under
certain circumstances will be required to, redeem AMPS in order to maintain or
restore the requisite asset coverage and avoid the adverse consequences to the
Fund and its stockholders of failing to qualify as a RIC. See "Description of
AMPS -- Redemption" herein and in the statement of additional information.
There can be no assurance, however, that any such action would achieve such
objectives.

         By law, your dividends and redemption proceeds will be subject to a
withholding tax if you have not provided a tax identification number or social
security number or if the number you have provided is incorrect.

         This section summarizes some of the consequences of an investment in
the Fund under current Federal income tax laws. It is not a substitute for
personal tax advice. Stockholders are urged to consult their tax advisers
regarding the applicability of any state or local taxes and with specific
questions regarding Federal taxes.

                         DESCRIPTION OF CAPITAL STOCK

         The Fund is authorized to issue 160,000,000 shares of capital stock,
divided into two classes, of 150,000,000 shares of common stock, par value
$.10 per share, and of 10,000,000 shares of preferred stock. Subject to the
Fund's Charter, the Board of Directors is authorized to issue one or more
series of preferred stock, and to fix the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such series of stock
and to increase or decrease the number of authorized shares of any existing
series. See "Description of AMPS" herein and in the statement of additional
information.

         The following table shows the amount of (i) capital stock authorized,
(ii) capital stock held by the Fund for its own account and (iii) capital
stock outstanding for each class of authorized securities of the Fund as of
July 7, 2004.

                                      40
<PAGE>

                                                                     Amount
                                                                   Outstanding
                                                                 (Exclusive Of
                                                  Amount Held     Amount Held
                                                  By Fund For     By Fund For
                                      Amount        Its Own         Its Own
Title of Class                      Authorized     Account)         Account)
Common Stock.....................   150,000,000      - 0 -       61,346,288
Preferred Stock..................   10,000,000        -0-            11,000
   Series A AMPS.................      2,000         - 0 -           2,000
   Series B AMPS.................      2,000         - 0 -           2,000
   Series C AMPS.................      2,000         - 0 -           2,000
   Series D AMPS.................      2,000         - 0 -           2,000
   Series E AMPS.................      3,000         - 0 -           3,000

         The Fund will send unaudited reports at least semi-annually and
audited annual financial statements to all of its stockholders.

Common Stock

         Holders of common stock are entitled to share equally in dividends
declared by the Board of Directors payable to holders of common stock and in
the net assets of the Fund available for distribution to holders of common
stock after payment of the preferential amounts payable to holders of any
outstanding preferred stock. Neither holders of common stock nor holders of
preferred stock have pre-emptive or conversion rights and shares of common
stock are not redeemable. The outstanding shares of common stock are fully
paid and non-assessable.

         Holders of common stock are entitled to one vote for each share held
and will vote with the holders of any outstanding shares of AMPS or other
preferred stock, including the Other AMPS, on each matter submitted to a vote
of holders of common stock, except as described under "Description of AMPS --
Voting Rights" herein and in the statement of additional information.

         The shares of common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the shares of common stock
voting for the election of Directors can elect all of the Directors standing
for election by holders of common stock, and in such event, the holders of
the remaining shares of common stock will not be able to elect any of such
Directors.

         So long as any shares of the Fund's preferred stock are outstanding,
including the AMPS and Other AMPS, holders of common stock will not be
entitled to receive any net income of or other distributions from the Fund
unless all accumulated dividends on preferred stock have been paid, and unless
asset coverage (as defined in the 1940 Act) with respect to preferred stock
would be at least 200% after giving effect to such distributions. See
"Description of AMPS -- Dividends -- Restrictions on Dividends and Other
Payments" herein and in the statement of additional information."

Preferred Stock

          The Fund has issued the issued an aggregate of 11,000 shares of
Other AMPS. Under the Articles Supplementary for the AMPS, the Fund is
authorized to issue an aggregate of 3,000 shares of AMPS. The terms of the
shares of Other AMPS are substantially the same as the terms of the shares of
AMPS. See "Description of AMPS." Under the 1940 Act, the 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. Neither holders of common stock nor
holders of preferred stock have pre-emptive rights to purchase any shares of
AMPS, Other AMPS or any other preferred stock that might be issued. It is
anticipated that the net asset value per share of the AMPS will equal its
original purchase price per share plus accumulated dividends per share.

         The shares of AMPS, Other 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 preferred stock, including AMPS and Other AMPS,

                                      41
<PAGE>

voting for the election of Directors can elect all of the Directors standing
for election by holders of preferred stock, and in such event, the holders of
the remaining shares of preferred stock will not be able to elect any of such
Directors.

Certain Provisions of the Charter and By-laws

         The Fund's Charter includes provisions that could have the effect of
limiting the ability of other entities or persons to acquire control of the
Fund or to change the composition of its Board of Directors and could have the
effect of depriving common 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 elected by the holders of
common stock or by the holders of preferred stock may be removed from office
only for cause by vote of the holders of at least 75% of the outstanding
shares of common stock or preferred stock, as the case may be, entitled to
vote in an election to fill that directorship.

         In addition, the Charter requires the favorable vote of the holders
of at least 75% of the Fund's outstanding shares of common stock, voting
separately by class, and the favorable vote of the holders of at least 75% of
the Fund's outstanding shares of preferred stock, voting separately by class,
to approve, adopt or authorize the following:

          o    a merger or consolidation or statutory share exchange of the
               Fund with any other corporation;

          o    a sale of all or substantially all of the Fund's assets (other
               than in the regular course of the Fund's investment
               activities); or

          o    a liquidation or dissolution of the Fund;

unless such action has been previously 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 the Fund's shares of common stock and preferred stock (including
the AMPS and Other AMPS), voting separately by class, is required.

         In addition, conversion of the Fund to an open-end investment company
would require an amendment to the Fund'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 favorable vote of the
holders of at least 75% of the Fund's outstanding shares of common stock and
preferred stock (including the AMPS, Other AMPS) entitled to be voted on the
matter, voting separately by class (or a majority of shares of each such class
if the amendment was previously approved, adopted or authorized by two-thirds
of the total number of Directors fixed in accordance with the By-laws). Such a
vote also would satisfy a separate requirement in the 1940 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 1940 Act)
at their net asset value, less such redemption charge, if any, as might be in
effect at the time of a redemption. 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 would no longer 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 Other AMPS) and would require changes in certain of the Fund'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.

         The Charter and By-laws provide that a majority of the entire Board
of Directors has the power to make, alter or repeal any of the By-laws (except
for any By-law specified not to be amended or repealed by the Board), subject
to the requirements of the 1940 Act. Neither this provision of the Charter,
nor any of the foregoing provisions of the Charter requiring the affirmative
vote of 75% of shares of common stock and preferred stock of the Fund, voting
separately by class, can be amended or repealed except by the vote of such
required number of shares.

                                      42
<PAGE>

         The Board of Directors has determined that the 75% voting
requirements described above, which are greater than the minimum requirements
under Maryland law or the 1940 Act, are in the best interests of stockholders
generally. Reference should be made to the Charter on file with the Commission
for the full text of these provisions.

                                   CUSTODIAN

         The Fund's securities and cash are held under a custodian agreement
with The Bank of New York, 101 Barclay Street, New York, New York 10286.



                                      43
<PAGE>

                                 UNDERWRITING

         Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Underwriter") has agreed, subject to the terms and conditions contained in a
purchase agreement with the Fund and the Investment Adviser, to purchase from
the Fund all of the shares of AMPS offered hereby. The Underwriter has agreed
to purchase all such shares if any are purchased.

         The Fund and the Investment Adviser have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriter may be required to make in respect of those liabilities.

         The Underwriter is offering the shares, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of legal matters
by its counsel, including the validity of the shares, and other conditions
contained in the purchase agreement, such as the receipt by the Underwriter of
officer's certificates and legal opinions. The Underwriter reserves the right
to withdraw, cancel or modify offers to the public and to reject orders in
whole or in part.

Commissions and Discounts

         The Underwriter has advised the Fund that it proposes initially to
offer the shares of AMPS to the public at the initial public offering price on
the cover page of this prospectus and to dealers at that price less a
concession not in excess of $137.50 per share. There is a sales charge or
underwriting discount of $250 per share, which is equal to 1% of the initial
public offering price per share. After the initial public offering, the public
offering price and concession may be changed. Investors must pay for any AMPS
purchased in the offering on or before , 2004.

         The expenses of the offering, excluding underwriting discount, are
estimated at $165,000 and are payable by the Fund.

Other Relationships

         Merrill Lynch acts in Auctions as a Broker-Dealer as set forth under
"The Auction -- General -- Broker-Dealer Agreements" and will be entitled to
fees for services as a Broker-Dealer as set forth under "The Auction --
Broker-Dealers." Merrill Lynch also may provide information to be used in
ascertaining the Reference Rate.

         The Fund also anticipates that Merrill Lynch may from time to time
act as a broker in connection with the execution of its portfolio
transactions. See "Portfolio Transactions" in the statement of additional
information. Merrill Lynch is an affiliate of the Investment Adviser. See
"Investment Restrictions" and "Portfolio Transactions" in the statement of
additional information.

         The address of the Underwriter is 4 World Financial Center, New York,
New York 10080.

            TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR

         The transfer agent, dividend disbursing agent and registrar for the
Fund's shares of AMPS, Other AMPS and common stock is The Bank of New York,
101 Barclay Street, New York, New York 10286.

                         ACCOUNTING SERVICES PROVIDER

         State Street Bank and Trust Company, 500 College Road East,
Princeton, New Jersey 08540, provides certain accounting services for the
Fund.

                                      44
<PAGE>

                                LEGAL OPINIONS

         Certain legal matters in connection with the AMPS offered hereby are
passed on for the Fund and the Underwriter by Sidley Austin Brown & Wood LLP,
New York, New York 10019.

           INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND EXPERTS

         ____________________ is the Fund's independent registered public
accounting firm. The audited financial statements of the Fund and certain of
the information appearing under the caption "Financial Highlights" included in
this prospectus have been audited by for the periods indicated in its report
with respect thereto, and are included in reliance upon such report and upon
the authority of such firm as experts in accounting and auditing. has an
office at .

                            ADDITIONAL INFORMATION

         The Fund is subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act and in accordance therewith
is required to file reports, proxy statements and other information with the
Commission. Any such reports and other information, including the Fund's Code
of Ethics, can be inspected and copied at the public reference facilities of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Information on the operation of such public reference
facilities may be obtained by calling the Commission at 1-202-942-8090. Copies
of such materials can be obtained from the public reference section of the
Commission by writing at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates, or by electronic request at publicinfo@sec.gov. The
Commission maintains a Web site at http://www.sec.gov containing reports and
information statements and other information regarding registrants, including
the Fund, that file electronically with the Commission. Reports, proxy
statements and other information concerning the Fund can also be inspected at
the offices of the New York Stock Exchange.

         Additional information regarding the Fund is contained in the
Registration Statement on Form N-2, including amendments, exhibits and
schedules thereto, relating to such shares filed by the Fund with the
Commission in Washington, D.C. This prospectus does not contain all of the
information set forth in the Registration Statement, including any amendments,
exhibits and schedules thereto. For further information with respect to the
Fund and the shares offered hereby, reference is made to the Registration
Statement. Statements contained in this prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. A copy of the Registration
Statement may be inspected without charge at the Commission's principal office
in Washington, D.C., and copies of all or any part thereof may be obtained
from the Commission upon the payment of certain fees prescribed by the
Commission.


                                      45
<PAGE>


           TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

                                                                        Page

Investment Objective and Policies...........................................3
Investment Restrictions.....................................................3
Description of AMPS.........................................................5
The Auction................................................................12
Rating Agency Guidelines...................................................13
Directors and Officers.....................................................20
Investment Advisory and Management Arrangements............................25
Portfolio Transactions.....................................................30
Taxes......................................................................32
Net Asset Value............................................................36
Financial Statements.......................................................37
APPENDIX A  Description of Municipal Bond Ratings.........................A-1
APPENDIX B  Settlement Procedures.........................................B-1
APPENDIX C  Auction Procedures............................................C-1




                                      46
<PAGE>


                                   GLOSSARY

         "Additional Dividend" has the meaning set forth on page [26] of this
prospectus.

         "Agent Member" means the member of the Securities Depository that
will act on behalf of a Beneficial Owner of one or more shares of AMPS or on
behalf of a Potential Beneficial Owner.

         "AMPS" means the Auction Market Preferred Stock, Series F, with a par
value of $.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) of the Fund.

         "AMPS Basic Maintenance Amount" has the meaning set forth on page
[27] of this prospectus.

         "AMPS Basic Maintenance Cure Date" has the meaning set forth on page
[27] of this prospectus.

         "AMPS Basic Maintenance Report" has the meaning set forth on page
[10] of the statement of additional information.

         "Anticipation Notes" shall mean the following Municipal Bonds:
revenue anticipation notes, tax anticipation notes, tax and revenue
anticipation notes, grant anticipation notes and bond anticipation notes.

         "Applicable Percentage" has the meaning set forth on page [31] of
this prospectus.

         "Applicable Rate" means the rate per annum at which cash dividends
are payable on shares of AMPS for any Dividend Period.

         "Applicable Spread" has the meaning set forth on page [31] of this
prospectus.

         "Articles Supplementary" means the Articles Supplementary of the Fund
specifying the powers, preferences and rights of the shares of the AMPS.

         "Auction" means a periodic operation of the Auction Procedures.

         "Auction Agent" means The Bank of New York unless and until another
commercial bank, trust company or other financial institution appointed by a
resolution of the Board of Directors of the Fund or a duly authorized
committee thereof enters into an agreement with the Fund 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.

         "Auction Agent Agreement" means the agreement entered into between
the Fund and the Auction Agent which provides, among other things, that the
Auction Agent will follow the Auction Procedures for the purpose of
determining the Applicable Rate.

         "Auction Date" has the meaning set forth on page [30] of this
prospectus.

         "Auction Procedures" means the procedures for conducting Auctions set
forth in Appendix C to the statement of additional information.

         "Available AMPS" has the meaning set forth on page [33] of this
prospectus.

         "Beneficial Owner" means a customer of a Broker-Dealer who is listed
on the records of that Broker- Dealer (or if applicable, the Auction Agent) as
a holder of shares of AMPS or a Broker-Dealer that holds AMPS for its own
account.

         "Bid" has the meaning set forth on page [33] of this prospectus.

                                      47
<PAGE>

         "Bidder" has the meaning set forth on page [31] of this prospectus.

         "Board of Directors" or "Board" means the Board of Directors of the
Fund.

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

         "Broker-Dealer Agreement" means an agreement entered into between the
Auction Agent and a Broker- Dealer, including Merrill Lynch, Pierce, Fenner &
Smith Incorporated, pursuant to which such Broker-Dealer agrees to follow the
Auction Procedures.

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

         "Cede" means Cede & Co., the nominee of DTC, and in whose name the
shares of AMPS initially will be registered.

         "Charter" means the Articles of Incorporation, as amended and
supplemented (including the Articles Supplementary and the Other AMPS Articles
Supplementary), of the Fund.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Common stock" means the common stock, par value $.10 per share, of
the Fund.

         "Date of Original Issue" means, with respect to each share of AMPS,
the date on which such share first is issued by the Fund.

         "Deposit Securities" means cash and Municipal Bonds rated at least A2
(having a remaining maturity of 12 months or less), P-1, VMIG-1 or MIG-1 by
Moody's or A (having a remaining maturity of 12 months or less), A-1+ or SP-1+
by S&P or A (having a remaining maturity of 12 months or less) or F-1+ by
Fitch.

         "Discount Factor" means a Moody's Discount Factor or an S&P Discount
Factor, as the case may be.

         "Discounted Value" means (i) with respect to an S&P Eligible Asset,
the quotient of the fair 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 fair market value thereof divided by the
applicable Moody's Discount Factor.

         "Dividend Payment Date" has the meaning set forth on page [25] of
this prospectus.

         "Dividend Period" has the meaning set forth on page [25] of this
prospectus.

         "DTC" means The Depository Trust Company.

         "Eligible Assets" means Moody's Eligible Assets or S&P Eligible
Assets, as the case may be.

         "Existing Holder" means a Broker-Dealer or any such other person as
may be permitted by the Fund that is listed as the holder of record of shares
of AMPS in the records of the Auction Agent.

         "Fitch" means Fitch Ratings or its successors.

         "Forward Commitment" has the meaning set forth on page [20] of the
statement of additional information.

         "Fund" means MuniVest Fund, Inc., a Maryland corporation that is the
issuer of the AMPS.

                                      48
<PAGE>

         "High Yield Municipal Bonds" means (a) with respect to Moody's (1)
Municipal Bonds rated Ba1 to B3 by Moody's, (2) Municipal Bonds not rated by
Moody's, but rated BB+ to B- by S&P or Fitch, and (3) Municipal Bonds not
explicitly rated by Moody's, S&P or Fitch, but rated at least the equivalent
of B3 internally by the Investment Adviser, provided that Moody's reviews and
achieves sufficient comfort with the Investment Adviser's internal credit
rating processes, and (b) with respect to S&P (1) Municipal Bonds not rated by
S&P but rated equivalent to BBB+ or lower by another NRSRO and (2) Municipal
Bonds rated BB+ or lower by S&P.

         "Hold Order" has the meaning set forth on page [30] of this
prospectus.

         "Initial Dividend Payment Date" means the first Dividend Payment Date
for the Series F AMPS.

         "Initial Dividend Period" means the period from and including the
Date of Original Issue to but excluding the Initial Dividend Payment Date for
the Series F AMPS.

         "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
financial futures contract.

         "Inverse Floaters" means trust certificates or other instruments
evidencing interests in one or more Municipal Bonds that qualify as (i) S&P
Eligible Assets the interest rates on which are adjusted at short term
intervals on a basis that is inverse to the simultaneous readjustment of the
interest rates on corresponding floating rate trust certificates or other
instruments issued by the same issuer, provided that the ratio of the
aggregate dollar amount of floating rate instruments to inverse floating rate
instruments issued by the same issuer does not exceed one to one at their time
of original issuance unless the floating rate instrument has only one reset
remaining until maturity or (ii) Moody's Eligible Assets the interest rates on
which are adjusted at short term intervals on a basis that is inverse to the
simultaneous readjustment of the interest rates on corresponding floating rate
trust certificates or other instruments issued by the same issuer, provided
that (a) such Inverse Floaters are rated by Moody's with the Investment
Adviser having the capability to collapse (or relink) within seven days as a
liquidity enhancement measure, and (b) the issuer of such Inverse Floaters
employs a leverage factor (i.e., the ratio of underlying capital appreciation
bonds or other instruments to residual long-term derivative instruments) of
not more than 2:1.

         "Investment Adviser" means Fund Asset Management, L.P.

         "IRS" means the United States Internal Revenue Service.

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

         "LIBOR Rate," on any Auction Date, means (i) the rate for deposits in
U.S. dollars for the designated Dividend Period, which appears on display page
3750 of Moneyline's Telerate Service ("Telerate Page 3750") (or such other
page as may replace that page on that service, or such other service as may be
selected by the LIBOR Dealer or its successors that are LIBOR Dealers) as of
11:00 a.m., London time, on the day that is the London Business Day preceding
the Auction Date (the "LIBOR Determination Date"), or (ii) if such rate does
not appear on Telerate Page 3750 or such other page as may replace such
Telerate Page 3750, (A) the LIBOR Dealer shall determine the arithmetic mean
of the offered quotations of the Reference Banks to leading banks in the
London interbank market for deposits in U.S. dollars for the designated
Dividend Period in an amount determined by such LIBOR Dealer by reference to
requests for quotations as of approximately 11:00 a.m. (London time) on such
date made by such LIBOR Dealer to the Reference Banks, (B) if at least two of
the Reference Banks provide such quotations, LIBOR Rate shall equal such
arithmetic mean of such quotations, (C) if only one or none of the Reference
Banks provide such quotations, LIBOR Rate shall be deemed to be the arithmetic
mean of the offered quotations that leading banks in The City of New York
selected by the LIBOR Dealer (after obtaining the Fund's approval) are quoting
on the relevant LIBOR Determination Date for deposits in U.S. dollars for the
designated Dividend Period in an amount determined by the LIBOR Dealer (after
obtaining the Fund's approval) that is representative of a single transaction
in such market at such time by reference to the principal London offices of
leading banks in the London interbank market; provided, however, that if one
of the LIBOR Dealers does not quote a rate required to determine the LIBOR
Rate, the LIBOR Rate will be determined on the basis of the quotation or

                                      49
<PAGE>

quotations furnished by any Substitute LIBOR Dealer or Substitute LIBOR
Dealers selected by the Fund to provide such rate or rates not being supplied
by the LIBOR Dealer; provided further, that if the LIBOR Dealer and Substitute
LIBOR Dealers are required but unable to determine a rate in accordance with
at least one of the procedures provided above, the LIBOR Rate shall be the
LIBOR Rate as determined on the previous Auction Date. If the number of
Dividend Period days shall be (i) 7 or more but fewer than 21 days, such rate
shall be the seven-day LIBOR rate; (ii) more than 21 but fewer than 49 days,
such rate shall be the one-month LIBOR rate; (iii) 49 or more but fewer than
77 days, such rate shall be the two-month LIBOR rate; (iv) 77 or more but
fewer than 112 days, such rate shall be the three-month LIBOR rate; (v) 112 or
more but fewer than 140 days, such rate shall be the four-month LIBOR rate;
(vi) 140 or more but fewer than 168 days, such rate shall be the five-month
LIBOR rate; (vii) 168 or more but fewer than 189 days, such rate shall be the
six-month LIBOR rate; (viii) 189 or more but fewer than 217 days, such rate
shall be the seven-month LIBOR rate; (ix) 217 or more but fewer than 252 days,
such rate shall be the eight-month LIBOR rate; (x) 252 or more but fewer than
287 days, such rate shall be the nine-month LIBOR rate; (xi) 287 or more but
fewer than 315 days, such rate shall be the ten-month LIBOR rate; (xii) 315 or
more but fewer than 343 days, such rate shall be the eleven-month LIBOR rate;
and (xiii) 343 or more but fewer than 365 days, such rate shall be the
twelve-month LIBOR rate.

         "London Business Day" means any day on which commercial banks are
generally open for business in London.

         "Long Term Dividend Period" means a Special Dividend Period
consisting of a specified period of one whole year or more but not greater
than five years.

         "Mandatory Redemption Price" has the meaning set forth on page [28]
of this prospectus.

         "Marginal Tax Rate" means the maximum marginal regular Federal
individual income tax rate applicable to ordinary income or the maximum
marginal regular Federal corporate income tax rate, whichever is greater.

         "Maximum Applicable Rate" has the meaning set forth on page [31] of
this prospectus.

         "Moody's" means Moody's Investors Service, Inc. or its successors.

         "Moody's Discount Factor" has the meaning set forth on pages [16 to
17] of the statement of additional information.
         "Moody's Eligible Assets" has the meaning set forth on pages [17 to
18] of the statement of additional information.

         "Moody's Hedging Transactions" has the meaning set forth on page [18]
of the statement of additional information.

         "Moody's Volatility Factor" means 272% as long as there has been no
increase enacted to the Marginal Tax Rate. If such an increase is enacted but
not yet implemented, the Moody's Volatility Factor shall be as follows:

       % Change in                                         Moody's Volatility
       Marginal Tax Rate                                         Factor
       <=5%..........................................              292%
       >5% but <=10%.................................              313%
       >10% but <=15%................................              338%
       >15% but <=20%................................              364%
       >20% but <=25%................................              396%
       >25% but <=30%................................              432%
       >30% but <=35%................................              472%
       >35% but <=40%................................              520%

         Notwithstanding the foregoing, the Moody's Volatility Factor may mean
such other potential dividend rate increase factor as Moody's advises the Fund
in writing is applicable.

                                      50
<PAGE>

         "Municipal Bonds" has the meaning set forth on page [12] of this
prospectus.

         "Municipal Index" has the meaning set forth on page [15] of the
statement of additional information.

         "1940 Act" means the Investment Company Act of 1940, as amended from
time to time.

         "1940 Act AMPS Asset Coverage" has the meaning set forth on page [27]
of this prospectus.

         "1940 Act Cure Date" has the meaning set forth on page [27] of this
prospectus.

         "Non-Call Period" has the meaning set forth under "Specific
Redemption Provisions" below.

         "Non-Payment Period" has the meaning set forth on page [8] of the
statement of additional information.

         "Non-Payment Period Rate" has the meaning set forth on page [8] of
the statement of additional information.

         "Normal Dividend Payment Date" has the meaning set forth on page [24]
of this prospectus.

         "Notice of Revocation" has the meaning set forth on page [7] of the
statement of additional information.

         "Notice of Special Dividend Period" has the meaning set forth on page
[26] of this prospectus.

         "NRSRO" means any nationally recognized statistical rating
organization, as that term is used in Rule 15a3-1 under the Securities and
Exchange Act of 1934, as amended, or any successor provisions.

         "Optional Redemption Price" has the meaning set forth on page [28] of
this prospectus.

         "Order" has the meaning set forth on page [31] of this prospectus.

         "Other AMPS" means the Auction Market Preferred Stock, Series A; the
Auction Market Preferred Stock, Series B; the Auction Market Preferred Stock,
Series C; the Auction Market Preferred Stock, Series D; and the Auction Market
Preferred Stock, Series E, each with a liquidation preference of $25,000 per
share plus an amount equal to accumulated but unpaid dividends thereon
(whether or not earned or declared) of the Fund.

         "Other AMPS Articles Supplementary" means the Articles Supplementary,
as amended and supplemented, of the Fund specifying the powers, preferences
and rights of the shares of the Other AMPS.

         "Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of shares of AMPS but that wishes
to purchase such shares, or that is a Beneficial Owner that wishes to purchase
additional shares of AMPS.

         "Potential Holder" means any Broker-Dealer or any such other person
as may be permitted by the Fund, including any Existing Holder, who may be
interested in acquiring shares of AMPS (or, in the case of an Existing Holder,
additional shares of AMPS).

         "Preferred stock" means preferred stock of the Fund and includes the
AMPS.

         "Premium Call Period" has the meaning set forth under "Specific
Redemption Provisions" below.

         "Receivables for Municipal Bonds Sold" for Moody's has the meaning
set forth under the definition of Moody's Discount Factor, and for S&P has the
meaning set forth under the definition of S&P Discount Factor.

                                      51
<PAGE>

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

         "Reference Rate" means: (i) with respect to a Dividend Period having
364 or fewer days, the higher of the applicable LIBOR Rate and the Taxable
Equivalent of the Short Term Municipal Bond Rate, or (ii) with respect to any
Dividend Period having 365 or more days, the applicable Treasury Index Rate.

         "Request for Special Dividend Period" has the meaning set forth on
page [25] of this prospectus.

         "Response" has the meaning set forth on page [26] of this prospectus.

         "Retroactive Taxable Allocation" has the meaning set forth on page
[26] of this prospectus.

         "Rule 2a-7 Money Market Funds" means investment companies registered
under the 1940 Act that comply with the requirements of Rule 2a-7 thereunder.

         "Series F AMPS" means the Auction Market Preferred Stock, Series F,
with a par value of $.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), of the Fund.

         "S&P" means Standard & Poor's or its successors.

         "S&P Discount Factor" has the meaning set forth on pages [14 to 15]of
the statement of additional information.

         "S&P Eligible Assets" has the meaning set forth on pages [15 to 16]
of the statement of additional information.

         "S&P Hedging Transactions" has the meaning set forth on page [15] of
the statement of additional information.

         "S&P Volatility Factor" means 277% or such other potential dividend
rate increase factor as S&P advises the Fund in writing is applicable.

         "Securities Depository" means The Depository Trust Company and its
successors and assigns or any successor securities depository selected by the
Fund that agrees to follow the procedures required to be followed by such
securities depository in connection with shares of AMPS.

         "Sell Order" has the meaning specified in Subsection 10(b)(i) of the
Auction Procedures.

         "7-Day Dividend Period" means a Dividend Period consisting of seven
days.

         "Short Term Dividend Period" means a Special Dividend Period
consisting of a specified number of days (other than seven) evenly divisible
by seven, and not fewer than seven days nor more than 364 days.

         "Special Dividend Period" has the meaning set forth on page [24] of
this prospectus.

         "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 Directors of the Fund, 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 Fund and (ii) a period (a "Premium Call Period"), consisting of
a number of whole years and determined by the Board of Directors of the Fund,
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 Fund's option at a price per share equal to $25,000 plus

                                      52
<PAGE>

accumulated but unpaid dividends plus a premium expressed as a percentage of
$25,000, as determined by the Board of Directors of the Fund after
consultation with the Auction Agent and the Broker-Dealers.

         "Submission Deadline" has the meaning set forth on page [32] of this
prospectus.

         "Submitted Bid" has the meaning set forth on page [33] of this
prospectus.

         "Submitted Hold Order" has the meaning set forth on page [33] of this
prospectus.

         "Submitted Order" has the meaning set forth on page [33] of this
prospectus.

         "Submitted Sell Order" has the meaning set forth on page [33] of this
prospectus.

         "Subsequent Dividend Period" means each Dividend Period after the
Initial Dividend Period.

         "Substitute Rating Agency" and "Substitute Rating Agencies" shall
mean an NRSRO or two NRSROs, respectively, selected by Merrill Lynch, Pierce,
Fenner & Smith Incorporated, or its respective affiliates and successors,
after obtaining the Fund's approval, to act as a substitute rating agency or
substitute rating agencies, as the case may be, to determine the credit
ratings of the AMPS.

         "Sufficient Clearing Bids" has the meaning set forth on page [33] of
this prospectus.

         "Taxable Equivalent of the Short Term Municipal Bond Rate" on any
date means 90% of the quotient of (A) the per annum rate expressed on an
interest equivalent basis equal to the Kenny S&P 30-day High Grade Index (the
"Kenny Index") or any successor index, made available for the Business Day
immediately preceding such date but in any event not later than 8:30 A.M.,
Eastern time, on such date by Kenny Information Systems Inc. or any successor
thereto, based upon 30-day yield evaluations at par of bonds the interest on
which is excludable for regular Federal income tax purposes under the Code of
"high grade" component issuers selected by Kenny Information Systems Inc. or
any such successor from time to time in its discretion, which component
issuers shall include, without limitation, issuers of general obligation bonds
but shall exclude any bonds the interest on which constitutes an item of tax
preference under Section 57(a)(5) of the Code, or successor provisions, for
purposes of the "alternative minimum tax," divided by (B) 1.00 minus the
Marginal Tax Rate (expressed as a decimal); provided, however, that if the
Kenny Index is not made so available by 8:30 A.M., Eastern time, on such date
by Kenny Information Systems Inc. or any successor, the Taxable Equivalent of
the Short Term Municipal Bond Rate shall mean the quotient of (A) the per
annum rate expressed on an interest equivalent basis equal to the most recent
Kenny Index so made available for any preceding Business Day, divided by (B)
1.00 minus the Marginal Tax Rate (expressed as a decimal). The Fund may not
utilize a successor index to the Kenny Index unless Moody's and S&P provide
the Fund with written confirmation that the use of such successor index will
not adversely affect the then-current respective Moody's and S&P ratings of
the AMPS.

         "Treasury Bonds" means U.S. Treasury Bonds or Notes.

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

         "U.S. Treasury Securities" means direct obligations of the United
States Treasury that are entitled to the full faith and credit of the United
States government.

                                      53
<PAGE>

         "Valuation Date" has the meaning set forth on page [27] of this
prospectus.

         "Variation Margin" means, in connection with an outstanding futures
contract owned or sold by the Fund, 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.

         "Winning Bid Rate" has the meaning set forth on page [33] of this
prospectus.



                                      54
<PAGE>


  ==========================================================================



                                  $75,000,000


                              MuniVest Fund, Inc.


                    Auction Market Preferred Stock ("AMPS")
                            3,000 Shares, Series F
                   Liquidation Preference $25,000 Per Share





                          --------------------------
                                  PROSPECTUS
                          --------------------------








                              Merrill Lynch & Co.







                                         , 2004         CODE #          -0804

  ==========================================================================



<PAGE>


The information in this statement of additional information is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
statement of additional information is not a prospectus.





                             Subject to Completion
      Preliminary Statement of Additional Information Dated July 9, 2004



STATEMENT OF ADDITIONAL INFORMATION




                                  $75,000,000

                              MuniVest Fund, Inc.

                    Auction Market Preferred Stock ("AMPS")

                            3,000 Shares, Series F

                   Liquidation Preference $25,000 Per Share

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

         MuniVest Fund, Inc. (the "Fund") is a non-diversified, closed-end
fund. The investment objective of the Fund is to provide shareholders with as
high a level of current income exempt from Federal income taxes as is
consistent with its investment policies and prudent investment management. The
Fund seeks to achieve its objective by investing, as a fundamental policy, at
least 80% of an aggregate of the Fund's net assets (including proceeds from
the issuance of any preferred stock), and the proceeds of any borrowings for
investment purposes, in a portfolio of municipal obligations the interest on
which, in the opinion of bond counsel to the issuer, is excludable from gross
income for Federal income purposes (except that the interest may be includable
in taxable income for purposes of the Federal alternative minimum tax). Under
normal market conditions, the Fund invests primarily in long term municipal
obligations that are rated investment grade or, if unrated, are considered by
the Fund's investment adviser to be of comparable quality. The Fund may invest
in certain tax exempt securities classified as "private activity bonds," as
discussed within, that may subject certain investors in the Fund to an
alternative minimum tax. There can be no assurance that the Fund's investment
objective will be realized.

         Certain capitalized terms not otherwise defined in this statement of
additional information have the meaning provided in the Glossary included as
part of the prospectus.

         This statement of additional information is not a prospectus, but
should be read in conjunction with the prospectus of the Fund, which has been
filed with the Securities and Exchange Commission (the "Commission") and can
be obtained, without charge, by calling (800) 543-6217. The prospectus is
incorporated by reference into this statement of additional information, and
this statement of additional information is incorporated by reference into the
prospectus.

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

                              Merrill Lynch & Co.

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

         The date of this statement of additional information is        , 2004.



<PAGE>


           TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

                                                                         Page

Investment Objective and Policies...........................................3
Investment Restrictions.....................................................3
Description of AMPS.........................................................5
The Auction................................................................12
Rating Agency Guidelines...................................................13
Directors and Officers.....................................................20
Investment Advisory and Management Arrangements............................25
Portfolio Transactions.....................................................30
Taxes......................................................................32
Net Asset Value............................................................36
Financial Statements.......................................................37
APPENDIX A  Description of Municipal Bond Ratings.........................A-1
APPENDIX B  Settlement Procedures.........................................B-1
APPENDIX C  Auction Procedures............................................C-1




                                      2
<PAGE>

                      INVESTMENT OBJECTIVE AND POLICIES

         The Fund's investment objective is to provide shareholders with as
high a level of current income exempt from Federal income taxes as is
consistent with its investment policies and prudent investment management. The
Fund seeks to achieve its objective by investing at least 80% of an aggregate
of the Fund's net assets (including proceeds from the issuance of any
preferred stock) and the proceeds of any borrowings for investment purposes,
in a portfolio of municipal obligations issued by or on behalf of states,
territories and possessions of the United States and their political
subdivisions, agencies or instrumentalities, each of which pays interest that,
in the opinion of bond counsel to the issuer, is excludable from gross income
for Federal income tax purposes (except that the interest may be includable in
taxable income for purposes of the Federal alternative minimum tax)
("Municipal Bonds"). The Fund's investment objective and its policy of
investing at least 80% of an aggregate of the Fund's net assets (including
proceeds from the issuance of any preferred stock) and the proceeds of any
borrowings for investment purposes, in Municipal Bonds are fundamental
policies that may not be changed without the approval of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act). There
can be no assurance that the Fund's investment objective will be realized.

         Reference is made to "Investment Objective and Policies" and "Other
Investment Policies" in the prospectus for information regarding other types
of securities that the Fund may invest in to achieve its objective.

                           INVESTMENT RESTRICTIONS

         The following are fundamental investment restrictions of the Fund and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding shares of common stock and outstanding shares of AMPS,
Other AMPS and any other preferred stock, voting together as a single class,
and the majority of the outstanding shares of AMPS, Other AMPS and any other
preferred stock, voting as a separate class (which for this purpose and under
the 1940 Act 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). The Fund
may not:

                  1. Make investments for the purpose of exercising control or
         management.

                  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 where no underwriter's or dealer's
         commission or profit, other than customary broker's commission, is
         involved and only if immediately thereafter no more than 10% of the
         Fund's total assets would be invested in such securities.

                  3. Purchase or sell real estate; 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.

                  4. Issue senior securities other than preferred stock or
         borrow in excess of 5% of its total assets taken at market value at
         the time of such issuance or borrowing.

                  5. Underwrite securities of other issuers except insofar as
         the Fund may be deemed an underwriter under the Securities Act of
         1933, as amended, in selling portfolio securities.

                  6. Invest more than 25% of its total assets (taken at market
         value at the time of each investment) in the Municipal Bonds of any
         one state.

                  7. Make loans to other persons, except that the Fund may
         purchase Municipal Bonds and other debt securities and enter into
         repurchase agreements in accordance with its investment objective,
         policies and limitation.

                                      3
<PAGE>

                  8. 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.

         For purposes of fundamental investment restriction (8), the exception
for states, municipalities and their political subdivisions applies only to
tax exempt securities issued by such entities.

         Additional investment restrictions adopted by the Fund, which may be
changed by the Board of Directors without stockholder approval, provide that
the Fund may not:

                  a. 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).

                  b. 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.

                  c. Mortgage, pledge, hypothecate or in any manner transfer,
         as security for indebtedness, any securities owned or held by the
         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.

         If a percentage restriction on investment policies or the investment
or use of assets set forth above is adhered to at the time a transaction is
effected, later changes in percentage resulting from changing values will not
be considered a violation.

         The Fund is classified as non-diversified within the meaning of the
1940 Act, which means that the Fund is not limited by the 1940 Act in the
proportion of its assets that it may invest in securities of a single issuer.
As a non-diversified fund, the Fund's investments are limited, however, in
order to allow the Fund to continue to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"). See
"Taxes." To qualify, the Fund complies with certain requirements, including
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's total assets will
be invested in the 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 of a single issuer and
the Fund will not own more than 10% of the outstanding voting securities of a
single issuer. For purposes of this restriction, the Fund will regard each
state and each political subdivision, agency or instrumentality of such state
and each multi-state agency of which such state is a member and each public
authority which issues securities on behalf of a private entity as a separate
issuer, except that if the security is backed only by the assets and revenues
of a non-government entity then the entity with the ultimate responsibility
for the payment of interest and principal may be regarded as the sole issuer.
These tax-related limitations may be changed by the Board of Directors of the
Fund to the extent necessary to comply with changes in the Federal tax
requirements. A fund that elects to be classified as "diversified" under the
1940 Act must satisfy the foregoing 5% and 10% requirements with respect to
75% of its total assets.

         The Investment Adviser of the Fund and Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") are owned and controlled by Merrill
Lynch & Co., Inc. ("ML & Co."). Because of the affiliation of Merrill Lynch
with the Investment Adviser, the 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 1940 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. See "Portfolio Transactions."

                                      4
<PAGE>

                              DESCRIPTION OF AMPS

         Certain of the capitalized terms used herein not otherwise defined in
this statement of additional information have the meaning provided in the
Glossary at the back of the prospectus.

         The Series F AMPS will be shares of preferred stock 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. After the Initial Dividend
Period, each Subsequent Dividend Period for the Series F AMPS generally will
be a 7-Day Dividend Period; provided however, that prior to any Auction, the
Fund may elect, subject to certain limitations described herein, upon giving
notice to holders thereof, a Special Dividend Period. The Applicable Rate for
a particular Dividend Period will be determined by an Auction conducted on the
Business Day before the start of such Dividend Period. Beneficial Owners and
Potential Beneficial Owners of shares of AMPS may participate in Auctions
therefor, although, except in the case of a Special Dividend Period of more
than 28 days, Beneficial Owners desiring to continue to hold all of their
shares of AMPS regardless of the Applicable Rate resulting from Auctions need
not participate. For an explanation of Auctions and the method of determining
the Applicable Rate, see Appendix C "Auction Procedures."

         Except as otherwise required by law or unless there is no Securities
Depository, all outstanding shares of the AMPS will be represented by one or
more certificates registered in the name of the nominee of the Securities
Depository (initially expected to be Cede), and no person acquiring shares of
AMPS will be entitled to receive a certificate representing such shares. See
Appendix C "Auction Procedures." As a result, the nominee of the Securities
Depository is expected to be the sole holder of record of the shares of AMPS.
Accordingly, each purchaser of AMPS must rely on (i) the procedures of the
Securities Depository and, if such purchaser is not a member of the Securities
Depository, such purchaser's Agent Member, to receive dividends, distributions
and notices and to exercise voting rights (if and when applicable) and (ii)
the records of the Securities Depository and, if such purchaser is not a
member of the Securities Depository, such purchaser's Agent Member, to
evidence its beneficial ownership of shares of AMPS.

         When issued and sold, the shares of AMPS will have a liquidation
preference of $25,000 per share plus an amount equal to accumulated but unpaid
dividends (whether or not earned or declared) and will be fully paid and
non-assessable. See "Description of AMPS -- Liquidation Rights" in the
prospectus. The shares of AMPS will not be convertible into shares of common
stock or other capital stock of the Fund, and the holders thereof will have no
preemptive rights. The AMPS will not be subject to any sinking fund but will
be subject to redemption at the option of the Fund at the Optional Redemption
Price on any Dividend Payment Date (except during the Initial Dividend Period
and during a Non-Call Period) and, under certain circumstances, will be
subject to mandatory redemption by the Fund at the Mandatory Redemption Price
stated in the prospectus. See "Description of AMPS -- Redemption" in the
prospectus.

         The Fund also has outstanding five series of shares of Other AMPS
with terms that are substantially the same as the terms of the shares of AMPS
described herein and in the prospectus. Cede, the nominee of the Securities
Depository, 55 Water Street, New York, New York 10041-0099, is the sole holder
of record of the shares of Other AMPS. The Series F AMPS offered hereby rank
on a parity with the Other AMPS with respect to dividends and liquidation
preference.

         In addition to serving as the Auction Agent in connection with the
Auction Procedures described in the prospectus, The Bank of New York also
serves as the transfer agent, registrar, dividend disbursing agent and
redemption agent for the shares of AMPS. The Auction Agent, however, will
serve merely as the agent of the Fund, acting in accordance with the Fund's
instructions, and will not be responsible for any evaluation or verification
of any matters certified to it.

         Except in an Auction, the Fund will have the right (to the extent
permitted by applicable law) to purchase or otherwise acquire any shares of
AMPS so long as the Fund is current in the payment of dividends on AMPS and on
any other capital stock of the Fund ranking on a parity with the AMPS,
including the Other AMPS, with respect to the payment of dividends or upon
liquidation.

                                      5
<PAGE>

         The following supplements the description of the terms of the shares
of AMPS set forth in the prospectus. This description does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Fund's Charter and Articles Supplementary, including the provisions thereof
establishing the AMPS. The Fund's Charter and the form of Articles
Supplementary establishing the terms of the AMPS have been filed as exhibits
to the Registration Statement of which this statement of additional
information is a part.

Dividends

         General. The holders of shares of the Series F AMPS will be entitled
to receive, when, as and if declared by the Board of Directors of the Fund,
out of funds legally available therefor, cumulative cash dividends on their
shares, at the Applicable Rate. Dividends on the 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 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 Fund's investments. Generally, dividends on shares of
AMPS, to the extent that they are derived from interest paid on Municipal
Bonds, will be exempt from Federal income taxes, subject to possible
application of the alternative minimum tax. See "Taxes."

         Notification of Dividend Period. In determining whether the Fund
should issue a Notice of Special Dividend for AMPS, the Broker-Dealers will
consider (i) existing short term and long term market rates and indices of
such short term and long term rates, (ii) existing market supply and demand
for short term and long term securities, (iii) existing yield curves for short
term and long term securities comparable to the AMPS, (iv) industry and
financial conditions that may affect the AMPS, (v) the investment objective of
the Fund, and (vi) the Dividend Periods and dividend rates at which current
and potential beneficial holders of the AMPS would remain or become beneficial
holders. If the Broker-Dealers shall not give the Fund a Response by such
second Business Day or if the Response states that given the factors set forth
above it is not advisable that the Fund give a Notice of Special Dividend
Period for the AMPS, the Fund 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 Fund give a Notice of Special
Dividend Period for the AMPS, the Fund, by no later than the second Business
Day prior to such Auction Date, may 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 Fund also shall provide a copy of such
Notice of Special Dividend Period to Moody's and S&P. The Fund shall not give
a Notice of Special Dividend Period, and, if such Notice of Special Dividend
Period shall have been given already, shall give telephonic and written notice
of its revocation (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 Asset
Coverage is not satisfied or the Fund 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 the
Valuation Date 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 Fund is an approximately equal rate for
securities similar to the AMPS with an equal dividend period), (y) sufficient
funds for the payment of dividends payable on the immediately succeeding
Dividend Payment Date have not been segregated in an account at the Fund's
custodian bank or on the books of the Fund by the close of business on the
third Business Day preceding the related Auction Date or (z) the
Broker-Dealers jointly advise the Fund that, after consideration of the
factors listed above, they have concluded that it is advisable to give a
Notice of Revocation. The Fund also shall provide a copy of such Notice of
Revocation to Moody's and S&P. If the Fund is prohibited from giving a Notice
of Special Dividend Period as a result of the factors enumerated in clause
(x), (y) or (z) above or if the Fund gives a Notice of Revocation with respect
to a Notice of Special Dividend Period, the next succeeding Dividend Period
will be a 7-Day 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 7-Day Dividend Period, and the Fund
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 7-Day Dividend Period.

                                      6
<PAGE>

         Non-Payment Period; Late Charge. A Non-Payment Period will commence
if the Fund fails 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 as described below) within three Business Days after such
Dividend Payment Date to the persons who held such shares as of 12:00 noon,
Eastern time, on the Business Day preceding such Dividend Payment Date, the
full 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, Eastern time, (A) on such Dividend Payment Date
the full amount of any cash dividend on such shares (if declared) payable on
such Dividend Payment Date or (B) on any redemption date for 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. Such Non-Payment Period will consist of the period commencing on and
including the aforementioned Dividend Payment Date or redemption date, as the
case may be, and ending on and including the Business Day on which, by 12:00
noon, Eastern time, all unpaid cash dividends and unpaid redemption prices
shall have been so deposited or otherwise shall have been made available to
the applicable holders in same-day funds, provided that a Non-Payment Period
for AMPS will not end unless the Fund shall have given at least five days' but
no more than 30 days' written notice of such deposit or availability to the
Auction Agent, the Securities Depository and all holders of shares of AMPS.
Notwithstanding the foregoing, the failure by the Fund to deposit funds as
provided for by clause (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 below, shall not constitute a
"Non-Payment Period."

         The Applicable Rate for each Dividend Period for shares of AMPS,
commencing during a Non-Payment Period, will 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 7-Day Dividend Period. Any dividend on
shares of AMPS due on any Dividend Payment Date for such shares (if, prior to
the close of business on the second Business Day preceding such Dividend
Payment Date, the Fund has declared such dividend payable on such Dividend
Payment Date to the persons who held such shares as of 12:00 noon, Eastern
time, on the Business Day preceding such Dividend Payment Date) or redemption
price with respect to such shares not paid to such persons when due may be
paid to such persons in the same form of funds by 12:00 noon, Eastern 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 Fund to pay a dividend on a Dividend Payment Date or to redeem any
shares of AMPS on the date set for such redemption, the preceding sentence
shall not apply and the Applicable 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 will be considered
equivalent to payment to that 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, Eastern 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, Eastern time, on the next Business Day.

         The Non-Payment Period Rate initially will be 200% of the applicable
Reference Rate (or 300% of such rate if the Fund has provided notification to
the Auction Agent prior to the Auction establishing the Applicable Rate for
any dividend that net capital gain or other taxable income will be included in
such dividend on shares of AMPS), provided that the Board of Directors of the
Fund shall have the authority to adjust, modify, alter or change from time to
time by resolution or otherwise the initial Non-Payment Period Rate if the
Board of Directors of the Fund determines and Moody's and S&P (and any
Substitute Rating Agency or Substitute Rating Agencies, as the case may be, in
lieu of Moody's or S&P, or both, in the event either or both of such parties
shall not rate the AMPS) advise the Fund in writing that such adjustment,
modification, alteration or change will not adversely affect their then
current ratings on the AMPS.

         Restrictions on Dividends and Other Payments. For so long as any
shares of AMPS are outstanding, the Fund will 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 shares
of AMPS as to dividends or upon liquidation) in respect of common stock or any
other stock of the Fund ranking junior to or on a parity with shares of AMPS
as to dividends or upon liquidation, or call for redemption, redeem, purchase
or otherwise acquire for consideration any shares of common stock or any

                                      7
<PAGE>

other such junior stock (except by conversion into or exchange for stock of
the Fund ranking junior to AMPS as to dividends and upon liquidation) or any
such parity stock (except by conversion into or exchange for stock of the Fund
ranking junior to or on a parity with AMPS as to dividends and upon
liquidation), unless (A) immediately after such transaction, the Fund would
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 1940 Act AMPS Asset Coverage (see "Asset Maintenance" and "Redemption"
below) would be satisfied, (B) full cumulative dividends on shares of AMPS and
shares of the Other AMPS 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 on or before the date of such declaration or
payment has been paid, and (D) the Fund has redeemed the full number of shares
of AMPS required to be redeemed by any provision for mandatory redemption
contained in the Articles Supplementary.

Asset Maintenance

         1940 Act AMPS Asset Coverage. The Fund will be required under the
Articles Supplementary to maintain, with respect to shares of AMPS, as of the
last Business Day of each month in which any shares of AMPS are outstanding,
asset coverage of at least 200% with respect to senior securities that are
stock, including the shares of AMPS and Other AMPS (or such other asset
coverage as in the future may be specified in or under the 1940 Act as the
minimum asset coverage for senior securities that are stock of a closed-end
investment company as a condition of paying dividends on its common stock)
("1940 Act AMPS Asset Coverage"). If the Fund fails to maintain 1940 Act AMPS
Asset Coverage and such failure is not cured as of the last Business Day of
the following month (the "1940 Act Cure Date"), the Fund will be required
under certain circumstances to redeem certain of the shares of AMPS. See
"Description of AMPS -- Redemption" in the prospectus and "-- Redemption"
below.

         AMPS Basic Maintenance Amount. So long as shares of AMPS are
outstanding, the Fund will be required under the Articles Supplementary as of
the last Business Day of each week (a "Valuation Date") to maintain S&P
Eligible Assets and Moody's Eligible Assets each having in the aggregate a
Discounted Value at least equal to the AMPS Basic Maintenance Amount. If the
Fund fails to meet such requirement as of any Valuation Date and such failure
is not cured on or before the sixth Business Day after such Valuation Date
(the "AMPS Basic Maintenance Cure Date"), the Fund will be required under
certain circumstances to redeem certain of the shares of AMPS. See
"Description of AMPS -- Redemption" in the prospectus and "-- Redemption"
below. Upon any failure to maintain the required Discounted Value, the Fund
will use its best efforts to alter the composition of its portfolio to
reattain a Discounted Value at least equal to the AMPS Basic Maintenance
Amount on or prior to the AMPS Basic Maintenance Cure Date.

         The 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 and Other AMPS outstanding on such Valuation Date multiplied by the
sum of $25,000 and 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
the AMPS and Other AMPS outstanding to (but not including) the end
of the current Dividend Period for the AMPS that follows such Valuation Date
in the event the then current Dividend Period will end within 49
calendar days of such Valuation Date or through the 49th day after such
Valuation Date in the event the then current Dividend Period will not end
within 49 calendar days of such Valuation Date; (C) in the event the then
current Dividend Period will end within 49 calendar days of such Valuation
Date, the aggregate amount of cash dividends that would accumulate at the
Maximum Applicable Rate applicable to a Dividend Period of 28 or fewer days on
any shares of AMPS and Other AMPS outstanding from the end of such Dividend
Period through the 49th day after such Valuation Date, multiplied by the
larger of the Moody's Volatility Factor and the S&P Volatility Factor,
determined from time to time by Moody's and S&P, respectively (except that if
such Valuation Date 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 Fund for the 90
days subsequent to such Valuation Date; (E) the amount of current outstanding
balances of any indebtedness that is senior to the AMPS plus interest actually
accrued together with 30 days additional interest on the current outstanding
balances calculated at the current rate; (F) the amount of the Fund's maximum
potential Additional Dividend liability as of such Valuation Date; and (G) any
current liabilities as of such Valuation Date to the extent not reflected in
any of (i)(A) through (i)(F) (including, without limitation, and immediately
upon determination, any amounts due and payable by the Fund for portfolio
securities purchased as of such Valuation Date and any liabilities

                                      8
<PAGE>

incurred for the purpose of clearing securities transactions) less (ii) either
(A) the Discounted Value of any of the Fund's assets, or (B) the face value of
any of the Fund's assets if such assets mature prior to or on the date of
redemption of AMPS or payment of a liability and are either securities issued
or guaranteed by the United States Government or Deposit Securities, in both
cases irrevocably deposited by the Fund for the payment of the amount needed
to redeem shares of AMPS subject to redemption or to satisfy any of (i)(B)
through (i)(G).

         The Discount Factors and guidelines for determining the market value
of the Fund's portfolio holdings have been based on criteria established in
connection with rating the AMPS. These factors include, but are not limited
to, the sensitivity of the market value of the relevant asset to changes in
interest rates, the liquidity and depth of the market for the relevant asset,
the credit quality of the relevant asset (for example, the lower the rating of
a debt obligation, the higher the related discount factor) and the frequency
with which the relevant asset is marked to market. In no event shall the
Discounted Value of any asset of the Fund exceed its unpaid principal balance
or face amount as of the date of calculation. The Discount Factor relating to
any asset of the Fund and the AMPS Basic Maintenance Amount, the assets
eligible for inclusion in the calculation of the Discounted Value of the
Fund's portfolio and certain definitions and methods of calculation relating
thereto may be changed from time to time by the Fund, without stockholder
approval, but only in the event the Fund receives written confirmation from
S&P, Moody's and any Substitute Rating Agency that any such changes would not
impair the rating then assigned to the shares of AMPS by S&P or Moody's or any
Substitute Rating Agency.

          On or before the seventh Business Day in the case of Moody's and the
third Business Day in the case of S&P after a Valuation Date on which the Fund
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, the Fund is required to (i) deliver to Moody's a report with respect
to the calculation of the AMPS Basic Maintenance Amount, the value of its
portfolio holdings and the net asset value and market price of the Fund's
common stock as of the date of such failure (an "AMPS Basic Maintenance
Report") and (ii) send S&P an electronic notification of such failure. The
Fund also will deliver an AMPS Basic Maintenance Report as of the last
Business Day of each month on or before the seventh Business Day after such
day. Within ten Business Days after delivery of such report relating to the
month in which the Fund's fiscal year ends, the Fund will deliver a letter
prepared by the Fund's independent accountants regarding the accuracy of the
calculations made by the Fund in such AMPS Basic Maintenance Report. If any
such letter prepared by the Fund's independent accountants shows that an error
was made in the AMPS Basic Maintenance Report, the calculation or
determination made by the Fund's independent accountants will be conclusive
and binding on the Fund. The Fund will also (i) provide Moody's with an AMPS
Basic Maintenance Report and (ii) send S&P an electronic notification, as of
each Valuation Date on or before the seventh Business Day in the case of
Moody's and the third Business Day in the case of S&P after such date when the
Discounted Value of Moody's Eligible Assets or S&P Eligible Assets, as the
case may be, fails to exceed the AMPS Basic Maintenance Amount by 10% or more
in the case of S&P and 25% or more in the case of Moody's. Also, on or before
5:00 p.m., Eastern time, on the first Business Day after shares of common
stock are repurchased by the Fund, the Fund will complete and deliver to S&P
and Moody's an AMPS Basic Maintenance Report as of the close of business on
such date that common stock is repurchased.

Redemption

         Mandatory Redemption. The number of shares of AMPS to be redeemed
will be equal to the lesser of (a) 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 other shares of the
preferred stock subject to redemption or retirement, would result in the Fund
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, on such
Cure Date (provided that, if there is no such minimum number of shares the
redemption of which would have such result, all shares of AMPS then
outstanding will be redeemed), and (b) the maximum number of shares of AMPS,
together with all other shares of 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 Fund shall
allocate the number required to be redeemed which would result in the Fund
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, Other AMPS and other preferred stock subject to
redemption pursuant to provisions similar to those set forth below; provided
that, shares of AMPS which may not be redeemed at the option of the Fund due
to the designation of a Non-Call Period applicable to such shares (A) will be
subject to mandatory

                                      9
<PAGE>

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 Fund is required to effect such a mandatory redemption on a
Business Day which is not later than 30 days after such Cure Date, except that
if the Fund does not have 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 Fund otherwise is unable to
effect such redemption on or prior to 30 days after such Cure Date, the Fund
will redeem those shares of AMPS that it was unable to redeem on the earliest
practicable date on which it is able to effect such redemption out of funds
legally available therefor.

         Notice of Redemption. If shares of AMPS are to be redeemed, a notice
of redemption will be mailed to each record holder of such shares of AMPS
(initially Cede as nominee of the Securities Depository) and to the Auction
Agent not less than 17 nor more than 60 days prior to the date fixed for the
redemption thereof. Each notice of redemption will include a statement setting
forth: (i) the redemption date, (ii) the redemption price, (iii) the aggregate
number of shares of AMPS to be redeemed, (iv) the place or places where shares
of AMPS are to be surrendered for payment of the redemption price, (v) a
statement that dividends on the shares to be redeemed will cease to accumulate
on such redemption date (except that holders may be entitled to Additional
Dividends) and (vi) the provision of the Articles Supplementary pursuant to
which such shares are being redeemed. The notice also will be published in the
eastern and national editions of The Wall Street Journal. No defect in the
notice of redemption or in the mailing or publication thereof will affect the
validity of the redemption proceedings, except as required by applicable law.

         In the event that less than all of the outstanding shares of AMPS are
to be redeemed, the shares to be redeemed will be selected by lot or such
other method as the Fund shall deem fair and equitable, and the results
thereof will be communicated to the Auction Agent. The Auction Agent will give
notice to the Securities Depository, whose nominee will be the record holder
of all shares of AMPS, and the Securities Depository will determine the number
of shares to be redeemed from the account of the Agent Member of each Existing
Holder. Each Agent Member will determine the number of shares to be redeemed
from the account of each Existing Holder for which it acts as agent. An Agent
Member may select for redemption shares from the accounts of some Existing
Holders without selecting for redemption any shares from the accounts of other
Existing Holders. Notwithstanding the foregoing, if neither the Securities
Depository nor its nominee is the record holder of all of the shares of AMPS,
the particular shares to be redeemed shall be selected by the Fund by lot or
by such other method as the Fund shall deem fair and equitable.

         If the Fund gives notice of redemption, and concurrently or
thereafter deposits in trust with the Auction Agent, or segregates in an
account at the Fund's custodian bank for the benefit of the holders of the
AMPS to be redeemed and for payment to the Auction Agent, Deposit Securities
(with a right of substitution) having an aggregate Discounted Value equal to
the redemption payment for the shares of AMPS as to which notice of redemption
has been given, with irrevocable instructions and authority to pay the
redemption price to the record holders thereof, then upon the date of such
deposit or, if no such deposit is made, upon such date fixed for redemption
(unless the Fund shall default in making payment of the redemption price), all
rights of the holders of such shares called for redemption will cease and
terminate, except the right of such holders to receive the redemption price in
respect thereof and any Additional Dividends, but without interest, and such
shares no longer will be deemed to be outstanding. The Fund will be entitled
to receive, from time to time, the interest, if any, earned on such Deposit
Securities deposited with the Auction Agent, and the holders of any shares so
redeemed will have no claim to any such interest. Any funds so deposited which
are unclaimed at the end of one year from such redemption date will be repaid,
upon demand, to the Fund, after which the holders of the shares of AMPS so
called for redemption may look only to the Fund for payment thereof.

         So long as any shares of AMPS are held of record by the nominee of
the Securities Depository (initially Cede), the redemption price for such
shares will be paid on the redemption date to the nominee of the Securities
Depository. The Securities Depository's normal procedures now provide for it
to distribute the amount of the redemption price to Agent Members who, in
turn, are expected to distribute such funds to the persons for whom they are
acting as agent. Notwithstanding the provisions for redemption described
above, no shares of AMPS shall be subject to optional redemption (i) unless
all dividends in arrears on the outstanding shares of AMPS, and all capital

                                      10
<PAGE>

stock of the Fund ranking on a parity with the AMPS with respect to the
payment of dividends or upon liquidation, including the Other AMPS, have been
or are being contemporaneously paid or declared and set aside for payment and
(ii) if redemption thereof would result in the Fund's failure to maintain
Moody's Eligible Assets or S&P Eligible Assets with an aggregate Discounted
Value equal to or greater than the AMPS Basic Maintenance Amount.

Voting Rights

         In connection with the election of the Fund's directors, holders of
shares of AMPS, Other AMPS and any other preferred stock, voting separately as
a single class, shall be entitled at all times to elect two of the Fund's
directors, and the remaining directors will be elected by holders of shares of
common stock, voting separately as a single class. In addition, if at any time
dividends on outstanding shares of AMPS shall be unpaid in an amount equal to
at least two full years' dividends thereon or if at any time holders of any
shares of preferred stock, including Other AMPS, are entitled, together with
the holders of AMPS, to elect a majority of the directors of the Fund under
the 1940 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, Other
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 AMPS, Other AMPS and any other preferred
stock, voting as a separate class, will be entitled to elect the smallest
number of additional directors that, together with the two directors that 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
the 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, including Other AMPS, for all past Dividend Periods, the
additional voting rights of the holders of shares of AMPS and any other
preferred stock, including Other AMPS, as described above shall cease, and the
terms of office of all of the additional directors elected by the holders of
shares of AMPS, Other AMPS and any other preferred stock (but not of the
directors with respect to whose election the holders of common stock were
entitled to vote or the two directors the holders of shares of AMPS, Other
AMPS and any other preferred stock have the right to elect in any event) will
terminate automatically.

         The affirmative vote of a majority of the votes entitled to be cast
by holders of outstanding shares of AMPS and any other preferred stock,
including Other AMPS, voting as a separate class, will be required to (i)
authorize, create or issue any class or series of stock ranking prior to the
AMPS or any other series of preferred stock with respect to the payment of
dividends or the distribution of assets on dissolution, liquidation or winding
up the affairs of the Fund, 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
preferred stock are outstanding, the Fund 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 AMPS differently
than those of a holder of shares of any other series of preferred stock
without the affirmative vote of at least a majority of votes entitled to be
cast by holders of the shares of AMPS adversely affected and outstanding at
such time (voting separately as a class). The Board of Directors, however,
without stockholder approval, may amend, alter or repeal any or all of the
various rating agency guidelines described herein in the event the 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. Furthermore, the Board of Directors, without stockholder approval, may
terminate compliance with the Moody's or S&P guidelines as discussed under
"Rating Agency Guidelines" in the prospectus. Unless a higher percentage is
provided for under "Description of Capital Stock -- Certain Provisions of the
Charter and By-laws" in the prospectus, the affirmative vote of the holders of
a majority of the outstanding shares of preferred stock (as defined under
"Investment Restrictions"), including AMPS and Other AMPS, entitled to be
cast, voting as a separate 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 including, among other things, changes in the Fund's
investment objective or changes in the investment policies and restrictions
described as fundamental policies in the prospectus and under "Investment
Restrictions." So long as any shares of AMPS are outstanding, the affirmative
vote of the holders of a majority of the outstanding shares of preferred stock
(as defined under "Investment Restrictions"), including AMPS and Other AMPS,
voting together as a single class, will be required to approve any voluntary
application by the Fund for relief

                                      11
<PAGE>

under Federal bankruptcy law or any similar application under state law for so
long as the Fund is solvent and does not foresee becoming insolvent. The class
vote of holders of shares of AMPS, Other AMPS and any other preferred stock
described above in each case will be in addition to a separate vote of the
requisite percentage of shares of common stock and shares of AMPS, Other AMPS
and any other preferred stock, voting together as a single class or voting as
separate classes, necessary to authorize the action in question. An increase
in the number of authorized shares of preferred stock pursuant to the Charter
or the issuance of additional shares of any series of preferred stock
(including AMPS and Other AMPS) pursuant to the Charter shall not in and of
itself be considered to adversely affect the contract rights of the holders of
the AMPS.

         Notwithstanding the foregoing, and except as otherwise required by
the 1940 Act, (i) holders of outstanding shares of the AMPS will be entitled
as a series, to the exclusion of the holders of all other securities,
including other preferred stock, common stock and other classes of capital
stock of the Fund, to vote on matters affecting the AMPS that do not
materially adversely affect any of the contract rights of holders of such
other securities, including other preferred stock, common stock and other
classes of capital stock, as expressly set forth in the Charter, and (ii)
holders of outstanding shares of AMPS will not be entitled to vote on matters
affecting any other preferred stock that do not materially adversely affect
any of the contract rights of holders of the AMPS, as expressly set forth in
the Charter.

         The foregoing voting provisions will not apply to any shares of AMPS
if, at or prior to the time when the act with respect to which such vote
otherwise would be required shall be effected, such shares shall have been (i)
redeemed or (ii) called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.

                                  THE AUCTION

Auction Agent Agreement

         The Auction Agent will act as agent for the Fund in connection with
Auctions. In the absence of bad faith or negligence on its part, the Auction
Agent will 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 the
Auction Agent Agreement, and will 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. Pursuant to the
Auction Agent Agreement, the Fund is required to indemnify the Auction Agent
for certain losses and liabilities incurred by the Auction Agent without
negligence or bad faith on its part in connection with the performance of its
duties under such agreement.

         The Auction Agent may terminate the Auction Agent Agreement upon
notice to the Fund, which termination may be no earlier than 60 days following
delivery of such notice. If the Auction Agent resigns, the Fund will use its
best efforts to enter into an agreement with a successor Auction Agent
containing substantially the same terms and conditions as the Auction Agent
Agreement. The Fund may terminate the Auction Agent Agreement at any time,
provided that prior to such termination the Fund shall have entered into such
an agreement with respect thereto with a successor Auction Agent.

Broker-Dealer Agreements

         The Auctions require the participation of one or more broker-dealers.
A Broker-Dealer Agreement may be terminated by the Auction Agent or a
Broker-Dealer on five days' notice to the other party, provided that the
Broker-Dealer Agreement with Merrill Lynch may not be terminated without the
prior written consent of the Fund, which consent may not be unreasonably
withheld.

         For the six months ended February 29, 2004 and the fiscal years ended
August 31, 2003, 2002 and 2001, Merrill Lynch, an affiliate of the Investment
Adviser, earned $115,634, $240,542, $278,259 and $299,644, respectively,
pursuant to its Broker-Dealer Agreement with the Fund.

                                      12
<PAGE>

Auction Procedures

         The Auction Procedures are set forth in Appendix C. The Settlement
Procedures to be used with respect to Auctions are set forth in Appendix B.

                           RATING AGENCY GUIDELINES

S&P AAA Rating Guidelines

         The Discounted Value of the Fund's S&P Eligible Assets is calculated
on each Valuation Date. See "Description of AMPS -- Asset Maintenance -- AMPS
Basic Maintenance Amount." S&P Eligible Assets include cash, Receivables for
Municipal Bonds Sold (as defined below), Rule 2a-7 Money Market Funds and
Municipal Bonds eligible for consideration under S&P's current guidelines. For
purposes of calculating the Discounted Value of the Fund's portfolio under
current S&P guidelines, the fair market value of Municipal Bonds eligible for
consideration under such guidelines must be discounted by the applicable S&P
Discount Factor set forth in the table below. The Discounted Value of a
Municipal Bond eligible for consideration under S&P guidelines is the fair
market value thereof divided by the S&P Discount Factor. The S&P Discount
Factor used to discount a particular Municipal Bond will be determined by
reference to the rating by S&P, Moody's or Fitch on such Municipal Bond;
provided, however, for purposes of determining the S&P Discount Factor
applicable to Municipal Bonds not rated by S&P, the Municipal Bonds will carry
an S&P rating one full rating category lower than the S&P rating category that
is the equivalent of the rating category in which such Municipal Bond is
placed by a NRSRO, in accordance with the table set forth below:

                           S&P's Rating Category(1)
- -----------------------------------------------------------------------------
AAA*(2)      AA*      A*      BBB*      BB*      B*      CCC*       NR**
- -------      ---      --      ----      ---      --      ----       ----
144.75%    147.75%  150.75%  153.75%  175.11%  195.11%  215.11%   220.00%

_____________
*        S&P rating.
**       Not Rated.
(1)      For Municipal Bonds of any one issuer rated at least BBB- by S&P, or
         if not rated by S&P, rated at least A- by another NRSRO, 2% is added
         to the applicable S&P Discount Factor for every 1% by which the fair
         market value of such Municipal Bonds exceeds 5% of the aggregate fair
         market value of the S&P Eligible Assets, but in no event greater than
         10%; or for any percentage over 5% add 10 percentage points to the
         applicable S&P Discount Factor.
(2)      For zero coupon Municipal Bonds, the S&P Discount Factor is 441.80%.

         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 120% 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 or F-1+ by Fitch; provided, however, such short-term
Municipal Bonds rated by Moody's or Fitch but not rated by S&P having a demand
feature exercisable in 30 days or less must be backed by a letter of credit,
liquidity facility or guarantee from a bank or other financial institution
having 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 or Fitch but not rated
by S&P may comprise no more than 50% of short-term Municipal Bonds that
qualify as S&P Eligible Assets, (ii) the S&P Discount Factor for Rule 2a-7
Money Market Funds will be 110%, (iii) the S&P Discount Factor for Receivables
for Municipal Bonds Sold that are due in more than five Business Days from
such Valuation Date will be the S&P Discount Factor applicable to the
Municipal Bonds sold and (iv) no S&P Discount Factor will be applied to cash
or to Receivables for Municipal Bonds Sold if such receivables are due within
five Business Days of such Valuation Date. "Receivables for Municipal Bonds
Sold," for purposes of calculating S&P 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. For purposes of the foregoing, Anticipation
Notes rated SP-1 or, if not rated by S&P, rated VMIG-1 by Moody's or F-1+ by
Fitch, which do not mature or have a demand feature exercisable in 30 days and
which do not have a long-term rating, shall be considered to be short-term
Municipal Bonds.

                                      13
<PAGE>

         The S&P guidelines require certain minimum issue size and impose
other requirements for purposes of determining S&P Eligible Assets. In order
to be considered S&P Eligible Assets, Municipal Bonds must:

                  (i) be issued by any of the 50 states of the United States,
         its 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) except for zero coupon Municipal Bonds rated AAA by S&P
         that mature in 30 years or less, be interest bearing and pay interest
         at least semi-annually;

                  (iii) be payable with respect to principal and interest in
         U.S. dollars;

                  (iv) not be subject to a covered call or covered put option
         written by the Fund;

                  (v) except for Inverse Floaters, not be part of a private
         placement; and

                  (vi) except for Inverse Floaters and legally defeased bonds
         that are secured by securities issued or guaranteed by the United
         States Government, be part of an issue with an original issue size of
         at least $10 million or, if of an issue with an original issue size
         below $10 million, is rated at least AA or higher by S&P.

         Notwithstanding the foregoing:

                  (i) Municipal Bonds issued by issuers in any one state or
         territory 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 fair market value of S&P Eligible Assets;

                  (ii) Municipal Bonds which are escrow bonds or defeased
         bonds may compose up to 100% of the aggregate fair market value of
         S&P Eligible Assets if such Bonds initially are assigned a rating by
         S&P in accordance with S&P's legal defeasance criteria or rerated by
         S&P as economic defeased escrow bonds and assigned an AAA rating.
         Municipal Bonds may be rated as escrow bonds by another NRSRO or
         rerated as an escrow bond and assigned the equivalent of an S&P AAA
         rating, provided that such equivalent rated Bonds are limited to 50%
         of the aggregate fair market value of S&P Eligible Assets and are
         deemed to have an AA S&P rating for purposes of determining the S&P
         Discount Factor applicable to such Municipal Bonds. The limitations
         on Municipal Bonds in clause (i) above and clauses (iii) and (iv)
         below are not applicable to escrow bonds;

                  (iii) Municipal Bonds which are not rated by any NRSRO may
         comprise no more than 10% of S&P Eligible Assets;

                  (iv) Municipal Bonds rated at least BBB- by S&P, or if not
         rated by S&P, rated at least A- by another NRSRO, of any one issuer
         or guarantor (excluding bond insurers) will be considered S&P
         Eligible Assets only to the extent the fair market value of such
         Municipal Bonds does not exceed 10% of the aggregate fair market
         value of the S&P Eligible Assets, High Yield Municipal Bonds of any
         issuer may comprise no more than 5% of S&P Eligible Assets, and
         Municipal Bonds of any one issuer which are not rated by any NRSRO
         will be considered S&P Eligible Assets only to the extent the fair
         market value of such Municipal Bonds does not exceed 5% of the
         aggregate fair market value of the S&P Eligible Assets. In the
         aggregate, the maximum issuer exposure is limited to 10% of the S&P
         Eligible Assets; and

                  (v) Municipal Bonds not rated by S&P but rated by another
         NRSRO will be included in S&P Eligible Assets only to the extent the
         fair market value of such Municipal Bonds does not exceed 50% of the
         aggregate fair market value of the S&P Eligible Assets.

                                      14
<PAGE>

         As discussed in the prospectus, the Fund may engage in options or
futures transactions. For so long as any shares of AMPS are rated by S&P, the
Fund will not purchase or sell financial futures contracts, write, purchase or
sell options on financial 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 Fund may purchase or sell financial
futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal
Index") or 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 Fund will not engage in any S&P Hedging Transaction
         based on the Municipal Index (other than transactions that terminate
         a financial futures contract or option held by the Fund by the Fund's
         taking an opposite position thereto ("Closing Transactions")), that
         would cause the Fund at the time of such transaction to own or have
         sold the least of (A) more than 1,000 outstanding financial futures
         contracts based on the Municipal Index, (B) outstanding financial
         futures contracts based on the Municipal Index exceeding in number
         25% of the quotient of the fair market value of the Fund's total
         assets divided by $1,000 or (C) outstanding financial futures
         contracts based on the Municipal Index exceeding in number 10% of the
         average number of daily traded financial futures contracts based on
         the Municipal Index in the 30 days preceding the time of effecting
         such transaction as reported by The Wall Street Journal;

                  (ii) the Fund will not engage in any S&P Hedging Transaction
         based on Treasury Bonds (other than Closing Transactions) that would
         cause the Fund at the time of such transaction to own or have sold
         the lesser of (A) outstanding financial futures contracts based on
         Treasury Bonds exceeding in number 50% of the quotient of the fair
         market value of the Fund's total assets divided by $100,000 ($200,000
         in the case of the two-year United States Treasury Note) or (B)
         outstanding financial futures contracts based on Treasury Bonds
         exceeding in number 10% of the average number of daily traded
         financial futures contracts based on Treasury Bonds in the 30 days
         preceding the time of effecting such transaction as reported by The
         Wall Street Journal;

                  (iii) the Fund will engage in Closing Transactions to close
         out any outstanding financial futures contract that the Fund owns or
         has sold or any outstanding option thereon owned by the Fund in the
         event (A) the Fund 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
         Fund is required to pay Variation Margin on the second such Valuation
         Date;

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

                  (v) when the Fund writes a financial futures contract or an
         option thereon, it will either maintain an amount of cash, cash
         equivalents or liquid assets in a segregated account with the Fund'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 Fund's broker with respect to such financial futures
         contract or option equals the fair market value of the financial
         futures contract or option, or, in the event the Fund writes a
         financial futures contract or option thereon that requires delivery
         of an underlying security, it shall hold such underlying security in
         its portfolio.

         For purposes of determining whether the Fund 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
financial futures contracts based on the Municipal Index that are owned by the
Fund plus (ii) 25% of the aggregate settlement value, as marked to market, of
any outstanding financial futures contracts based on Treasury Bonds which
contracts are owned by the Fund.

                                      15
<PAGE>

Moody's Aaa Rating Guidelines

         The Discounted Value of the Fund's Moody's Eligible Assets is
calculated on each Valuation Date. See "Description of AMPS -- Asset
Maintenance -- AMPS Basic Maintenance Amount." Moody's Eligible Assets include
cash, Receivables for Municipal Bonds Sold (as defined below), Rule 2a-7 Money
Market Funds and Municipal Bonds eligible for consideration under Moody's
guidelines. For purposes of calculating the Discounted Value of the Fund's
portfolio under current Moody's guidelines, the fair market value of Municipal
Bonds eligible for consideration under such guidelines must be discounted by
the applicable Moody's Discount Factor set forth in the table below. The
Discounted Value of a Municipal Bond eligible for consideration under Moody's
guidelines is the lower of par and the quotient of the fair market value
thereof divided by the Moody's Discount Factor. The Moody's Discount Factor
used to discount a particular Municipal Bond will be determined by reference
to the rating by Moody's, S&P or Fitch on such Municipal Bond, in accordance
with the tables set forth below:

                          Moody's Rating Category(1)
- ------------------------------------------------------------------------------
        Aaa       Aa         A        Baa      Other (2)
        ---       --         -        ---      ---------
       151%      159%      160%      173%         225%


(1)      Ratings assigned by S&P or Fitch are generally accepted by Moody's at
         face value. However, adjustments to face value may be made to
         particular categories of credits for which the S&P and/or Fitch
         rating does not seem to approximate a Moody's rating equivalent.
         Split rated securities assigned by S&P and Fitch will be accepted at
         the lower of the two ratings.
(2)      Municipal Bonds rated Ba1 to B3 by Moody's or, if not rated by
         Moody's, rated BB+ to B- by S&P or Fitch. In addition, Municipal
         Bonds not explicitly rated by Moody's, S&P or Fitch, but rated at
         least the equivalent of B3 internally by the Investment Adviser,
         provided that Moody's reviews and achieves sufficient comfort with
         the Investment Adviser's internal credit rating processes, will be
         included under "Other" in the table. Unless conclusions regarding
         liquidity risk as well as estimates of both the probability and
         severity of default for the Fund's assets can be derived from other
         sources as well as combined with a number of sources as presented by
         the Fund to Moody's, unrated Municipal Bonds which are rated at least
         the equivalent of B3 by the Investment Adviser internally are limited
         to 10% of Moody's Eligible Assets.

                          Moody's Rating Category
        --------------------------------------------------------------
          MIG-1, VMIG-1, P-1(1)                  MIG-1, VMIG-1, P-1(2)
        -----------------------------    -----------------------------
                   100%                                 136%
- ---------------------
(1)      Moody's rated Municipal Bonds that have a maturity less than or equal
         to 49 days and Municipal Bonds not rated by Moody's but rated the
         equivalent to MIG-1, VMIG-1, or P-1 by S&P or Fitch that have a
         maturity less than or equal to 49 days.
(2)      Moody's rated Municipal Bonds that have a maturity greater than 49
         days and Municipal Bonds not rated by Moody's but rated the
         equivalent to MIG-1, VMIG-1, or P-1 by S&P or Fitch that have a
         maturity greater than 49 days.

         Notwithstanding the foregoing, no Moody's Discount Factor will be
applied to cash or to Receivables for Municipal Bonds Sold that are due within
five Business Days of such Valuation Date. The Moody's Discount Factor for
Receivables for Municipal Bonds Sold that are due within six and 30 Business
Days of such Valuation Date will be the Moody's Discount Factor applicable to
the Municipal Bonds sold. "Receivables for Municipal Bonds Sold," for purposes
of calculating Moody'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 30 Business Days of such
Valuation Date.

         The Moody's Discount Factor for Inverse Floaters shall be the product
of (x) the percentage determined by reference to the rating on the security
underlying such Inverse Floaters multiplied by (y) 1.25.

         The Moody's Discount Factor for Rule 2a-7 Money Market Funds shall be
110%.

                                      16
<PAGE>

         The Moody's guidelines impose certain requirements as to minimum
issue size, issuer diversification and geographical concentration, as well as
other requirements for purposes of determining whether Municipal Bonds
constitute Moody's Eligible Assets, as set forth in the table below:


                      Minimum           Maximum              Maximum
                     Issue Size    Underlying Obligor     State Allowed
     Rating         ($ Millions)       (%)(1)               (%)(1)(3)
      Aaa                 *              100                    100
       Aa                10              20                     60
       A                 10              10                     40
      Baa                10               6                     20
       Ba                10               4                     12
       B                 10               3                     12
   Other (2)             10               2                     12

- ------------------
*        Not applicable.
(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, S&P or Fitch, but rated at
         least the equivalent of B3 internally by the Investment Adviser.
(3)      Territorial bonds (other than those issued by Puerto Rico and counted
         collectively) are each limited to 10% of Moody's Eligible Assets. For
         diversification purposes, Puerto Rico will be treated as a state.

         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.

         Current Moody's guidelines also require that Municipal Bonds
constituting Moody's Eligible Assets pay interest in cash, are publicly rated
B3 or higher by Moody's or, if not rated by Moody's, but rated by S&P or
Fitch, are publicly rated at least B- by S&P or Fitch, or if not explicitly
rated by Moody's, S&P or Fitch, be rated at least the equivalent of B3
internally by the Investment Adviser, provided that Moody's reviews and
achieves sufficient comfort with the Investment Adviser's internal credit
rating processes, not have suspended ratings by Moody's, if an Inverse
Floater, be explicitly rated by Moody's, and be part of an issue of Municipal
Bonds of at least $10,000,000 (except for issues rated Aaa by Moody's, as
provided in the chart above).

         When the Fund sells a Municipal Bond and agrees to repurchase it at a
future date, the Discounted Value of such Municipal Bond will constitute a
Moody's Eligible Asset and the amount the Fund is required to pay upon
repurchase of such Bond will count as a liability for purposes of calculating
the AMPS Basic Maintenance Amount. For so long as the AMPS are rated by
Moody's, the Fund will not enter into any such reverse repurchase agreements
unless it has received written confirmation from Moody's that such
transactions would not impair the rating then assigned the AMPS by Moody's.
When the Fund purchases a Municipal Bond and agrees to sell it at a future
date to another party, cash receivable by the Fund thereby will constitute a
Moody's Eligible Asset if the long-term debt of such other party is rated at
least A2 by Moody's and such agreement has a term of 30 days or less;
otherwise the Discounted Value of such Bond will constitute a Moody's Eligible
Asset.

         High Yield Municipal Bonds may comprise no more than 20% of Moody's
Eligible Assets. Unless conclusions regarding liquidity risk as well as
estimates of both the probability and severity of default for the Fund's
assets can be derived from other sources as well as combined with a number of
sources as presented by the Fund to Moody's, unrated High Yield Municipal
Bonds which are rated at least the equivalent of B3 by the Investment Adviser
internally are limited to 10% of Moody's Eligible Assets.

         Inverse Floaters, including primary market and secondary market
residual interest bonds, may constitute no more than 10% of Moody's Eligible
Assets.

         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

                                      17
<PAGE>

kind, (iii) held for the purchase of a security pursuant to a Forward
Commitment or (iv) irrevocably deposited by the Fund for the payment of
dividends or redemption.

         For so long as shares of AMPS are rated by Moody's, in managing the
Fund's portfolio, the Investment Adviser will not alter the composition of the
Fund's portfolio if, in the reasonable belief of the Investment Adviser, the
effect of any such alteration would be to cause the Fund 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 5% or
less, the Investment Adviser will not alter the composition of the Fund's
portfolio in a manner reasonably expected to reduce the aggregate Discounted
Value of Moody's Eligible Assets unless the Fund shall have confirmed that,
after giving effect to such alteration, the aggregate Discounted Value of
Moody's Eligible Assets would exceed the AMPS Basic Maintenance Amount.

         For so long as any shares of AMPS are rated by Moody's, the Fund will
not engage in Bond Market Association Municipal Swap Index swap transactions
("BMA swap transactions"), buy or sell financial futures contracts, write,
purchase or sell call options on financial futures contracts or purchase put
options on financial 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, except that the Fund may
engage in BMA swap transactions, purchase or sell exchange-traded financial
futures contracts based on any index approved by Moody's or Treasury Bonds,
and purchase, write or sell exchange-traded put options on such financial
futures contracts, and purchase, write or sell exchange-traded call options on
such financial futures contracts (collectively, "Moody's Hedging
Transactions"), subject to the following limitations:

                  (i) the Fund will not engage in any Moody's Hedging
         Transaction based on the Municipal Index (other than Closing
         Transactions) that would cause the Fund at the time of such
         transaction to own or have sold (A) outstanding financial futures
         contracts based on the Municipal Index exceeding in number 10% of the
         average number of daily traded financial futures contracts based on
         the Municipal Index in the 30 days preceding the time of effecting
         such transaction as reported by The Wall Street Journal or (B)
         outstanding financial futures contracts based on the Municipal Index
         having a fair market value exceeding 50% of the fair market value of
         all Municipal Bonds constituting Moody's Eligible Assets owned by the
         Fund (other than Moody's Eligible Assets already subject to a Moody's
         Hedging Transaction);

                  (ii) the Fund will not engage in any Moody's Hedging
         Transaction based on Treasury Bonds (other than Closing Transactions)
         that would cause the Fund at the time of such transaction to own or
         have sold (A) outstanding financial futures contracts based on
         Treasury Bonds having an aggregate fair market value exceeding 40% of
         the aggregate fair market value of Moody's Eligible Assets owned by
         the Fund 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 financial futures
         contracts based on Treasury Bonds having an aggregate fair market
         value exceeding 80% of the aggregate fair market value of all
         Municipal Bonds constituting Moody's Eligible Assets owned by the
         Fund (other than Moody's Eligible Assets already subject to a Moody's
         Hedging Transaction) and rated Baa or A by Moody's (or, if not rated
         by Moody's but rated by S&P, rated A or AA by S&P) (for purposes of
         the foregoing clauses (i) and (ii), the Fund shall be deemed to own
         the number of financial futures contracts that underlie any
         outstanding options written by the Fund);

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

                                      18
<PAGE>

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

                  (vi) the Fund (A) will not engage in options and futures
         transactions for leveraging or speculative purposes, except that the
         Fund may engage in an option or futures transaction so long as the
         combination of the Fund's non-derivative positions, together with the
         relevant option or futures transaction, produces a synthetic
         investment position, or the same economic result, that could be
         achieved by an investment, consistent with the Fund's investment
         objective and policies, in a security that is not an option or
         futures transaction, subject to the Investment Adviser periodically
         demonstrating to Moody's that said economic results are achieved, and
         (B) will not write any call options or sell any financial futures
         contracts for the purpose of hedging the anticipated purchase of an
         asset prior to completion of such purchase;

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

                  (viii) the Fund will not engage in BMA swap transactions
         with respect to more than 20% of the Fund's net assets; provided that
         the Fund's use of futures will proportionately decrease as the Fund's
         use of BMA swap transactions increases, and vice-versa.

         For purposes of determining whether the Fund 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 that
the Fund 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 Fund that are either exchange-traded and "readily reversible"
or that 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 Fund; (ii) assets subject to
call options written by the Fund not meeting the requirements of clause (i) of
this sentence shall have no value; (iii) assets subject to put options written
by the Fund 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 Fund is the
seller the contract may be valued at the settlement price and where the Fund
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 Fund with any security
of a class of securities, the Fund shall assume that it will take delivery of
the security with the lowest Discounted Value.

         For purposes of determining whether the Fund 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 Fund:
(i) 10% of the exercise price of a written call option; (ii) the exercise
price of any written put option; (iii) where the Fund is the seller under a
financial futures contract, 10% of the settlement price of the financial
futures contract; (iv) where the Fund is the purchaser under a financial
futures contract, the settlement price of assets purchased under such
financial futures contract; (v) the settlement price of the underlying
financial futures contract if the Fund writes put options on a financial
futures contract; and (vi) 105% of the fair market value of the underlying
financial futures contracts if the Fund writes call options on a financial
futures contract and does not own the underlying contract.

         For so long as any shares of AMPS are rated by Moody's, the Fund 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), except that the Fund 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 Fund 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 fair market value that
         equals or exceeds the amount of the Fund's obligations under any
         Forward Commitments to which it is from time to time a party or
         long-term, fixed

                                      19
<PAGE>

         income securities with a Discounted Value that equals or exceeds the
         amount of the Fund's obligations under any Forward Commitment to
         which it is from time to time a party, and

                  (ii) the Fund will not enter into a Forward Commitment
         unless, after giving effect thereto, the Fund would continue to have
         Moody's Eligible Assets with an aggregate Discounted Value equal to
         or greater than the AMPS Basic Maintenance Amount.

         For purposes of determining whether the Fund 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 Fund is a party and of all securities deliverable to the Fund
pursuant to such Forward Commitments shall be zero.

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

         For so long as shares of AMPS are rated by S&P or Moody's, the Fund,
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
the AMPS by S&P and/or Moody's, as the case may be, will not (i) borrow money
except for the purpose of clearing transactions in portfolio securities (which
borrowings under any circumstances shall be limited to the lesser of $10
million and an amount equal to 5% of the fair market value of the Fund's
assets at the time of such borrowings and which borrowings shall be repaid
within 60 days and not be extended or renewed and shall not cause the
aggregate Discounted Value of Moody's Eligible Assets and S&P Eligible Assets
to be less than the AMPS Basic Maintenance Amount), (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 Fund, (v) reissue any AMPS previously
purchased or redeemed by the Fund, (vi) merge or consolidate into or with any
other corporation or entity, (vii) change the Fund's pricing service or (viii)
engage in reverse repurchase agreements.

         For as long as the AMPS are rated by S&P, the Fund will not, unless
it has received written confirmation from S&P that such action would not
impair the rating then assigned to the shares of AMPS by S&P, engage in
interest rate swaps, caps and floors, except that the Fund may, without
obtaining the written consent described above, engage in swaps, caps and
floors if: (i) the counterparty to the swap transaction has a short-term
rating of A-1 or, if the counterparty does not have a short-term rating, the
counterparty's senior unsecured long-term debt rating is A- or higher, (ii)
the original aggregate notional amount of the interest rate swap transaction
or transactions is not to be greater than the liquidation preference of the
AMPS, (iii) the interest rate swap transaction will be marked-to-market weekly
by the swap counterparty, (iv) if the Fund fails to maintain an aggregate
discounted value at least equal to the AMPS Basic Maintenance Amount on two
consecutive Valuation Dates then the agreement shall terminate immediately,
(v) for the purpose of calculating the Discounted Value of S&P Eligible
Assets, 90% of any positive mark-to-market valuation of the Fund's rights will
be S&P Eligible Assets, 100% of any negative mark-to-market valuation of the
Fund's rights will be included in the calculation of the AMPS Basic
Maintenance Amount, and (vi) the Fund must maintain liquid assets with a value
at least equal to the net amount of the excess, if any, of the Fund's
obligations over its entitlement with respect to each swap. For caps/floors,
the Fund must maintain liquid assets with a value at least equal to the Fund's
obligations with respect to such caps or floors.

                            DIRECTORS AND OFFICERS

         The Directors of the Fund consist of seven individuals, six of whom
are not "interested persons" of the Fund as defined in the 1940 Act (the
"non-interested Directors"). The Directors 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 1940 Act.

         Each non-interested Director is a member of the Fund's Audit and
Oversight Committee (the "Audit Committee"). The principal responsibilities of
the Audit Committee are the appointment, compensation and oversight of the
Fund's independent accountants, including the resolution of disagreements
regarding financial reporting between Fund management and such independent
accountants. The Audit Committee's responsibilities include, without
limitation, to (i) review with the independent accountants the arrangements
for and scope of annual and special audits and any other services provided by
the independent accountants to the Fund; (ii) discuss with the

                                      20
<PAGE>

independent accountants certain matters relating to the Fund's financial
statements, including any adjustment to such financial statements recommended
by such independent accountants or any other results of any audit; (iii)
ensure that the independent accountants submit on a periodic basis a formal
written statement with respect to their independence, discuss with the
independent accountants any relationships or services disclosed in the
statement that may impact the objectivity and independence of the Fund's
independent accountants and recommend that the Board of Directors take
appropriate action in response thereto to satisfy itself of the independent
accountants' independence; and (iv) consider the comments of the independent
accountants with respect to the quality and adequacy of the Fund's accounting
and financial reporting policies and practices and internal controls and Fund
management's responses thereto. The Board of Directors of the Fund has adopted
a written charter for the Audit Committee. The Committee has retained
independent legal counsel to assist it in connection with these duties. The
Audit Committee met five times during the Fund's fiscal year ended August 31,
2003.

         Each non-interested Director is also a member of the Fund's
Nominating Committee (the "Nominating Committee"). The principal
responsibilities of the Nominating Committee are to identify individuals
qualified to serve as non-interested Directors of the Fund and to recommend
its nominees for consideration by the full Board. While the Nominating
Committee is solely responsible for the selection and nomination of the Fund's
non-interested Directors, the Nominating Committee may consider nominations
for the office of the Director made by Fund stockholders as it deems
appropriate. Fund stockholders who wish to recommend a nominee should send
nominations to the Secretary of the Fund that include biographical information
and set forth the qualifications of the proposed nominee. The Nominating
Committee is newly formed and did not meet during the Fund's fiscal year ended
August 31, 2003.

Biographical Information

         Certain biographical and other information relating to the
non-interested Directors of the Fund is set forth below, including their ages,
their principal occupations for at least the last five years, the length of
time served, the total number of portfolios overseen in the complex of funds
advised by the Investment Adviser, Merrill Lynch Investment Managers, L.P.
("MLIM") or their affiliates ("MLIM/FAM-advised funds") and other public
directorships.

<TABLE>
<CAPTION>

                                                                                   Number of
                                     Term of                                    MLIM/FAM-Advised
                  Position(s)     Office** and                                     Funds and
Name, Address*   Held with the   Length of Time      Principal Occupation(s)      Portfolios            Public
    and Age          Fund            Served          During Past Five Years        Overseen         Directorships
- -------------   ------------   ----------------    ---------------------------  --------------   ------------------------
<S>              <C>            <C>                <C>                          <C>              <C>
Ronald W.        Director       Director           Professor Emeritus of        49               None
Forbes (63)                     since 1988         Finance, School of           registered
                                                   Business, State University   investment
                                                   of New York at Albany        companies
                                                   since 2000 and professor     consisting of
                                                   thereof from 1989 to 2000;   49 portfolios
                                                   International Consultant,
                                                   Urban Institute,
                                                   Washington, D.C. from 1995
                                                   to 1999.

Cynthia A.       Director       Director since     Professor, Harvard           49               NewellRubbermaid
Montgomery                      1993               Business School since        registered       Inc. (manufacturing)
(51)                                               1989; Associate Professor,   investment
                                                   J.L. Kellogg Graduate        companies
                                                   School of Management,        consisting of
                                                   Northwestern University      49 portfolios
                                                   from 1985 to 1989;
                                                   Associate Professor,
                                                   Graduate School of
                                                   Business Administration,
                                                   University of Michigan
                                                   from 1979 to 1985.

Kevin A. Ryan    Director       Director           Founder and currently        49               None
(71)                            since 1992         Director Emeritus of the     registered
                                                   Boston University Center     investment
                                                   for the Advancement of       companies
                                                   Ethics and Character and     consisting of
                                                   Director thereof from 1989   49
                                                   to 1999; Professor           portfolios
                                                                                                 (continued on next page)
                                      21
<PAGE>
                                                                                   Number of
                                     Term of                                    MLIM/FAM-Advised
                  Position(s)     Office** and                                     Funds and
Name, Address*   Held with the   Length of Time      Principal Occupation(s)      Portfolios            Public
    and Age          Fund            Served          During Past Five Years        Overseen         Directorships
- -------------   ------------   ----------------    ---------------------------  --------------   ------------------------
                                                   from 1982 to 1999 and
                                                   currently Professor Emeritus
                                                   of Education of Boston
                                                   University; formerly
                                                   taught on the faculties of
                                                   The University of Chicago,
                                                   Stanford University and
                                                   Ohio State University.


Roscoe S.        Director       Director since     President, Middle East       49               None
Suddarth (68)                   2000               Institute, from 1995 to      registered
                                                   2001; Foreign Service        investment
                                                   Officer, United States       companies
                                                   Foreign Service, from 1961   consisting of
                                                   to 1995; Career Minister,    49 portfolios
                                                   from 1989 to 1995; Deputy
                                                   Inspector General, U.S.
                                                   Department of State, from
                                                   1991 to 1994; U.S.
                                                   Ambassador to the
                                                   Hashemite Kingdom of
                                                   Jordan, from 1987 to 1990.

Richard R.       Director       Director since     Professor of Finance since   49               Bowne & Co., Inc.
West (66)                       1988               1984, Dean from 1984 to      registered       (financial
                                                   1993 and currently Dean      investment       printers); Vornado
                                                   Emeritus of New York         companies        Realty Trust, Inc.
                                                   University Leonard N.        consisting of    (real estate
                                                   Stern School of Business     49 portfolios    holding company);
                                                   Administration.                               Vornado Operating
                                                                                                 Company (real
                                                                                                 estate company);
                                                                                                 Alexander's Inc.
                                                                                                 (real estate
                                                                                                 company)

Edward D.        Director       Director since     Self-employed financial      49               None
Zinbarg (69)                    2000               consultant since 1994;       registered
                                                   Executive Vice President     investment
                                                   of the Prudential            companies
                                                   Insurance Company of         consisting of
                                                   America from 1988 to 1994;   49 portfolios
                                                   Former Director of
                                                   Prudential Reinsurance
                                                   Company and former Trustee
                                                   of the Prudential
                                                   Foundation.
- ------------------
</TABLE>

*        The address of each non-interested Director is P.O. Box 9095,
         Princeton, New Jersey 08543-9095.
**       Each Director serves until his or her successor is elected and
         qualified, until December 31 of the year in which he or she turns 72,
         or until his or her death, resignation, or removal as provided in the
         Fund's By-laws, Charter or by statute.

         Certain biographical and other information relating to the Director
who is an "interested person" of the Fund as defined in the 1940 Act (the
"interested Director") and the other officers of the Fund is set forth below,
including their ages, their principal occupations for at least the last five
years, the length of time served, the total number of portfolios overseen in
MLIM/FAM-advised funds and public directorships held.
<TABLE>
<CAPTION>

                                                                                   Number of
                                      Term of                                   MLIM/FAM-Advised
                  Position(s)       Office and                                     Funds and
Name, Address*   Held with the    Length of Time      Principal Occupation(s)     Portfolios            Public
    and Age          Fund            Served**         During Past Five Years       Overseen         Directorships
- -------------   ------------   ----------------    ---------------------------  --------------   ------------------------
<S>              <C>            <C>                  <C>                        <C>              <C>
Terry K. Glenn   President      President since      President of the           125 registered   None
(63)***          and Director   1999 and             MLIM/FAM-advised funds     investment
                                Director**** since   since 1999; Chairman       companies
                                1988                 (Americas Region) of       consisting of
                                                     MLIM from 2000 to 2002;    160 portfolios
                                                     Executive Vice President
                                                     of

                                                                                                 (continued on next page)

                                      22
<PAGE>
                                                                                   Number of
                                      Term of                                   MLIM/FAM-Advised
                  Position(s)       Office and                                     Funds and
Name, Address*   Held with the    Length of Time      Principal Occupation(s)     Portfolios            Public
    and Age          Fund            Served**         During Past Five Years       Overseen         Directorships
- -------------   ------------   ----------------    ---------------------------  --------------   ------------------------
                                                     MLIM and the Investment
                                                     Adviser (which terms
                                                     as used herein
                                                     include their corporate
                                                     predecessors) from 1983
                                                     to 2002; President of FAM
                                                     Distributors, Inc.
                                                     ("FAMD" or the
                                                     "Distributor") from 1986
                                                     to 2002 and Director
                                                     thereof from 1991 to
                                                     2002; Executive Vice
                                                     President and Director of
                                                     Princeton Services, Inc.
                                                     ("Princeton Services")
                                                     from 1993 to 2002;
                                                     President of Princeton
                                                     Administrators, L.P. from
                                                     1988 to 2002; Director of
                                                     Financial Data Services,
                                                     Inc. from 1985 to 2002.

Donald C.        Vice           Vice President       First Vice President of    124 registered   None
Burke (43)       President      since 1993 and       MLIM and the Investment    investment
                 and Treasurer  Treasurer since      Adviser since 1997 and     companies
                                1999                 Treasurer thereof since    consisting of
                                                     1999; Senior Vice          159 portfolios
                                                     President and Treasurer
                                                     of Princeton Services
                                                     since 1999; Vice
                                                     President of FAMD since
                                                     1999; Vice President of
                                                     MLIM and the Investment
                                                     Adviser from 1990 to
                                                     1997; Director of
                                                     Taxation of MLIM since
                                                     1990.

Kenneth A.       Senior Vice    Senior Vice          Managing Director of       39 registered    None
Jacob (53)       President      President since      MLIM since 2000; First     investment
                                2002                 Vice President of MLIM     companies
                                                     from 1997 to 2000; Vice    consisting of
                                                     President of MLIM from     51 portfolios
                                                     1984 to 1997.

John M.          Senior Vice    Senior Vice          Managing Director of       39 registered    None
Loffredo (40)    President      President since      MLIM since 2000; First     investment
                                2002                 Vice President of MLIM     companies
                                                     from 1997 to 2000; Vice    consisting of
                                                     President of MLIM from     51 portfolios
                                                     1991 to 1997; Portfolio
                                                     Manager of the
                                                     Investment Adviser and
                                                     MLIM since 1997.

Fred K. Steube   Vice           Vice President       Director (Municipal        4                None
(53)             President      since 1990           Tax-Exempt Fund            registered
                                                     Management) since 2000;    investment
                                                     Vice President             companies
                                                     of MLIM from               consisting
                                                     1994 to 2000.              of 4
                                                                                portfolios

                                                                                                 (continued on next page)

                                      23
<PAGE>

                                                                                   Number of
                                      Term of                                   MLIM/FAM-Advised
                  Position(s)       Office and                                     Funds and
Name, Address*   Held with the    Length of Time      Principal Occupation(s)     Portfolios            Public
    and Age          Fund            Served**         During Past Five Years       Overseen         Directorships
- -------------   ------------   ----------------    ---------------------------  --------------   ------------------------
Phillip S.       Secretary      Secretary since      First Vice President of    124 registered
Gillespie (40)                  2004                 MLIM since 2001;           investment
                                                     Director of MLIM from      companies
                                                     2000 to 2001; Vice         consisting of
                                                     President of MLIM from     159 portfolios
                                                     1999 to 2000.






</TABLE>
_______________________
*        The address of each officer listed is P.O. Box 9011, Princeton, New
         Jersey 08543-9011.
**       Elected by and serves at the pleasure of the Board of Directors of
         the Fund.
***      Mr. Glenn is an "interested person," as defined in the 1940 Act, of
         the Fund based on his former positions with the Investment Adviser,
         MLIM, FAMD, Princeton Services, and Princeton Administrators, L.P.
****     As a Director, Mr. Glenn serves until his successor is elected and
         qualified or until December 31 of the year in which he turns 72, or
         until his death, resignation, or removal as provided in the Fund's
         by-laws, charter or by statute.

         In connection with the election of the Fund's Directors, holders of
shares of AMPS, Other AMPS and other preferred stock, voting as a separate
class, are entitled to elect two of the Fund's Directors, and the remaining
Directors are elected by all holders of capital stock, voting as a single
class. Mr. Forbes and Mr. West are the Directors elected by holders of
preferred stock. See "Description of AMPS-Voting Rights."

Share Ownership

         Information relating to each Director's share ownership in the Fund
and in all registered funds in the Merrill Lynch family of funds that are
overseen by the respective Director ("Supervised Merrill Lynch Funds") as of
December 31, 2003 is set forth in the chart below.

                                                          Aggregate Dollar Range
                                                             of Securities in
                                  Aggregate Dollar Range    Supervised Merrill
Name                              of Equity in the Fund        Lynch Funds
- ----                              ---------------------        -----------
Interested Director:
     Terry K. Glenn............       over $100,000           Over $100,000
Non-interested Directors:
     Ronald W. Forbes..........      $10,001-$50,000          Over $100,000
     Cynthia A. Montgomery.....            None               Over $100,000
     Kevin A. Ryan.............            None               Over $100,000
     Roscoe S. Suddarth........            None               Over $100,000
     Richard R. West...........            None               Over $100,000
     Edward D. Zinbarg.........            None               Over $100,000


         As of the date of this statement of additional information, none of
the Directors and officers of the Fund owned any outstanding shares of common
stock or Other AMPS of the Fund. As of the date of this statement of
additional information, none of the non-interested Directors of the Fund or
their immediate family members owned beneficially or of record any securities
in ML & Co.

Compensation of Directors

         The Fund pays each non-interested Director a combined fee of $3,800
per year plus a fee of $150 for each in-person Board meeting attended and $150
for each in-person Audit Committee and Nominating Committee meeting attended,
together with such Director's out-of-pocket expenses relating to attendance at
such meetings. The Chairman of the Fund's Audit Committee receives an
additional annual fee of $1,000.

                                      24
<PAGE>


         The following table shows the compensation earned by the
non-interested Directors for the Fund's fiscal year ended August 31, 2003 and
the aggregate compensation paid to them from all MLIM/FAM-advised funds for
the calendar year ended December 31, 2003.


                                                   Pension          Aggregate
                                                  Retirement      Compensation
                                                   Benefits       From Fund and
                                                  Accrued as          other
                                  Compensation   Part of Fund       FAM/MLIM-
            Name of Director       from Fund       Expense       Advised Funds**
- --------------------------------   -----------  --------------  ---------------
 Ronald W. Forbes*...................$6,000          None           $272,592
 Cynthia A. Montgomery...............$5,000          None           $251,925
 Kevin A. Ryan.......................$5,000          None           $251,925
 Roscoe S. Suddarth..................$5,000          None           $251,925
 Richard R. West.....................$5,000          None           $251,925
 Edward D. Zinbarg...................$5,000          None           $251,925

- ---------------
*    Chairman of the Audit Committee.
**   For the number of MLIM/FAM-advised funds from which each Director
     received compensation see table above under "--Biographical Information."

         Pursuant to its investment advisory agreement with the Fund (the
"Investment Advisory Agreement"), the Investment Adviser pays all compensation
to all officers of the Fund and all Directors of the Fund who are affiliated
with ML & Co. or its subsidiaries.

                INVESTMENT ADVISORY AND MANAGEMENT ARRANGEMENTS

         The Investment Adviser, which is owned and controlled by ML & Co., a
financial services holding company and the parent of Merrill Lynch, provides
the Fund with investment advisory and administrative services. The Investment
Adviser acts as the investment adviser to more than 100 registered investment
companies and offers investment advisory services to individuals and
institutional accounts. As of May 2004, the Investment Adviser and its
affiliates, including MLIM, had a total of approximately $491 billion in
investment company and other portfolio assets under management, including
approximately $253 billion in fixed income assets. This amount includes assets
managed by certain affiliates of the Investment Adviser. The Investment
Adviser is a limited partnership, the partners of which are ML & Co. and
Princeton Services. The principal business address of the Investment Adviser
is 800 Scudders Mill Road, Plainsboro, New Jersey 08536.

         The Investment Advisory Agreement provides that, subject to the
supervision of the Fund's Board of Directors, the Investment Adviser is
responsible for the actual management of the Fund's portfolio. The
responsibility for making decisions to buy, sell or hold a particular security
rests with the Investment Adviser, subject to review by the Board of
Directors.

         The portfolio manager primarily responsible for the Fund's day to day
management is Fred K. Steube. Fred K. Steube has been a Director (Municipal
Tax-Exempt Fund Management) of MLIM since 2000 and has 24 years of experience
investing in Municipal Bonds. The Fund's portfolio manager will consider
analyses from various sources, make the necessary investment decisions, and
place orders for transactions accordingly.

         For its services, the Fund pays the Investment Adviser a monthly fee
at the annual rate of 0.50% of the Fund's average weekly net assets ("average
weekly net assets" means the average weekly value of the total assets of the
Fund, including the proceeds from the issuance of preferred stock, minus the
sum of (i) accrued liabilities of the Fund, (ii) any accrued and unpaid
interest on outstanding borrowings and (iii) accumulated dividends on shares
of preferred stock). For purposes of this calculation, average weekly net
assets is determined at the end of each month on the basis of the average net
assets of the Fund for each week during the month. The assets for each weekly
period are determined by averaging the net assets at the last

                                      25
<PAGE>

business day of a week with the net assets at the last business day of the
prior week. The liquidation preference of any outstanding preferred stock
(other than accumulated dividends) is not considered a liability in
determining the Fund's average daily net assets.

         For the six months ended February 29, 2004 and the fiscal years ended
August 31, 2003, 2002 and 2001, the fees paid by the Fund to the Investment
Adviser pursuant to the Investment Advisory Agreement were $2,187,658,
$4,371,765, $4,281,952 and $4,269,279, respectively.

         For the six months ended February 29, 2004, and the fiscal years
ended August 31, 2003, 2002 and 2001, the Investment Adviser reimbursed the
Fund $25,727, $33,163, $1,705, and $0, respectively.

         The Investment Advisory Agreement obligates the Investment Adviser to
provide investment advisory services and to pay all compensation of and
furnish office space for officers and employees of the Fund connected with
investment and economic research, trading and investment management of the
Fund, as well as the compensation of all Directors of the Fund who are
affiliated persons of the Investment Adviser or any of its affiliates. The
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
preparing, printing and mailing proxies, listing fees, stock certificates and
stockholder reports, charges of the custodian and the transfer agent, dividend
disbursing agent and registrar, Commission fees, fees and expenses of
non-interested 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. Certain accounting
services are provided to the Fund by State Street Bank and Trust Company
("State Street") pursuant to an agreement between State Street and the Fund.
The Fund will pay the costs of these services. In addition, the Fund will
reimburse the Investment Adviser for certain additional accounting services.

         The table below shows the amounts paid by the Fund to State Street
and to the Investment Adviser for accounting services for the periods
indicated:
<TABLE>
<CAPTION>

                                               Paid by the Fund   Paid by the Fund to the
    Period                                     to State Street       Investment Adviser

<S>                                                  <C>                <C>
    Six months ended February 29, 2004...            $117,126           $8,884
    Fiscal year ended 2003...............            $237,622           $19,189
    Fiscal year ended 2002...............            $233,869           $27,918
    Fiscal year ended 2001...............            $154,896           $105,628
</TABLE>

         Unless earlier terminated as described below, the Investment Advisory
Agreement will remain in effect 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 the Fund and (b) by a majority of the Directors who are not parties to such
contract or interested persons (as defined in the 1940 Act) of any such party.
Such contract is not assignable and may be terminated without penalty on 60
days' written notice at the option of either party thereto or by the vote of
the stockholders of the Fund.

         In connection with the Board of Directors' consideration of the
Investment Advisory Agreement, the Board compared the Fund's fee rate for
advisory and administrative services and the Fund's historical performance to
certain comparable funds and reviewed information derived from a number of
sources and covering a range of issues. The Board of Directors considered the
compensation paid to the Investment Adviser and the services provided to the
Fund by the Investment Adviser under the Investment Advisory Agreement, as
well as other services provided by the Investment Adviser and its affiliates
under other agreements, and the personnel who will provide these services. In
addition to the investment advisory services provided to the Fund, the
Investment Adviser and its affiliates provide administrative services,
stockholder services, oversight of fund accounting, marketing services,
assistance in meeting legal and regulatory requirements, and other services
necessary for the operation of the Fund. The Fund's Board of Directors also
considered the direct and indirect benefits to the Investment Adviser from its

                                      26
<PAGE>

relationship with the Fund. Based on their experience as Directors of the Fund
and as directors of other MLIM/FAM-advised funds, the Board of Directors
concluded that the services provided in all areas were of a high quality and
that the Fund benefits and would continue to benefit from those services.

         In reviewing the Investment Advisory Agreement, the Board focused on
the experience, resources and strengths of the Investment Adviser and its
affiliates in managing investment companies that invest in Municipal Bonds,
including a number of other MLIM/FAM-advised leveraged closed end funds that
have investment objectives and strategies substantially similar to those of
the Fund. The Board also considered the Investment Adviser's experience in
managing funds that use leverage through the issuance of preferred stock. The
Board concluded that the Investment Adviser has a high level of expertise in
managing the types of investments used by the Fund and in managing leverage,
and concluded that the Fund benefits from that expertise. The Directors, based
on their experience as directors of other investment companies managed by the
Investment Adviser and its affiliates as well as of the Fund, also focused on
the quality of the Investment Adviser's compliance and administrative staff.
The Board noted that, in addition to the analysts and compliance personnel
dedicated to the tax-exempt fixed income management group, the Investment
Adviser has a separate administrative, legal and compliance staff to ensure a
high level of quality in the compliance and administrative services provided
to the Fund.

         In connection with its consideration of the Investment Advisory
Agreement, the Board of Directors also reviewed the compliance and
administrative services provided to the Fund by the Investment Adviser,
including its oversight of the Fund's day to day operations and its oversight
of Fund accounting. The Investment Adviser and its affiliates provide
compliance and administrative services to the Fund and all the
MLIM/FAM-advised funds, as well as to a number of third party fund groups. The
Board of Directors concluded, based on their experience as Directors, that,
historically, the compliance and administrative services provided by the
Investment Adviser and its affiliates were of a high quality and that the Fund
has benefited from these services.

         In reviewing the Investment Advisory Agreement, the Board of
Directors placed significant emphasis on the Fund's fee rate for advisory and
administrative services and the Fund's historical performance as compared to
those of comparable leveraged, closed end funds that are managed by other
investment advisers that invest primarily in municipal obligations as provided
by Lipper Inc. In particular, the Board of Directors noted that the Fund had
the second lowest contractual advisory fee rate at a common asset level (below
the median of the group) among ten comparable funds. The Board of Directors
also found that the Fund had the fourth lowest fee rate for advisory and
administrative services as a percentage of total assets at a common asset
level and the fourth lowest fee rate for advisory and administrative services
as a percentage of assets attributable to common stock at a common asset level
including leverage (below the median of the group). The Board also compared
the Fund's total expenses, both including and excluding assets attributable to
leverage, and concluded that, in each case the Fund's expenses were fifth
lowest in its category and below the median of the group. The Board also noted
that the Fund's historical performance was comparable to that of other
similarly managed closed end leveraged municipal debt funds. The Board of
Directors concluded that the advisory fee rate was reasonable in relation to
the services provided by the Investment Adviser to the Fund as well as the
costs incurred and benefits to be gained by the Investment Adviser and its
affiliates in providing such services.

         The Board considered whether there should be changes in the advisory
fee rate or structure in order to enable the Fund to participate in any
economies of scale that the Investment Adviser may experience as a result of
growth in the Fund's assets. The Board of Directors determined that the
current management fee structure was reasonable and that no changes are
currently necessary. The non-interested Directors were represented by
independent counsel who assisted them in their deliberations.

Code of Ethics

         The Fund's Board of Directors approved a Code of Ethics under Rule
17j-1 of the 1940 Act that covers the Fund and the Investment Adviser. 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 the Fund.

                                      27
<PAGE>

Proxy Voting Policies and Procedures

         The Fund's Board of Directors has delegated to the Investment Adviser
authority to vote all proxies relating to the Fund's portfolio securities. The
Investment Adviser has adopted policies and procedures ("Proxy Voting
Procedures") with respect to the voting of proxies related to the portfolio
securities held in the account of one or more of its clients, including the
Fund. Pursuant to these Proxy Voting Procedures, the Investment Adviser's
primary objective when voting proxies is to make proxy voting decisions solely
in the best interests of the Fund and its stockholders, and to act in a manner
that the Investment Adviser believes is most likely to enhance the economic
value of the securities held by the Fund. The Proxy Voting Procedures are
designed to ensure that the Investment Adviser considers the interests of its
clients, including the Fund, and not the interests of the Investment Adviser,
when voting proxies and that real (or perceived) material conflicts that may
arise between the Investment Adviser's interest and those of the Investment
Adviser's clients are properly addressed and resolved.

         In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The Committee
is comprised of the Investment Adviser's Chief Investment Officer (the "CIO"),
one or more other senior investment professionals appointed by the CIO,
portfolio managers and investment analysts appointed by the CIO and any other
personnel the CIO deems appropriate. The Committee will also include two
non-voting representatives from the Investment Adviser's Legal department
appointed by the Investment Adviser's General Counsel. The Committee's
membership shall be limited to full-time employees of the Investment Adviser.
No person with any investment banking, trading, retail brokerage or research
responsibilities for the Investment Adviser's affiliates may serve as a member
of the Committee or participate in its decision making (except to the extent
such person is asked by the Committee to present information to the Committee,
on the same basis as other interested knowledgeable parties not affiliated
with the Investment Adviser might be asked to do so). The Committee determines
how to vote the proxies of all clients, including the Fund, that have
delegated proxy voting authority to the Investment Adviser and seeks to ensure
that all votes are consistent with the best interests of those clients and are
free from unwarranted and inappropriate influences. The Committee establishes
general proxy voting policies for the Investment Adviser and is responsible
for determining how those policies are applied to specific proxy votes, in
light of each issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated consequences of
alternate actions. In so doing, the Committee may determine to vote a
particular proxy in a manner contrary to its generally stated policies. In
addition, the Committee will be responsible for ensuring that all reporting
and recordkeeping requirements related to proxy voting are fulfilled.

         The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires a
case-by-case determination. In such cases, the Committee may elect not to
adopt a specific voting policy applicable to that issue. The Investment
Adviser believes that certain proxy voting issues require investment analysis
- -- such as approval of mergers and other significant corporate transactions --
akin to investment decisions, and are, therefore, not suitable for general
guidelines. The Committee may elect to adopt a common position for the
Investment Adviser on certain proxy votes that are akin to investment
decisions, or determine to permit the portfolio manager to make individual
decisions on how best to maximize economic value for the Fund (similar to
normal buy/sell investment decisions made by such portfolio managers). While
it is expected that the Investment Adviser will generally seek to vote proxies
over which the Investment Adviser exercises voting authority in a uniform
manner for all the Investment Adviser's clients, the Committee, in conjunction
with the Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.

         To assist the Investment Adviser in voting proxies, the Committee has
retained Institutional Shareholder Services ("ISS"). ISS is an independent
adviser that specializes in providing a variety of fiduciary-level
proxy-related services to institutional investment managers, plan sponsors,
custodians, consultants, and other institutional investors. The services
provided to the Investment Adviser by ISS include in-depth research, voting
recommendations (although the Investment Adviser is not obligated to follow
such recommendations), vote execution, and recordkeeping. ISS will also assist
the Fund in fulfilling its reporting and recordkeeping obligations under the
1940 Act.

         The Investment Adviser's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For instance,
under the Proxy Voting Procedures, the Investment Adviser generally

                                      28
<PAGE>

will not seek to vote proxies related to portfolio securities that are on
loan, although it may do so under certain circumstances. In addition, the
Investment Adviser will vote proxies related to securities of foreign issuers
only on a best efforts basis and may elect not to vote at all in certain
countries where the Committee determines that the costs associated with voting
generally outweigh the benefits. The Committee may at any time override these
general policies if it determines that such action is in the best interests of
the Fund.

         From time to time, the Investment Adviser may be required to vote
proxies in respect of an issuer where an affiliate of the Investment Adviser
(each, an "Affiliate"), or a money management or other client of the
Investment Adviser (each, a "Client") is involved. The Proxy Voting Procedures
and the Investment Adviser's adherence to those procedures are designed to
address such conflicts of interest. The Committee intends to strictly adhere
to the Proxy Voting Procedures in all proxy matters, including matters
involving Affiliates and Clients. If, however, an issue representing a
non-routine matter that is material to an Affiliate or a widely known Client
is involved such that the Committee does not reasonably believe it is able to
follow its guidelines (or if the particular proxy matter is not addressed by
the guidelines) and vote impartially, the Committee may, in its discretion for
the purposes of ensuring that an independent determination is reached, retain
an independent fiduciary to advise the Committee on how to vote or to cast
votes on behalf of the Investment Adviser's clients.

         In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an independent
fiduciary, the powers of the Committee shall pass to a subcommittee, appointed
by the CIO (with advice from the Secretary of the Committee), consisting
solely of Committee members selected by the CIO. The CIO shall appoint to the
subcommittee, where appropriate, only persons whose job responsibilities do
not include contact with the Client and whose job evaluations would not be
affected by the Investment Adviser's relationship with the Client (or failure
to retain such relationship). The subcommittee shall determine whether and how
to vote all proxies on behalf of the Investment Adviser's clients or, if the
proxy matter is, in their judgment, akin to an investment decision, to defer
to the applicable portfolio managers, provided that, if the subcommittee
determines to alter the Investment Adviser's normal voting guidelines or, on
matters where the Investment Adviser's policy is case-by-case, does not follow
the voting recommendation of any proxy voting service or other independent
fiduciary that may be retained to provide research or advice to the Investment
Adviser on that matter, no proxies relating to the Client may be voted unless
the Secretary, or in the Secretary's absence, the Assistant Secretary of the
Committee concurs that the subcommittee's determination is consistent with the
Investment Adviser's fiduciary duties.

         In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain recurring proxy
issues that are not expected to involve unusual circumstances. These policies
are guidelines only, and the Investment Adviser may elect to vote differently
from the recommendation set forth in a voting guideline if the Committee
determines that it is in the Fund's best interest to do so. In addition, the
guidelines may be reviewed at any time upon the request of a Committee member
and may be amended or deleted upon the vote of a majority of Committee members
present at a Committee meeting at which there is a quorum.

         The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:

          o    Proposals related to the composition of the Board of Directors
               of issuers other than investment companies. As a general
               matter, the Committee believes that a company's Board of
               Directors (rather than stockholders) is most likely to have
               access to important, nonpublic information regarding a
               company's business and prospects, and is therefore
               best-positioned to set corporate policy and oversee management.
               The Committee, therefore, believes that the foundation of good
               corporate governance is the election of qualified, independent
               corporate directors who are likely to diligently represent the
               interests of stockholders and oversee management of the
               corporation in a manner that will seek to maximize stockholder
               value over time. In individual cases, the Committee may look at
               a nominee's history of representing stockholder interests as a
               director of other companies or other factors, to the extent the
               Committee deems relevant.

          o    Proposals related to the selection of an issuer's independent
               auditors. As a general matter, the Committee believes that
               corporate auditors have a responsibility to represent the
               interests of stockholders and provide an independent view on
               the propriety of financial reporting decisions

                                      29
<PAGE>

               of corporate management. While the Committee will generally
               defer to a corporation's choice of auditor, in individual
               cases, the Committee may look at an auditors' history of
               representing stockholder interests as auditor of other
               companies, to the extent the Committee deems relevant.

          o    Proposals related to management compensation and employee
               benefits. As a general matter, the Committee favors disclosure
               of an issuer's compensation and benefit policies and opposes
               excessive compensation, but believes that compensation matters
               are normally best determined by an issuer's board of directors,
               rather than stockholders. Proposals to "micro-manage" an
               issuer's compensation practices or to set arbitrary
               restrictions on compensation or benefits will, therefore,
               generally not be supported.

          o    Proposals related to requests, principally from management, for
               approval of amendments that would alter an issuer's capital
               structure. As a general matter, the Committee will support
               requests that enhance the rights of common stockholders and
               oppose requests that appear to be unreasonably dilutive.

          o    Proposals related to requests for approval of amendments to an
               issuer's charter or by-laws. As a general matter, the Committee
               opposes poison pill provisions.

          o    Routine proposals related to requests regarding the formalities
               of corporate meetings.

          o    Proposals related to proxy issues associated solely with
               holdings of investment company shares. As with other types of
               companies, the Committee believes that a fund's Board of
               Directors (rather than its stockholders) is best-positioned to
               set fund policy and oversee management. However, the Committee
               opposes granting Boards of Directors authority over certain
               matters, such as changes to a fund's investment objective, that
               the Investment Company Act envisions will be approved directly
               by stockholders.

          o    Proposals related to limiting corporate conduct in some manner
               that relates to the stockholder's environmental or social
               concerns. The Committee generally believes that annual
               stockholder meetings are inappropriate forums for discussion of
               larger social issues, and opposes stockholder resolutions
               "micro-managing" corporate conduct or requesting release of
               information that would not help a stockholder evaluate an
               investment in the corporation as an economic matter. While the
               Committee is generally supportive of proposals to require
               corporate disclosure of matters that seem relevant and material
               to the economic interests of stockholders, the Committee is
               generally not supportive of proposals to require disclosure of
               corporate matters for other purposes.

                            PORTFOLIO TRANSACTIONS

         Subject to policies established by the Board of Directors, the
Investment Adviser is primarily responsible for the execution of the Fund's
portfolio transactions and the allocation of brokerage. The Fund has no
obligation to deal with any dealer or group of dealers in the execution of
transactions in portfolio securities of the Fund. Where possible, the Fund
deals directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. It is the policy of the Fund to obtain the best results in
conducting portfolio transactions for the Fund, taking into account such
factors as price (including the applicable dealer spread or commission), the
size, type and difficulty of the transaction involved, the firm's general
execution and operations facilities and the firm's risk in positioning the
securities involved. The cost of portfolio securities transactions of the Fund
primarily consists of dealer or underwriter spreads and brokerage commissions.
While reasonable competitive spreads or commissions are sought, the Fund will
not necessarily be paying the lowest spread or commission available on any
particular transaction.

         Subject to obtaining the best net results, dealers who provide
supplemental investment research (such as quantitative and modeling
information assessments and statistical data and provide other similar
services) to the Investment Adviser may receive orders for transactions by the
Fund. Information so received will be in addition to and not in lieu of the
services required to be performed by the Investment Adviser under the
Investment Advisory

                                      30
<PAGE>

Agreement and the expense of the Investment Adviser will not necessarily be
reduced as a result of the receipt of such supplemental information.
Supplemental investment research obtained from such dealers might be used by
the Investment Adviser in servicing all of its accounts and such research
might not be used by the Investment Adviser in connection with the Fund.

         The Fund invests in securities traded in the over-the-counter
markets, and the Fund intends to deal directly with dealers who make markets
in the securities involved, except in those circumstances where better
execution is available elsewhere. Under the 1940 Act, except as permitted by
exemptive order, persons affiliated with the Fund, including Merrill Lynch,
are prohibited from dealing with the Fund as principal in the purchase and
sale of securities. Since transactions in the over-the-counter market usually
involve transactions with dealers acting as principals for their own accounts,
the Fund does not deal with Merrill Lynch and its affiliates in connection
with such principal transactions except that, pursuant to exemptive orders
obtained by the Investment Adviser, the Fund may engage in principal
transactions with Merrill Lynch in high quality, short term, tax exempt
securities. See "Investment Restrictions." However, affiliated persons of the
Fund, including Merrill Lynch, may serve as its brokers in certain
over-the-counter transactions conducted on an agency basis. In addition, the
Fund has received an exemptive order, under which it may purchase investment
grade Municipal Bonds through group orders from an underwriting syndicate of
which Merrill Lynch is a member subject to conditions set forth in such order
(the "Group Order Exemptive Order"). A group order is an order for securities
held in an underwriting syndicate for the account of all members of the
syndicate, and in proportion to their respective participation in the
syndicate.

         The Fund also may purchase tax exempt debt instruments in
individually negotiated transactions with the issuers. Because an active
trading market may not exist for such securities, the prices that the Fund may
pay for these securities or receive on their resale may be lower than that for
similar securities with a more liquid market.

         Certain court decisions have raised questions as to the extent to
which investment companies should seek exemptions under the 1940 Act in order
to seek to recapture underwriting and dealer spreads from affiliated entities.
The Fund's Board of Directors has considered all factors deemed relevant and
has made a determination not to seek such recapture at this time. The Fund's
Board of Directors will reconsider this matter from time to time.

         The Fund has received an exemptive order from the Commission
permitting it to lend portfolio securities to Merrill Lynch or its affiliates.
Pursuant to that order, the Fund also has retained an affiliated entity of the
Investment Adviser as the securities lending agent for a fee, including a fee
based on a share of the returns on investment of cash collateral. That entity
may, on behalf of the Fund, invest cash collateral received by the Fund for
such loans, among other things, in a private investment company managed by
that entity or in registered money market funds advised by the Investment
Adviser or its affiliates.

         Securities held by the Fund may also be held by, or be appropriate
investments for, other funds or investment advisory clients for which the
Investment Adviser or its affiliates act as an adviser. Because of different
investment 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 the Investment Adviser for the Fund or
other funds for which it acts as investment adviser or for other 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 by the
Investment Adviser (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.

         Section 11(a) of the Securities Exchange Act of 1934 generally
prohibits members of the U.S. national securities exchanges from executing
exchange transactions for their affiliates and institutional accounts that
they manage unless the member (i) has obtained prior express authorization
from the account to effect such transactions, (ii) at least annually furnishes
the account with a statement setting forth the aggregate compensation received
by the member in effecting such transactions, and (iii) complies with any
rules the Commission has prescribed with respect to the requirements of
clauses (i) and (ii). To the extent Section 11(a) would apply to Merrill Lynch
acting as a broker for the Fund in any of its portfolio transactions executed
on any such securities exchange of which it is a member, appropriate consents
have been obtained from the Fund and annual statements as to aggregate
compensation will be provided to the Fund.

                                      31
<PAGE>

Portfolio Turnover

         Generally, the Fund does not purchase securities for short term
trading profits. However, the Fund may dispose of securities without regard to
the time they have been held when such actions, for defensive or other
reasons, appear advisable to the Investment Adviser. While it is not possible
to predict turnover rates with any certainty, at present it is anticipated
that the Fund's annual portfolio turnover rate, under normal circumstances,
should be less than 100%. (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 the 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 the Fund and
may have certain tax consequences for stockholders.

         For the six months ended February 29, 2004 and the fiscal years ended
August 31, 2003 and 2002, the Fund's portfolio turnover rates were
25.00%, 44.30% and 74.00%, respectively.

                                     TAXES

         The Fund has elected to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue
Code of 1986, as amended (the "Code"). As long as it so qualifies, in any
taxable year in which it distributes at least 90% of its taxable net income
and 90% of its tax exempt net income (see below), the Fund (but not its
stockholders) will not be subject to Federal income tax to the extent that it
distributes its net investment income and net realized capital gains. The Fund
intends to distribute substantially all of such income. If, in any taxable
year, the Fund fails to qualify as a RIC under the Code, it would be taxed in
the same manner as an ordinary corporation and all distributions from earnings
and profits (as determined under U.S. Federal income tax principles) to its
stockholders would be taxable as ordinary dividend income eligible for the
maximum 15% tax rate for non-corporate shareholders and the dividends-received
deduction for corporate shareholders. However , the Fund's distributions
derived from income on tax exempt obligations, as defined herein, would no
longer qualify for treatment as exempt interest.

         The Code requires a RIC to pay a nondeductible 4% excise tax to the
extent the RIC 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 will not apply to the tax exempt income of a RIC, such as
the Fund, that pays exempt-interest dividends.

         The Internal Revenue Service (the "IRS"), in a revenue ruling, held
that certain auction rate preferred stock would be treated as stock for
Federal income tax purposes. The terms of the AMPS are substantially similar,
but not identical, to the auction rate preferred stock discussed in the
revenue ruling, and in the opinion of Sidley Austin Brown & Wood LLP, counsel
to the Fund, the shares of AMPS will constitute stock of the Fund and
distributions with respect to shares of 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 the Fund's current and accumulated
earnings and profits as calculated for Federal income tax purposes.
Nevertheless, it is possible that the IRS might take a contrary position,
asserting, for example, that the shares of AMPS constitute debt of the Fund.
If this position were upheld, the discussion of the treatment of distributions
below would not apply. Instead, distributions by the Fund to holders of shares
of AMPS would constitute taxable interest income, whether or not they exceeded
the earnings and profits of the Fund, would be included in full in the income
of the recipient and would be taxed as ordinary income. Counsel believes that
such a position, if asserted by the IRS, would be unlikely to prevail.

         The Fund will only purchase a Municipal Bond or Non-Municipal
Tax-Exempt Security if it is accompanied by an opinion of counsel to the
issuer, which is delivered on the date of issuance of the security, that the
interest paid on such security is excludable from gross income for Federal
income tax purposes (i.e., "tax-exempt"). The Fund intends to qualify to pay
"exempt-interest dividends" 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 its total assets consists of obligations that pay interest
which is excludable from gross income for Federal income tax purposes ("tax
exempt obligations") under Section 103(a) of the Code (relating generally to
obligations of a state or local governmental unit), the Fund shall be
qualified to pay exempt-interest dividends to its stockholders.
Exempt-

                                      32
<PAGE>

interest dividends are dividends or any part thereof paid by the Fund that are
attributable to interest on tax exempt obligations and designated by the Fund
as exempt-interest dividends in a written notice mailed to the Fund's
stockholders within 60 days after the close of its taxable year. To the extent
that the dividends distributed to the Fund's stockholders are derived from
interest income exempt from tax under Code Section 103(a) and are properly
designated as exempt-interest dividends, they will be excludable from a
stockholder's gross income for Federal tax purposes. Exempt-interest dividends
are included, however, in determining the portion, if any, of a person's
social security and railroad retirement benefits subject to Federal income
taxes. Each stockholder is advised to consult a tax adviser with respect to
whether exempt-interest dividends retain the exclusion under Code Section
103(a) if such stockholder would be treated as a "substantial user" or
"related person" under Code Section 147(a) with respect to property financed
with the proceeds of an issue of PABs, if any, held by the Fund.

         To the extent that the Fund'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 ("ordinary income dividends"), such
distributions are considered ordinary income for Federal income tax purposes.
Distributions by the Fund, whether from exempt-interest income, ordinary
income or capital gains, are not eligible for the dividends received deduction
allowed to corporations under the Code or the reduced tax rates available to
non-corporate shareholders pursuant to recent legislation. 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 ("capital gain dividends") are taxable as long-term capital
gains for Federal income tax purposes, regardless of the length of time the
stockholder has owned Fund shares. Generally not later than 60 days after the
close of its taxable year, the Fund will provide its stockholders with a
written notice designating the amounts of any exempt-interest dividends and
capital gain dividends. If the 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 will be
treated for tax purposes as being paid by the Fund and received by its
stockholders on December 31 of the year in which such dividend was declared.

         All or a portion of the Fund's gain from the sale or redemption of
tax exempt obligations purchased at a market discount will be treated for
Federal income tax purposes as ordinary income rather than capital gain. This
rule may increase the amount of ordinary income dividends received by
stockholders. Distributions in excess of the Fund's earnings and profits will
first reduce the adjusted tax basis of a holder'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). The sale or exchange
of AMPS could result in capital gain or loss to holders of AMPS who hold their
shares as capital assets. Generally, a stockholder's gain or loss will be
long-term capital gain or loss if the shares have been held for more than one
year. Any loss upon the sale or exchange of Fund shares held for six months or
less will be disallowed to the extent of any exempt-interest dividends
received by the stockholder. In addition, any such loss that is not disallowed
under the rule stated above will be treated as long-term capital loss to the
extent of any capital gain dividends received by the stockholder.

         If you borrow money to buy the Fund's AMPS, you may not be permitted
to deduct the interest on that loan. Under Federal income tax rules, the
Fund's AMPS may be treated as having been bought with borrowed money even if
the purchase cannot be traced directly to borrowed money. Stockholders should
consult their own tax advisers regarding the impact of an investment in AMPS
upon the deductibility of interest payable by the stockholder.

         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's proportionate
share of particular types of income, including exempt-interest income and net
long-term capital gains. A class'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. Thus, the Fund is
required to allocate a portion of its net capital gain and other taxable
income to the shares of AMPS and Other AMPS of each series. Accordingly, the
Fund intends to designate dividends paid to the Series F AMPS and Other AMPS
as tax exempt interest, capital gains or other taxable income, as applicable,
in proportion to each series' share of total dividends paid during the year.
The Fund may notify the Auction Agent of the amount of any net capital gain
and 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
Fund also may include such income in a dividend on shares of AMPS without
giving advance notice thereof if it increases the dividend by an additional
amount calculated as if such income were a Retroactive Taxable

                                      33
<PAGE>

Allocation and the additional amount were an Additional Dividend, provided
that the Fund will notify the Auction Agent of the additional amounts to be
included in such dividend prior to the applicable Dividend Payment Date. See
"The Auction -- Auction Procedures -- Auction Date; Advance Notice of
Allocation of Taxable Income; Inclusion of Taxable Income in Dividends" in the
prospectus. Except for the portion of any dividend that it informs the Auction
Agent will be treated as capital gains or other taxable income, the Fund
anticipates that the dividends paid on the shares of AMPS will constitute
exempt-interest dividends. The amount of net capital gain and ordinary income
allocable to shares of AMPS (the "taxable distribution") will depend upon the
amount of such gains and income realized by the Fund and the total dividends
paid by the Fund on shares of common stock and shares of the series of AMPS
during a taxable year, but the taxable distribution generally is not expected
to be significant.

         If the Fund makes a Retroactive Taxable Allocation, it will pay
Additional Dividends to holders of AMPS who are subject to the Retroactive
Taxable Allocation. See "Description of AMPS -- Dividends -- Additional
Dividends" in the prospectus. The Federal income tax consequences of
Additional Dividends under existing law are uncertain. The Fund intends to
treat a holder as receiving a dividend distribution in the amount of any
Additional Dividend only as and when such Additional Dividend is paid. An
Additional Dividend generally will be designated by the 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 Dividend is a
taxable dividend either in the taxable year for which the Retroactive Taxable
Allocation is made or in the taxable year in which the Additional Dividend is
paid.

         In the opinion of Sidley Austin Brown & Wood LLP, counsel to the
Fund, under current law the manner in which the Fund intends to allocate items
of tax exempt income, net capital gain and other taxable income among shares
of common stock and shares of the series of AMPS will be respected for Federal
income tax purposes. However, the tax treatment of Additional Dividends may
affect the Fund's calculation of each class's 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 the Fund's
method for allocating tax exempt income, net capital gain and other taxable
income, if any, among shares of common stock and shares of the AMPS will be
respected for Federal income tax purposes, and it is possible that the IRS
could disagree with counsel's opinion and attempt to reallocate the Fund's net
capital gain or other taxable income. In the event of a reallocation, some of
the dividends identified by the Fund as exempt-interest dividends to holders
of shares of AMPS may be recharacterized as additional capital gains or other
taxable income. In the event of such recharacterization, the Fund would not be
required to make payments to such stockholders to offset the tax effect of
such reallocation. In addition, a reallocation may cause the Fund to be liable
for income tax and excise tax on any reallocated taxable income. Sidley Austin
Brown & Wood LLP has advised the Fund that, in its opinion, if the IRS were to
challenge in court the Fund's allocations of income and gain, the IRS would be
unlikely to prevail. A holder should be aware, however, that the opinion of
Sidley Austin Brown & Wood LLP represents only its best legal judgment and is
not binding on the IRS or the courts.

         The Code subjects interest received on certain otherwise tax exempt
securities to a Federal alternative minimum tax. The Federal alternative
minimum tax applies to interest received on PABs issued after August 7, 1986.
PABs are bonds that, although tax exempt, are used for purposes other than
those performed by governmental units and that benefit non-governmental
entities (e.g., bonds used for industrial development or housing purposes).
Income received on such bonds is classified as an item of "tax preference,"
which could subject certain investors in such bonds, including stockholders of
the Fund, to an increased Federal alternative minimum tax. The Fund intends to
purchase such PABs and will report to stockholders at the close of the
calendar year-end the portion of its dividends declared during the year which
constitutes an item of tax preference for Federal 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's "adjusted
current earnings," which more closely reflect a corporation's economic income.
Because an exempt-interest dividend paid by the Fund will be included in
adjusted current earnings, a corporate stockholder may be required to pay a
Federal alternative minimum tax on exempt-interest dividends paid by the Fund.

         The Fund may invest in instruments the return on which includes
nontraditional features such as indexed principal or interest payments
("nontraditional instruments"). These instruments may be subject to special
tax rules under which the 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 nontraditional
instruments could be recharacterized as taxable ordinary income.

                                      34
<PAGE>

         The Fund may engage in interest rate swaps. The Federal income tax
rules governing the taxation of interest rate swaps are not entirely clear and
may require the Fund to treat payments received under such arrangements as
ordinary income and to amortize payments under certain circumstances. Because
payments received by the Fund in connection with swap transactions will be
taxable rather than tax exempt, they may result in increased taxable
distributions to stockholders.

         Certain transactions entered into by the Fund are subject to complex
Federal income tax provisions that may, among other things, (a) affect the
character of gains and losses realized, (b) disallow, suspend or otherwise
limit the allowance of certain losses or deductions, and (c) accelerate the
recognition of income. Operation of these tax rules could, therefore, affect
the character, amount and timing of distributions and result in increased
taxable distributions to stockholders. Special tax rules also will require the
Fund to mark-to-market certain types of positions in its portfolio (i.e.,
treat them as sold on the last day of the taxable year), and may result in the
recognition of income without a corresponding receipt of cash. The Fund
intends to monitor its transactions, make appropriate tax elections and make
appropriate entries in its books and records to lessen the effect of these tax
rules and avoid any possible disqualification for the special treatment
afforded RICs under the Code.

         The Fund's ability to distribute dividends exempt from Federal income
tax depends on the exclusion from gross income of the interest income that it
receives on the securities in which it invests. The Fund will only purchase
Municipal Bonds if they are accompanied by an opinion of counsel to the
issuer, which is delivered on the date of issuance of that security, that
interest on such securities is excludable from gross income for Federal income
tax purposes (the "tax exemption opinion").

         Events occurring after the date of issuance of the Municipal Bonds
and Non-Municipal Tax Exempt Securities in which the Fund invests, however,
may cause the interest on such securities to be includable in gross income for
Federal income tax purposes. For example, the Code establishes certain
requirements, such as restrictions as to the investment of the proceeds of the
issue, limitations as to the use of proceeds of such issue and the property
financed by such proceeds, and the payment of certain excess earnings to the
Federal government, that must be met after the issuance of securities for
interest on such securities to remain excludable from gross income for Federal
income tax purposes. The issuers and the conduit borrowers of the Municipal
Bonds or Non-Municipal Tax Exempt Securities generally covenant to comply with
such requirements, and the tax exemption opinion generally assumes continuing
compliance with such requirements. Failure to comply with these continuing
requirements, however, may cause the interest on such securities to be
includable in gross income for Federal income tax purposes retroactive to
their date of issue.

         In addition, the IRS has an ongoing enforcement program that involves
the audit of tax exempt bonds to determine whether an issue of bonds satisfies
all of the requirements that must be met for interest on such bonds to be
excludable from gross income for Federal income tax purposes. From time to
time, some of the securities held by the Fund may be the subject of such an
audit by the IRS, and the IRS may determine that the interest on such
securities is includable in gross income for Federal income tax purposes,
either because the IRS has taken a legal position adverse to the conclusion
reached by counsel to the issuer in the tax exemption opinion or as a result
of an action taken or not taken after the date of issue of such obligation. If
a Municipal Bond or Non-Municipal Tax Exempt Security in which the Fund
invests is determined to pay taxable interest subsequent to the Fund's
acquisition of such security, the IRS may demand that the Fund pay taxes on
the affected interest income. If the Fund agrees to do so, the Fund's yield on
its common stock could be adversely affected. A determination that interest on
a security held by the Fund is includable in gross income for Federal income
tax purposes retroactively to its date of issue may, likewise, cause a portion
of prior distributions received by stockholders, including holders of AMPS, to
be taxable to those stockholders in the year of receipt. The Fund will not pay
an Additional Dividend to a holder of AMPS under these circumstances.

         If at any time when shares of AMPS are outstanding the Fund does not
meet the asset coverage requirements of the 1940 Act, the Fund will be
required to suspend distributions to holders of common stock until the asset
coverage is restored. See "Description of AMPS -- Dividends -- Restrictions on
Dividends and Other Payments" and in the prospectus. This may prevent the Fund
from distributing at least 90% of its net income, and may, therefore,
jeopardize the Fund's qualification for taxation as a RIC. If the Fund were to
fail to qualify as a RIC, some or all of the distributions paid by the Fund
would be fully taxable for Federal income tax purposes. Upon any failure to
meet the asset coverage requirements of the 1940 Act, the Fund, in its sole
discretion, may, and under

                                      35
<PAGE>

certain circumstances will be required to, redeem shares of AMPS in order to
maintain or restore the requisite asset coverage and avoid the adverse
consequences to the Fund and its stockholders of failing to qualify as a RIC.
See "Description of AMPS -- Redemption" herein and in the prospectus. There
can be no assurance, however, that any such action would achieve such
objectives.

         As noted above, the 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. Additional preferred stock that the Fund has authority to
issue may raise an issue as to whether distributions on such preferred stock
are "preferential" under the Code and therefore not eligible for the dividends
paid deduction. The Fund intends to issue preferred stock that counsel advises
will not result in the payment of a preferential dividend. If the Fund
ultimately relies on a legal opinion with regard to such preferred stock,
there is no assurance 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 Fund could lose the
benefit of the special treatment afforded RICs under the Code. In this case,
dividends paid by the Fund would not be exempt from Federal income taxes.
Additionally, the Fund would be subject to Federal income tax, including the
alternative minimum tax.

         Under certain Code provisions, some stockholders may be subject to a
withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Backup withholding may also be
required on distributions paid by the Fund, unless it reasonably estimates
that at least 95% of its distributions during the taxable year are comprised
of exempt-interest dividends. Generally, stockholders subject to backup
withholding will be those for whom no certified taxpayer identification number
is on file with the Fund or who, to the Fund'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 investor is not
otherwise subject to backup withholding. Backup withholding is not an
additional tax. Any amount withheld generally may be allowed as a refund or a
credit against a shareholder's Federal income tax liability; provided that the
required information is timely provided to the IRS.

         The Fund is generally not an appropriate investment for retirement
plans, other entities that are not subject to tax and foreign stockholders.

State and Local Taxes

         The exemption from Federal income tax for exempt-interest dividends
does not necessarily result in an exemption for such dividends under the
income or other tax laws of any state or local taxing authority. Stockholders
are advised to consult their own tax advisers concerning state and local
matters.

         In some states, the portion of any exempt-interest dividend that is
derived from interest received by a RIC on its holdings of that state's
securities and its political subdivisions and instrumentalities is exempt from
that state's income tax. Therefore, the Fund will report annually to its
stockholders the percentage of interest income earned by the Fund during the
preceding year on tax exempt obligations indicating, on a state-by-state basis
the source of such income.

         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.

         Stockholders are urged to consult their tax advisers regarding
specific questions as to Federal, state, local or foreign taxes.

                                NET ASSET VALUE

         Net asset value per share of common stock is determined Monday
through Friday as of the close of business on the NYSE (generally, the NYSE
closes at 4:00 p.m., Eastern time), on each business day during which

                                      36
<PAGE>

the NYSE is open for trading. For purposes of determining the net asset value
of a share of common stock, 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 any outstanding shares of preferred stock is divided by
the total number of shares of common stock outstanding at such time. Expenses,
including the fees payable to the Investment Adviser, are accrued daily.

         The Municipal Bonds and other portfolio securities in which the Fund
invests are traded primarily in over-the-counter ("OTC") municipal bond and
money markets and are valued at the last available bid price for long
positions and at the last available ask price for short positions in the OTC
market or on the basis of yield equivalents as obtained from one or more
dealers or pricing services approved by the Directors. One bond is the "yield
equivalent" of another bond when, taking into account market price, maturity,
coupon rate, credit rating and ultimate return of principal, both bonds will
theoretically produce an equivalent return to the bondholder. Financial
futures contracts and options thereon, which are traded on exchanges, are
valued at their settlement prices as of the close of such exchanges.
Short-term investments with a remaining maturity of 60 days or less are valued
on an amortized cost basis, which approximates market value, unless the
Investment Adviser believes that this method no longer produces fair
valuations. Repurchase agreements will be valued at cost plus accrued
interest. The value of swaps, including interest rate swaps, caps and floors,
will be determined by obtaining dealer quotations. Repurchase agreements will
be valued at cost plus accrued interest. 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 Directors, including
valuations furnished by a pricing service retained by the Fund, which may use
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 Directors.

         The Fund makes available for publication the net asset value of its
shares of common stock determined as of the last business day each week.
Currently, the net asset values of shares of publicly traded closed-end
investment companies investing in debt securities are published in Barron's,
the Monday edition of The Wall Street Journal and the Monday and Saturday
editions of The New York Times.

                             FINANCIAL STATEMENTS

         The Fund's audited financial statements for the fiscal year ended
August 31, 2003, together with the report of __________________ thereon, are
incorporated in this statement of additional information by reference to its
2003 Annual Report. The Fund's unaudited financial statements for the six
months ended February 29, 2004 are incorporated in this statement of
additional information by reference to its 2004 Semi-Annual Report. You may
request a copy of the Annual Report and the Semi-Annual Report at no charge by
calling (800) 543-6217 between 8:30 a.m. and 5:30 p.m. Eastern time on any
business day.


                                      37
<PAGE>


                                  APPENDIX A

                     DESCRIPTION OF MUNICIPAL BOND RATINGS

Description of Municipal Bond Ratings

Aaa                      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
                         "gilt edge." 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.

Aa                       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.

A                        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.

Baa                      Bonds which are rated Baa are considered as
                         medium-grade obligations, i.e., they are neither
                         highly protected nor poorly secured. Interest
                         payments 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.

Ba                       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 of position
                         characterizes bonds in this class.

B                        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.

Caa                      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.

Ca                       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.

C                        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.

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a
ranking in the lower end of that generic rating category.

                                     A-1
<PAGE>

Description of Moody's U.S. Short-Term Ratings

MIG 1/VMIG 1        This designation denotes superior credit quality.
                    Excellent protection is afforded by established cash
                    flows, highly reliable liquidity support, or demonstrated
                    broad-based access to the market for refinancing.

MIG 2/VMIG 2        This designation denotes strong credit quality. Margins of
                    protection are ample, although not as large as in the
                    preceding group.

MIG 3/VMIG 3        This designation denotes acceptable credit quality.
                    Liquidity and cash-flow protection may be narrow, and
                    market access for refinancing is likely to be less
                    well-established.

SG                  This designation denotes speculative-grade credit quality.
                    Debt instruments in this category may lack sufficient
                    margins of protection.

Description of Moody's Commercial Paper Ratings

         Moody'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's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers:

         Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of short term promissory obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well established industries; high rates of return
on funds employed; conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earning 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.

         Issuers rated Prime-2 (or 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.

         Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of short term promissory obligations. The effects of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes to the level
of debt protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.

         Issuers rated Not Prime do not fall within any of the Prime rating
categories.

Description of Standard & Poor's, a Division of The McGraw-Hill Companies,
Inc. ("Standard & Poor's"), Debt Ratings

         A Standard & Poor's issue credit 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 program.
It takes into consideration the creditworthiness of guarantors, insurers, or
other forms of credit enhancement on the obligation.

         The issue credit 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.

         The issue credit ratings are based on current information furnished
by the obligors or obtained by Standard & Poor's from other sources Standard &
Poor's considers reliable. Standard & Poor's does not perform an audit in
connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be

                                     A-2
<PAGE>

changed, suspended, or withdrawn as a result of changes in, or unavailability
of, such information, or based on other circumstances.

         The issue credit ratings are based, in varying degrees, on the
following considerations:

         I.       Likelihood of payment-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;

         II.      Nature of and provisions of the obligation;

         III.     Protection afforded to, 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' rights.

Long Term Issue Credit Ratings

AAA                      An obligation rated "AAA" has the highest rating
                         assigned by Standard & Poor's. Capacity to meet its
                         financial commitment on the obligation is extremely
                         strong.

AA                       An obligation rated "AA" differs from the highest
                         rated issues only in small degree. The Obligor's
                         capacity to meet its financial commitment on the
                         obligation is very strong.

A                        An obligation rated "A" is somewhat more susceptible
                         to the adverse effects of changes in circumstances
                         and economic conditions than debt in higher-rated
                         categories. However, the obligor's capacity to meet
                         its financial commitment on the obligation is still
                         strong.

BBB                      An obligation rated "BBB" 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.

BB                       An obligation rated "BB," "B," "CCC," "CC" and
B                        "C" are regarded as having significant
CCC                      speculative characteristics. "BB" indicates the
CC                       least degree of speculation and "C" the highest
C                        degree of speculation. While such debt will likely
                         have some quality and protective
                         characteristics, these may be outweighed by large
                         uncertainties or major risk exposures to adverse
                         conditions.


D                        An obligation rated "D" is in payment default. The
                         "D" 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 & Poor's believes that such payments will
                         be made during such grace period. The "D" rating
                         also will be used upon the filing of a bankruptcy
                         petition or the taking of similar action if
                         payments on an obligation are jeopardized.

c                        The 'c' 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's bonds are
                         deemed taxable.

p                        The letter 'p' 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
                         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 the 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.

*                        Continuance of the ratings is contingent upon
                         Standard & Poor's receipt of an executed copy

                                     A-3
<PAGE>

                         of the escrow agreement or closing documentation
                         confirming investments and cash flows.

r                        This symbol is attached to the ratings of instruments
                         with significant noncredit risks. It highlights risks
                         to principal or volatility of expected returns which
                         are not addressed in the credit rating.

N.R.                     This indicates that no rating has been requested,
                         that there is insufficient information on which to
                         base a rating, or that Standard & Poor's does not
                         rate a particular obligation as a matter of policy.

         Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.

Description of Standard & Poor's Commercial Paper Ratings

         A Standard & Poor'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
"A-1" for the highest-quality obligations to "D" for the lowest. These
categories are as follows:

A-1                      A short-term obligation rated "A-1" is rated in the
                         highest category by Standard & Poor's. The obligor's
                         capacity to meet its financial commitment on the
                         obligation is strong. Within this category, certain
                         obligations are designated with a plus sign (+). This
                         indicates that the obligor's capacity to meet its
                         financial commitment on these obligations is
                         extremely strong.

A-2                      A short-term obligation rated "A-2" is somewhat more
                         susceptible to the adverse effects of changes in
                         circumstances and economic conditions than
                         obligations in higher rating categories. However, the
                         obligor's capacity to meet its financial commitment
                         on the obligation is satisfactory.

A-3                      A short-term obligation rated "A-3" 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.

B                        A short-term obligation rated "B" is regarded as
                         having significant speculative characteristics. The
                         obligor currently has the capacity to meet its
                         financial commitment on the obligation; however, it
                         faces major ongoing uncertainties which could lead to
                         the obligor's inadequate capacity to meet its
                         financial commitment on the obligation.

C                        A short-term obligation rated "C" is currently
                         vulnerable to nonpayment and is dependent upon
                         favorable business, financial and economic conditions
                         for the obligor to meet its financial commitment on
                         the obligation.

D                        A short-term obligation rated "D" is in payment
                         default. The "D" 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 & Poor's believes
                         that such payments will be made during such grace
                         period. The "D" rating will also be used upon the
                         filing of a bankruptcy petition or the taking of a
                         similar action if payments on an obligation are
                         jeopardized.

c                        The "c" 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's bonds are
                         deemed taxable.

p                        The letter "p" 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

                                     A-4
<PAGE>

                         payment of 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.

*                        Continuance of the ratings is contingent upon
                         Standard & Poor's receipt of an executed copy of
                         the escrow agreement or closing

r                        The "r" highlights derivative, hybrid, and certain
                         other obligations that Standard & Poor'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 "r" symbol
                         should not be taken as an indication that an
                         obligation will exhibit no volatility or
                         variability in total return.

         A commercial paper rating is not a recommendation to purchase or sell
a security. The ratings are based on current information furnished to Standard
& Poor's by the issuer or obtained by Standard & Poor'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.

         A Standard & Poor'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.

         --Amortization schedule--the larger the final maturity relative to
         other maturities, the more likely it will be treated as a note.

         --Source of payment--the more dependent the issue is on the market
         for its refinancing, the more likely it will be treated as a note.

         Note rating symbols are as follows:

SP-1                     Strong capacity to pay principal and interest. An
                         issue determined to possess a very strong capacity to
                         pay debt service is given a plus (+) designation.

SP-2                     Satisfactory capacity to pay principal and interest
                         with some vulnerability to adverse financial and
                         economic changes over the term of the notes.

SP-3                     Speculative capacity to pay principal and interest.

Description of Fitch Ratings' ("Fitch") Investment Grade Bond Ratings

         Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The rating
represents Fitch's assessment of the issuer's ability to meet the obligations
of a specific debt issue or class of debt in a timely manner.

         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's future financial strength and credit quality.

         Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guarantees unless otherwise
indicated.

                                     A-5
<PAGE>

         Bonds carrying 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.

         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.

         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.

AAA                      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.

AA                       Bonds considered to be investment grade and of very
                         high credit quality. The obligor's ability to pay
                         interest and repay principal is very strong, although
                         not quite as strong as bonds rated "AAA." Because
                         bonds rated in the "AAA" and "AA" categories are not
                         significantly vulnerable to foreseeable future
                         developments, short term debt of these issuers is
                         generally rated "F-1+."

A                        Bonds considered to be investment grade and of high
                         credit quality. The obligor'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.

BBB                      Bonds considered to be investment grade and of
                         satisfactory-credit quality. The obligor'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.

         Plus (+) or Minus (-): 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 "AAA" category.

Description of Fitch's Speculative Grade Bond Ratings

         Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch'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 ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation. 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's future financial strength.

         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.

BB                       Bonds are considered speculative. The obligor'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.

B                        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

                                     A-6
<PAGE>

                         reflects the obligor's limited margin of safety and
                         the need for reasonable business and economic
                         activity throughout the life of the issue.

CCC                      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.

CC                       Bonds are minimally protected. Default in payment of
                         interest and/or principal seems probable over time.

C                        Bonds are in imminent default in payment of interest
                         or principal.

D                        Bonds are in default on interest and/or principal
DD                       payments. Such bonds are extremely speculative and
DDD                      should be valued on the basis of their ultimate
                         recovery value in liquidation or reorganization of
                         the obligor. "DDD" represents the highest potential
                         for recovery on these bonds, and "D" represents the
                         lowest potential for recovery.

                         Plus (+) or Minus (-): 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 "DDD,"
                         "DD," or "D" categories.

Description of Fitch's Short term Ratings

         Fitch'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 investment
notes.

         The short term rating places greater emphasis than a long term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

         Fitch short term ratings are as follows:

F-1+                     Exceptionally Strong Credit Quality. Issues
                         assigned this rating are regarded as having the
                         strongest degree of assurance for timely payment.

F-1                      Very Strong Credit Quality. Issues assigned this
                         rating reflect an assurance of timely payment only
                         slightly less in degree than issues rated "F-1+."

F-2                      Good Credit Quality. 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 "F-1+" and "F-1" ratings.

F-3                      Fair Credit Quality. 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.

F-S                      Weak Credit Quality. 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.

D                        Default. Issues assigned this rating are in actual
                         or imminent payment default.

LOC                      The symbol "LOC" indicates that the rating is based
                         on a letter of credit issued by a commercial bank.

                                     A-7
<PAGE>

NR              Indicates that Fitch does not rate the specific issue.

Conditional           A conditional rating is premised on the successful
                      completion of a project or the occurrence of a
                      specific event.

Suspended             A rating is suspended when Fitch deems the amount of
                      information available from the issuer to be inadequate
                      for rating purposes.

Withdrawn             A rating will be withdrawn when an issue matures or is
                      called or refinanced and, at Fitch's discretion, when an
                      issuer fails to furnish proper and timely information.

FitchAlert            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 "Positive," indicating a potential
                      upgrade, "Negative," for potential downgrade, or
                      "Evolving," where ratings may be raised or lowered.
                      FitchAlert is relatively short term, and should be
                      resolved within 12 months.

Ratings Outlook: An outlook is used to describe the most likely direction of
any rating change over the intermediate term. It is described as "Positive" or
"Negative." The absence of a designation indicates a stable outlook.


                                     A-8
<PAGE>

                                  APPENDIX B

                             SETTLEMENT PROCEDURES

         The following summary of Settlement Procedures sets forth the
procedures expected to be followed in connection with the settlement of each
Auction and will be incorporated by reference in the Auction Agent Agreement
and each Broker-Dealer Agreement. Nothing contained in this Appendix B
constitutes a representation by the Fund that in each Auction each party
referred to herein actually will perform the procedures described herein to be
performed by such party. Capitalized terms used herein shall have the
respective meanings specified in the Glossary in the prospectus or this
Appendix B hereto, as the case may be.

         (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 Beneficial Owner or Potential Beneficial Owner 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 a Sell Order on behalf of a Beneficial Owner, the
         number of shares, if any, of AMPS to be sold by such Beneficial
         Owner;

                  (iv) if such Broker-Dealer (a "Buyer's Broker-Dealer")
         submitted a Bid on behalf of a Potential Beneficial Owner, the number
         of shares, if any, of AMPS to be purchased by such Potential
         Beneficial Owner;

                  (v) if the aggregate number of shares of AMPS to be sold by
         all Beneficial Owners on whose behalf such Broker-Dealer submitted a
         Bid or a Sell Order exceeds the aggregate number of shares of AMPS to
         be purchased by all Potential Beneficial Owners on whose behalf such
         Broker-Dealer submitted a Bid, the name or names of one or more
         Buyer's Broker-Dealers (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 shares of AMPS and the number of such shares to
         be purchased from one or more Beneficial Owners on whose behalf such
         Broker-Dealer acted by one or more Potential Beneficial Owners on
         whose behalf each of such Buyer's Broker-Dealers acted;

                  (vi) if the aggregate number of shares of AMPS to be
         purchased by all Potential Beneficial Owners on whose behalf such
         Broker-Dealer submitted a Bid exceeds the aggregate number of shares
         of AMPS to be sold by all Beneficial Owners 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 shares of AMPS and the
         number of such shares to be sold to one or more Potential Beneficial
         Owners on whose behalf such Broker-Dealer acted by one or more
         Beneficial Owners on whose behalf each of such Seller's
         Broker-Dealers acted; and

                  (vii) the Auction Date of the next succeeding Auction with
         respect to the AMPS.

         (b) On each Auction Date, each Broker-Dealer that submitted an Order
on behalf of any Beneficial Owner or Potential Beneficial Owner shall:

                  (i) in the case of a Broker-Dealer that is a Buyer's
         Broker-Dealer, instruct each Potential Beneficial Owner on whose
         behalf such Broker-Dealer submitted a Bid that was accepted, in whole
         or in part, to instruct such Potential Beneficial Owner'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
         shares of AMPS to be purchased pursuant to such Bid against receipt
         of such shares and advise such Potential Beneficial Owner of the
         Applicable Rate for the next succeeding Dividend Period;

                                     B-1
<PAGE>

                  (ii) in the case of a Broker-Dealer that is a Seller's
         Broker-Dealer, instruct each Beneficial Owner 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 Beneficial Owner's Agent Member to deliver to such Broker-Dealer
         (or its Agent Member) through the Securities Depository the number of
         shares of AMPS to be sold pursuant to such Order against payment
         therefor and advise any such Beneficial Owner that will continue to
         hold shares of AMPS of the Applicable Rate for the next succeeding
         Dividend Period;

                  (iii) advise each Beneficial Owner on whose behalf such
         Broker-Dealer submitted a Hold Order of the Applicable Rate for the
         next succeeding Dividend Period;

                  (iv) advise each Beneficial Owner on whose behalf such
         Broker-Dealer submitted an Order of the Auction Date for the next
         succeeding Auction; and

                  (v) advise each Potential Beneficial Owner 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 Beneficial Owner or a Beneficial Owner shall, in such manner and at
such time or times as in its sole discretion it may determine, allocate any
funds received by it pursuant to (b)(i) above and any shares of AMPS received
by it pursuant to (b)(ii) above among the Potential Beneficial Owners, if any,
on whose behalf such Broker-Dealer submitted Bids, the Beneficial Owners, 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 Beneficial Owner and Beneficial Owner
         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 Beneficial Owner 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 Seller's Broker-Dealer pursuant to (a)(v)
         above against payment therefor; and

                  (iii) each Buyer'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 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 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 in (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

                                     B-2
<PAGE>

                  (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 a Beneficial Owner selling shares of AMPS in an Auction fails
to deliver such shares (by authorized book-entry), a Broker-Dealer may deliver
to the Potential Beneficial Owner on behalf of which it submitted a Bid that
was accepted a number of whole shares of AMPS that is less than the number of
shares that otherwise was to be purchased by such Potential Beneficial Owner.
In such event, the number of shares of AMPS 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>


                                  APPENDIX C

                              AUCTION PROCEDURES

         The following procedures will be set forth in provisions of the
Articles Supplementary relating to the AMPS, and will be incorporated by
reference in the Auction Agent Agreement and each Broker-Dealer Agreement. The
terms not defined below are defined in the prospectus or in the Glossary in
the prospectus. Nothing contained in this Appendix C constitutes a
representation by the Fund that in each Auction each party referred to herein
actually will perform the procedures described herein to be performed by such
party.

Paragraph 10(a) Certain Definitions.

         As used in this Paragraph 10, 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 10.

                  (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 10(d)(i) below.

                  (iv) "Bid" shall have the meaning specified in Paragraph
         10(b)(i) below.

                  (v) "Bidder" shall have the meaning specified in Paragraph
         10(b)(i) below.

                  (vi) "Hold Order" shall have the meaning specified in
         Paragraph 10(b)(i) below.

                  (vii) "Maximum Applicable Rate" for any Dividend Period will
         be the higher of the Applicable Percentage of the Reference Rate or
         the Applicable Spread plus the Reference Rate. The Applicable
         Percentage and the Applicable Spread will be determined based on 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) as follows:

<TABLE>
<CAPTION>

                                                        Applicable         Applicable      Applicable     Applicable
                                                        Percentage         Percentage      Spread Over   Spread Over
                 Credit Ratings                         of Reference      of Reference     Reference     Reference
  ------------------------------------------------       Rate--No            Rate--         Rate--No       Rate--
       Moody's                     S&P                 Notification       Notification    Notification   Notification
- -----------------------  ------------------------   ----------------   ----------------  -------------  ----------------
<S>                           <C>                          <C>                <C>             <C>           <C>
         Aaa                       AAA                     110%               125%            1.10%         1.25%
      Aa3 to Aa1               AA- to AA+                  125%               150%            1.25%         1.50%
       A3 to A1                 A- to A+                   150%               200%            1.50%         2.00%
     Baa3 to Baa1             BBB- to BBB+                 175%               250%            1.75%         2.50%
      Below Baa3               Below BBB-                  200%               300%            2.00%         3.00%
</TABLE>


         The Applicable Percentage and the Applicable Spread as so determined
may be further subject to upward but not downward adjustment in the discretion
of the Board of Directors of the Fund after consultation with the
Broker-Dealers, provided that immediately following any such increase the Fund
would be in compliance with the AMPS Basic Maintenance Amount. Subject to the
provisions of paragraph 12 of the Articles Supplementary entitled "Termination
of Rating Agency Provisions," the Fund shall take all reasonable action
necessary to enable S&P and Moody's to provide a rating for the AMPS. If
either S&P or Moody's shall not make such a rating available or if neither S&P
nor Moody's shall make such a rating available, subject to the provisions of
paragraph 12 of the Articles Supplementary entitled "Termination of Rating
Agency Provisions," Merrill Lynch, Pierce, Fenner & Smith

                                     C-1
<PAGE>

Incorporated or its affiliates and successors, after obtaining the Fund's
approval, shall select a NRSRO or two NRSROs to act as a Substitute Rating
Agency or Substitute Rating Agencies, as the case may be.

                  (viii) "Order" shall have the meaning specified in Paragraph
         10(b)(i) below.

                  (ix) "Sell Order" shall have the meaning specified in
         Paragraph 10(b)(i) below.

                  (x) "Submission Deadline" shall mean 1:00 p.m., Eastern
         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 10(d)(i) below.

                  (xii) "Submitted Hold Order" shall have the meaning
         specified in Paragraph 10(d)(i) below.

                  (xiii) "Submitted Order" shall have the meaning specified in
         Paragraph 10(d)(i) below.

                  (xiv) "Submitted Sell Order" shall have the meaning
         specified in Paragraph 10(d)(i) below.

                  (xv) "Sufficient Clearing Bids" shall have the meaning
         specified in Paragraph 10(d)(i) below.

                  (xvi) "Winning Bid Rate" shall have the meaning specified in
         Paragraph 10(d)(i) below.

Paragraph 10(b) Orders by Beneficial Owners, Potential Beneficial Owners,
Existing Holders And Potential Holders.

         (i) Unless otherwise permitted by the Fund, Beneficial Owners and
Potential Beneficial Owners may only participate in Auctions through their
Broker-Dealers. Broker-Dealers will submit the Orders of their respective
customers who are Beneficial Owners and Potential Beneficial Owners to the
Auction Agent, designating themselves as Existing Holders in respect of shares
subject to Orders submitted or deemed submitted to them by Beneficial Owners
and as Potential Holders in respect of shares subject to Orders submitted to
them by Potential Beneficial Owners. A Broker-Dealer may also hold shares of
AMPS in its own account as a Beneficial Owner. A Broker-Dealer may thus submit
Orders to the Auction Agent as a Beneficial Owner or a Potential Beneficial
Owner and therefore participate in an Auction as an Existing Holder or
Potential Holder on behalf of both itself and its customers. On or prior to
the Submission Deadline on each Auction Date:

                  (A) each Beneficial Owner may submit to its Broker-Dealer
         information as to:

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

                           (2) the number of outstanding shares, if any, of
                  AMPS held by such Beneficial Owner which such Beneficial
                  Owner 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
                  Beneficial Owner; and/or

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

                  (B) each Broker-Dealer, using a list of Potential Beneficial
         Owners that shall be maintained in good faith for the purpose of
         conducting a competitive Auction, shall contact Potential Beneficial
         Owners, including Persons that are not Beneficial Owners, on such
         list to determine the number of

                                     C-2
<PAGE>

         outstanding shares, if any, of AMPS which each such Potential
         Beneficial Owner 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 Beneficial Owner.

         For the purposes hereof, the communication by a Beneficial Owner or
Potential Beneficial Owner to a Broker-Dealer, or the communication by a
Broker-Dealer acting for its own account to the Auction Agent, of information
referred to in clause (A) or (B) of this Paragraph 10(b)(i) is hereinafter
referred to as an "Order" and each Beneficial Owner and each Potential
Beneficial Owner placing an Order, including a Broker-Dealer acting in such
capacity for its own account, is hereinafter referred to as a "Bidder"; an
Order containing the information referred to in clause (A)(1) of this
Paragraph 10(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 10(b)(i) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (A)(3) of this Paragraph
10(b)(i) is hereinafter referred to as a "Sell Order." Inasmuch as a
Broker-Dealer participates in an Auction as an Existing Holder or a Potential
Holder only to represent the interests of a Beneficial Owner or Potential
Beneficial Owner, whether it be its customers or itself, all discussion herein
relating to the consequences of an Auction for Existing Holders and Potential
Holders also applies to the underlying beneficial ownership interests
represented.

                  (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
                  10(e)(i)(D) if 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 10(e)(ii)(C) if
                  such specified rate per annum shall be 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
                  10(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
                  10(e)(i)(E) if the Applicable Rate determined on such
                  Auction Date shall be equal to the rate per annum specified
                  therein.

Paragraph 10(c) Submission of Orders by Broker-Dealers to Auction Agent.

         (i) Each Broker-Dealer shall submit in writing or through a mutually
acceptable electronic means to the Auction Agent prior to the Submission
Deadline on each Auction Date all Orders obtained by such Broker-Dealer,
designating itself (unless otherwise permitted by the Fund) as an Existing
Holder in respect of shares subject to Orders submitted or deemed submitted to
it by Beneficial Owners and as a Potential Holder in respect of shares subject
to Orders submitted to it by Potential Beneficial Owners, and specifying with
respect to each Order:

                                     C-3
<PAGE>

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

                  (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 of more than 28 days) and a Sell Order (in the case of an
Auction relating to a Special Dividend Period of more than 28 days) to have
been submitted on behalf of such Existing Holder covering the number of
outstanding shares of AMPS held by such Existing Holder and not subject to
Orders submitted to the Auction Agent.

         (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 Orders 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, 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 10(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
         10(c)(iv)(A) above and of the foregoing portion of this Paragraph
         10(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 of shares); and the number of shares, if any,
         subject to Bids not valid under this Paragraph 10(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

                                     C-4
<PAGE>

         Hold Orders referred to in Paragraph 10(c)(iv)(A) and Bids referred
         to in Paragraph 10(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 therein specified.

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

Paragraph 10(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");

                  (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 hereinafter being 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, 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.

                                     C-5
<PAGE>

         (ii) Promptly after the Auction Agent has made the determinations
pursuant to Paragraph 10(d)(i), the Auction Agent shall advise the Fund 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, the Dividend Period next succeeding the
         Auction automatically shall be the same length as the immediately
         preceding Dividend Period and the Applicable Rate for the next
         succeeding Dividend Period shall be equal to 60% of the Reference
         Rate (or 90% of such rate if the Fund has provided notification to
         the Auction Agent prior to establishing the Applicable Rate for any
         dividend that net capital gain or other taxable income will be
         included in such dividend on shares of AMPS) on the date of the
         Auction.

Paragraph 10(e) Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares.

         Based on the determinations made pursuant to Paragraph 10(d)(i), the
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 10(e)(iii) and Paragraph 10(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
         10(e)(i)(B) and Paragraph 10(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

                                     C-6
<PAGE>

                  (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 10(e)(i)(B),
         Paragraph 10(e)(i)(C) and Paragraph 10(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 Paragraph 10(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 Maximum Applicable Rate
         shall be accepted and the Submitted Sell Orders of each Existing
         Holder shall be accepted, in both cases 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 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 10(e)(ii)(A) and Paragraph 10(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.

         (iii) If, as a result of the procedures described in Paragraph
10(e)(i) or Paragraph 10(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 Existing
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
10(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, in such
manner as in its sole discretion it shall determine, shall 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 the outstanding shares of AMPS to be purchased and the aggregate
number of 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 Broker-Dealers acting for one or
more sellers such Broker-Dealer shall receive, as the case may be, outstanding
shares of AMPS.

                                     C-7
<PAGE>

Paragraph 10(f) Miscellaneous.

         The Fund may interpret the provisions of this Paragraph 10 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 Beneficial Owners of AMPS. A Beneficial Owner or an Existing 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 10
or to or through a Broker-Dealer, provided that in the case of all transfers
other than pursuant to Auctions such Beneficial Owner or Existing Holder, its
Broker-Dealer, if applicable, 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 Beneficial Owner's beneficial ownership. Neither
the Fund nor any affiliate (other than Merrill Lynch, Pierce, Fenner & Smith
Incorporated) shall submit an Order in any Auction. Any Beneficial Owner that
is an affiliate (other than Merrill Lynch, Pierce, Fenner & Smith
Incorporated) shall not sell, transfer or otherwise dispose of shares of AMPS
to any person other than the Fund. All of the outstanding shares of AMPS of a
series 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 Fund'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 Beneficial Owner thereof and such Beneficial Owner
thereupon will be entitled to receive certificates therefor and required to
deliver certificates thereof or upon transfer or exchange thereof.


                                     C-8
<PAGE>


                           PART C. OTHER INFORMATION

Item 24. Financial Statements And Exhibits.

(1)           Financial Statements
Part A:
              Financial Highlights for the six months ended February 29, 2004
              and each of the fiscal years in the ten-year period ended August
              31, 2003.
Part B:
              Schedule of Investments of the Fund as of August 31, 2003.*
              Statement of Net Assets of the Fund as of August 31, 2003.*
              Statement of Operations of the Fund for the fiscal year ended
              August 31, 2003.*
              Statements of Changes in Net Assets of the Fund for the fiscal
              years ended August 31, 2002 and 2003.* Financial Highlights of
              the Fund for each of the fiscal years in the five-year period
              ended August 31, 2003.*
              Report of Independent Auditors.*
              Schedule of Investments of the Fund as of February 29, 2004.**
              Statement of Net Assets of the Fund as of February 29, 2004.**
              Statement of Operations of the Fund for the six months ended
              February 29, 2004.**
              Statements of Changes in Net Assets of the Fund for the six
              months ended February 29, 2004.**
              Financial Highlights of the Fund for the six months ended
              February 29, 2004 and each of the fiscal years in the
              five-year period ended August 31, 2003.**

*   Incorporated by reference to the Registrant's Annual Report to
    Shareholders for the fiscal year ended August 31, 2003 filed with the
    Securities and Exchange Commission ("Commission") on November 3, 2003
    pursuant to Rule 30b2-1 under the Investment Company Act of 1940, as
    amended ("1940 Act").

**  Incorporated by reference to the Registrant's Semi-Annual Report to
    Shareholders for the six month period ended February 29, 2004 filed with
    the Commission on April 29, 2004 pursuant to Rule 30b2-1 under the 1940
    Act.

Exhibits          Description
- ---------         -----------
(a)(1)            Articles of Incorporation of the Registrant.
(a)(2)            Articles of Amendment to the Articles of Incorporation of
                  the Registrant, dated August 10, 1988.
(a)(3)            Articles Supplementary creating the Series A, Series B,
                  Series C, Series D and Series E of Auction Market Preferred
                  Stock ("AMPS") of the Registrant.
(a)(4)            Certificate of Correction, dated April 18, 1989
(a)(5)            Articles of Amendment to the Articles Supplementary, dated
                  November 30, 1994.
(a)(6)            Articles of Amendment to the Articles Supplementary, dated
                  November 30, 1994.
(a)(7)            Articles of Amendment to the Articles Supplementary, dated
                  October 11, 1999.
(a)(8)            Certificate of Correction, dated July 8, 2004.
(a)(9)            Form of Articles Supplementary creating one series of AMPS.
(b)               By-laws of the Registrant.
(c)               Not applicable.
(d)(1)            Portions of the Articles of Incorporation, By-laws and
                  Articles Supplementary of the Registrant defining the rights
                  of holders of shares of the Registrant.(a)
(d)(2)            Form of specimen certificate for the AMPS of the Registrant.
(e)               Form of Automatic Dividend Reinvestment Plan.
(f)               Not applicable.
(g)               Form of Investment Advisory Agreement between the Registrant
                  and Fund Asset Management, L.P. ("FAM" or the "Investment
                  Adviser").
(h)(1)            Form of Purchase Agreement between the Registrant and
                  Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
                  Lynch") relating to the AMPS.
(h)(2)            Form of Merrill Lynch Standard Dealer Agreement.(b)
(i)               Not applicable.
(j)               Form of Custodian Agreement between the Registrant and The
                  Bank of New York ("BONY").(c)
(k)(l)            Form of Registrar, Transfer Agency, Dividend Disbursing
                  Agency and Shareholder Servicing Agency Agreement between the
                  Registrant and BONY.

                                     C-1
<PAGE>

(k)(2)            Form of Agreement of Resignation, Appointment and Acceptance
                  among the Registrant, IBJ Whitehall Bank & Trust Company and
                  BONY.(e)
(k)(3)            Form of Administrative Services Agreement between the
                  Registrant and State Street Bank and Trust Company.(d)
(k)(4)            Form of Auction Agent Agreement between the Registrant and
                  BONY.
(k)(5)            Form of Broker-Dealer Agreement.(f)
(k)(6)            Form of Letter of Representations.
(l)               Opinion and Consent of Sidley Austin Brown & Wood LLP.*
(m)               Not applicable.
(n)               Consent of                         , independent auditors
                  for the Registrant.*
(o)               Not applicable.
(p)               Not applicable.
(q)               Not applicable.
(r)               Code of Ethics.(g)

- -------------- --
(a)    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's Articles of Incorporation, filed as
       Exhibit (a)(1) 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's By-Laws filed as Exhibit (b)(1) hereto; and to
       the Articles Supplementary and Articles of Amendment filed as Exhibit
       (a)(3), (a)(5), (a)(6), (a)(7) and (a)(8).
(b)    Incorporated by reference to Exhibit (h)(2) to Pre-Effective Amendment
       No. 3 to the Registration Statement on Form N-2 of Preferred Income
       Strategies, Inc. (File No. 333-102712), filed on March 25, 2003.
(c)    Incorporated by reference to Exhibit 7 to Post-Effective No. 13 to the
       Registration Statement on Form N-1A of The Asset Program, Inc. (File
       No. 33-53887), filed on March 21, 2002.
(d)    Incorporated by reference to Exhibit 8(d) to Post-Effective Amendment
       No. 1 to the Registration Statement on Form N-1A of Merrill Lynch Focus
       Twenty Fund, Inc. (File No. 333-89775) filed on March 20, 2001.
(e)    Incorporated by reference to an exhibit to the Registration Statement
       on Form N-14 of MuniYield Fund, Inc. (File No. 333-65242), filed on
       September 14, 2001.
(f)    Incorporated by reference to Exhibit (k)(5) to the Registration
       Statement on Form N-2 of MuniYield Insured Fund, Inc. (File No.
       333-116604), filed on June 18, 2004.
(g)    Incorporated by reference to Exhibit 15 to Pre-Effective Amendment No.
       1 to the Registration Statement on Form N-1A of Merrill Lynch Inflation
       Protected Fund (File No. 333-110936), filed on January 22, 2004.

* To be provided by amendment.

Item 25. Marketing Arrangements.

         See Exhibits (h)(1) and (2).

Item 26. Other Expenses of Issuance and Distribution.

         The following table sets forth the estimated expenses to be incurred
in connection with the offering described in this Registration Statement:

Registration fees                                               $    9,503
Printing (other than stock certificates)                        $   21,250
Legal fees and expenses                                         $   65,000
Accounting fees and expenses                                    $    6,000
Rating Agency Fees                                              $   60,000
Miscellaneous                                                   $    3,247
                                                                ---------------
Total                                                             $165,000


Item 27. Persons Controlled by or Under Common Control with Registrant.

         The Registrant is not controlled by, or under common control with,
any person.

                                     C-2
<PAGE>

Item 28. Number of Holders of Securities.

                                               Number of Record Holders At
Title of Class                                          , 2004
- ---------------------------                    -------------------------------
Common Stock, $.10 par value
Preferred Stock                                                 1

Item 29. Indemnification.

         Reference is made to Section 2-418 of the General Corporation Law of
the State of Maryland, Article V of the Registrant's Articles of
Incorporation, Article VI of the Registrant's By-laws and Section 6 of the
Purchase Agreement, which provide for indemnification.

         Article VI of the By-laws provides that each officer and director of
the Registrant shall be indemnified by the Registrant to the full extent
permitted under the Maryland General Corporation Law, except that such
indemnity shall not protect any such person against any liability to the
Registrant or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
Absent a court determination that an officer or director seeking
indemnification was not liable on the merits or guilty of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his or her office, the decision by the Registrant to indemnify
such person must be based upon the reasonable determination of independent
legal counsel or the vote of a majority of a quorum of non-party independent
directors, after review of the facts, that such officer or director is not
guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.

         Each officer and director of the Registrant claiming indemnification
within the scope of Article VI of the By-laws shall be entitled to advances
from the Registrant for payment of the reasonable expenses incurred by him or
her in connection with proceedings to which he or she is a party in the manner
and to the full extent permitted under the Maryland General Corporation Law;
provided, however, that the person seeking indemnification shall provide to
the Registrant a written affirmation of his or her good faith belief that the
standard of conduct necessary for indemnification by the Registrant has been
met and a written undertaking to repay any such advance, if it ultimately
should be determined that the standard of conduct has not been met, and
provided further that at least one of the following additional conditions is
met: (i) the person seeking indemnification shall provide a security in form
and amount acceptable to the Registrant for his or her undertaking; (ii) the
Registrant is insured against losses arising by reason of the advance; or
(iii) a majority of a quorum of non-party independent directors, or
independent legal counsel in a written opinion shall determine, based on a
review of facts readily available to the Registrant at the time the advance is
proposed to be made, that there is reason to believe that the person seeking
indemnification will ultimately be found to be entitled to indemnification.

         The Registrant may purchase insurance on behalf of an officer or
director protecting such person to the full extent permitted under the
Maryland General Corporation Law from liability arising from his or her
activities as officer or director of the Registrant. The Registrant, however,
may not purchase insurance on behalf of any officer or director of the
Registrant that protects or purports to protect such person from liability to
the Registrant or to its stockholders to which such officer or director would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
or her office.

         In Section 7 of the Purchase Agreement relating to the securities
being offered hereby, the Registrant agrees to indemnify Merrill Lynch and
each person, if any, who controls Merrill Lynch within the meaning of the
Securities Act of 1933 (the "1933 Act") against certain types of civil
liabilities arising in connection with the Registration Statement or
Prospectus and Statement of Additional Information.

         Insofar as indemnification for liabilities arising under the 1933 Act
may be provided to directors, officers and controlling persons of the
Registrant and Merrill Lynch, 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

                                     C-3
<PAGE>

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.

Item 30. Business and Other Connections of The Investment Adviser.

         FAM acts as the investment adviser for a number of affiliated
open-end and closed-end registered investment companies.

         Merrill Lynch Investment Managers, L.P. ("MLIM"), acts as the
investment adviser for a number of affiliated open-end and closed-end
registered investment companies, and also acts as sub-adviser to certain other
portfolios.

         The address of each of these registered investment companies is P.O.
Box 9011, Princeton, New Jersey 08543-9011, except that the address of Merrill
Lynch Funds for Institutions Series is One Financial Center, 23rd Floor,
Boston, Massachusetts 02111-2665.

         The address of the Investment Adviser, MLIM, Princeton Services, Inc.
("Princeton Services") and Princeton Administrators, L.P. ("Princeton
Administrators") is also P.O. Box 9011, Princeton, New Jersey 08543-9011. The
address of Merrill Lynch and Merrill Lynch & Co., Inc. ("ML & Co.") is World
Financial Center, North Tower, 250 Vesey Street, New York, New York 10080. The
address of the Fund's transfer agent, The Bank of New York (the "Transfer
Agent"), is 101 Barclay Street, New York, New York 10286.

         Set forth below is a list of each executive officer and partner of
the Investment Adviser indicating each business, profession, vocation or
employment of a substantial nature in which each such person or entity has
been engaged for the past two years for his, her or its own account or in the
capacity of director, officer, employee, partner or Director. Mr. Burke is
Vice President and Treasurer of all or substantially all of the investment
companies advised by FAM or its affiliates, and Mr. Doll is an officer of one
or more of such companies.

<TABLE>
<CAPTION>

                                                                                     Other Substantial Business,
                                                                                        Profession, Vocation
                 Name                     Position(s) with Investment Adviser               Or Employment
- -------------------------------------    -------------------------------------  -------------------------------------
<S>                                      <C>                                    <C>
ML & Co.                                 Limited Partner                        Financial Services Holding Company;
                                                                                Limited Partner of MLIM

Princeton Services                       General Partner                        General Partner of MLIM

Robert C. Doll, Jr.                      President                              President of MLIM; Director of
                                                                                Princeton Services; Chief Investment
                                                                                Officer of OppenheimerFunds, Inc. in
                                                                                1999 and Executive Vice President
                                                                                thereof from 1991 to 1999

Donald C. Burke                          First Vice President and Treasurer;    First Vice President, Treasurer and
                                         Director of Taxation of MLIM           Director of Taxation of MLIM; Senior
                                                                                Vice President and Treasurer of
                                                                                Princeton Services; Vice President
                                                                                of FAMD

Andrew J. Donohue                        General Counsel                        Senior Vice President and General
                                                                                Counsel of MLIM; Senior Vice


                                     C-4
<PAGE>
                                                                                     Other Substantial Business,
                                                                                        Profession, Vocation
                 Name                     Position(s) with Investment Adviser               Or Employment
- -------------------------------------    -------------------------------------  -------------------------------------
                                                                                President, Director and General
                                                                                Counsel of Princeton Services

</TABLE>


Item 31. Location of Account and Records.

         All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the Rules promulgated thereunder are
maintained at the offices of the Registrant (800 Scudders Mill Road,
Plainsboro, New Jersey 08536), its Investment Adviser (800 Scudders Mill Road,
Plainsboro, New Jersey 08536), its custodian and transfer agent, The Bank of
New York (101 Barclay Street, New York, New York 10286), and its accounting
services provider, State Street (500 College Road East, Princeton,
New Jersey 08540).

Item 32. Management Services.

         Not applicable.

Item 33. Undertakings.

         (1) The Registrant undertakes to suspend the offering of the shares
of preferred stock covered hereby until it amends its prospectus contained
herein if (1) subsequent to the effective date of this Registration Statement,
its net asset value per share of preferred stock declines more than 10% from
its net asset value per share of preferred stock as of the effective date of
this Registration Statement, or (2) its net asset value per share of preferred
stock increases to an amount greater than its net proceeds as stated in the
prospectus contained herein.

         (2) Not applicable.

         (3) Not applicable.

         (4) Not applicable.

         (5) The Registrant undertakes that:

                  (a) For purposes of determining any liability under the 1933
         Act, the information omitted from the form of prospectus filed as
         part of this Registration Statement in reliance upon Rule 430A and
         contained in the form of prospectus filed by the registrant pursuant
         to Rule 497(h) under the 1933 Act shall be deemed to be part of this
         Registration Statement as of the time it was declared effective.

                  (b) For the purpose of determining any liability under the
         1933 Act, each post-effective amendment that contains a form of
         prospectus shall be deemed to be a new registration statement
         relating to the securities offered therein, and the offering of such
         securities at that time shall be deemed to be the initial bona fide
         offering thereof.

                  (c) The Registrant undertakes to send by first-class mail or
         other means designed to ensure equally prompt delivery, within two
         business days of receipt of a written or oral request, any statement
         of additional information.


                                     C-5
<PAGE>

                                  SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Plainsboro, and State of New
Jersey, on the 9th day of July, 2004.


                                         MUNIVEST FUND, INC.
                                         (Registrant)

                                         By: /s/ Donald C. Burke
                                             -------------------
                                            (Donald C. Burke, Vice President
                                               and Treasurer)

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>

              Signature                                   Title                                Date

<S>                                           <C>                                       <C>
            Terry K. Glenn*                   President (Principal Executive
- -----------------------------------------         Officer) and Director
          (TERRY K. GLENN)

            Donald C. Burke*                   Vice President and Treasurer
- -----------------------------------------        (Principal Financial and
          (DONALD C. BURKE)                        Accounting Officer)


           Ronald W. Forbes*                             Director
- -----------------------------------------
         (RONALD W. FORBES)

       Cynthia A. Montgomery*                            Director
- -----------------------------------------
       (CYNTHIA A. MONTGOMERY)

            Kevin A. Ryan*                               Director
- -----------------------------------------
           (KEVIN A. RYAN)

         Roscoe S. Suddarth*                             Director
- -----------------------------------------
        (ROSCOE S. SUDDARTH)

           Richard R. West*                              Director
- -----------------------------------------
          (RICHARD R. WEST)

           Edward D. Zinbarg*                            Director
- -----------------------------------------
         (EDWARD D. ZINBARG)

      *By: /s/ Donald C. Burke                                                             July 9, 2004
           --------------------
 (Donald C. Burke, Attorney-in-Fact)

</TABLE>



                                     C-6
<PAGE>

                               POWER OF ATTORNEY

         The undersigned, Terry K. Glenn, Donald C. Burke, Ronald W. Forbes,
Cynthia A. Montgomery, Kevin A. Ryan, Roscoe S. Suddarth, Richard R. West and
Edward D. Zinbarg, the Directors/Trustees and the Officers of each of the
registered investment companies listed below, or of the master trust in which
such registered investment company invests, hereby authorize Terry K. Glenn,
Andrew J. Donohue, Donald C. Burke, Robert C. Doll, Jr. and Phillip S.
Gillespie or any of them, as attorney-in-fact, to sign on his or her behalf in
the capacities indicated any Registration Statement or amendment thereto
(including post-effective amendments) for each of the following registered
investment companies and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission: CBA Money Fund; CMA Government Securities
Fund; CMA Money Fund; CMA Multi-State Municipal Series Trust; CMA Tax-Exempt
Fund; CMA Treasury Fund; Debt Strategies Fund, Inc.; Floating Rate Income
Strategies Fund; Floating Rate Income Strategies Fund II; Global Financial
Services Master Trust; Master Bond Trust; Master Government Securities Trust;
Master Money Trust; Master Senior Floating Rate Trust; Master Tax-Exempt
Trust; Master Treasury Trust;. Master U.S. High Yield Trust; Merrill Lynch
Balanced Capital Fund, Inc.; Merrill Lynch Bond Fund, Inc.; Merrill Lynch
Developing Capital Markets Fund, Inc.; Merrill Lynch Dragon Fund, Inc.;
Merrill Lynch Equity Dividend Fund; Merrill Lynch EuroFund; Merrill Lynch
Global Allocation Fund, Inc.; Merrill Lynch Global Financial Services Fund,
Inc.; Merrill Lynch Global SmallCap Fund, Inc.; Merrill Lynch Global
Technology Fund, Inc.; Merrill Lynch Global Value Fund, Inc.; Merrill Lynch
Healthcare Fund, Inc.; Merrill Lynch International Equity Fund; Merrill Lynch
Latin America Fund, Inc.; Merrill Lynch Municipal Bond Fund, Inc.; Merrill
Lynch Municipal Series Trust; Merrill Lynch Pacific Fund, Inc.; Merrill Lynch
Senior Floating Rate Fund, Inc.; Merrill Lynch Senior Floating Rate Fund II,
Inc.; Merrill Lynch U.S. High Yield Fund, Inc.; Merrill Lynch Utilities and
Telecommunications Fund, Inc.; MuniHoldings Florida Insured Fund; MuniHoldings
Fund, Inc.; MuniHoldings Fund II, Inc.; MuniHoldings Insured Fund, Inc.;
MuniHoldings New Jersey Insured Fund, Inc.; MuniHoldings New York Insured
Fund, Inc.; MuniVest Fund, Inc.; MuniVest Fund II, Inc.; Senior High Income
Portfolio, Inc.; The Municipal Fund Accumulation Program, Inc.; WCMA
Government Securities Fund; WCMA Money Fund; WCMA Tax-Exempt Fund; and WCMA
Treasury Fund.

Dated:  February 10, 2004




       /s/ Terry K. Glenn                           /s/ Donald C. Burke
- ------------------------------------     --------------------------------------
          Terry K. Glenn                              Donald C. Burke
  (President/Principal Executive            (Vice President/Treasurer/Principal
    Officer/Director/Trustee)                Financial and Accounting Officer)



       /s/ Ronald W. Forbes                        /s/ Cynthia A. Montgomery
- ------------------------------------     --------------------------------------
         Ronald W. Forbes                           Cynthia A. Montgomery
        (Director/Trustee)                             (Director/Trustee)



       /s/ Kevin A. Ryan                         /s/ Roscoe S. Suddarth
- ------------------------------------     --------------------------------------
          Kevin A. Ryan                               Roscoe S. Suddarth
        (Director/Trustee)                            (Director/Trustee)


<PAGE>


      /s/ Richard R. West                       /s/ Edward D. Zinbarg
- ------------------------------------     --------------------------------------
       Richard R. West                               Edward D. Zinbarg
     (Director/Trustee)                             (Director/Trustee)





<PAGE>


Exhibit Index

(a)(1)            Articles of Incorporation of the Registrant.
(a)(2)            Articles of Amendment to the Articles of Incorporation of the
                  Registrant, dated August 10, 1988.
(a)(3)            Articles Supplementary creating the Series A, Series B,
                  Series C, Series D and Series E of Auction Market Preferred
                  Stock ("AMPS") of the Registrant.
(a)(4)            Certificate of Correction, dated April 18, 1989.
(a)(5)            Articles of Amendment to the Articles Supplementary, dated
                  November 30, 1994.
(a)(6)            Articles of Amendment to the Articles Supplementary, dated
                  November 30, 1994.
(a)(7)            Articles of Amendment to the Articles Supplementary, dated
                  October 11, 1999.
(a)(8)            Certificate of Correction, dated July 8, 2004.
(a)(9)            Form of Articles Supplementary creating one series of AMPS.
(b)               By-laws of the Registrant.
(d)(2)            Form of specimen certificate for the AMPS of the Registrant.
(e)               Form of Automatic Dividend Reinvestment Plan.
(g)               Form of Investment Advisory Agreement between the Registrant
                  and Fund Asset Management, L.P.
(h)(1)            Form of Purchase Agreement between the Registrant and
                  Merrill Lynch, Pierce, Fenner & Smith Incorporated relating
                  to the AMPS.
(k)(1)            Form of Registrar, Transfer Agency, Dividend Disbursing
                  Agency and Shareholder Servicing Agency Agreement between
                  the Registrant and The Bank of New York ("BONY").
(k)(4)            Form of Auction Agent Agreement between the Registrant and
                  BONY.
(k)(6)            Form of Letter of Representations.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(1)
<SEQUENCE>2
<FILENAME>efc4-1273_5567885ex992a1.txt
<TEXT>
                                                                Exhibit (a)(1)

                           ARTICLES OF INCORPORATION

                                      OF

                              MUNIPLUS FUND, INC.

                                   * * * * *

                                  ARTICLE I

     THE UNDERSIGNED, Margaret J. Lane, whose post office address is c/o Brown
& Wood, One World Trade Center, New York, New York 10048, being at least
eighteen (18) years of age, does hereby act as an incorporator, under and by
virtue of the General Laws of the State of Maryland authorizing the formation
of corporations and with the intention of forming a corporation.

                                  ARTICLE II

                                     Name
                                     ----

     The name of the Corporation is MUNIPLUS FUND, INC. (the "Corporation").

                                 ARTICLE III

                              PURPOSES AND POWERS
                              -------------------

     The purpose or purposes for which the Corporation is formed is to act as
a closed-end, management investment company under the federal Investment
Company Act of 1940, as amended, and to exercise and enjoy all of the powers,
rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland now or hereafter in force.

                                  ARTICLE IV

                      PRINCIPAL OFFICE AND RESIDENT AGENT
                      -----------------------------------

     The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation
in this State is The Corporation Trust Incorporated, a corporation of this
State, and the post office address of the resident agent is 32 South Street,
Baltimore, Maryland 21202.


<PAGE>

                                  ARTICLE V

                                 CAPITAL STOCK
                                 -------------

     (1)  The total number of shares of all classes of stock which the
corporation shall have authority to issue is 160,000,000 shares with an
aggregate par value of $16,000,000 divided into two classes, of 150,000,000
shares of common stock, $.10 par value per share (the "Common Stock"), and of
10,000,000 shares of preferred stock, $.10 par value per shares (the
"Preferred Stock").

     (2)  The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption, of the Common Stock and the Preferred Stock are as
follows:

          A. Common Stock

               (i) Dividends. Subject to law and to the preferences of the
          Preferred Stock, the holders of the Preferred Stock, the holders of
          the Common Stock shall be entitled to receive dividends at such time
          and in such amounts as may be determined by the Board of Directors.

               (ii) Voting. Except as provided by law and in or pursuant to
          this Article V, the holders of the Common Stock shall have one vote
          for each share on each matter submitted to a vote of the
          stockholders of the Corporation.

               (iii) Liquidation. In the event of any liquidations,
          dissolution or winding up of the Corporation, whether voluntary or
          involuntary, after payment or provision for payment of the debts and
          other liabilities of the Corporation and the preferential amounts to
          which the holders of the Preferred Stock shall be entitled upon
          liquidation, the holders of the Common Stock shall be entitled to
          share in the remaining assets of the Corporation according to their
          respective interests.

          B. Preferred Stock.

               (i) Authority of the Board of Directors to issue in series. The
          Preferred Stock may be issued from time to time in one or more
          series. All shares of any one series of Preferred Stock shall be
          identical except as to the respective dates of their issue, the
          dates from which dividends on shares of the series issued on
          different dates accumulate, dividend rates, dividend periods,
          dividend payment dates and redemption provisions. Subject to the
          charter, authority is expressly granted to the Board of Directors to
          authorize the issue of one or more series of Preferred Stock, and to
          fix by resolution or resolutions providing for the issue of each
          such series the preferences, conversion or other rights, voting
          powers, restrictions, limitations as to dividends, qualifications,
          and terms and conditions of redemption, of such series, to the full
          extent how or hereafter permitted by law, including but not limited
          to the following:



                                      2
<PAGE>

                    a. The number of shares of such series, which may be
               subsequently be increased (except as otherwise provided by the
               resolution or resolutions of the Board of Directors providing
               for the issue of such series) or decreased (to a number not
               less than the number of shares then outstanding) by resolution
               or resolutions of the Board of Directors, and the distinctive
               designations of the series;

                    b. The rates or amounts, the periods, and the times of
               payment, of dividends on shares of such series;

                    c. The voting powers, if any, of the holder of such series
               in addition to the voting powers provided by law and in this
               Article V.

                    d. The terms and conditions, upon which the shares of such
               series shall be convertible into or exchangeable for shares of
               any other series, class or classes, or any other securities, to
               the full extent now or hereafter permitted by law;

                    e. The time or times during which, the price or prices at
               which, and the terms and conditions on which, the shares of
               such series may be redeemed by the Corporation;

                    f. The terms or any sinking fund to be applied to the
               purchase or redemption, or both, of shares of such series, and
               the terms and amount of any sinking fund payments and the
               manner of their application; and

                    g. The amount which the holders of each series shall be
               entitled to receive in the event of any voluntary or
               involuntary liquidation, dissolution or winding up of the
               Corporation.

          Except as stated above in this Section 2(B) of this Article V, all
          shares of Preferred Stock shall be identical. All shares of
          Preferred Stock, regardless of series, shall be of equal rank, and
          there shall be no priority of one series over any other series in
          any payment of dividends nor upon any distribution of assets.

               (ii) Dividends. The holders of Preferred stock of each series
          shall be entitled to receive, when and as declared by the Board of
          Directors, cumulative cash dividends at the rate or amounts, for the
          periods, and at the times, determined as, or in the manner,
          specified for such series by the Board of Directors as authorized in
          this Section 2(B) of this Article V.

               No dividends shall be paid or declared or set apart for payment
          on any share of Preferred Stock of any series for any dividend
          period unless at or prior to such time all dividends accumulated on
          all shares of Preferred Stock then outstanding shall have been
          declared through the most recently ended dividend period of the
          respective shares, and terminating on the same and any earlier date
          shall have been paid or declared and set apart for payment.



                                      3
<PAGE>

               (iii) Voting. At any meeting of stockholders of the Corporation
          at which directors are to be elected, the holders of Preferred Stock
          of all series, voting separately as a single class, shall be
          entitled to elect two members of the Board of Directors, and the
          holders of Common Stock, voting separately as a single class, shall
          be entitled to elect the balance of the members of the Board of
          Directors.

               If at any time dividends on any outstanding Preferred Stock of
          any series shall be unpaid in an amount equal to two full years'
          dividends, the number of directors constituting the Board of
          Directors shall automatically be increased by the smallest number
          that, when added to the number of directors then constituting the
          Board of Directors, shall constitute a majority of such increased
          number, including the two directors elected by the holders of
          Preferred Stock pursuant to the preceding paragraph; and at a
          special meeting of stockholders which shall be called and held as
          soon as practicable, and at all subsequent meetings at which
          directors are to be elected, the holders of Preferred Stock of all
          series, voting separately as a single class, shall be entitled to
          elect the smallest number of additional directors of the Corporation
          who will constitute a majority of the total number of directors or
          the Corporation so increased. The terms of office of persons who are
          directors at the time of that election shall continue. If the
          Corporation thereafter shall pay, or declare and set apart for
          payment, in full all dividends payable on all outstanding shares of
          Preferred Stock or all series for all past dividend periods, the
          voting rights stated in the preceding sentence shall cease, and the
          terms of office of all of the additional directors elected by the
          holders of Preferred Stock (but not of the directors elected by the
          holders of Common Stock) shall terminate automatically. At all
          subsequent meetings of stockholders at which directors are to be
          elected, the holders of shares of Preferred Stock and of Common
          Stock shall have the right to elect the members of the Board of
          Directors as stated in the preceding paragraph, subject to the
          revesting of the rights of the holders of the Preferred Stock as
          provided in the first sentence of this paragraph in the event of any
          subsequent arrearage in the payment of two full years' dividends on
          the shares of Preferred Stock of any series.

               Any vacancy in the office of any director elected by the
          holders of shares of Preferred Stock may be filled by the remaining
          directors (or director) so elected or, if not so filled, by the
          holders of shares of Preferred Stock of all series, voting
          separately as a single class, at any meeting of stockholders for the
          election of directors held thereafter.

               The affirmative vote of the holders of a majority of the
          outstanding shares of the Preferred Stock, voting as a separate
          class, will be required to amend, alter or repeal any of the
          preferences, rights or powers of holders of shares of Preferred
          Stock so as to affect materially and adversely such preferences,
          rights, or powers, or increase or decrease the number of shares of
          Preferred Stock authorized to be issued. Unless a higher percentage
          is provided for under the charter of the Corporation, the
          affirmative vote of the holders of a majority of the outstanding


                                      4
<PAGE>

          shares of the Preferred Stock, voting each separate class, will be
          required to approve any plan of Reorganization adversely affecting
          such shares or any action requiring a vote of security holders under
          Section 13(a) of the Investment Company Act of 1940, as amended,
          including among other things, changes in the Corporation's
          investment objective or changes in the investment restrictions
          described in the prospectus of the Corporation.

               Except to the extent stated otherwise in this Article V, the
          provisions of Article VI shall apply to this Article V.

               (iv) Liquidation. In the event of any liquidation, dissolution
          or winding up or the Corporation, whether voluntary or involuntary,
          the holders of Preferred Stock of each series shall be entitled to
          receive only such amount or amounts, including accumulated and
          unpaid dividends, as shall have been fixed by the Articles of
          Incorporation or by the resolution or resolutions of the Board of
          Directors providing for the issue of such series. If, upon any such
          liquidation, dissolution or winding up of the Corporation, whether
          voluntary or involuntary, the assets of the Corporation available
          for distribution among the holders of all outstanding shares of
          Preferred Stock of all series should be insufficient to permit the
          payment in full to such holders of the amounts to which they are
          entitled, then such available assets shall be distributed among
          shareholders of shares of Preferred Stock ratably in any such
          distribution of assets according to the respective amounts that
          would be paid in full. A consolidation or merger of the Corporation
          with or into one or more other corporations or a sale, lease or
          exchange of all or substantially all of the assets of the
          Corporation shall not be deemed to be a voluntary or involuntary
          liquidation, dissolution or winding up, within the meaning of this
          Article V.

          C. All Stock

               (i) Sale of Shares. The Board or Directors may authorize the
          sale and issuance from time to time of shares of stock, whether now
          or hereafter authorized, for such consideration as the Board of
          Directors considers advisable, but not less than par value, subject
          to such limitations as may be set forth in the charter of the
          Corporation, the By-laws, the General Laws of the State of Maryland,
          the Investment Company Act of 1940, as amended, and other applicable
          laws.

               (ii) Fractional Share. Except as may be provided otherwise by
          the Board of Directors in authorizing the issuance of a series of
          Preferred Stock, stock may be issued in fractions of whole shares,
          to which attach pro rata all of the rights of whole shares,
          including the rights of voting and of receipt of dividends, except
          that there shall be no right of receipt of a certificate
          representing any fraction of a whole share.

               (iii) No preemptive rights. No holder of stock of the
          Corporation shall, as such holder, have any right to purchase or
          subscribe for any shares of the


                                      5
<PAGE>

          capital stock of the Corporation or any other security of the
          Corporation which it may issue or sell (whether out of the number of
          shares authorized by these Articles of Incorporation, or out of any
          shares of the capital stock of the Corporation acquired by it after
          the issue thereof, or otherwise) other than such right, if any, as
          the Board of Directors, in its discretion, may determine.

     (3) Notwithstanding any provision of the Maryland General Corporation Law
requiring a greater portion than a majority of the votes of all classes or
series of capital stock of the Corporation (or of any class or series entitled
to vote thereon as a separate class or series) to take or authorize any
action, the Corporation is hereby authorized (subject to the requirements of
the Investment Company Act of 1940, as amended, and in effect from time to
time, and any rules, regulations and orders issued thereunder) to take such
action upon the concurrence of a majority of the aggregate number of shares of
capital stock of the Corporation entitled to vote thereon (or a majority of
the aggregate number of shares of a class or series entitled to vote thereon
as a separate class or series).

     (4) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of the charter and By-Laws of the
Corporation. As used in the charter of the Corporation, the terms "charter"
and "Articles of Incorporation" shall mean and include the Articles of
Incorporation of the Corporation as amended, supplemented and restated from
time to time by Articles of Amendment, Articles Supplementary, Articles of
Restatement or otherwise.

                                  ARTICLE VI

                     PROVISIONS FOR DEFINING, LIMITING AND
                     REGULATING CERTAIN POWERS OF THE COR-
                       PORATION AND OF THE DIRECTORS AND
                                 STOCKHOLDERS
                 -------------------------------------------

     (1) The number of directors of the Corporation shall be three (3), which
number may be increased pursuant to the Bye-Laws of the Corporation but shall
never be less than three (3). The names of the directors who shall act until
the first annual meeting or until their successors are duly elected and
qualify are:

              Philip L. Kirstein
              Mark B. Goldfus
              Susan B. Baker

     (2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time shares of capital stock, whether now
or hereafter authorized after such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in these
Articles of Incorporation or in the By-Laws of the Corporation or in the
General Laws of the State of Maryland.

     (3) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General
Laws of the State of Maryland, subject to


                                      6
<PAGE>

the requirements of the Investment Company Act of 1940, as amended. No
amendment of these Articles of Incorporation or repeal of any provision hereof
shall limit or eliminate the benefits provided to directors and officers under
this provision in connection with any act or omission that occurred prior to
such amendment or repeal.

     (4) To the fullest extent permitted by the General Laws of the State of
Maryland, subject to the requirements of the Investment Company Act of 1940,
as amended, no director or officer of the Corporation shall be personally
liable to the Corporation or its security holders for money damages. No
amendment of these Articles of Incorporation or repeal of any provision hereof
shall limit or eliminate the benefits provided to directors and officers under
this provision in connection with any act or omission that occurred prior to
such amendment or repeal.

     (5) The Board of Directors of the Corporation may make, alter or repeal
from time to time any of the By-Laws the Corporation except any particular
By-Law which is specified as not subject to alteration or repeal by the Board
of Directors, subject to the requirements of the Investment Company Act of
1940, as amended.

     (6) A director elected by the holders of Preferred Stock or Common Stock
may be removed for cause, but only by action taken by holders of at least 75%
of the shares of Preferred Stock or of Common Stock, respectively, then
entitled to vote in an election to fill that directorship.

                                 ARTICLE VII

                           DETERMINATION OF BINDING
                           ------------------------

     Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice by or pursuant to
the direction of the Board of Directors, as to the amount of assets,
obligations or liabilities of the Corporation, as to the amount of net income
of the Corporation from dividends and interest for any period or amounts at
any time legally available for the payment of dividends, as to the amount of
any reserves or charges set up and the proprietary thereof, as to the time of
or purpose for creating reserves or as to the use, alteration or cancellation
of any reserves or charges (whether or not any obligation or liability for
which such reserves or charges shall have been created, shall have been paid
or discharged or shall be then or thereafter required to be paid or
discharged), as to the price of any security owned by the Corporation or as to
any other matters relating to the issuance, sale, redemption or other
acquisition or disposition of securities or shares of capital stock of the
Corporation, and any reasonable determination made in good faith by the Board
of Directors as to whether any transaction constitutes a purchase of
securities on "margin", a sale of securities "short", or an underwriting of
the sale of, or a participation in any underwriting or selling group in
connection with the public distribution of, any securities, shall be final and
conclusive, and shall be binding upon the Corporation and all holders of its
capital stock, past, present and future, and shares of the capital stock or
acceptance of share certificates, the any and all such determinations shall be
binding as aforesaid. No provision of these Articles of Incorporation shall be
effective to (a) require a waiver of compliance with any provision of the
Securities Act of 1933, as amended, or the Investment Company Act of 1940, as
amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission thereunder or (b) protect or


                                      7
<PAGE>

purport to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.

                                 ARTICLE VIII

                       PRIVATE PROPERTY OF STOCKHOLDERS
                       --------------------------------

     The private property of shareholders shall not be subject to the payment
of corporate debts to any extent whatsoever.

                                  ARTICLE IX

                              PERPETUAL EXISTENCE
                              -------------------

     The duration of the Corporation shall be perpetual.

                                  ARTICLE X

                        CONVERSION TO OPEN-END COMPANY
                        ------------------------------

     Notwithstanding any other provisions of these Articles of Incorporation
or the By-Laws of the Corporation, a favorable vote of the holders of at least
seventy-five percent (75%) of the outstanding shares of Common Stock and
Preferred Stock of the Corporation entitled to be voted on the matter, voting
separately by class, shall be required to approve, adopt or authorize an
amendment to these Articles of Incorporation of the Corporation that makes the
Common Stock a "redeemable security" (as that term is defined in section
2(a)(32) the Investment Company Act of 1940, as amended), unless such action
has previously been approved, adopted or authorized by the affirmative vote of
at least two-thirds of the total number of directors find in accordance with
the By-Laws of the Corporation, in which case the affirmative vote of the
holders of a majority of the


                                      8
<PAGE>

outstanding shares or Common Stock and Preferred Stock or the Corporation
entitled to vote thereon, voting separately by class, shall be required.

                                  ARTICLE XI

                      MERGER, SALE OF ASSETS, LIQUIDATION
                      -----------------------------------

     Notwithstanding any other provisions of these Articles of Incorporation
or the By-Laws of the Corporation, a favorable vote of the holders of at least
seventy-five percent (75%) of the outstanding shares of Common Stock and
Preferred Stock of the Corporation entitled to be voted on the matter, voting
separately by class, shall be required to approve, adopt or authorize (i) a
merger or consolidation or statutory share exchange of the Corporation with
any other corporation, (ii) a sale of all or substantially all of the assets
of the Corporation (other than in the regular course of its investment
activities), or (iii) a liquidation or dissolution of the Corporation, unless
such action has previously 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 of the Corporation, in which case the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and Preferred Stock of the Corporation entitled to vote thereon,
separately by class, shall be required.

                                 ARTICLE XII

                            CONSENT OF STOCKHOLDERS
                            -----------------------

     Notwithstanding any other provisions of these Articles of Incorporation
or the By-Laws of the Corporation, any action taken by the written consent of
the holders of the outstanding shares of the capital stock of the Corporation
must be taken by unanimous written consent of the holders of the outstanding
shares of capital stock of the Corporation entitled to be voted on the matter.

                                 ARTICLE XIII

                                   AMENDMENT
                                   ---------

     The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, including any amendment with alters the
contract rights, as expressly set forth in the charter, of any outstanding
stock and substantially adversely affects the stockholders' rights and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding any other provisions of these Articles of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, these Articles of
Incorporation or the By-Laws of the Corporation), the amendment or repeal of
Section ___________ of Article V, Section (3), Section (4), Section (5) and
Section (6) of Article I, Article VIII, Article IX, Article X, Article XI,
Article XII or this Article XIII, of these Articles of Incorporation shall
require the affirmative vote of the holders of at least seventy-five percent
(75%) of the outstanding shares of Common Stock and Preferred Stock of the
Corporation entitled to be voted on the matter, voting separately by class.

     IN WITNESS WHEREOF, the undersigned incorporator of MUNIPLUS FUND, INC.
hereby executes the foregoing Articles of Incorporation and acknowledges the
same to be his act and further acknowledges that, to the best of his
knowledge, the matters and facts set forth therein are true in all material
respects under the penalties of perjury.

     Dated the 6th day of July, 1988



                                            /s/ Margaret J. Lane
                                          --------------------------------------
                                                 Margaret J. Lane



                                      9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(2)
<SEQUENCE>3
<FILENAME>efc4-1273_5567689ex992a2.txt
<TEXT>
                                                                Exhibit (a)(2)

                              MUNIPLUS FUND, INC.

                             ARTICLES OF AMENDMENT

         MUNIPLUS FUND, INC., a Maryland corporation having its principal office

c/o The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland

21202 (hereinafter called the Corporation), hereby certifies to the State

Department of Assessments and Taxation of Maryland, that

               FIRST: The Articles of Incorporation of the Corporation is
          hereby amended by striking out Article II and inserting in lieu
          thereof the following:

                                  ARTICLE II

                                     Name
                                     ----

          The name of the Corporation is

                             MUNIVEST FUND, INC.

               SECOND: This amendment to the Articles of Incorporation of the
          Corporation was duly approved at a meeting of the board of directors
          of the Corporation on August 10, 1988 and at the time of the meeting
          of the directors there were no shares of stock of the Corporation
          entitled to vote on the matter either outstanding or subscribed for.

          IN WITNESS WHEREOF, MuniVest Fund, Inc. has caused these articles to

be signed in its name and on its behalf by its President and attested by its

Assistant Secretary on August 10, 1988.

                                    MUNIPLUS FUND, INC.



                                    By:    /s/ Philip L. Kirstein
                                         ---------------------------------------
                                               Philip L. Kirstein
                                                   President

Attest:




<PAGE>

  /s/ Susan Baker
- ------------------------------------
Susan Baker
Assistant Secretary


                                      2

<PAGE>

                                  Certificate
                                  -----------

         THE UNDERSIGNED, President of MuniPlus Fund, Inc., who executed on

behalf of the Corporation the foregoing Articles of Amendment of which this

Certificate is made a part, hereby acknowledges in the name and on behalf of

said Corporation the foregoing Articles of Amendment to be the corporate act

of said Corporation and hereby certifies that to the best of his knowledge,

information, and belief the matters and facts set forth therein with respect

to the authorization and approval thereof are true in all material respects

under the penalties of perjury.

                                        /s/ Philip L. Kirstein
                                   --------------------------------------------
                                            Philip L. Kirstein
                                                President

                                      3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(3)
<SEQUENCE>4
<FILENAME>efc4-1273_5568188exha3.txt
<TEXT>
                                                                Exhibit (a)(3)

                              MUNIVEST FUND, INC.

                Articles Supplementary creating five series of
                       Auction Market Preferred Stock(SM)

     MUNIVEST 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
classified its preferred stock and has authorized the issuance of four series
of 500 shares each and one series of 750 shares of its authorized preferred
stock, par value $.10 per share, liquidation preference $100,000 per share,
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:

                                  DESIGNATION

     SERIES A: A series of 500 shares of preferred stock, par value $.10 per
share, liquidation preference $100,000 per share, is hereby designated
"Auction Market Preferred Stock, Series A." Each share of Auction Market
Preferred Stock, Series A shall be issued on December 8, 1988; have an Initial
Dividend Rate equal to 6.50% per annum, have an Initial Dividend Payment Date
of January 9, 1989; and have such other preferences, limitations and relative
voting rights, in addition to those required by applicable law or set forth in
the


                                      2


<PAGE>


Corporation's Charter applicable to preferred stock of the Corporation, 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 except as provided in paragraph 4 of these Articles
Supplementary.

     SERIES B: A series of 500 shares of preferred stock, par value $.10 per
share, liquidation preference $100,000 per share, is hereby designated
"Auction Market Preferred Stock, Series B." Each share of Auction Market
Preferred Stock, Series B shall be issued on December 8, 1988; have an Initial
Dividend Rate equal to 6.55% per annum; have an Initial Dividend Payment Date
of January 17, 1989; and have such other preferences, limitations and relative
voting rights, in addition to those required by applicable law or set forth in
the Corporation's Charter applicable to preferred stock of the Corporation, as
are set forth in these Articles Supplementary. The Auction Market Preferred
Stock, Series B shall constitute a separate series of preferred stock of the
Corporation, and each share of Auction Market Preferred Stock, Series B shall
be identical except as provided in paragraph 4 of these Articles
Supplementary.

     SERIES C: A series of 500 shares of preferred stock, par value $.10 per
share, liquidation preference $100,000 per share, is hereby designated
"Auction Market Preferred Stock, Series C." Each share of Auction Market
Preferred Stock, Series C shall be issued on December 8, 1988; have an Initial
Dividend Rate equal to 6.60% per annum; have an Initial Dividend Payment Date
of January 23, 1989; and have such other preferences, limitations and relative
voting rights, in addition to those required by applicable law or set forth in
these Articles Supplementary applicable to preferred stock of the Corporation,
as are set forth in the


                                      3


<PAGE>


Corporation's Charter. 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 except as
provided in paragraph 4 of these Articles Supplementary.

     SERIES D: A series of 500 shares of preferred stock, par value $.10 per
share, liquidation preference $100,000 per share, is hereby designated
"Auction Market Preferred Stock, Series D." Each share of Auction Market
Preferred Stock, Series D shall be issued on December 8, 1988; have an Initial
Dividend Rate equal to 6.60% per annum; have an Initial Dividend Payment Date
of January 30, 1989; and have such other preferences, limitations and relative
voting rights, in addition to those required by applicable law or set forth in
these Articles Supplementary applicable to preferred stock of the Corporation,
as are set forth in the Corporation's Charter. 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 except as provided in paragraph 4 of these Articles
Supplementary.

     SERIES E: A Series of 750 shares of preferred stock, par value $.10 per
share, liquidation preference $100,000 per share, is hereby designated
"Auction Market Preferred Stock, Series E." Each share of Auction Market
Preferred Stock, Series E ("Series E AMPS") shall be issued on December 8,
1988; have an Initial Dividend rate equal to 6.40% per annum; have an Initial
Dividend Payment Date of December 19, 1988; and have such other preferences,
limitations and relative voting rights, in addition to those required by
applicable law or set forth in these Articles Supplementary applicable to
preferred stock of the Corporation, as are set forth in the Corporation's
Charter. 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


                                      4


<PAGE>


Stock, Series E shall be identical except as provided in paragraph 4 of these
Articles Supplementary.

     1. Definitions. (a) 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:

     "Accountant's Confirmation" has the meaning set forth in paragraph 7(c)
of these Articles Supplementary.

     "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, 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.

     "AMPS Basic Maintenance Amount," as of any Valuation Date, means the
dollar amount equal to the sum of (i)(A) the product of the number of shares
of AMPS and Other AMPS Outstanding on such date multiplied by $100,000; (B)
the aggregate amount of cash dividends that will have accumulated (whether or
not earned or declared) for each share of AMPS and Other AMPS Outstanding, in
each case, to (but not including) the next Dividend Payment Date


                                      5


<PAGE>


therefor that follows such Valuation Date; (C) the aggregate amount of cash
dividends that would accumulate at the then current Maximum Applicable Rate on
any shares of AMPS and Other AMPS Outstanding from the Business Days following
such Dividend Payment Dates through the 63rd day after such Valuation Date,
multiplied by the larger of potential dividend rate increase factors
(currently 240%) determined from time to time by Moody's and S&P (except that
if such Valuation Date 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; and (E) any current liabilities
as of such Valuation Date to the extent not reflected in any of (i)(A) through
(i)(D) (including, without limitation, and immediately upon determination, any
Rights which the Corporation has determined are payable pursuant to paragraph
2(e) of these Articles Supplementary with respect to AMPS or an analogous
provision with respect to Other AMPS, and payables for Municipal Bonds
purchased as of such Valuation Date) less (ii) the sum of (A) the lesser of
(1) the value of receivables for Municipal Bonds sold as of or prior to such
Valuation Date to parties with a long-term debt rating of A2 or better from
Moody's and (2) the Discounted Value of such Municipal Bonds calculated using
the higher of the S&P Discount Factor and the Moody's Discount Factor
applicable to such Municipal Bonds, and (B) the value of any of the
Corporation's assets irrevocably deposited by the Corporation for the payment
of any of (i)(A) through (i)(E).

     "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 ninth Business Day following such Valuation Date.


                                      6


<PAGE>


     "AMPS Basic Maintenance Report" means a report signed by 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 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.

     "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.


                                      7


<PAGE>


     "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 (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 MuniVest 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.

     "Deposit Securities" means cash and Municipal Bonds rated at least AAA,
AA, 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 quotient of the
Market Value thereof divided by the applicable Moody's Discount Factor.


                                      8


<PAGE>


     "Dividend Coverage Amount," as of any Valuation Date, means (i) the
aggregate amount of cash dividends that will accumulate on all shares of AMPS
and Other AMPS, in each case to (but not including) the next Dividend Payment
Date therefor that follows such Valuation Date less (ii) the combined value of
Deposit Securities irrevocably deposited 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, and having in the aggregate a value not less
than the Dividend Coverage Amount.

     "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 and any Subsequent
Dividend Period.

     "Existing Holder" means a Person who has signed a Purchaser's Letter and
is listed as the Existing Holder of shares of AMPS in the Stock Books.

     "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.


                                      9


<PAGE>


     "Initial Dividend Payment Date" means the Initial Dividend Payment Date
specified herein with respect to the AMPS or Other AMPS, as the case may be.

     "Initial 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.

     "Initial Dividend Rate," with respect to AMPS, means the rate per annum
specified herein as such with respect to the AMPS and, with respect to Other
AMPS, has the equivalent meaning.

     "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.

     "Market Value" of any asset of the Corporation shall be the market value
thereof determined by the pricing service designated from time to time by the
Board of Directors of the Corporation and notified to S&P and Moody's. Market
Value of any asset shall include any interest accrued thereon. The pricing
service shall value portfolio securities at the quoted bid price 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.


                                      10


<PAGE>


     "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.

     "Minimum Liquidity Level" means, as of any date of determination, an
aggregate Market Value of the Corporation's Dividend Coverage Assets equal to
or in excess of 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 Moody's Eligible Asset, the percentage determined by
reference to the rating by Moody's or S&P on such asset and the shortest
Moody's Collateral Period set forth opposite such rating that is the same
length as or is longer than the Moody's Exposure Period, in accordance with
the table set forth below:

<TABLE>
<CAPTION>

                                                                              Rating Category
                                                               ------------------------------------------------
Moody's Collateral 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
10 weeks or less but greater than nine weeks..............     161       175       186       213       250
</TABLE>

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

 *  Moody's rating
**  Municipal Bonds not rated by Moody's but rated BBB by 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 or A-1+/AA or SP-1+/AA by S&P
and mature or have a demand feature at par exercisable in 30 days or less and
(ii) no Moody's Discount Factor will be applied to cash.


                                      11


<PAGE>


     "Moody's Eligible Asset" means cash 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. Municipal Bonds issued by any one issuer and
rated BBB by S&P may comprise no more than 4% of total Moody's Eligible
Assets; such BBB-rated Municipal Bonds, if any, together with any Municipal
Bonds issued by the same issuer and rated Baa by Moody's may comprise no more
than 6% of total Moody's Eligible Assets; such BBB and Baa-rated Municipal
Bonds, if any, together with any Municipal Bonds issued by the same issuer and
rated A by Moody's may comprise no more than 10% of total Moody's Eligible
Assets; and such BBB, Baa and A-rated Municipal Bonds, if any, together with
any Municipal Bonds issued by the same issuer and rated Aa by Moody's, may
comprise no more than 20% of total Moody's Eligible Assets. Municipal Bonds
issued by issuers located within a single state or territory and rated BBB by
S&P may comprise no more than 12% of total Moody's Eligible Assets; such
BBB-rated Municipal Bonds, if any, together with any Municipal Bonds issued by
issuers located within the same state or territory and rated Baa by Moody's
may comprise no more than 20% of total Moody's Eligible Assets; such BBB and
Baa-rated Municipal Bonds, if any, together with any Municipal Bonds issued by
issuers located within the same state or territory and rated A by Moody's, may
comprise no more than 40% of total Moody's Eligible Assets; and such BBB, Baa
and A-rated Municipal Bonds, if any, together with any Municipal Bonds issued
by issuers located within the same state or territory


                                      12


<PAGE>


and rated Aa by Moody's, may comprise no more than 60% of total Moody's
Eligible Assets. Cash acquired by the Corporation in exchange for Municipal
Bonds as collateral pursuant to a repurchase agreement that obligates the
Corporation to repurchase such Municipal Bonds will only constitute Moody's
Eligible Assets if the long-term debt of such other party is rated at least A2
by Moody's and such agreement has a term of 30 days or less. Municipal Bonds
acquired as collateral by the corporation pursuant to a repurchase agreement
that obligates the other party thereto to repurchase such Municipal Bonds will
only constitute a Moody's Eligible Asset if the long-term debt of such other
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 subject to any material lien, mortgage, pledge,
security interest or security agreement of any kind (collectively, "Liens"),
except for (a) any Lien the validity of which is being contested in good faith
by appropriate proceedings, (b) Liens for taxes that are not than due and
payable or that can be paid thereafter without penalty, (c) Liens to secure
payment for services rendered or cash advanced to the Corporation by Fund
Asset Management, Inc., Merrill Lynch Asset Management, Inc., The Bank of New
York, the Auction Agent or any Broker-Dealer and (d) any Lien by virtue of a
repurchase agreement.

     "Moody's Exposure Period" means the period commencing on a given
Valuation Date and ending 63 days thereafter.

     "Municipal Bonds" means "Municipal Bonds" as defined in the Corporation's
Registration Statement on Form N-2 (File Nos. 33-22958) on file with the
Securities and Exchange Commission, as such Registration Statement may be
amended from time to time.


                                      13


<PAGE>


     "1940 Act" means the Investment Company Act of 1940, as amended from time
to time.

     "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.

     "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).

     "Non-Payment Period" (i) with respect to AMPS, means 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
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 or (to the extent permitted by
paragraph 2(c)(i) of these Articles Supplementary) within three Business Days
after 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 or (to
the extent permitted by paragraph 2(c)(i) of these Articles Supplementary)
within three Business Days after any


                                      14


<PAGE>


redemption date for any shares of AMPS called for redemption, the redemption
price of $100,000 per share plus the full amount of any cash dividends thereon
(whether or not earned or declared) accumulated but unpaid to such redemption
date 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 to the Auction Agent, all Existing Holders (at their addresses
appearing in the Stock Books) and the Securities Depository; and, (ii) with
respect to Other AMPS, has the equivalent meaning.

     "Non-Payment Period Rate" means, initially, 200% of the applicable 60-day
"AA" Composite Commercial Paper Rate, 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 or any Substitute
Rating Agencies 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)(i) 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.


                                      15


<PAGE>


     "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 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).


                                      16


<PAGE>


     "Preferred Stock" means the preferred stock of the Corporation, and
includes AMPS and Other AMPS.

     "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.

     "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.

     "Rightholder" has the meaning set forth in paragraph 2(e) 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
February 28, 1989.

     "S&P" means Standard & Poor's Corporation or its successors.

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

<TABLE>
<CAPTION>

                                                                           Rating Category
                                                               --------------------------------------
S&P Collateral Period                                          Aaa*      Aa*       A*        BBB*
- ---------------------                                          --------  --------  --------  --------
<S>                                                            <C>       <C>       <C>       <C>
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
</TABLE>

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

*  S&P rating.


                                      17


<PAGE>



     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.

     "S&P Eligible Asset" means cash or a Municipal Bond that (i) is interest
bearing and pays interest at least semi-annually; (ii) is payable with respect
to principal and interest in United States Dollars; (iii) 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); (iv) is not subject to a covered call
option written by the Corporation; (v) is not part of a private placement of


                                      18


<PAGE>


Municipal Bonds; and (vi) 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 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 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 the 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).


                                      19


<PAGE>


     "Securities Depository" means The Depository Trust Company or any
successor company or other entity selected 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.

     "60-day 'AA' Composite Commercial Paper Rate," on any date, means (i) the
Interest Equivalent of the 60-day rate on commercial paper placed on behalf of
issuers whose corporate bonds are rated "AA" by S&P, or the equivalent of such
rating by S&P or another nationally recognized statistical rating
organization, as such 60-day rate is made available on a discount basis or
otherwise by the Federal Reserve Bank of New York for the Business Day
immediately 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 arithmetical
average of the Interest Equivalent of the 60-day rate on commercial paper
placed on behalf of such issuers, as quoted to the Auction Agent on a discount
basis or otherwise by the Commercial Paper Dealer for the close of business on
the Business Day immediately preceding such date. If the Commercial Paper
Dealer does not quote a rate required to determine the 60-day "AA" Composite
Commercial Paper Rate, the 60-day "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.

     "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.


                                      20


<PAGE>


     "Stock Register" means the register of holders of record of shares of
AMPS 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.

     "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.

          (b) The foregoing definitions of Accountant's Confirmation, AMPS
     Basic Maintenance Amount, AMPS Basic Maintenance Cure Date, AMPS Basic
     Maintenance Report, Deposit Securities, Discounted Value, Dividend
     Coverage Amount, Dividend


                                      21


<PAGE>


     Coverage Assets, Independent Accountants, Market Value, Minimum Liquidity
     Level, Moody's Discount Factor, Moody's Eligible Asset, Moody's Exposure
     Period, S&P Discount Factor, S&P Eligible Asset, S&P Exposure Period and
     Valuation Date 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 if
     the Board of Directors of the Corporation determines and 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 or a duly authorized
committee thereof, 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 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 and in preference to and
priority over any dividends declared and payable on the Common Stock, 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 up to the amount of net tax-exempt income of the
Corporation for purposes of Section 852 of the Code. No dividend on shares of
AMPS shall be paid or payable out of long-


                                      22


<PAGE>


term or short-term capital gains of the Corporation. 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 commencing on the Initial
     Dividend Payment Date and on each fourth Monday thereafter (in the case
     of AMPS other than Series E AMPS) and each Monday thereafter (in the case
     of Series E AMPS) (each such Monday being referred to herein as a "Normal
     Dividend Payment Date"); provided, however, that if any of such Normal
     Dividend Payment Date, the Friday preceding such Normal Dividend Payment
     Date or the Tuesday following such Normal Dividend Payment is not a
     Business Day, then the Dividend Payment Date shall be the second Business
     Day of the earliest series of three consecutive Business Days (the first
     and second of which need not be consecutive calendar days and the second
     and third of which must be consecutive calendar days), the first Business
     Day of which is no earlier than the Thursday preceding such Normal
     Dividend Payment Date (the Initial Dividend Payment Date and each
     subsequent date of payment of dividends being herein referred to as a
     "Dividend Payment Date"). Although any particular Dividend Payment Date
     may not occur on a Normal Dividend Payment Date because of the
     above-mentioned provisos, the next succeeding Dividend Payment Date shall
     be, subject to such provisos, the next Normal 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,


                                      23


<PAGE>


     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 a Dividend Payment Date and shall end on the calendar day
     prior to the next Dividend 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. 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 12:00 noon, New York City time, on such Dividend Payment Date, the
Corporation has declared such dividend payable on or within three Business
Days after 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


                                      24


<PAGE>


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 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 for 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) for any Dividend Period or part thereof shall be computed by
     multiplying the Applicable Rate for such Dividend Period by a fraction
     the numerator of which shall be the number of days in such Dividend
     Period or part thereof that such share was outstanding and the
     denominator of which shall be 365, multiplying the amount so obtained by
     $100,000, and rounding the amount so obtained to the nearest cent.

          (d) (i) Holders shall not be entitled to any dividends, whether
     payable in cash, property or stock, in excess of full cumulative
     dividends, as herein provided, on the shares of AMPS. 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.



                                      25


<PAGE>


               (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 AMPS Basic Maintenance Amount and the 1940 Act AMPS
     Asset Coverage would be achieved, (B) full cumulative dividends on shares
     of AMPS and shares of other AMPS 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 Right 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) a right (a "Right") to receive cash (as determined
     below). Each Right shall thereafter be independent of the share or shares
     of AMPS on which the dividend was


                                      26


<PAGE>


     paid. The Corporation shall cause to be maintained a record of each Right
     received by the respective Holders. The Corporation shall not be required
     to recognize any transfer of a Right. If the Internal Revenue Service
     promulgate or revokes any public notice. pronouncement, ruling,
     procedure, regulation or other administrative position, the effect of
     which could, in the opinion of counsel to the Corporation who is not an
     employee or officer of Merrill Lynch & Co., Inc., any of its subsidiaries
     or the Corporation, result in all or any portion of the dividends paid on
     the shares of AMPS during the most recently ended taxable year of the
     Corporation being included in the gross income (as defined in Section 61
     of the Code) of a Rightholder (as defined below) ("Nonqualifying
     Distributions") because the Corporation must allocate ordinary income or
     capital gains to the shares of AMPS, the applicable Rights shall entitle
     the holders thereof ("Rightholders") to additional cash (as set forth
     below), unless, within 270 days after the close of any taxable year of
     the Corporation, the Corporation receives an opinion of such counsel that
     notwithstanding such promulgation or revocation, the Corporation should
     not be required to allocate ordinary income and capital gains to the
     shares of AMPS. If the Corporation does not receive such opinion within
     270 days after the close of the first taxable year of the Corporation for
     which such promulgation or revocation would be effective, the Corporation
     shall provide notice to the Auction Agent that Rightholders are entitled
     to additional cash (as set forth below). The Auction Agent will mail a
     copy of such notice to each Rightholder at the address specified in such
     Rightholder's Master Purchaser's Letter as promptly as practicable after
     its receipt of such notice from 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 Rightholders), out


                                      27


<PAGE>


     of funds legally available therefor, cash in satisfaction of the
     applicable Rights in an amount specified below with respect to all
     Nonqualifying Distributions made during such fiscal year.

     Cash payable pursuant to a Right shall be paid to the Rightholder thereof
in an amount which, when taken together with the aggregate Nonqualifying
Distributions paid to such Rightholder during any fiscal year, would cause
such Rightholder's net yield in dollars (after Federal income tax
consequences) from the aggregate of both the Nonqualifying Distributions and
the cash receivable pursuant to such Right to be equal to the net yield in
dollars (after Federal income tax consequences) which would have been received
by such Rightholder if the amount of the aggregate Nonqualifying Distributions
would have qualified for the Dividends-Received Deduction in the hands of such
Rightholder. Such cash receivable on such Right shall be calculated without
consideration being given to the time value of money and using the applicable
maximum marginal corporate Federal tax rate in effect at the time such Right
was declared with respect to which such cash payable in satisfaction of such
right is made.

     The Corporation may estimate the amount payable in respect of any Right
and pay all or any portion of such estimated amount prior to the end of the
fiscal year in which such Right was declared.

     If, for any fiscal year, the Corporation distributed no capital gains or
taxable income to shares of AMPS, then the amount of each Additional Dividend
with respect to that year shall be zero.

          (f) No fractional share of AMPS shall be issued.


                                      28


<PAGE>


     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 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 $100,000 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. 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. A consolidation or merger of the Corporation with or into any
other corporation or corporations 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 be 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, on the next succeeding
     scheduled Dividend Payment Date


                                      29


<PAGE>


     applicable to those shares of AMPS called for redemption, out of funds
     legally available therefor, at a redemption price equal to $100,000 per
     share plus an amount equal to dividends thereon accumulated but unpaid to
     the date fixed for redemption (whether or not earned or declared). 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 a redemption price equal to $100,000 per share plus
     accumulated but unpaid dividends (whether or not earned or declared) to
     the date of redemption, 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 the AMPS Basic Maintenance Amount or
     the 1940 Act AMPS Asset Coverage and such failure is not cured on or
     before the AMPS Basic Maintenance Cure Date or the 1940 Act Cure Date
     (herein referred to respectively as the "Cure Date"), as the case may be.
     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 satisfaction of the AMPS
     Basic Maintenance Amount or the 1940 Act 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


                                      30


<PAGE>


     the redemption of which would have such result, all shares of AMPS 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. 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 to satisfy
     the AMPS Basic Maintenance Amount or the 1940 Act AMPS Asset Coverage, as
     the case may be, pro rata among shares of AMPS, Other AMPS and other
     Preferred Stock subject to redemption pursuant to provisions similar to
     those contained in this paragraph 4(a)(ii). The Corporation shall effect
     such redemption on a Business Day which is not later than 45 days after
     such Cure Date, except that if the Corporation does not have 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 45 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.

     (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 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. In the event that less than all the
outstanding shares of AMPS are to be redeemed and there is more than one
Holder, the shares to be redeemed shall be selected by lot or such other
method as the Corporation shall deem fair and equitable.


                                      31


<PAGE>


     (c) Whenever shares of AMPS are to be deemed, 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
Notice of Redemption shall 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 to be redeemed, (iv) the place or places
where shares of AMPS are to be surrendered for payment of the redemption
price, (v) a statement that dividends on the shares to be redeemed shall cease
to accumulate on such redemption date and (vi) the provision 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 the redemption payment for the shares of AMPS as to which
such Notice of Redemption has been 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 of 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, 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


                                      32


<PAGE>


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.

     5. Voting Rights. (a) General. Except as otherwise provided in the
Charter or by law, 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 shares of Preferred Stock,
including AMPS, represented in person or by proxy at said meeting, shall be
entitled, as a class, to the exclusion of the holders of all other securities
and classes of capital stock of the Corporation, to elect two directors of the
Corporation, each share of Preferred Stock, including AMPS, entitling the
holder thereof to one vote. Subject to paragraph 5(b) hereof, the holders of
outstanding shares of common stock, 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 by
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


                                      33


<PAGE>


Stock shall be entitled, voting as a class on a one-vote-per-share basis (to
the exclusion of the holders of all other securities and classes of capital
stock of the Corporation), to elect such smallest number of 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 the close of business on any Dividend Payment Date
     accumulated dividends (whether or not earned or declared, and whether or
     not funds are then legally available in an amount sufficient therefor) on
     the outstanding 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 Paying 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.

          Upon the termination of a Voting Period, the voting rights described
     in this paragraph 5(b) shall cease, subject always, however, to the
     revesting of such voting rights in the Holders upon the further
     occurrence of any of the events described in this 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 or consent of the holders of a majority of the
     outstanding shares of Preferred Stock outstanding at the time, in person
     or by proxy, either in writing or at a meeting (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


                                      34


<PAGE>


     Preferred Stock with respect to payment of dividends or the distribution
     of assets on liquidation (other than the Other AMPS issued on the Date of
     Original Issue), or increase the authorized amount of AMPS, or (ii)
     amend, alter or repeal the provisions of the Charter, whether by merger,
     consolidation or otherwise, so as to affect any preference, right or
     power of any series Preferred Stock or the holders thereof. The
     Corporation shall notify Moody's or 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 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
     requisite percentage of shares of common stock and shares of Preferred
     Stock, including AMPS, 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 notify the Auction Agent and the Auction Agent shall call a
          special meeting of such holders, by mailing a notice of such special
          meeting to such holders, such meeting to be held not less than 10
          nor more than 20 days after the date of mailing of such notice. If
          the 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


                                      35


<PAGE>


          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 entitled to elect the number of
          directors prescribed in paragraph 5(b) above on a one-vote-per-share
          basis. 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 an announcement at the meeting, until a quorum is present.

               (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


                                      36


<PAGE>


          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).

               (e) Exclusive Remedy.Unless otherwise required by law, the
          Holders of shares of AMPS shall not have any relative rights or
          preferences or other special rights 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. 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 that such
          vote is to be taken and the nature of the action with respect to
          which such vote is to be taken.


                                      37


<PAGE>


               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 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. 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.

               (b) On or before 5:00 p.m., New York City time, on the 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 an 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 full
          AMPS Basic Maintenance Report. The Corporation will also deliver an
          AMPS Basic Maintenance Report to the Auction Agent, Moody's 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


                                      38


<PAGE>


          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 all 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) 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


                                      39


<PAGE>


Certificate, (ii) that, in such Report (and in such randomly selected Report),
the Corporation determined in accordance with these Articles Supplementary 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, (iii)
that, in such Report (and in such randomly selected Report), the Corporation
determined in accordance with these Articles Supplementary whether the
Corporation had, at such Quarterly Valuation Date (and at the Valuation Date
addressed in such randomly-selected Report), 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, and Senior Debt Obligations, issuer name, issue
size and coupon rate listed in such Report and (with respect to S&P only) such
Certificate, that information has been traced and agrees with the information
listed in The Stand & Poor's Bond Guide (in the event such information does
not agree or such information is not listed in The Standard & Poor's Bond
Guide, the Independent Account will inquire of S&P what such information is,
and provide a listing in their letter of such difference, if any), (vi) with
respect to the Moody's ratings on Municipal Bonds, issuer name, issue size and
coupon rate listed in such Report and (with respect to S&P only) such
Certificate, that information has been traced and agrees with the information
listed in Moody's Bond Record (in the event such information does not agree or
such information is not listed in Moody's Bond Record, the Independent Account
will inquire of Moody's what such information is, and provide a listing in
their letter of such differences), and (vii) with respect to the bid or mean
price (or such


                                      40


<PAGE>


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 Account
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 the 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 Account will provide a listing in its letter of such differences)
(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 satisfy the AMPS Basic Maintenance Amount, and relating to the Cure
Date with respect to such failure to satisfy the AMPS Basic Maintenance
Amount, the Independent Accountant will provide 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 was required to be delivered, or shows that a lower aggregate
Discounted Value for the aggregate of all S&P Eligible Assets or 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 Account 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


                                      41


<PAGE>


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 on 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 (i) the mathematical accuracy of the calculations reflected in such Report
and (ii) that the amount of S&P Eligible Assets reflected thereon equals or
exceeds the AMPS Basic Maintenance Amount reflected thereon.

     8. Minimum Liquidity Level. (i) The Corporation shall be required to
have, as of each Valuation Date, Dividend Coverage Assets with respect to each
share of AMPS having a value not less than the Dividend Coverage Assets with
respect to such share.

     (ii) As of each Valuation Date as long as any shares of AMPS are rated by
S&P, the Corporation shall determine (A) the Market Value of the Dividend
Coverage Assets owned by the Corporation as of that Valuation Date, (B) the
Dividend Coverage Amount on that Valuation Date, and (C) 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 the auction Agent not later than the close of business on
the third Business Day after the Valuation Date. The Minimum


                                      42


<PAGE>


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 set and which is not
manifestly inaccurate. In the event that a Certificate of Minimum Liquidity is
not delivered to the Auction Agent when required, the Minimum Liquidity level
shall be deemed not to have been met as of the applicable date.

     (iii) 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 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 the Auction Agent 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. for so long as any shares of AMPS are
Outstanding, the Corporation will not, unless it has received written
confirmation from Moody's and S&P that any such action would not impair the
ratings then assigned by Moody's and S&P to shares of AMPS engage in any one
or more of the following transactions:

          (a) buy or sell future contracts or write put or call options
(except covered call options written by the Fund); or


                                      43


<PAGE>


          (b) borrow money except for the purpose of clearing transactions in
portfolio securities (which borrowings shall be limited to an amount equal to
5% of the value of the Corporation's assets at the time of such borrowings).

     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.



     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) "Holder Order" shall have the meaning specified in paragraph
11(b)(i) below.


                                      44
<PAGE>

          (vii) "Maximum Applicable Rate," on any Auction Date, shall mean the
rate obtained by multiplying the 60-day "AA" Composite Commercial Paper Rate
on such Auction Late by a percentage determined as set forth below based on
the lower of the credit rating or ratings assigned to the AMPS 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 selected as provided below or, in the event
that only one such rating shall be available, the percentage will be based on
such rating).

                       Credit Rating
     ------------------------------------------------
                                                              Applicable
               S&P                    Moody's                 Percentage
     -----------------------  -----------------------  -----------------------

     AA- or Above             "aa3" or Above                    110%

     A- to A+                 "a3" to "a1"                      125%

     BBB- to BBB+             "baa3" to "baa1"                  150%

     Below BBB-               Below "baa3"                      200%

     The corporation shall take all reasonable action necessary to enable S&P
     and Moody's to provide a rating for the AMPS. If either S&P or Moody's
     shall not take 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 have the meaning specified in paragraph
11(b)(i) below.

          (ix) "Sell Order" shall have the meaning specified in paragraph
11(b)(i) below.


                                      45


<PAGE>


          (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(b)(i) below.

          (xii) "Submitted Hold Order" shall have the meaning specified in
paragraph 11(b)(i) below.

          (xiii) "Submitted Order" shall have the meaning specified in
paragraph 11(b)(i) below.

          (xiv) "Submitted Sell Order" shall have the meaning specified in
paragraph 11(b)(i) below.

          (xv) "Sufficient Clearing Bids" shall have the meaning specified in
paragraph 11(b)(i) below.

          (xvi) "Winning Bid Rate" shall have the meaning specified in
paragraph 11(b)(i) below.

     (b) Order 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 share, 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


                                      46


<PAGE>

                    (B) each Broker-Dealer, using a list of Potential Holders
          that shall be maintained in good faith for the purposes of
          conducting a competitive Auction, shall 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) if 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 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;


                                      47


<PAGE>


                         (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 of 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 Proceeding 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:

                    (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 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



                                      48


<PAGE>


                    (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 is not submitted to the Auction Agent prior
to the Submission Deadline, the Auction Agent shall deem a Hold Order to have
been submitted on behalf of such Existing Holder covering the number of
Outstanding shares of AMPS held by such Existing Holder and not subject to
Order submitted to the auction Agent.

          (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 Orders shall be
considered valid as follows and in the following order of priority:

                    (A) any Holder 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
          Holder 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 Holder Orders shall be reduced pro rata so that


                                      49


<PAGE>


          such Holder 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, 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 Holder 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 11(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 of shares); and the number of shares, if any,
          subject of 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


                                      50
<PAGE>

          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 hereafter referred to individually as a "Submitted
Holder 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 Holder Orders (such excess being hereinafter
          referred to as the "Available AMPS");

                    (B) from the Submitted Orders whether the number of
          outstanding shares of AMPS that are the subject of Submitted Bids by
          Potential


                                      51


<PAGE>


          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 or 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 exits (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 Holder 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 and Winning Bid Rate and all other Submitted Bids
               from


                                      52


<PAGE>


               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,
               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 to the Maximum
          Applicable Rate; or

                    (C) if 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 59% of the 60-day
          "AA" Composite Commercial Paper Rate on the date of the Auction.

          (a) Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocations of Shares. Based on the determinations made pursuant to
paragraph 11(d)(i), the


                                      53


<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


                                      54


<PAGE>


          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 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 (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 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 11(e)(i)(C) and


                                      55


<PAGE>


          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
          numbers 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 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 Maximum Applicable Rate
          shall be accepted and the Submitted Sell Orders of each Existing
          Holder shall be accepted, in both cases 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


                                      56


<PAGE>


          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.

          (iii) If, as a result of the procedures described in paragraph
11(e)(i) or paragraph 11(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 Existing
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.


                                      57


<PAGE>


          (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 Outstanding shares of AMPS to be purchased and the aggregate number of
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 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 Board of Directors 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 adversely affect
the rights of Existing Holders of AMPS. An Existing 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


                                      58


<PAGE>


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.

     12. Securities Depository; Stock Certificates. (a) If there is a
Securities Depository, one certificate for all of the shares of 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 Master 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
Paying 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


                                      59


<PAGE>


paragraph 12(a)) registered in the names of the Existing Holders of their
nominees and rescind the stop-transfer instructions referred to in paragraph
12(a) with respect to such shares.

     IN WITNESS WHEREOF, MUNIVEST FUND, INC. has caused these presents to be
signed in its name and on its behalf by its President, and its corporate seal
to be hereunto affixed and attested by its Secretary, and the said officers of
the Corporation further acknowledged said instrument to be the corporate act
of the corporation, and stated under the penalties of perjury that to the best
of their knowledge, information and belief the matters and facts therein set
forth with respect to approval are true in all material respects, all on
December 7, 1988.



                                 MUNIVEST FUND, INC.



                                  By  /s/ Terry K. Glenn
                                      ----------------------------------------
                                      Terry K. Glenn, Executive Vice President



Attest:





/s/ Mark B. Goldfus
- ----------------------------------

Mark B. Goldfus, Secretary



                                      60

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(4)
<SEQUENCE>5
<FILENAME>efc4-1273_5567747ex992a4.txt
<TEXT>
                                                                Exhibit (a)(4)




                              MUNIVEST FUND, INC.

                           CERTIFICATE OF CORRECTION

     MuniVest Fund, Inc., a Maryland corporation (the "Corporation"), hereby
sets forth the following information to correct an error of transcription in
the Corporation's Articles Supplementary creating five series of its Auction
Market Preferred Stock:

     1.   The title of the document being corrected is Articles Supplementary.

     2.   The name of each party to the document being corrected is MuniVest
Fund, Inc.

     3.   The date that the document being corrected was filed is December 7,
1988.

     4a.  The provision in the document as previously filed, the second
paragraph of Section 2(e) beginning on page 33, reads as follows:

          Cash payable pursuant to a Right shall be paid to the Rightholder
thereof in an amount which, when taken together with the aggregate
Nonqualifying Distributions paid to such Rightholder during any fiscal year,
would cause such Rightholder's net yield in dollars (after federal income tax
consequences) from the aggregate of both the Nonqualifying Distributions and
the cash receivable pursuant to such Right to be equal to the net yield in
dollars (after Federal income tax consequences) which would have been received
by such Rightholder if the amount of the aggregate Nonqualifying Distributions
would have qualified for the Dividends-Received Deduction in the hands of such
Rightholder. Such cash receivable on such Right shall be calculated without
consideration being given to the time value of money and using the applicable
maximum marginal corporate Federal tax rate in effect at the time such Right
was declared with respect to which such cash payable in satisfaction of such
Right is made.

     4b.   The provision in the document as corrected, the second paragraph of
Section 2(e) beginning on page 33, is:

     Cash payable pursuant to a Right shall be paid to the Rightholder thereof
in an amount which, when taken together with the aggregate Nonqualifying
Distribution paid to such Rightholder during any fiscal year, would cause such
Rightholder's net yield in dollars (after Federal income tax consequences)
from the aggregate of both the Nonqualifying Distributions and the cash
receivable pursuant to such right to be equal to the net yield in dollars
(after Federal income tax consequences) which would have been received by such
Rightholder if the amount of the aggregate Nonqualifying Distributions would
have been excludable from the gross income of such Rightholder. Such cash
receivable on such Right shall be calculated (i) without consideration being
given to the time value of money, (ii) assuming that no Rightholder is subject
to the alternative minimum tax with respect to dividends received from the
Corporation

<PAGE>

and (iii) assuming that each Nonqualifying Distribution would be taxable in
the hands of each Rightholder at the maximum Federal income tax rate in effect
during the fiscal year in question.

     5. The execution of the Articles Supplementary was not defective.

     IN WITNESS WHEREOF, MUNIVEST FUND, INC. has caused these presents to be
signed in its name and on its behalf by its President or one of its Vice
Presidents and its corporate seal to be hereunto affixed and attested by its
Secretary or Assistant 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 therein set
forth are true in all material respects, all on April 18, 1989.

ATTEST:                                  MUNIVEST FUND, INC.



/s/ Mark B. Goldfus                      By:  /s/ Vincent R. Giordano
- ----------------------------------            ---------------------------------
Name: Mark B. Goldfus                         Name: Vincent R. Giordano
Title: Secretary                              Title: Vice President




                                      2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(5)
<SEQUENCE>6
<FILENAME>efc4-1273_exh992a5.txt
<TEXT>
                                                                Exhibit (a)(5)




                              MUNIVEST FUND, INC.

                Articles Supplementary creating five series of

                       Auction Market Preferred Stock(R)



     MUNIVEST 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 8,250 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 $100,000 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 2,750 shares of
Auction Market Preferred Stock previously reclassified and authorized by the
Board of Directors pursuant to Articles Supplementary dated December 7, 1988
and filed on December 7, 1988 with the Maryland State Department of
Assessments and Taxation. 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 exceptions:


     At page 2, in the section entitled "DESIGNATION," strike out the date
"December 8, 1988" and insert in lieu thereof the date "December 1, 1994";
strike out the number "500" and insert in lieu thereof the number "1,500"; and
strike out the number "750" and insert in lieu thereof the number "2,250".

     IN WITNESS WHEREOF, MUNIVEST 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

                                      2


<PAGE>



respect to approval are true in all material respects, all on November 30,
1994.

                                              MUNIVEST 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


                                      3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(6)
<SEQUENCE>7
<FILENAME>efc4-1273_exh992a6.txt
<TEXT>
                                                                Exhibit (a)(6)




                              MUNIVEST FUND, INC.

           Articles of Amendment to Articles Supplementary creating
               five series of Auction Market Preferred Stock(R)

     MUNIVEST 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: The Articles Supplementary, filed on December 7, 1988 creating
2,750 shares of Auction Market Preferred Stock of the Corporation, and the
Articles Supplementary, filed on December 1, 1994, creating 8,250 shares of
Auction Market Preferred Stock of the Corporation (collectively, the "Articles
Supplementary"), are hereby amended by these Articles of Amendment as follows:

     In each instance in which "$.10" appears, delete "$.10" and substitute
"$.025" therefor;

     In each instance in which "$100,000" appears, delete "$100,000" and
substitute "$25,000" therefor.

     SECOND: The foregoing amendment to the Articles Supplementary has been
effected in the manner and by the vote required by the Corporation's Charter
and the laws of


_______________
(R) Registered trademark of Merrill Lynch & Co., Inc.



<PAGE>

Maryland. Pursuant to Section 2-603 of the Code, the amendment of the Articles
Supplementary as hereinabove set forth has been duly advised, approved and
adopted by a majority of the entire Board of Directors of the Corporation,
there being no stock entitled to be voted on the Charter amendment outstanding
or subscribed for at the time of approval.

     THIRD: Except as amended hereby, the Charter shall remain in full force
and effect.

     FOURTH: The authorized capital stock of the Corporation has not been
increased by these Articles of Amendment.

     FIFTH: These Articles of Amendment shall be effective contemporaneously
with the acceptance for recording or filing by the Maryland State Department
of Assessments and Taxation of the Corporation's Articles Supplementary dated
November 30, 1994.

     The Senior Vice President acknowledges these Articles of Amendment to be
the corporate act of the Corporation and states that to the best of his
knowledge, information and belief the matters and facts set forth in these
Articles with respect to the authorization and approval of the amendment of
the Corporation's Articles Supplementary are true in all material respects,
and that this statement is made under the penalties of perjury.

                                      2

<PAGE>

     IN WITNESS WHEREOF, MUNIVEST FUND, INC. has caused these Articles to be
signed in its name and on its behalf by its Senior Vice President, a duly
authorized officer of the Corporation, and attested by its Secretary as of
November 30, 1994.

                                           MUNIVEST 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


                                      3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(7)
<SEQUENCE>8
<FILENAME>efc4-1273_ex992a7.txt
<TEXT>

                                                                Exhibit (a)(7)


                              MUNIVEST FUND, INC.

           Articles of Amendment to Articles Supplementary creating
                        Auction Market Preferred Stock

         MUNIVEST 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: The Articles Supplementary, filed on December 7, 1988,
creating 2,750 shares of Auction Market Preferred Stock ("AMPS(R)") of the
Corporation and the Articles Supplementary filed on December 1, 1994 creating
8,500 shares of AMPS (the "Articles Supplementary"), are hereby amended by
these Articles of Amendment as follows:

         In each of the Articles Supplementary, paragraph (c) of section 5
entitled "Right to Vote with Respect to Certain Other Matters" is deleted in
its entirety and replaced with the following:

                  (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 the Preferred Stock Outstanding at the time, voting
         separately as one class: (i) authorize, create or issue any class or
         series of stock ranking prior to the AMPS or any other series of
         Preferred Stock with respect to payment of dividends or the
         distribution of assets on liquidation, 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 separately as a class). The


- ------------------
(R)   Registered trademark of Merrill Lynch & Co., Inc.




<PAGE>



         Corporation shall notify Moody's and S&P ten 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 requisite 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.


         SECOND: The foregoing amendment to the Articles Supplementary has
been effected in the manner and by the vote required by the charter of the
Corporation (the "Charter") and the laws of Maryland. The amendment of the
Articles Supplementary, as hereinabove set forth has been duly advised,
approved, and adopted by a majority of the entire Board of Directors of the
Corporation, and by a majority of the outstanding Common Stock and AMPS voting
together as a single class and by a majority of the outstanding AMPS voting
together as a separate class.

         THIRD:   Except as amended, hereby, the Charter shall remain in full
force and effect.

         FOURTH:  The authorized capital stock of the Corporation has not been
increased by these Articles of Amendment.

         FIFTH:   These Articles of Amendment shall be effective immediately
upon the acceptance for recording or filing by the Maryland State Department
of Assessments and Taxation.




                                      2
<PAGE>



         The undersigned Vice President and Treasurer acknowledges these
Articles of Amendment to be the corporate act of the Corporation and as to all
matters or facts required to be verified under oath, the undersigned Vice
President and Treasurer states that to the best of his knowledge, information
and belief the matters and facts set forth in these Articles of Amendment with
respect to the authorization and approval of the amendment of the
Corporation's Articles Supplementary are true in all material respects, and
that this statement is made under the penalties of perjury.

         IN WITNESS WHEREOF, MUNIVEST FUND, INC. has caused these Articles of
Amendment to be signed in its name and on its behalf by its Vice President and
Treasurer, a duly authorized officer of the Corporation, and attested by its
Secretary as of October 11, 1999.


                                       MUNIVEST FUND, INC.



                                       By  /s/  Donald C. Burke
                                         ------------------------------------
                                          Name:  Donald C. Burke
                                          Title: Vice President and Treasurer


Attest:


  /s/  William E. Zitelli
- -------------------------------
Name:  William E. Zitelli
Title: Secretary





                                      3


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(8)
<SEQUENCE>9
<FILENAME>efc4-1273_exh992a8.txt
<TEXT>
                                                                Exhibit (a)(8)

                              MUNIVEST FUND, INC.

                           CERTIFICATE OF CORRECTION


         MuniVest Fund, Inc., a Maryland corporation (the "Corporation"),
hereby sets forth the following information to correct an error of
transcription in the Corporation's Articles Supplementary creating five series
of Auction Market Preferred Stock:

         1. The title of the document being corrected is Articles
Supplementary.

         2. The name of each party to the document being corrected is MuniVest
Fund, Inc.

         3. The date that the document being corrected was filed is December
1, 1994.

         4a. The provision in the document, as previously filed, reads as
follows:

         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 8,250 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 $100,000 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.

4b.      The provision in the document, as corrected, is:

         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 classified the preferred stock of the Corporation and has
authorized the issuance of 8,250 shares of authorized preferred stock of the
Corporation, par value $.10 per share, liquidation preference $100,000 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.

5.       The execution of the Articles Supplementary was not defective.


<PAGE>


         IN WITNESS WHEREOF, MUNIVEST FUND, INC. has caused this Certificate
of Correction to be signed in its name and on its behalf by its Vice
President, and attested by its Secretary, on the 8th day of July, 2004.

                                   MUNIVEST FUND, INC.



                                   By:  /s/ Donald C. Burke
                                       ------------------------------
                                        Name:   Donald C. Burke
                                        Title:  Vice President

Attest:


 /s/ Phillip S. Gillespie
- --------------------------------
Name:  Phillip S. Gillespie
Title: Secretary


         THE UNDERSIGNED, Vice President of MUNIVEST FUND, INC. (the
"Corporation"), who executed on behalf of the Corporation the foregoing
Certificate of Correction, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of the Corporation, the foregoing
Certificate of Correction to be the corporate act of the Corporation and, as
to all matters and facts required to be verified under oath, further certifies
that, to the best of his knowledge, information and belief, these matters and
facts contained herein are true in all material respects and that this
statement is made under the penalties for perjury.


                                   By:  /s/ Donald C. Burke
                                       ------------------------------
                                        Name:   Donald C. Burke
                                        Title:  Vice President

                                      2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(A)(9)
<SEQUENCE>10
<FILENAME>efc4-1273_exh992a9.txt
<TEXT>
                                                                Exhibit (a)(9)

                              MUNIVEST FUND, INC.

                 Articles Supplementary creating one series of

                        Auction Market Preferred Stock


         MUNIVEST 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 authorized the issuance of one series of 3,000 shares of
preferred stock, par value $.10 per share, liquidation preference $25,000 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,
Series F.

         SECOND: The preferences, voting powers, restrictions, limitations as
to dividends, qualifications, and terms and conditions of redemption, of the
shares of preferred stock are as follows:

                                  DESIGNATION

         A series of 3,000 shares of preferred stock, par value $.10 per
share, liquidation preference $25,000 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 F." Each share of
Auction Market Preferred Stock, Series F (sometimes referred to herein as
"AMPS") shall be issued on a date to be determined by the Board of Directors
of the Corporation or pursuant to their delegated authority; have an Initial
Dividend Rate and an Initial Dividend Payment Date as shall be determined in
advance of the issuance thereof by the Board of Directors of the Corporation
or pursuant to their delegated authority; and have such other





<PAGE>



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 F shall constitute a
separate series of preferred stock of the Corporation, and each share of
Auction Market Preferred Stock, Series F shall be identical.




                                      2
<PAGE>



          1. Definitions.

          (a) 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:

          "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, L.P.

          "Affiliate" means 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 a Beneficial Owner of one or more shares of AMPS or a
Potential Beneficial Owner.

          "AMPS" means the Auction Market Preferred Stock, Series F.

          "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 and Other AMPS Outstanding on such Valuation Date multiplied by the
sum of (a) $25,000 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, to (but not
including) the end of the current Dividend Period that follows such Valuation
Date in the event the then current Dividend Period will end within 49 calendar
days of such Valuation Date or through the 49th day after such Valuation Date
in the event the then current Dividend Period will not end within 49




                                      3
<PAGE>


calendar days of such Valuation Date; (C) in the event the then current
Dividend Period will end within 49 calendar days of such Valuation Date, the
aggregate amount of cash dividends that would accumulate at the Maximum
Applicable Rate applicable to a Dividend Period of 28 or fewer days on any
shares of AMPS and Other AMPS Outstanding from the end of such Dividend Period
through the 49th day after such Valuation Date, multiplied by the larger of
the Moody's Volatility Factor and the S&P Volatility Factor, determined from
time to time by Moody's and S&P, respectively (except that if such Valuation
Date 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 current outstanding
balances of any indebtedness which is senior to the AMPS plus interest
actually accrued together with 30 days additional interest on the current
outstanding balances calculated at the current rate; (F) the amount of the
Corporation's Maximum Potential Additional Dividend Liability as of such
Valuation Date; and (G) any current liabilities as of such Valuation Date to
the extent not reflected in any of (i)(A) through (i)(F) (including, without
limitation, and immediately upon determination, any amounts due and payable by
the Corporation for portfolio securities purchased as of such Valuation Date
and any liabilities incurred for the purpose of clearing securities
transactions) less (ii) either (A) the Discounted Value of any of the
Corporation's assets, or (B) the face value of any of the Corporation's assets
if such assets mature prior to or on the date of redemption of AMPS or payment
of a liability and are either securities issued or guaranteed by the United
States Government or Deposit Securities, in both cases irrevocably deposited
by the Corporation for the payment of the amount needed to redeem shares of
AMPS subject to redemption or to satisfy any of (i)(B) through (i)(G).



                                      4
<PAGE>



          "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), the AMPS Basic Maintenance Amount and the net asset value
and market trading price per share of Common Stock.

          "Anticipation Notes" shall mean the following Municipal Bonds:
revenue anticipation notes, tax anticipation notes, tax and revenue
anticipation notes, grant anticipation notes and bond anticipation notes.


          "Applicable Percentage" has the meaning set forth in paragraph
10(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.

          "Applicable Spread" has the meaning set forth in paragraph
10(a)(vii) of these Articles Supplementary.

          "Auction" means a periodic operation of the Auction Procedures.

          "Auction Agent" means The Bank of New York unless and until another
commercial bank, trust company or other financial institution appointed by a
resolution of the Board of 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



                                      5
<PAGE>



Applicable Rate and to act as transfer agent, registrar, dividend disbursing
agent and redemption agent for the AMPS and Other AMPS.

          "Auction Date" has the meaning set forth in paragraph 10(a)(ii) of
these Articles Supplementary.

          "Auction Procedures" means the procedures for conducting Auctions
set forth in paragraph 10 of these Articles Supplementary.

          "Auditors' Confirmation" has the meaning set forth in paragraph 7(c)
of these Articles Supplementary.

          "Beneficial Owner" means a customer of a Broker-Dealer who is listed
on the records of that Broker-Dealer (or, if applicable, the Auction Agent) as
a holder of shares of AMPS or a Broker-Dealer that holds AMPS for its own
account.

          "Broker-Dealer" means any broker-dealer, or other entity permitted
by law to perform the functions required of a Broker-Dealer in paragraph 10 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" means an agreement between the Auction
Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in paragraph 10 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.




                                      6
<PAGE>



          "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.

          "Common Stock" means the common stock, par value $.10 per share, of
the Corporation.

          "Corporation" means MuniVest 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.

          "Deposit Securities" means cash and Municipal Bonds rated at least
A2 (having a remaining maturity of 12 months or less), P-1, VMIG-1 or MIG-1 by
Moody's or A (having a remaining maturity of 12 months or less), A-1+ or SP-1+
by S&P or A (having a remaining maturity of 12 months or less) or F-1+ by
Fitch.

          "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 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 and any Special Dividend Period.

          "Existing Holder" means a Broker-Dealer or any such other Person as
may be permitted by the Corporation that is listed as the holder of record of
shares of AMPS in the Stock Books.




                                      7
<PAGE>



          "Fitch" means Fitch Ratings or its successors.

          "Forward Commitment" has the meaning set forth in paragraph 8(c) of
these Articles Supplementary.

          "High Yield Municipal Bonds" means (a) with respect to Moody's (1)
Municipal Bonds rated Ba1 to B3 by Moody's, (2) Municipal Bonds not rated by
Moody's, but rated BB+ to B- by S&P or Fitch, and (3) Municipal Bonds not
explicitly rated by Moody's, S&P or Fitch, but rated at least the equivalent
of B3 internally by the Adviser, provided that Moody's reviews and achieves
sufficient comfort with the Adviser's internal credit rating processes, and
(b) with respect to S&P (1) Municipal Bonds not rated by S&P but rated
equivalent to BBB+ or lower by another NRSRO and (2) Municipal Bonds rated BB+
or lower by S&P.

          "Holder" means a Person identified as a holder of record of shares
of AMPS in the Stock Register.

          "Independent Auditors" 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 the AMPS or Other AMPS, as the case may be.

          "Initial Dividend Period," with respect to the 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.



                                      8
<PAGE>




          "Initial Dividend Rate," with respect to the AMPS, means the rate
per annum applicable to the Initial Dividend Period for the 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.

          "Inverse Floaters" means trust certificates or other instruments
evidencing interests in one or more Municipal Bonds that qualify as (i) S&P
Eligible Assets the interest rates on which are adjusted at short term
intervals on a basis that is inverse to the simultaneous readjustment of the
interest rates on corresponding floating rate trust certificates or other
instruments issued by the same issuer, provided that the ratio of the
aggregate dollar amount of floating rate instruments to inverse floating rate
instruments issued by the same issuer does not exceed one to one at their time
of original issuance unless the floating rate instrument has only one reset
remaining until maturity or (ii) Moody's Eligible Assets the interest rates on
which are adjusted at short term intervals on a basis that is inverse to the
simultaneous readjustment of the interest rates on corresponding floating rate
trust certificates or other instruments issued by the same issuer, provided
that (a) such Inverse Floaters are rated by Moody's with the Adviser having
the capability to collapse (or relink) within seven (7) days as a liquidity
enhancement measure, and (b) the issuer of such Inverse Floaters employs a
leverage factor (i.e., the ratio of underlying capital appreciation bonds or
other instruments to residual long-term derivative instruments) of not more
than 2:1.

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




                                      9
<PAGE>



          "LIBOR Rate," on any Auction Date, means (i) the rate for deposits
in U.S. dollars for the designated Dividend Period, which appears on display
page 3750 of Moneyline's Telerate Service ("Telerate Page 3750") (or such
other page as may replace that page on that service, or such other service as
may be selected by the LIBOR Dealer or its successors that are LIBOR Dealers)
as of 11:00 a.m., London time, on the day that is the London Business Day
preceding the Auction Date (the "LIBOR Determination Date"), or (ii) if such
rate does not appear on Telerate Page 3750 or such other page as may replace
such Telerate Page 3750, (A) the LIBOR Dealer shall determine the arithmetic
mean of the offered quotations of the Reference Banks to leading banks in the
London interbank market for deposits in U.S. dollars for the designated
Dividend Period in an amount determined by such LIBOR Dealer by reference to
requests for quotations as of approximately 11:00 a.m. (London time) on such
date made by such LIBOR Dealer to the Reference Banks, (B) if at least two of
the Reference Banks provide such quotations, LIBOR Rate shall equal such
arithmetic mean of such quotations, (C) if only one or none of the Reference
Banks provide such quotations, LIBOR Rate shall be deemed to be the arithmetic
mean of the offered quotations that leading banks in The City of New York
selected by the LIBOR Dealer (after obtaining the Corporation's approval) are
quoting on the relevant LIBOR Determination Date for deposits in U.S. dollars
for the designated Dividend Period in an amount determined by the LIBOR Dealer
(after obtaining the Corporation's approval) that is representative of a
single transaction in such market at such time by reference to the principal
London offices of leading banks in the London interbank market; provided,
however, that if one of the LIBOR Dealers does not quote a rate required to
determine the LIBOR Rate, the LIBOR Rate will be determined on the basis of
the quotation or quotations furnished by any Substitute LIBOR Dealer or
Substitute LIBOR Dealers selected by the Corporation to provide such rate or



                                      10
<PAGE>



rates not being supplied by the LIBOR Dealer; provided further, that if the
LIBOR Dealer and Substitute LIBOR Dealers are required but unable to determine
a rate in accordance with at least one of the procedures provided above, the
LIBOR Rate shall be the LIBOR Rate as determined on the previous Auction Date.
If the number of Dividend Period days shall be (i) 7 or more but fewer than 21
days, such rate shall be the seven-day LIBOR rate; (ii) more than 21 but fewer
than 49 days, such rate shall be the one-month LIBOR rate; (iii) 49 or more
but fewer than 77 days, such rate shall be the two-month LIBOR rate; (iv) 77
or more but fewer than 112 days, such rate shall be the three-month LIBOR
rate; (v) 112 or more but fewer than 140 days, such rate shall be the
four-month LIBOR rate; (vi) 140 or more but fewer than 168 days, such rate
shall be the five-month LIBOR rate; (vii) 168 or more but fewer than 189 days,
such rate shall be the six-month LIBOR rate; (viii) 189 or more but fewer than
217 days, such rate shall be the seven-month LIBOR rate; (ix) 217 or more but
fewer than 252 days, such rate shall be the eight-month LIBOR rate; (x) 252 or
more but fewer than 287 days, such rate shall be the nine-month LIBOR rate;
(xi) 287 or more but fewer than 315 days, such rate shall be the ten-month
LIBOR rate; (xii) 315 or more but fewer than 343 days, such rate shall be the
eleven-month LIBOR rate; and (xiii) 343 or more but fewer than 365 days, such
rate shall be the twelve-month LIBOR rate.

          "London Business Day" means any day on which commercial banks are
generally open for business in London.

          "Long Term Dividend Period" means a Special Dividend Period
consisting of a specified period of one whole year or more but not greater
than five years.

          "Mandatory Redemption Price" means $25,000 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.




                                      11
<PAGE>


          "Marginal Tax Rate" means the maximum marginal regular Federal
individual income tax rate applicable to ordinary income or the maximum
marginal regular Federal corporate income tax rate, whichever is greater.

          "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 from dealers who are members of the National Association of
Securities Dealers, Inc. and who make a market in the security, at least one
of which shall be in writing. Futures contracts and options are valued at
closing prices for such instruments established by the exchange or board of
trade on which they are traded, or if market quotations are not readily
available, are valued at fair value on a consistent basis using methods
determined in good faith by the Board of Directors.

          "Maximum Applicable Rate," with respect to AMPS, has the meaning set
forth in paragraph 10(a)(vii) of these Articles Supplementary and, with
respect to Other AMPS, has the equivalent meaning.



                                      12
<PAGE>




          "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 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.

          "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 the rating by Moody's, S&P or
Fitch on such Municipal Bond, in accordance with the tables (for the
applicable Moody's Exposure Period) set forth below:

        --------------------------------------------------------
                          Moody's Rating Category (1)
        --------------------------------------------------------
                Aaa     Aa      A       Baa     Other (2)
        --------------------------------------------------------
                151%    159%    160%    173%    225%
        --------------------------------------------------------

Footnotes:
(1)  Ratings assigned by S&P or Fitch are generally accepted by Moody's at
     face value. However, adjustments to face value may be made to particular
     categories of credits for which the S&P and/or Fitch rating does not seem
     to approximate a Moody's rating equivalent. Split rated securities
     assigned by S&P and Fitch will be accepted at the lower of the two
     ratings.
(2)  Municipal Bonds rated Ba1 to B3 by Moody's or, if not rated by Moody's,
     rated BB+ to B- by S&P or Fitch. In addition, Municipal Bonds not
     explicitly rated by Moody's, S&P or Fitch, but rated at least the
     equivalent of B3 internally by the Adviser, provided that Moody's reviews
     and achieves sufficient comfort with the Adviser's internal credit rating
     processes, will be included under "Other" in the table. Unless
     conclusions regarding liquidity risk as well as estimates of both the
     probability and severity of default for the Corporation's assets can be
     derived from other sources as well as combined with a number of sources
     as presented by the Corporation to Moody's, unrated Municipal Bonds which
     are rated at least the equivalent of B3 by the Adviser internally are
     limited to 10% of Moody's Eligible Assets.



                 ----------------------------------------------------
                               Moody's Rating Category
                 ----------------------------------------------------
                   MIG-1, VMIG-1, P-1 (1)    MIG-1, VMIG-1, P-1 (2)
                 ----------------------------------------------------
                            100%                      136%
                 ----------------------------------------------------

Footnotes:
(1)  Moody's rated Municipal Bonds that have a maturity less than or equal to
     49 days and Municipal Bonds not rated by Moody's but rated the equivalent
     to MIG-1, VMIG-1, or P-1 by S&P or Fitch that have a maturity less than
     or equal to 49 days.
(2)  Moody's rated Municipal Bonds that have a maturity greater than 49 days
     and Municipal Bonds not rated by Moody's but rated the equivalent to
     MIG-1, VMIG-1, or P-1 by S&P or Fitch that have a maturity greater than
     49 days.




                                      13
<PAGE>


         Notwithstanding the foregoing, no Moody's Discount Factor will be
applied to cash or to Receivables for Municipal Bonds Sold that are due within
five Business Days of such Valuation Date. The Moody's Discount Factor for
Receivables for Municipal Bonds Sold that are due within six and 30 Business
Days of such Valuation Date will be the Moody's Discount Factor applicable to
the Municipal Bonds sold. "Receivables for Municipal Bonds Sold," for purposes
of calculating Moody'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 30 Business Days of such
Valuation Date.

         The Moody's Discount Factor for Inverse Floaters shall be the product
of (x) the percentage determined by reference to the rating on the security
underlying such Inverse Floaters multiplied by (y) 1.25.

         The Moody's Discount Factor for Rule 2a-7 Money Market Funds shall be
110%.

         "Moody's Eligible Asset" means cash, Receivables for Municipal Bonds
Sold, Rule 2a-7 Money Market Funds or a Municipal Bond that (i) pays interest
in cash, (ii) is publicly rated B3 or higher by Moody's or, if not rated by
Moody's, but rated by S&P or Fitch, is publicly rated at least B- by S&P or
Fitch, or if not explicitly rated by Moody's, S&P or Fitch, be rated at least
the equivalent of B3 internally by the Adviser, provided that Moody's reviews
and achieves sufficient comfort with the Adviser's internal credit rating
processes, (iii) does not have its Moody's rating suspended by Moody's, (iv)
if an Inverse Floater, is explicitly rated by Moody's, and (v) is part of an
issue of Municipal Bonds of at least $10,000,000 (except for issues rated Aaa
by Moody's, as provided in the chart below). 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:



                                      14
<PAGE>


<TABLE>
<CAPTION>


                                                   Minimum                Maximum                 Maximum State
                                                 Issue Size              Underlying                  Allowed
Rating                                          ($ Millions)          Obligor (%) (1)              (%) (1)(3)
- ------------------------------------------     ----------------    -----------------------    ----------------------
<S>                                                 <C>                    <C>                        <C>

Aaa...............................                    *                     100                        100
Aa................................                   10                      20                        60
A.................................                   10                      10                        40
Baa...............................                   10                      6                         20
Ba................................                   10                      4                         12
B ................................                   10                      3                         12
Other (2).........................                   10                      2                         12

- ---------------------
(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, S&P or Fitch, but rated at least the equivalent of B3 internally by
       the Adviser.
(3)    Territorial bonds (other than those issued by Puerto Rico and counted
       collectively) are each limited to 10% of Moody's Eligible Assets. For
       diversification purposes, Puerto Rico will be treated as a state.
*      Not applicable.

</TABLE>


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.

         When the Corporation sells a Municipal Bond and agrees to repurchase
it at a future date, the Discounted Value of such Bond will constitute a
Moody's Eligible Asset and the amount the Corporation is required to pay upon
repurchase of such Bond will count as a liability for purposes of calculating
the AMPS Basic Maintenance Amount. For so long as the AMPS are rated by
Moody's, the Corporation will not enter into any such reverse repurchase
agreements unless it has received written confirmation from Moody's that such
transactions would not impair the rating then assigned the AMPS by Moody's.
When the Corporation purchases a Municipal Bond and agrees to sell it at a
future date to another party, cash receivable by the Corporation thereby will
constitute a Moody's Eligible Asset if the long-term debt of such other party
is rated at least A2 by Moody's and such agreement has a term of 30 days or
less; otherwise the Discounted Value of such Bond will constitute a Moody's
Eligible Asset.




                                      15
<PAGE>


         High Yield Municipal Bonds may comprise no more than 20% of Moody's
Eligible Assets. Unless conclusions regarding liquidity risk as well as
estimates of both the probability and severity of default for the
Corporation's assets can be derived from other sources as well as combined
with a number of sources as presented by the Corporation to Moody's, unrated
High Yield Municipal Bonds which are rated at least the equivalent of B3 by
the Adviser internally are limited to 10% of Moody's Eligible Assets.

         Inverse Floaters, including primary market and secondary market
residual interest bonds, may constitute no more than 10% of Moody's Eligible
Assets.

         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 the period commencing on a given
Valuation Date and ending 49 days thereafter.

         "Moody's Hedging Transactions" has the meaning set forth in paragraph
8(b) of these Articles Supplementary.

         "Moody's Volatility Factor" means 272% as long as there has been no
increase enacted to the Marginal Tax Rate. If such an increase is enacted but
not yet implemented, the Moody's Volatility Factor shall be as follows:





                                      16
<PAGE>



                      % Change in               Moody's Volatility
                   Marginal Tax Rate                 Factor

                         <=5%                         292%
                     >5% but <=10%                    313%
                    >10% but <=15%                    338%
                    >15% but <=20%                    364%
                    >20% but <=25%                    396%
                    >25% but <=30%                    432%
                    >30% but <=35%                    472%
                    >35% but <=40%                    520%

         Notwithstanding the foregoing, the Moody's Volatility Factor may mean
such other potential dividend rate increase factor as Moody's advises the
Corporation in writing is applicable.

         "Municipal Bonds" means "Municipal Bonds" as defined in the
Corporation's Registration Statement on Form N-2 (File No. 333-_____) relating
to the AMPS on file with the Securities and Exchange Commission, as such
Registration Statement may be amended from time to time, as well as short-term
municipal obligations, High Yield Municipal Bonds and Inverse Floaters.

         "Municipal Index" has the meaning set forth in paragraph 8(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).




                                      17
<PAGE>


"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 the 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, Eastern
time, on the Business Day preceding such Dividend Payment Date, the full
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, Eastern 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,
Eastern 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



                                      18
<PAGE>


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 300% 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 Agency or Substitute
Rating Agencies, as the case may be, in lieu of Moody's or S&P, or both, in
the event either or both 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)(i) 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.




                                      19
<PAGE>



         "NRSRO" means any nationally recognized statistical rating
organization, as that term is used in Rule 15a3-1 under the Securities
Exchange Act of 1934, as amended, or any successor provisions.

         "Optional Redemption Price" means $25,000 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 Deposit Securities shall have been
deposited in trust or segregated 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 a Beneficial Owner, provided 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.



                                      20
<PAGE>


         "Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.

         "Potential Beneficial Owner" means a customer of a Broker-Dealer or a
Broker-Dealer that is not a Beneficial Owner of shares of AMPS but that wishes
to purchase such shares, or that is a Beneficial Owner that wishes to purchase
additional shares of AMPS.

         "Potential Holder" means any Broker-Dealer or any such other Person
as may be permitted by the Corporation, including any Existing Holder, 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 Service" means J.J. Kenny 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.

         "Receivables for Municipal Bonds Sold" for Moody's has the meaning
set forth under the definition of Moody's Discount Factor, and for S&P has the
meaning set forth under the definition of S&P Discount Factor.

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



                                      21
<PAGE>



         "Reference Rate" means: (i) with respect to a Dividend Period having
364 or fewer days, the higher of the applicable LIBOR Rate and the Taxable
Equivalent of the Short-Term Municipal Bond Rate, or (ii) with respect to any
Dividend Period having 365 or more days, the applicable Treasury Index 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 the AMPS, has the meaning set forth in
paragraph 2(e) of these Articles Supplementary and, with respect to Other
AMPS, has the equivalent meaning.

         "Rule 2a-7 Money Market Funds" means investment companies registered
under the 1940 Act that comply with the requirements of Rule 2a-7 thereunder.

         "S&P" means Standard & Poor's or its successors.

         "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 the rating by S&P, Moody's or
Fitch on such Municipal Bond; provided, however, for purposes of determining
the S&P Discount Factor applicable to Municipal Bonds not rated by S&P, the
Municipal Bonds will carry an S&P rating one full rating category lower than
the S&P rating category that is the equivalent of the rating category in which
such Municipal Bond is placed by a NRSRO, in accordance with the table (for
the applicable S&P Exposure Period) set forth below:



                                      22
<PAGE>



- ------------------------------------------------------------------------------
                          S&P's Rating Category (1)
- ------------------------------------------------------------------------------
  AAA*(2)     AA*       A*       BBB*      BB*        B*       CCC*     NR
- ------------------------------------------------------------------------------
 144.75%   147.75%   150.75%   153.75%   175.11%   195.11%   215.11%   220.00%
- ------------------------------------------------------------------------------

- ------------
* S&P rating.
(1)  For Municipal Bonds of any one issuer rated at least BBB- by S&P, or if
     not rated by S&P, rated at least A- by another NRSRO, 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, but in no event greater than 10%; or for any percentage
     over 5% add 10 percentage points to the applicable S&P Discount Factor.
(2)  For zero coupon Municipal Bonds, the S&P Discount Factor is 441.80%.

         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 120% 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 or F-1+ by Fitch; provided, however, such short-term
Municipal Bonds rated by Moody's or Fitch but not rated by S&P having a demand
feature exercisable in 30 days or less must be backed by a letter of credit,
liquidity facility or guarantee from a bank or other financial institution
having 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 or Fitch but not rated
by S&P may comprise no more than 50% of short-term Municipal Bonds that
qualify as S&P Eligible Assets, (ii) the S&P Discount Factor for Rule 2a-7
Money Market Funds will be 110%, (iii) the S&P Discount Factor for Receivables
for Municipal Bonds Sold that are due in more than five Business Days from
such Valuation Date will be the S&P Discount Factor applicable to the
Municipal Bonds sold, and (iv) no S&P Discount Factor will be applied to cash
or to Receivables for Municipal Bonds Sold if such receivables are due within
five Business Days of such Valuation Date. "Receivables for Municipal Bonds
Sold," for purposes of calculating S&P 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. For purposes of the foregoing, Anticipation



                                      23
<PAGE>



Notes rated SP-1 or, if not rated by S&P, rated VMIG-1 by Moody's or F-1+ by
Fitch, which do not mature or have a demand feature exercisable in 30 days and
which do not have a long-term rating, shall be considered to be short-term
Municipal Bonds.

         "S&P Eligible Asset" means cash, Receivables for Municipal Bonds
Sold, Rule 2a-7 Money Market Funds or a Municipal Bond that (i) is issued by
any of the 50 states of the United States, its 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) except for zero coupon Municipal Bonds rated AAA by S&P that mature in 30
years or less, 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 not subject to a covered call or covered put option written
by the Corporation; (v) except for Inverse Floaters, is not part of a private
placement; and (vi) except for Inverse Floaters and legally defeased bonds
that are secured by securities issued or guaranteed by the United States
Government, is part of an issue of Municipal Bonds with an original issue size
of at least $10 million or, if of an issue with an original issue size below
$10 million, is rated at least AA or higher by S&P. Notwithstanding the
foregoing:

               (1) 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 25% of the
          aggregate Market Value of S&P Eligible Assets;

               (2) Municipal Bonds which are escrow bonds or defeased bonds
          may compose up to 100% of the aggregate Market Value of S&P Eligible
          Assets if such Bonds initially are





                                      24
<PAGE>




          assigned a rating by S&P in accordance with S&P's legal defeasance
          criteria or rerated by S&P as economic defeased escrow bonds and
          assigned an AAA rating. Municipal Bonds may be rated as escrow bonds
          by another NRSRO or rerated as an escrow bond and assigned the
          equivalent of an S&P AAA rating, provided that such equivalent rated
          Bonds are limited to 50% of the aggregate Market Value of S&P
          Eligible Assets and are deemed to have an AA S&P rating for purposes
          of determining the S&P Discount Factor applicable to such Municipal
          Bonds. The limitations on Municipal Bonds in clause (1) above and
          clauses (3) and (4) below are not applicable to escrow bonds;

               (3) Municipal Bonds which are not rated by any NRSRO may
          comprise no more than 10% of S&P Eligible Assets;

               (4) Municipal Bonds rated at least BBB- by S&P, or if not rated
          by S&P, rated at least A- by another NRSRO, 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
          Eligible Assets, High Yield Municipal Bonds of any issuer may
          comprise no more than 5% of S&P Eligible Assets, and Municipal Bonds
          of any one issuer which are not rated by any NRSRO will be
          considered S&P Eligible Assets only to the extent the Market Value
          of such Municipal Bonds does not exceed 5% of the aggregate Market
          Value of the S&P Eligible Assets. In the aggregate, the maximum
          issuer exposure is limited to 10% of the S&P Eligible Assets; and

               (5) Municipal Bonds not rated by S&P but rated by another NRSRO
          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.




                                      25
<PAGE>




         "S&P Exposure Period" means the sum of (i) that number of days from
the last Valuation Date on which the Corporation's Discounted Value of S&P
Eligible Assets were greater than the AMPS Basic Maintenance Amount to the
Valuation Date on which the Corporation's Discounted Value of S&P Eligible
Assets failed to exceed the AMPS Basic Maintenance Amount, (ii) the maximum
number of days following a Valuation Date that the Corporation has under these
Articles Supplementary to cure any failure to maintain a Discounted Value of
S&P Eligible Assets at least equal to the AMPS Basic Maintenance Amount, and
(iii) the maximum number of days the Corporation has to effect a mandatory
redemption under Section 4(a)(ii) of these Articles Supplementary.

         "S&P Hedging Transactions" has the meaning set forth in paragraph
8(a) of these Articles Supplementary.

         "S&P Volatility Factor" means 277% or such other potential dividend
rate increase factor as S&P advises the Corporation in writing is applicable.

         "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.

         "7-Day Dividend Period" means a Dividend Period consisting of seven
days.

         "Short Term Dividend Period" means a Special Dividend Period
consisting of a specified number of days (other than seven), evenly divisible
by seven, and not fewer than seven nor more than 364.




                                      26
<PAGE>



         "Special Dividend Period" means a Dividend Period consisting of (i) a
specified number of days (other than seven), evenly divisible by seven and not
fewer than seven nor more than 364 or (ii) a specified period of one whole
year or more but 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 Directors 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 $25,000 plus accumulated but unpaid dividends plus a
premium expressed as a percentage of $25,000, as determined by the Board of
Directors of the Corporation after consultation with the Auction Agent and the
Broker-Dealers.

         "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.



                                      27
<PAGE>



         "Substitute LIBOR Dealers" means such Substitute LIBOR 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
NRSRO or two NRSROs, respectively, selected by Merrill Lynch, Pierce, Fenner &
Smith Incorporated or its affiliates and successors, after obtaining the
Corporation's approval, 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.

         "Taxable Equivalent of the Short-Term Municipal Bond Rate" on any
date means 90% of the quotient of (A) the per annum rate expressed on an
interest equivalent basis equal to the Kenny S&P 30 day High Grade Index (the
"Kenny Index") or any successor index, made available for the Business Day
immediately preceding such date but in any event not later than 8:30 A.M.,
Eastern time, on such date by Kenny Information Systems Inc. or any successor
thereto, based upon 30-day yield evaluations at par of bonds the interest on
which is excludable for regular Federal income tax purposes under the Code of
"high grade" component issuers selected by Kenny Information Systems Inc. or
any such successor from time to time in its discretion, which component
issuers shall include, without limitation, issuers of general obligation bonds
but shall exclude any bonds the interest on which constitutes an item of tax
preference under Section 57(a)(5) of the Code, or successor provisions, for
purposes of the "alternative minimum tax," divided by (B) 1.00 minus the
Marginal Tax Rate (expressed as a decimal); provided, however, that if the
Kenny Index is not made so available by 8:30 A.M., Eastern time, on such date
by Kenny Information Systems Inc. or any successor, the Taxable Equivalent of
the Short-Term Municipal Bond Rate shall mean the quotient of (A) the per
annum



                                      28
<PAGE>



rate expressed on an interest equivalent basis equal to the most recent
Kenny Index so made available for any preceding Business Day, divided by (B)
1.00 minus the Marginal Tax Rate (expressed as a decimal). The Corporation may
not utilize a successor index to the Kenny Index unless Moody's and S&P
provide the Corporation with written confirmation that the use of such
successor index will not adversely affect the then-current respective Moody's
and S&P ratings of the AMPS.

         "Treasury Bonds" means U.S. Treasury Bonds or Notes.

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

         "U.S. Treasury Securities" means direct obligations of the United
States Treasury that are entitled to the full faith and credit of the United
States government.

         "Valuation Date" means, for purposes of determining whether the
Corporation is maintaining the AMPS Basic Maintenance Amount, the last
Business Day of each week



                                      29
<PAGE>



commencing with the Date of Original Issue; provided, however, that the first
Valuation Date may occur on any date established by the Corporation; provided,
however, that such date shall not be more than one week from the Date of
Original Issue.

         "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 AMPS Basic Maintenance Amount, AMPS
Basic Maintenance Cure Date, AMPS Basic Maintenance Report, Auditors'
Confirmation, Deposit Securities, Discounted Value, High Yield Municipal
Bonds, Independent Auditors, Initial Margin, Inverse Floaters, Market Value,
Maximum Potential Additional Dividend Liability, Moody's Discount Factor,
Moody's Eligible Asset, Moody's Exposure Period, Moody's Hedging Transactions,
Moody's Volatility Factor, S&P Discount Factor, S&P Eligible Asset, S&P
Exposure Period, S&P Hedging Transactions, S&P Volatility Factor, 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, without shareholder
approval, to amend, alter or repeal from time to time by resolution or
otherwise the foregoing definitions and the restrictions and guidelines if
Moody's and S&P or any Substitute Rating Agency advises the Corporation in
writing that such amendment, alteration or repeal will not materially affect
the then current rating of the AMPS. Furthermore, if the Board of Directors
determines as provided in paragraph 12 hereto not to continue to comply with
the provisions of paragraphs 7 and 8 hereof with respect to Moody's, and any
other provisions hereof with respect



                                      30
<PAGE>


to obtaining and maintaining a rating on the AMPS from Moody's, and/or
paragraphs 7 and 8 hereof with respect to S&P, and any other provisions hereof
with respect to obtaining and maintaining a rating on the AMPS from S&P, then
such definitions listed in this paragraph, unless the context requires
otherwise, shall have no meaning in these Articles Supplementary for 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, (ii) a Right to receive cash as set forth in paragraph 2(e)
below, and (iii) any additional amounts as set forth in paragraph 2(f) below,
and no more, payable on the Dividend Payment Date set forth below. Dividends
on the shares of AMPS so declared and payable shall be paid (i) in preference
to and 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, out of funds legally available therefor, commencing on the
Initial Dividend Payment Date with respect to the AMPS. Following the Initial
Dividend Payment Date for the AMPS, dividends on the AMPS will be payable, at
the option of the Corporation, either (i) with respect to any 7-Day Dividend
Period and any Short Term Dividend Period of 35 or fewer days, on the day next
succeeding the




                                      31
<PAGE>


last day thereof, or (ii) with respect to any Short Term Dividend Period of
more than 35 days and with respect to any Long Term Dividend Period, monthly
on the first Business Day of each calendar month during such Short Term
Dividend Period or Long Term Dividend Period and on the day next succeeding
the last day thereof (each such date referred to in clause (i) or (ii) being
herein referred to as a "Normal Dividend Payment Date"), except that if such
Normal Dividend Payment Date is not a Business Day, then the Dividend Payment
Date shall be the first Business Day next succeeding such Normal Dividend
Payment Date. Although any particular Dividend Payment Date may not occur on
the originally scheduled date because of the exception discussed above, the
next succeeding Dividend Payment Date, subject to such exception, 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 Board of Directors by resolution
prior to authorization of a dividend by the Board of Directors may change a
Dividend Payment Date if such change does not adversely affect the contract
rights of the Holders of shares of AMPS set forth in the Charter. The Initial
Dividend Period, 7-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, Eastern 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.



                                      32
<PAGE>


         (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 Payment Date (or last Dividend Payment Date in a Dividend
Period if there is more than one Dividend Payment Date), shall be equal to the
rate per annum that results from implementation of the Auction Procedures.

         The Applicable 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 7-Day 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, Eastern 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, Eastern 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



                                      33
<PAGE>



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 the date set for such redemption, the preceding
sentence shall not apply and the Applicable 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, Eastern 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, Eastern time, on the next Business Day.

               (ii) The amount of cash dividends per share of AMPS payable (if
          declared) on the Initial Dividend Payment Date and on each Dividend
          Payment Date of each 7-Day Dividend Period and each 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 or part thereof that
          such share was outstanding and the denominator of which will be 365,
          multiplying the amount so obtained by $25,000, and rounding the
          amount so obtained to the nearest cent. During any Long Term
          Dividend Period, the amount of cash dividends per share of AMPS
          payable (if declared) on any Dividend Payment Date shall be computed
          by multiplying the Applicable Rate for such Dividend Period by a
          fraction, the numerator of which will be such number of days in such
          part of such Dividend Period that such share was outstanding and for
          which dividends are payable on such Dividend Payment Dates and



                                      34
<PAGE>



          the denominator of which will be 360, multiplying the amount so
          obtained by $25,000, and rounding the amount so obtained to the
          nearest cent.

               (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 the AMPS be a number of days (other than seven), evenly
          divisible by seven and not fewer than seven nor more than 364 in the
          case of a Short Term Dividend Period or one whole year or more but
          not greater than five years in the case of a Long Term Dividend
          Period, specified in such notice, provided that the Corporation may
          not give a Request for Special Dividend Period (and any such request
          shall be null and void) unless, for any Auction occurring after the
          initial Auction, 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 second Business Day but
          not more than seven Business Days prior to an Auction Date for the
          AMPS and, in the case of a Long Term Dividend Period, shall be given
          on or prior to the second Business 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 AMPS as contemplated by such Request for Special
          Dividend Period and the Optional Redemption Price of the AMPS during
          such Special Dividend



                                      35
<PAGE>


          Period and the Specific Redemption Provisions and shall give the
          Corporation written notice (a "Response") of such determination by
          no later than the second Business 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 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 a
          Response by such second Business 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 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 AMPS, the
          Corporation may by no later than the second Business 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 also shall provide a copy of such Notice of Special
          Dividend Period to Moody's and S&P. The Corporation shall not give a
          Notice of Special Dividend Period and, if the Corporation




                                      36
<PAGE>


          has given a Notice of Special Dividend Period, the Corporation is
          required to give telephonic and written notice of its revocation (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 Asset
          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 the Valuation Date 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 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
          segregated in an account at the Corporation's custodian bank or on
          the books of the Corporation by the close of business on the third
          Business Day preceding the related Auction Date or (z) the
          Broker-Dealer(s) 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. The Corporation also
          shall provide a copy of such Notice of Revocation to Moody's and
          S&P. 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) above or if the Corporation gives a Notice
          of Revocation with respect to a Notice




                                      37
<PAGE>



          of Special Dividend Period for AMPS, the next succeeding Dividend
          Period will be a 7-Day 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 7-Day Dividend Period 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 7-Day Dividend Period.

         (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 charges, as herein provided, on the shares of AMPS (except for
Additional Dividends as provided in paragraph 2(e) hereof and additional
payments as provided in paragraph 2(f) 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



                                      38
<PAGE>



          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
          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
          in Section 4(a)(ii).


         (e) Each dividend shall consist of (i) cash at the Applicable Rate,
(ii) an uncertificated right (a "Right") to receive an Additional Dividend (as
defined below), and (iii) any additional amounts as set forth in paragraph
2(f) 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 income subject to
regular Federal income taxes 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




                                      39
<PAGE>



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 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
(after Federal income tax consequences) 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 had 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 greater of:
(x) the maximum marginal regular Federal individual income tax rate applicable
to ordinary income or capital gains depending on the taxable character



                                      40
<PAGE>


of the distribution (including any surtax); or (y) the maximum marginal
regular Federal corporate income tax rate applicable to ordinary income or
capital gains depending on the taxable character of the distribution
(disregarding in both (x) and (y) the effect of any state or local taxes and
the phase out of, or provision limiting, personal exemptions, itemized
deductions, or the benefit of lower tax brackets).

         (f) Except as provided below, whenever the Corporation intends to
include any net capital gains or other income subject to regular Federal
income taxes 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. The Corporation may also include such income in a dividend on
shares of AMPS without giving advance notice thereof if it increases the
dividend by an additional amount calculated as if such income was a
Retroactive Taxable Allocation and the additional amount was an Additional
Dividend, provided that the Corporation will notify the Auction Agent of the
additional amounts to be included in such dividend at least five Business Days
prior to the applicable Dividend Payment Date.

         (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 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 $25,000 per share plus accumulated
but unpaid dividends (whether or not earned or declared) thereon to the date
of distribution, and after such payment the Holders will be entitled to no
other payments other than Additional Dividends



                                      41
<PAGE>



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 be 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) Optional Redemption. 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) the Initial Dividend Period with respect to
          such share or (B) a Non-Call Period to 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



                                      42
<PAGE>



          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) Mandatory Redemption. 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 collectively 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 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



                                      43
<PAGE>



          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, 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 30 days after such Cure Date, except that if the
          Corporation does not have 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 30 days after such Cure Date,



                                      44
<PAGE>



          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) No Redemption Under Certain Circumstances. 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 or S&P 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 deem fair and equitable.

         (c) Notice of Redemption. Whenever shares of AMPS are to be redeemed,
the Corporation, not less than 17 nor more than 60 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 to be redeemed, (iv) the place or places where shares
of AMPS are to be surrendered for payment of the redemption price, (v) a
statement that dividends on the shares to be redeemed shall cease to
accumulate on such redemption date (except that holders may be entitled to
Additional Dividends) and (vi) the



                                      45
<PAGE>



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, or segregated in an account at the Corporation's custodian
bank for the benefit of the Holders of the AMPS to be redeemed and for payment
to the Auction Agent, Deposit Securities (with a right of substitution) having
an aggregate Discounted Value equal to the redemption payment for the shares
of AMPS as to which such Notice of Redemption has been 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 Deposit Securities 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.



                                      46
<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 Common Stock of the Corporation, 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 by
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 of 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 the



                                      47
<PAGE>



          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 this 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 any class or series of stock ranking prior to the AMPS or any other
series of Preferred Stock with respect to payment of dividends or the
distribution of assets on dissolution, liquidation or winding up the affairs
of the Corporation, 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
Preferred Stock 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 AMPS
differently than those of a Holder of shares of any other series of Preferred
Stock without the affirmative vote of the holders of at least a majority of
the shares of AMPS adversely affected and outstanding at such time (voting
separately as a class). The Corporation shall notify Moody's and S&P ten
Business Days prior



                                      48
<PAGE>



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. So long as any shares of the AMPS are outstanding, 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 voluntary application by the Corporation for relief
under Federal bankruptcy law or any similar application under state law for so
long as the Corporation is solvent and does not foresee becoming insolvent.
For purposes of the two preceding sentences, the phrase "vote of the holders
of a majority of the outstanding shares of Preferred Stock" shall have the
meaning set forth in 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 requisite percentage of shares of Common
Stock and shares of Preferred Stock, including AMPS, voting together as a
single class or voting as separate classes necessary to authorize the action
in question. An increase in the number of authorized shares of Preferred Stock
pursuant to the Charter or the issuance of additional shares of any series of
Preferred Stock (including AMPS and Other AMPS) pursuant to the Charter shall
not in and of itself be considered to adversely affect the contract rights of
the holders of the AMPS.

         Notwithstanding the foregoing, and except as otherwise required by
the 1940 Act, (i) holders of outstanding shares of the AMPS will be entitled
as a series, to the exclusion of the holders of all other securities,
including other Preferred Stock, Common Stock and other classes of capital
stock of the Corporation, to vote on matters affecting the AMPS that do not
materially



                                      49
<PAGE>


adversely affect any of the contract rights of holders of such other
securities, including other Preferred Stock, Common Stock and other classes of
capital stock, as expressly set forth in the Charter, and (ii) holders of
outstanding shares of AMPS will not be entitled to vote on matters affecting
any other Preferred Stock that do not materially adversely affect any of the
contract rights of holders of the AMPS, as expressly set forth in the Charter.

         (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 Corporation
          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 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.



                                      50
<PAGE>


               (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,
          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).

         (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




                                      51
<PAGE>


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 and, not later than ten Business Days after the date on which such vote
is taken, notify S&P and Moody's of the result of such vote.

         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 (ii) Moody's Eligible Assets having
an aggregate Discounted Value equal 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 a Discounted Value at least equal to the AMPS Basic
Maintenance Amount on or prior to the AMPS Basic Maintenance Cure Date.

         (b) On or before 5:00 p.m., Eastern time, on the seventh Business Day
in the case of Moody's and on the third Business Day in the case of S&P, after
a Valuation Date on which the Corporation fails to satisfy the AMPS Basic
Maintenance Amount, the Corporation shall complete (i) and deliver to Moody's
a complete



                                      52
<PAGE>



AMPS Basic Maintenance Report as of the date of such failure and (ii) send S&P
an electronic notification of such failure. The Corporation will (i) deliver
an AMPS Basic Maintenance Report to Moody's and (ii) send S&P an electronic
notification on or before 5:00 p.m., Eastern time, on the seventh Business Day
in the case of Moody's and on the third Business Day in the case of S&P, after
a Valuation Date on which the Corporation cures its failure to maintain
Moody's Eligible Assets or S&P Eligible Assets, as the case may be, with an
aggregate Discounted Value equal to or greater than the AMPS Basic Maintenance
Amount and on which the Corporation fails to maintain Moody's Eligible Assets
or S&P Eligible Assets, as the case may be, with an aggregate Discounted Value
which exceeds the AMPS Basic Maintenance Amount by 10% or more in the case of
S&P and 25% or more in the case of Moody's. The Corporation will also deliver
an AMPS Basic Maintenance Report to Moody's and S&P as of the last Business Day
of each month on or before the seventh Business Day after such date. The
Corporation shall also provide Moody's and S&P with an AMPS Basic Maintenance
Report when specifically requested by either Moody's or S&P. 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 in accordance with paragraph 7(b) above relating to
the month in which the Corporation's fiscal year ends, the Independent
Auditors will confirm in writing to S&P and Moody's (i) the mathematical
accuracy of the calculations reflected in such Report, (ii) that, in such
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 its fiscal year end in accordance with these Articles
Supplementary, and (iii) that, in such Report, the Corporation determined
whether the Corporation had, at its fiscal year end in accordance with these
Articles Supplementary, S&P



                                      53
<PAGE>



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 (such
confirmation is herein called the "Auditors' Confirmation").

         (d) Within ten Business Days after the date of delivery to 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 Auditors will provide to S&P and
Moody's an Auditors' Confirmation as to such AMPS Basic Maintenance Report.

         (e) If any Auditors' 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 date for which such Auditors' Confirmation
as required to be delivered, or shows that a lower aggregate Discounted Value
for the aggregate of all S&P Eligible Assets or Moody's Eligible Assets, as
the case may be, of the Corporation was determined by the Independent
Auditors, the calculation or determination made by such Independent Auditors
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 S&P and Moody's promptly following receipt by the Corporation of
such Auditors' Confirmation.

         (f) On or before 5:00 p.m., Eastern 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



                                      54
<PAGE>



Original Issue. Within five Business Days of such Date of Original Issue, the
Independent Auditors 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. Also, on or
before 5:00 p.m., Eastern time, on the first Business Day after shares of
Common Stock are repurchased by the Corporation, 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 that Common Stock is repurchased.

         (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 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. Certain Other Restrictions and Requirements.



                                      55
<PAGE>



         (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
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 Municipal Index
          exceeding in number 25% of the quotient of the Market Value of the
          Corporation's total assets divided by $1,000 or (C) outstanding
          futures contracts based on the Municipal Index exceeding in number
          10% of the average number of daily traded futures contracts based on
          the Municipal Index in the 30 days preceding the time of effecting
          such transaction as reported by The Wall Street Journal;

               (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



                                      56
<PAGE>



          contracts based on Treasury Bonds exceeding in number 50% of
          the quotient of the Market Value of the Corporation's total assets
          divided by $100,000 ($200,000 in the case of the two-year United
          States Treasury Note) or (B) outstanding futures contracts based on
          Treasury Bonds exceeding in number 10% of the average number of
          daily traded futures contracts based on Treasury Bonds in the 30
          days preceding the time of effecting such transaction as reported by
          The Wall Street Journal;

               (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 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 liquid assets 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



                                      57
<PAGE>


          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 engage in Bond Market Association Municipal Swap Index
swap transactions ("BMA swap transactions"), 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, except that the Corporation may
engage in BMA swap transactions, purchase or sell exchange-traded futures
contracts based on any index approved by Moody's or Treasury Bonds and
purchase, write or sell exchange-traded put 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




                                      58
<PAGE>



          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 30 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 50% of the Market Value of all Municipal
          Bonds constituting 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 Municipal
          Bonds constituting 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 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;



                                      59
<PAGE>



               (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 (A) will not engage in options and futures
          transactions for leveraging or speculative purposes, except that the
          Corporation may engage in an option or futures transaction so long
          as the combination of the Corporation's non-derivative positions,
          together with the relevant option or futures transaction, produces a
          synthetic investment position, or the same economic result, that
          could be achieved by an investment, consistent with the
          Corporation's investment objective and policies, in a security that
          is not an option or futures transaction, subject to the Adviser
          periodically demonstrating to Moody's that said economic results are
          achieved, and (B) 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;

               (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; and



                                      60
<PAGE>



               (viii) the Corporation will not engage in BMA swap transactions
          with respect to more than 20% of the Corporation's net assets;
          provided that the Corporation's use of futures will proportionately
          decrease as the Corporation's use of BMA swap transactions
          increases, and vice-versa.

         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 may
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.



                                      61
<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 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 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; (v) the settlement price of the underlying futures contract if the
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 does not own 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 8(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



                                      62
<PAGE>


          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 with an aggregate Discounted Value
          equal to or greater than the AMPS Basic Maintenance Amount.

         (d) 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.

         (e) 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 and which
borrowings shall be repaid within 60 days and not be extended or renewed and
shall not cause the aggregate Discounted Value of Moody's Eligible Assets and
S&P Eligible Assets to be less than the AMPS Basic Maintenance Amount), (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



                                      63
<PAGE>



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.

         (f) For as long as the AMPS are rated by S&P, the Corporation will
not, unless it has received written confirmation from S&P that such action
would not impair the rating then assigned to the shares of AMPS by S&P, engage
in interest rate swaps, caps and floors, except that the Corporation may,
without obtaining the written consent described above, engage in swaps, caps
and floors if: (i) the counterparty to the swap transaction has a short-term
rating of A-1 or, if the counterparty does not have a short-term rating, the
counterparty's senior unsecured long-term debt rating is A- or higher, (ii)
the original aggregate notional amount of the interest rate swap transaction
or transactions is not to be greater than the liquidation preference of the
AMPS, (iii) the interest rate swap transaction will be marked-to-market weekly
by the swap counterparty, (iv) if the Corporation fails to maintain an
aggregate discounted value at least equal to the AMPS Basic Maintenance Amount
on two consecutive Valuation Dates then the agreement shall terminate
immediately, (v) for the purpose of calculating the Discounted Value of S&P
Eligible Assets, 90% of any positive mark-to-market valuation of the
Corporation's rights will be S&P Eligible Assets, 100% of any negative
mark-to-market valuation of the Corporation's rights will be included in the
calculation of the AMPS Basic Maintenance Amount, and (vi) the Corporation
must maintain liquid assets with a value at least equal to the net amount of
the excess, if any, of the Corporation's obligations over its entitlement with
respect to each swap. For caps/floors, the Corporation must maintain liquid
assets with a value at least equal to the Corporation's obligations with
respect to such caps or floors.



                                      64
<PAGE>



         (g) For so long as shares of AMPS are rated by S&P or Moody's, as the
case may be, the Corporation agrees to provide S&P and/or Moody's with the
following, unless the Corporation has received written confirmation from S&P
and/or Moody's, as the case may be, that the provision of such information is
no longer required and that the current rating then assigned to the shares of
AMPS by S&P and/or Moody's, as the case may be, would not be impaired: a
notification letter at least 30 days prior to any material change in the
Charter; a copy of the AMPS Basic Maintenance Report prepared by the
Corporation in accordance with these Articles Supplementary; and a notice upon
the occurrence of any of the following events: (i) any failure by the
Corporation to declare or pay any dividends on the AMPS or successfully
remarket the AMPS; (ii) any mandatory or optional redemption of the AMPS
effected by the Corporation; (iii) any assumption of control of the Board of
Directors of the Corporation by the holders of the AMPS; (iv) a general
unavailability of dealer quotes on the assets of the Corporation; (v) any
material auditor discrepancies on valuations; (vi) the occurrence of any
Special Dividend Period; (vii) any change in the Maximum Applicable Rate or
the Reference Rate; (viii) the acquisition by any person of beneficial
ownership of more than 5% of the Corporation's voting stock (inclusive of
Common Stock and Preferred Stock); (ix) the occurrence of any change in
Internal Revenue Service rules with respect to the payment of Additional
Dividends; (x) any change in the Pricing Service employed by the Corporation;
(xi) any change in the Adviser; (xii) any increase of greater than 40% to the
maximum marginal Federal income tax rate applicable to individuals or
corporations; and (xiii) the maximum marginal Federal income tax rate
applicable to individuals or corporations is increased to a rate in excess of
50%.

         (h) For so long as shares of AMPS are rated by S&P or Moody's, the
Corporation shall provide S&P and/or Moody's with a copy of the Corporation's
annual audited financial



                                      65
<PAGE>



statements as soon as practicable (not later than 60 days) after such annual
audited financial statements have been made available to the Corporation's
stockholders.

         9. 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.

         10. Auction Procedures.

         (a) Certain definitions. As used in this paragraph 10, the following
terms shall have the following meanings, unless the context otherwise
requires:

               (i) "AMPS" means the shares of AMPS being auctioned pursuant to
          this paragraph 10.

               (ii) "Auction Date" means the first Business Day preceding the
          first day of a Dividend Period.

               (iii) "Available AMPS" has the meaning specified in paragraph
          10(d)(i) below.

               (iv) "Bid" has the meaning specified in paragraph 10(b)(i)
          below.

               (v) "Bidder" has the meaning specified in paragraph 10(b)(i)
          below.

               (vi) "Hold Order" has the meaning specified in paragraph
          10(b)(i) below.

               (vii) "Maximum Applicable Rate" for any Dividend Period will be
          the higher of the Applicable Percentage of the Reference Rate or the
          Applicable Spread plus the Reference Rate. The Applicable Percentage
          and Applicable Spread 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



                                      66
<PAGE>




          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:



<TABLE>
<CAPTION>


                                                Applicable       Applicable      Applicable       Applicable
                                                Percentage of    Percentage of   Spread over      Spread over
                Credit Ratings                  Reference        Reference       Reference        Reference
        --------------------------------        Rate - No        Rate -          Rate - No        Rate -
             Moody's            S&P             Notification     Notification    Notification     Notification
        ---------------  ---------------        ------------     ------------    ------------     ------------


<S>       <C>                  <C>                   <C>              <C>             <C>             <C>

              Aaa                  AAA              110%              125%            1.10%           1.25%
           Aa3 to Aa1          AA- to AA+           125%              150%            1.25%           1.50%
            A3 to A1            A- to A+            150%              200%            1.50%           2.00%
          Baa3 to Baa1        BBB- to BBB+          175%              250%            1.75%           2.50%
           Below Baa3          Below BBB-           200%              300%            2.00%           3.00%

</TABLE>


         The Applicable Percentage and the Applicable Spread as so determined
may be further subject to upward but not downward adjustment in the discretion
of the Board of Directors of the Corporation after consultation with the
Broker-Dealers, provided that immediately following any such increase the
Corporation would be in compliance with the AMPS Basic Maintenance Amount.
Subject to the provisions of paragraph 12, the Corporation shall take all
reasonable action necessary to enable S&P and Moody's to provide a rating for
the 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, subject to the
provisions of paragraph 12, Merrill Lynch, Pierce, Fenner & Smith Incorporated
or its affiliates and successors, after obtaining the Corporation's approval,
shall select a NRSRO or two NRSROs to act as a Substitute Rating Agency or
Substitute Rating Agencies, as the case may be.

               (viii) "Order" has the meaning specified in paragraph 10(b)(i)
          below.

               (ix) "Sell Order" has the meaning specified in paragraph
          10(b)(i) below.



                                      67
<PAGE>




               (x) "Submission Deadline" means 1:00 P.M., Eastern 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" has the meaning specified in paragraph
          10(d)(i) below.

               (xii) "Submitted Hold Order" has the meaning specified in
          paragraph 10(d)(i) below.

               (xiii) "Submitted Order" has the meaning specified in paragraph
          10(d)(i) below.

               (xiv) "Submitted Sell Order" has the meaning specified in
          paragraph 10(d)(i) below.

               (xv) "Sufficient Clearing Bids" has the meaning specified in
          paragraph 10(d)(i) below.

               (xvi) "Winning Bid Rate" has the meaning specified in paragraph
          10(d)(i) below.

         (b) Orders by Beneficial Owners, Potential Beneficial Owners,
Existing Holders and Potential Holders. (i) Unless otherwise permitted by the
Corporation, Beneficial Owners and Potential Beneficial Owners may only
participate in Auctions through their Broker-Dealers. Broker-Dealers will
submit the Orders of their respective customers who are Beneficial Owners and
Potential Beneficial Owners to the Auction Agent, designating themselves as
Existing Holders in respect of shares subject to Orders submitted or deemed
submitted to them by Beneficial Owners and as Potential Holders in respect of
shares subject to Orders submitted to them by Potential Beneficial Owners. A
Broker-Dealer may also hold shares of AMPS in its own account as a Beneficial
Owner. A Broker-Dealer may thus submit Orders to the Auction



                                      68
<PAGE>



Agent as a Beneficial Owner or a Potential Beneficial Owner and therefore
participate in an Auction as an Existing Holder or Potential Holder on behalf
of both itself and its customers. On or prior to the Submission Deadline on
each Auction Date:

                    (A) each Beneficial Owner may submit to its Broker-Dealer
               information as to:

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

                         (2) the number of Outstanding shares, if any, of AMPS
                    held by such Beneficial Owner which such Beneficial Owner
                    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 Beneficial
                    Owner; and/or

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

                    (B) each Broker-Dealer, using a list of Potential
               Beneficial Owners that shall be maintained in good faith for
               the purpose of conducting a competitive Auction, shall contact
               Potential Beneficial Owners, including Persons that are not
               Beneficial Owners, on such list to determine the number of
               Outstanding shares, if any, of AMPS which each such Potential
               Beneficial Owner offers to purchase,




                                      69
<PAGE>



               provided that the Applicable Rate for the next succeeding
               Dividend Period shall not be less than the rate per annum
               specified by such Potential Beneficial Owner.

         For the purposes hereof, the communication by a Beneficial Owner or
Potential Beneficial Owner to a Broker-Dealer, or the communication by a
Broker-Dealer acting for its own account to the Auction Agent, of information
referred to in clause (A) or (B) of this paragraph 10(b)(i) is hereinafter
referred to as an "Order" and each Beneficial Owner and each Potential
Beneficial Owner placing an Order, including a Broker-Dealer acting in such
capacity for its own account, is hereinafter referred to as a "Bidder"; an
Order containing the information referred to in clause (A)(1) of this
paragraph 10(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 10(b)(i) is hereinafter referred to as a "Bid"; and an Order
containing the information referred to in clause (A)(3) of this paragraph
10(b)(i) is hereinafter referred to as a "Sell Order". Inasmuch as a
Broker-Dealer participates in an Auction as an Existing Holder or a Potential
Holder only to represent the interests of a Beneficial Owner or Potential
Beneficial Owner, whether it be its customers or itself, all discussion herein
relating to the consequences of an Auction for Existing Holders and Potential
Holders also applies to the underlying beneficial ownership interests
represented.

                    (ii) 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
                    10(e)(i)(D) if the



                                      70
<PAGE>



                    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 10(e)(ii)(C) if
                    such specified rate per annum shall be 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
                    10(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
                    10(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.



                                      71
<PAGE>




               (i) Each Broker-Dealer shall submit in writing or through
          mutually acceptable electronic means to the Auction Agent prior to
          the Submission Deadline on each Auction Date all Orders obtained by
          such Broker-Dealer, designating itself (unless otherwise permitted
          by the Corporation) as an Existing Holder in respect of shares
          subject to Orders submitted or deemed submitted to it by Beneficial
          Owners and as a Potential Holder in respect of shares subject to
          Orders submitted to it by Potential Beneficial Owners, and
          specifying with respect to each Order:

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

                    (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.



                                      72
<PAGE>


               (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 of more than
          28 days) and a Sell Order (in the case of an Auction relating to a
          Special Dividend Period of more than 28 days) to have been submitted
          on behalf of such Existing Holder covering the number of Outstanding
          shares of AMPS held by such Existing Holder and not subject to
          Orders submitted to the Auction Agent.

               (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



                                      73
<PAGE>



               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 10(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
               10(c)(iv)(A) above and of the foregoing portion of this
               paragraph 10(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 of shares);
               and the number of shares, if any, subject to Bids not valid
               under this paragraph 10(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
               10(c)(iv)(A) and Bids referred to in paragraph 10(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




                                      74
<PAGE>



               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 therein specified.

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

         (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");

                    (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:





                                      75
<PAGE>


                         (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 clause (1) above and this
                    clause (2) 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,



                                      76
<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 10(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, 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
               60% 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 Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Shares.



                                      77
<PAGE>



         Based on the determinations made pursuant to paragraph 10(d)(i), the
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 10(e)(iii) and paragraph 10(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




                                      78
<PAGE>



               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 10(e)(i)(B) and paragraph 10(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 number 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 10(e)(i)(B), paragraph 10(e)(i)(C) and paragraph
               10(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




                                      79
<PAGE>


               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
               paragraph 10(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
                    Maximum Applicable Rate shall be accepted and the
                    Submitted Sell Orders of each Existing Holder shall be
                    accepted, in both cases 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 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 10(e)(ii)(A) and paragraph
                    10(e)(ii)(B) by (y) a fraction the numerator



                                      80
<PAGE>



                    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.

               (iii) If, as a result of the procedures described in paragraph
          10(e)(i) or paragraph 10(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 Existing 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
          10(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



                                      81
<PAGE>


          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 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 10 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 Beneficial Owners of AMPS. A Beneficial Owner
or an Existing 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 10 or to or through a Broker-Dealer, provided that
in the case of all transfers other than pursuant to Auctions such Beneficial
Owner or Existing Holder, its Broker-Dealer, if applicable, 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 Beneficial
Owner's beneficial ownership. Neither the Corporation nor any Affiliate, other
than an Affiliate that is a Broker-Dealer, shall submit an Order in any
Auction. Any Beneficial Owner 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




                                      82
<PAGE>


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 Beneficial Owner
thereof and such Beneficial Owner thereupon will be entitled to receive
certificates therefor and required to deliver certificates therefor upon
transfer or exchange thereof.

         11. Securities Depository; Stock Certificates.

         (a) If there is a Securities Depository, one certificate for all of
the shares of 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. 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 Beneficial
Owner 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 11(a)) registered
in the names of the Beneficial Owners or their nominees and rescind the
stop-transfer instructions referred to in paragraph 11(a) with respect to such
shares.

         12. Termination of Rating Agency Provisions.

         (a) The Board of Directors may determine that it is not in the best
interests of the Corporation to continue to comply with the provisions of
paragraphs 7 and 8 hereof with respect



                                      83
<PAGE>




to Moody's, and any other provisions hereof with respect to obtaining and
maintaining a rating on the AMPS from Moody's (together, the "Moody's
Provisions"), and paragraphs 7 and 8 hereof with respect to S&P, and any other
provisions hereof with respect to obtaining and maintaining a rating on the
AMPS from S&P (together, the "S&P Provisions"), in which case the Corporation
will no longer be required to comply with any of the Moody's Provisions or the
S&P Provisions, as the case may be, provided that (i) the Corporation has
given the Auction Agent, the Broker-Dealers, Moody's or S&P and Holders of the
AMPS at least 45 calendar days written notice of such termination of
compliance, (ii) the Corporation is in compliance with the Moody's Provisions
and the S&P Provisions, as the case may be, at the time the notice required in
clause (i) hereof is given and at the time of the termination of compliance
with the Moody's Provisions or the S&P Provisions, and (iii) the AMPS continue
to be rated by at least one NRSRO at the time of the termination of compliance
with the Moody's Provisions or the S&P Provisions, as the case may be.

         (b) On the date that the notice is given in paragraph 12(a) above and
on the date that compliance with the Moody's Provisions and/or the S&P
Provisions, as the case may be, is terminated, the Corporation shall provide
the Auction Agent and Moody's or S&P, as applicable, with an officers'
certificate as to the compliance with the provisions of paragraph 12(a)
hereof, and the Moody's Provisions and/or the S&P Provisions, as applicable,
on such later date and thereafter shall have no force or effect.



                                      84
<PAGE>



         IN WITNESS WHEREOF, MUNIVEST FUND, INC. has caused these Articles
Supplementary to be signed in its name and on its behalf by its Vice
President, and attested by its Secretary, on the _____ day of _____, 2004.

                                      MUNIVEST FUND, INC.



                                      By:
                                          ------------------------------------
                                           Name:
                                           Title:

Attest:



- ------------------------------
Name:
Title:   Secretary


         THE UNDERSIGNED, Vice President of MUNIVEST FUND, INC. (the
"Corporation"), who executed on behalf of the Corporation the foregoing
Articles Supplementary, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of the Corporation, the foregoing
Articles Supplementary to be the corporate act of the Corporation and, as to
all matters and facts required to be verified under oath, further certifies
that, to the best of his knowledge, information and belief, these matters and
facts contained herein are true in all material respects and that this
statement is made under the penalties for perjury.





                                  By:
                                      ---------------------------------------
                                       Name:
                                       Title:




                                      85


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(B)
<SEQUENCE>11
<FILENAME>efc4-1273_5567773ex992b.txt
<TEXT>
                                                                   Exhibit (b)









                                    BY-LAWS

                                      OF

                              MUNIVEST FUND, INC.


                                   ARTICLE I

                                    Offices
                                    -------

     Section 1. Principal Office. The principal office of the Corporation
shall be in the City of Baltimore, State of Maryland.

     Section 2. Principal Executive Office. The principal executive office of
the Corporation shall be at 800 Scudders Mill Road, Plainsboro, New Jersey
08536.

     Section 3. Other Offices. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.


                                  ARTICLE II

                           Meetings of Stockholders
                           ------------------------

     Section 1. Annual Meeting. The annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such
other business as may properly be brought before the meeting shall be held on
such day in March of each year as shall be designated annually by the Board of
Directors.

     Section 2. Special Meetings. Special meetings of the stockholders, unless
otherwise provided by law or by the Charter, may be called for any purpose or
purposes by a majority of the Board of Directors, the President, or on the
written request of the holders of the outstanding shares of capital stock of
the Corporation entitled to vote at such meeting to the extent permitted by
Maryland law.

     Section 3. Place of Meetings. The annual meeting and any special meeting
of the stockholders shall be held at such place within the United States as
the Board of Directors may from time to time determine.

     Section 4. Notice of Meetings; Waiver of Notice. Notice of the place,
date and time of the holding of each annual and special meeting of the
stockholders and the purpose or


                                     -1-
<PAGE>

purposes of each special meeting shall be given personally or by mail, not
less than ten nor more than ninety days before the date of such meeting, to
each stockholder entitled to vote at such meeting and to each other
stockholder entitled to notice of the meeting. Notice by mail shall be deemed
to be duly given when deposited in the United States mail addressed to the
stockholder at his address as it appears on the records of the Corporation,
with postage thereon prepaid.

     Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless the Board of Directors, after the adjournment, shall
fix a new record date for an adjourned meeting, or the adjournment is for more
than one hundred and twenty days after the original record date, notice of
such adjourned meeting need not be given if the time and place to which the
meeting shall be adjourned were announced at the meeting at which the
adjournment is taken.

     Section 5. Quorum. At all meetings of the stockholders, the holders of a
majority of the shares of stock of the Corporation entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided by statute or by the
Charter. In the absence of a quorum no business may be transacted, except that
the holders of a majority of the shares of stock present in person or by proxy
and entitled to vote may adjourn the meeting from time to time, without notice
other than announcement thereat except as otherwise required by these By-Laws,
until the holders of the requisite amount of shares of stock shall be so
present. At any such adjourned meeting at which a quorum may be present any
business may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy, of
holders of the number of shares of stock of the Corporation in excess of a
majority thereof which may be required by the laws of the State of Maryland,
the Investment Company Act of 1940, as amended, or other applicable statute,
the Charter, or these By-Laws, for action upon any given matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting, if there shall be present thereat, in person
or by proxy, holders of the number of shares of stock of the Corporation
required for action in respect of such other matter or matters.

     Section 6. Organization. At each meeting of the stockholders, the
chairman of the Board (if one has been designated by the Board), or in his
absence or inability to act, the President, or in the absence or inability to
act of the Chairman of the Board and the President, a Vice President, shall
act as chairman of the meeting. The Secretary, or in his absence or inability
to act, any person appointed by the chairman of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.

     Section 7. Order of Business. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.

     Section 8. Voting. Except as otherwise provided by statute or the
Charter, each holder of record of shares of stock of the Corporation having
voting power shall be entitled at each meeting of the stockholders to one vote
for every share of such stock standing in his name on the record of
stockholders of the Corporation as of the record date determined pursuant to


                                     -2-
<PAGE>

Section 9 of this Article or if such record date shall not have been so fixed,
then at the later of (i) the close of business on the day on which notice of
the meeting is mailed or (ii) the thirtieth day before the meeting.

     Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases where such proxy states that
it is irrevocable and where an irrevocable proxy is permitted by law. Except
as otherwise provided by statute, the Charter or these By-Laws, any corporate
action to be taken by vote of the stockholders shall be authorized by a
majority of the total votes cast at a meeting of stockholders by the holders
of shares present in person or represented by proxy and entitled to vote on
such action.

     If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute
or these By-Laws, or determined by the chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by his proxy, if there be
such proxy, and shall state the number of shares voted.

     Section 9. Fixing of Record Date. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to vote at any
meeting of the stockholders. The record date, which may not be prior to the
close of business on the day the record date is fixed, shall be not more than
ninety nor less than ten days before the date of the meeting of the
stockholders. All persons who were holders of record of shares at such time,
and not others, shall be entitled to vote at such meeting and any adjournment
thereof.

     Section 10. Inspectors. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take
and sign an oath to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors shall determine the number of shares outstanding and the voting
powers of each, the number of shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising
in connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting or any stockholder entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, request or matter determined
by them and shall execute a certificate of any fact found by them. No director
or candidate for the office of director shall act as inspector of an election
of directors. Inspectors need not be stockholders.

     Section 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute or the Charter, any action required to be taken
at any annual or special meeting of stockholders, or any action which may be
taken at any annual or special meeting of


                                     -3-
<PAGE>

such stockholders, may be taken without a meeting, without prior notice and
without a vote, if the following are filed with the records of stockholders
meetings: (i) a unanimous written consent which sets forth the action and is
signed by each stockholder entitled to vote on the matter and (ii) a written
waiver of any right to dissent signed by each stockholder entitled to notice
of the meeting but not entitled to vote thereat.


                                 ARTICLE III

                              Board of Directors
                              ------------------

     Section 1. General Powers. Except as otherwise provided in the Charter,
the business and affairs of the Corporation shall be managed under the
direction of the Board of Directors. All powers of the Corporation may be
exercised by or under authority of the Board of Directors except as conferred
on or reserved to the stockholders by law or by the Charter or these By-Laws.

     Section 2. Number of Directors. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a
majority of the Directors then in office; provided, however, that the number
of directors shall in no event be less than three nor more than fifteen. Any
vacancy created by an increase in Directors may be filled in accordance with
Section 6 of this Article III. No reduction in the number of directors shall
have the effect of removing any director from office prior to the expiration
of his term unless such director is specifically removed pursuant to Section 5
of this Article III at the time of such decrease. Directors need not be
stockholders. As long as any preferred stock of the Corporation is
outstanding, the number of Directors shall be not less than five.

     Section 3. Election and Term of Directors. Directors shall be elected
annually, by written ballot at the annual meeting of stockholders, or a
special meeting held for that purpose. The term of office of each director
shall be from the time of his election and qualification until the annual
election of directors next succeeding his election and until his successor
shall have been elected and shall have qualified, or until his death, or until
he shall have resigned, or have been removed as hereinafter provided in these
By-Laws, or as otherwise provided by statute or the Charter.

     Section 4. Resignation. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman
of the Board or the President or the Secretary. Any such resignation shall
take effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.

     Section 5. Removal of Directors. Any director of the corporation may be
removed for cause (but not without cause) by the stockholders by a vote of
seventy-five percent (75%) of the outstanding shares of capital stock then
entitled to vote in the election of such director.

     Section 6. Vacancies. Subject to the provisions of the Investment Company
Act of 1940, as amended, any vacancies in the Board, whether arising from
death, resignation, removal,


                                     -4-
<PAGE>

an increase in the number of directors or any other cause, shall be filled by
a vote of the Board of Directors in accordance with the Charter.

     Section 7. Place of Meetings. Meetings of the Board may be held at such
place as the Board may from time to time determine or as shall be specified in
the notice of such meeting.

     Section 8. Regular Meeting. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.

     Section 9. Special Meetings. Special meetings of the Board may be called
by two or more directors of the Corporation or by the Chairman of the Board or
the President.

     Section 10. Telephone Meetings. Members of the Board of Directors or of
any committee thereof may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Subject to the provisions of
the Investment Company Act of 1940, as amended, participation in a meeting by
these means constitutes presence in person at the meeting.

     Section 11. Notice of Special Meetings. Notice of each special meeting of
the Board shall be given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by telephone
or any standard form of telecommunication, at least twenty-four hours before
the time at which such meeting is to be held, or by first-class mail, postage
prepaid, addressed to him at his residence or usual place of business, at
least three days before the day on which such meeting is to be held.

     Section 12. Waiver of Notice of Meetings. Notice of any special meeting
need not be given to any director who shall, either before or after the
meeting, sign a written waiver of notice which is filed with the records of
the meeting or who shall attend such meeting. Except as otherwise specifically
required by these By-Laws, a notice or waiver or notice of any meeting need
not state the purposes of such meeting.

     Section 13. Quorum and Voting. One-third, but not less than two, of the
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and except as otherwise expressly required by statute, the Charter,
these By-Laws, the Investment Company Act of 1940, as amended, or other
applicable statute, the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the directors
present thereat may adjourn such meeting to another time and place until a
quorum shall be present thereat. Notice of the time and place of any such
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless such time and place were announced at the
meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.

     Section 14. Organization. The Board may, by resolution adopted by a
majority of the


                                     -5-
<PAGE>

entire Board, designate a Chairman of the Board, who shall preside at each
meeting of the Board. In the absence or inability of the Chairman of the Board
to preside at a meeting, the President or, in his absence of inability to act,
another director chosen by a majority of the directors present, shall act as
chairman of the meeting and preside there-at. The Secretary (or, in his
absence or inability to act, any person appointed by the Chairman) shall act
as secretary of the meeting and keep the minutes thereof.

     Section 15. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the Investment Company Act of 1940, as-amended, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writings or writing are filed with the minutes of the proceedings of the Board
or committee.

     Section 16. Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such
manner and in such amounts as may be fixed from time to time by the Board.

     Section 17. Investment Policies. It shall be the duty of the Board of
Directors to direct that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Corporation are
at all times consistent with the investment policies and restrictions, with
respect to securities investments and otherwise of the Corporation, as recited
in the Prospectus of the Corporation included in the registration statement of
the Corporation relating to the initial public offering of its capital stock,
as filed with the securities and Exchange Commission (or as such investment
policies and restrictions may be modified by the Board of Directors, or, if
required, by majority vote of the stockholders of the Corporation in
accordance with the Investment Company Act of 1940, as amended) and as
required by the Investment Company Act of 1940, as amended. The Board however,
may delegate the duty of management of the assets and the administration of
its day to day operations to an individual or corporate management company
and/or investment adviser pursuant to a written contract or contracts which
have obtained the requisite approvals, including the requisite approvals of
renewals thereof, of the Board of Directors and/or the stockholders of the
Corporation in accord-ante with the provisions of the Investment Company Act
of 1940, as amended.


                                  ARTICLE IV

                                  Committees
                                  ----------

     Section 1. Executive Committee. The Board may, by resolution adopted by a
majority of the entire board, designate an Executive Committee consisting of
two or more of the directors of the corporation, which committee shall have
and may exercise all the powers and authority of the Board with respect to all
matters other than:

     (a) the submission to stockholders of any action requiring authorization
of stockholders pursuant to statute or the Charter;

     (b) the filling of vacancies on the Board of Directors;



                                     -6-
<PAGE>

     (c) the fixing of compensation of the directors for serving on the Board
or on any committee of the Board, including the Executive Committee;

     (d) the approval or termination of any contract with an investment
adviser or principal underwriter, as such terms are defined in the Investment
Company Act of 1940, as amended, or the taking of any other action required to
be taken by the Board of Directors by the Investment Company Act of 1940, as
amended;

     (e) the amendment or repeal of these By-laws or the adoption of new
By-Laws;

     (f) the amendment or repeal of any resolution of the Board which by its
terms may be amended or repealed only by the Board;

     (g) the declaration of dividends and the issuance of capital stock of the
Corporation; and

     (h) the approval of any merger or share exchange which does not require
stockholder approval.

     The Executive Committee shall keep written minutes of its proceedings and
shall report such minutes to the Board. All such proceedings shall be subject
to revision or alteration by the Board; provided, however, that third parties
shall not be prejudiced by such revision or alteration.

     Section 2. Other Committees of the Board. The Board of Directors may from
time to time, by resolution adopted by a majority of the whole Board,
designate one or more other committees of the Board, each such committee to
consist of two or more directors and to have such powers and duties as the
Board of Directors may, by resolution, prescribe.

     Section 3. General. One-third, but not less than two, of the members of
any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting,
and the act of a majority present shall be the act of such committee. The
Board may designate a chairman of any committee and such chairman or any two
members of any committee may fix the time and place of its meetings unless the
Board shall otherwise provide. In the absence or disqualification of any
member of any committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member. The
Board shall have the power at "any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace
any absent or disqualified member, or to dissolve any such committee. Nothing
herein shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall have or may
exercise any authority or power of the Board in the management of the business
or affairs of the Corporation.



                                     -7-
<PAGE>


                                  ARTICLE V

                        Officers, Agents and Employees
                        ------------------------------

     Section 1. Number of Qualifications. The officers of the Corporation
shall be a President, who shall be a director of the Corporation, a Secretary
and a Treasurer, each of whom shall be elected by the Board of Directors. The
Board of Directors may elect or appoint one or more Vice Presidents and may
also appoint such other officers, agents and employees as it may deem
necessary or proper. Any two or more offices may be held by the same person,
except the offices of President and Vice President, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity. Such
officers shall be elected by the Board of Directors each year at its first
meeting held after the annual meeting of stockholders, each to hold office
until the next meeting of the stockholders and until his successor shall have
been duly elected and shall have qualified, or until his death, or until he
shall have resigned, or have been removed, as hereinafter provided in these
By-Laws. The Board may from time to time elect, or delegate to the President
the power to appoint, such officers (including one or more Assistant Vice
Presidents, one or more Assistant Treasurers and one or more Assistant
Secretaries) and such agents, as may be necessary or desirable for the
business of the Corporation. Such officers and agents shall have such duties
and shall hold their offices for such terms as may be prescribed by the Board
or by the appointing authority.

     Section 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of resignation to the Board, the Chairman of the
Board, President or the Secretary. Any such resignation shall take effect at
the time specified therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its receipt; and, unless
otherwise specified therein, the acceptance of such resignation shall be
necessary to make it effective.

     Section 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract rights, if
any, but the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.

     Section 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of the office which shall be vacant, in the
manner prescribed in these By-Laws for the regular election or appointment to
such office.

     Section 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.

     Section 6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
such surety or sureties as the Board may require.



                                     -8-
<PAGE>

     Section 7. President. The President shall be the chief executive officer
of the Corporation. In the absence of the Chairman of the Board (or if there
be none), he shall preside at all meetings of the stockholders and of the
Board of Directors. He shall have, subject to the control of the Board of
Directors, general charge of the business and affairs of the Corporation. He
may employ and discharge employees and agents of the Corporation, except such
as shall be appointed by the Board, and he may delegate these powers.

     Section 8. Vice President. Each Vice President shall have such powers and
perform such duties as the Board of Directors or the President may from time
to time prescribe.

     Section 9. Treasurer. The Treasurer shall

     (a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation, except those which the Corporation has placed
in the custody of a bank or trust company or member of a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934, as
amended) pursuant to a written agreement designating such bank or trust
company or member of a national securities exchange as custodian of the
property of the Corporation;

     (b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;

     (c) cause all moneys and other valuables to be deposited to the credit of
the Corporation;

     (d) receive, and give receipts for, moneys due and payable, to the
Corporation from any source whatsoever;

     (e) disburse the funds of the Corporation and supervise the investment of
its funds as ordered or authorized by the Board, taking proper vouchers
therefor; and

     (f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the Board or the President.

     Section 10. Secretary. The Secretary shall

     (a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the committees of the Board
and the stockholders;

     (b) see that all notices are duly given in accordance with the provisions
of these By-Laws and as required by law;

     (c) be custodian of the records and the seal of the Corporation and affix
and attest the seal to all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;

     (d) see that the books, reports, statements, certificates and other
documents and


                                     -9-
<PAGE>

records required by law to be kept and filed are properly kept and filed; and

     (e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board or the President.

     Section 11. Delegation of Duties. In case of the absence of any officer
of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may confer for the time being the powers or duties, or
any of them, of such officer upon any other officer or upon any director.


                                  ARTICLE VI

                                Indemnification
                                ---------------

     Each officer and director of the Corporation shall be indemnified by the
Corporation to the full extent permitted under the General Laws of the State
of Maryland, except that such indemnity shall not protect any such person
against any liability to the Corporation or any stockholder thereof to which
such person would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
con-duct of his office. Absent a court determination that an officer or
director seeking indemnification was not liable on the merits or guilty of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, the decision by the Corporation
to indemnify such person must be based upon the reasonable determination of
independent counsel or non-party independent directors, after review of the
facts, that such officer or director is not guilty of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.

     The Corporation may purchase insurance on behalf of an officer or
director protecting such person to the full extent permitted under the General
Laws of the State of Maryland, from liability arising from his activities as
officer or director of the Corporation. The Corporation, however, may not
purchase insurance on behalf of any officer or director of the Corporation
that protects or purports to protect such person from liability to the
Corporation or to its stockholders to which such officer or director would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.

     The Corporation may indemnify or purchase insurance to the extent
provided in this Article VI on behalf of an employee or agent who is not an
officer or director of the Corporation.


                                 ARTICLE VII

                                 Capital Stock
                                 -------------

     Section 1. Stock Certificates. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him, provided,


                                     -10-
<PAGE>

however, that certificates for fractional shares will not be delivered in any
case. The certificates representing shares of stock shall be signed by or in
the name of the Corporation by the President or a Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
and sealed with the seal of the Corporation. Any or all of the signatures or
the seal on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate shall be issued, it may be issued by the
Corporation with the same effect as if such officer, transfer agent or
registrar were still in office at the date of issue.

     Section 2. Books of Account and Record of Stockholders. There shall be
kept at the principal executive office of the Corporation correct and complete
books and records of account of all the business and transactions of the
Corporation. There shall be made available upon request of any stockholder, in
accordance with Maryland law, a record containing the number of shares of
stock issued during a specified period not to exceed twelve months and the
consideration received by the Corporation for each such share.

     Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent
or transfer clerk, and on surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions,
and to vote as such owner, and the Corporation shall not be bound to recognize
any equitable or legal claim to or interest in any such share or shares on the
part of any other person.

     Section 4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to
bear the signature or signatures of any of them.

     Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof
shall allege to have been lost or destroyed or which shall have been
mutilated, and the Board may, in its discretion, require such owner or his
legal representatives to give to the Corporation a bond in such sum, limited
or unlimited, and in such form and with such surety or sureties, as the Board
in its absolute discretion shall determine, to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss
or destruction of any such certificate, or issuance of a new certificate.
Anything herein to the contrary notwithstanding, the Board, in its absolute
discretion, may refuse to issue any such new certificate, except pursuant to
legal


                                     -11-
<PAGE>

proceedings under the laws of the State of Maryland.

     Section 6. Fixing of a Record Date for Dividends and Distributions. The
Board may fix, in advance, a date not more than ninety days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising out of any
change, conversion or exchange of common stock or other securities, as the
record date for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights or interests, and in such case
only the stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or interests.

     Section 7. Information to Stockholders and Others. Any stockholder of the
Corporation or his agent may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its stockholders, annual
statements of its affairs, and voting trust agreements on file at its
principal office.


                                 ARTICLE VIII

                                     Seal
                                     ----

     The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words
"Corporate Seal" and "Maryland". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner
reproduced.


                                  ARTICLE IX

                                  Fiscal Year
                                  -----------

     Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of August, 1988.


                                  ARTICLE X

                          Depositories and Custodians
                          ---------------------------

     Section 1. Depositories. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.

     Section 2. Custodians. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every
arrangement entered into with any bank or other company for the safekeeping of
the securities and investments of the Corporation shall contain provisions
complying with the Investment Company Act of 1940, as amended, and the general
rules and


                                     -12-
<PAGE>

regulations thereunder.


                                  ARTICLE XI

                           Execution of Instruments
                           ------------------------

     Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as
the Board of Directors by resolution shall from time to time designate.

     Section 2. Sale or Transfer of Securities. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, transferred or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to authorization by the Board
and, when so authorized to be held on behalf of the Corporation or sold,
transferred or otherwise disposed of, may be transferred from the name of the
Corporation by the signature of the President or a Vice President or the
Treasurer or pursuant to any procedure approved by the Board of Directors,
subject to applicable law.


                                 ARTICLE XII

                        Independent Public Accountants
                        ------------------------------

     The firm of independent public accountants which shall sign or certify
the financial statements of the Corporation which are filed with the
Securities and Exchange Commission shall be selected annually by the Board of
Directors and ratified by the stockholders in accordance with the provisions
of the Investment Company Act of 1940, as amended.


                                 ARTICLE XIII

                               Annual Statement
                               ----------------

     The books of account of the Corporation shall be examined by an
independent firm of public accountants at the close of each annual period of
the Corporation and at such other times as may be directed by the Board. A
report to the stockholders based upon each such examination shall be mailed to
each stockholder of the Corporation of record on such date with respect to
each report as may be determined by the Board, at his address as the same
appears on the books of the Corporation. Such annual statement shall also be
available at the annual meeting of stockholders and be placed on file at the
Corporation's principal office in the State of Maryland. Each such report
shall show the assets and liabilities of the Corporation as of the close of
the annual or quarterly period covered by the report and the securities in
which the funds of the corporation were then invested. Such report shall also
show the Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or quarterly
period covered by the report and any other information required by the


                                     -13-
<PAGE>

Investment Company Act of 1940, as amended, and shall set forth such other
matters as the Board or such firm of independent public accountants shall
determine.


                                 ARTICLE XIV

                                  Amendments
                                  ----------

     These By-Laws or any of them may be amended, altered or repealed at any
regular meeting of the stockholders or at any special meeting of the
stockholders by a favorable vote of the holders of at least seventy-five
percent (75%) of the outstanding shares of capital stock of the Corporation
entitled to be voted on the matter, provided that notice of the proposed
amendment, alteration or repeal be contained in the notice of such special
meeting. These By-Laws may also be amended, altered or repealed by the
affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board of Directors, except any particular By-Law which
is specified as not subject to alteration or repeal by the Board of Directors,
subject to the requirements of the Investment Company Act of 1940, as amended.
















                                     -14-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(D)(2)
<SEQUENCE>12
<FILENAME>efc4-1273_5567001exh992d2.txt
<TEXT>


                                                                Exhibit (d)(2)

                   Auction Market Preferred Stock, Series F

NUMBER 1                                                          3,000 SHARES

                              MUNIVEST FUND, INC.

INCORPORATED UNDER THE LAWS                           SEE REVERSE FOR
OF THE STATE OF MARYLAND                              CERTAIN DEFINITIONS

THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NY          CUSIP #626295703

THIS CERTIFIES THAT

                                  CEDE & CO.

IS THE OWNER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF AUCTION MARKET PREFERRED STOCK, PAR
VALUE $.10 PER SHARE, LIQUIDATION PREFERENCE $25,000 PER SHARE PLUS AN AMOUNT
EQUAL TO ACCUMULATED BUT UNPAID DIVIDENDS THEREON (WHETHER OR NOT EARNED OR
DECLARED) OF

                              MUNIVEST 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, MUNIVEST 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:          , 2004

Countersigned and Registered:

THE BANK OF NEW YORK
(New York)  Transfer Agent             --------------------------------------



By:
   -------------------------------     --------------------------------------
       Authorized Signature



THE TRANSFER OF THE SHARES OF AUCTION MARKET PREFERRED STOCK REPRESENTED
HEREBY IS SUBJECT TO THE RESTRICTIONS CONTAINED IN THE CORPORATION'S CHARTER.
THE CORPORATION WILL FURNISH INFORMATION ABOUT SUCH RESTRICTIONS TO ANY
STOCKHOLDER, WITHOUT CHARGE, UPON REQUEST TO THE SECRETARY OF THE CORPORATION.

                              MUNIVEST 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 and series of stock which the Corporation is authorized to issue and the
differences in the relative rights and preferences between the shares of each
class and 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 classes and 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
                                                        (Cust)         (Minor)
TEN ENT--as tenants by the entireties
JT TEN-- as joint tenants with right    under Uniform Gifts to Minors Act
         of survivorship and not as                                     (State)
         tenants in common

     Additional abbreviations also may 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)

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

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

<PAGE>

- ------------------------------------------------------------------------ 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 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
                             whatsoever.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(E)
<SEQUENCE>13
<FILENAME>efc4-1273_5567304exh992e.txt
<TEXT>


                                                                   Exhibit (e)


                              MUNIVEST FUND, INC.

                            TERMS AND CONDITIONS OF
                     AUTOMATIC DIVIDEND REINVESTMENT PLAN

     1. Appointment of Agent. You, ______, will act as Agent for me, and will
open an account for me under the Dividend Reinvestment Plan (the "Plan") in
the same name as my present shares of common stock, par value $.10 per share
("Common Stock"), of MUNIVEST FUND, INC. (the "Fund") are registered, and will
automatically put into effect for me the dividend reinvestment option of the
Plan as of the first record date for a dividend or capital gains distribution
(collectively referred to herein as a "dividend"), payable at the election of
shareholders in cash or shares of Common Stock.

     2. Dividends Payable in Common Stock. My participation in the Plan
constitutes an election by me to receive dividends in shares of Common Stock
whenever the Fund declares a dividend. In such event, the dividend amount
shall automatically be made payable to me entirely in shares of Common Stock
which shall be acquired by the Agent for my account, depending upon the
circumstances described in paragraph 3, either (i) through receipt of
additional shares of unissued but authorized shares of Common Stock from the
Fund ("newly issued shares") as described in paragraph 6 or (ii) by purchase
of outstanding shares of Common Stock on the open market ("open-market
purchases") as described in paragraph 7.

     3. Determination of Whether Newly-Issued Shares or Open Market Purchases.
If on the payment date for the dividend (the "valuation date"), the net asset
value per share of the Common Stock, as defined in paragraph 8, is equal to or
less than the market price per share of the Common Stock, as defined in
paragraph 8, plus estimated brokerage commissions (such condition being
referred to herein as "market premium"), the Agent shall invest the dividend
amount in newly issued shares on my behalf as described in paragraph 6. If on
the valuation date, the net asset value per share is greater than the market
value (such condition being referred to herein as "market discount"), the
Agent shall invest the dividend amount in shares acquired on my behalf in
open-market purchases as described in paragraph 7.

     4. Purchase Period for Open-Market Purchases. In the event of a market
discount on the valuation date, the Agent shall have until the last business
day before the next ex-dividend date with respect to the shares of Common
Stock or in no event more than 30 days after the valuation date (the "last
purchase date") to invest the dividend amount in shares acquired in
open-market purchases except where temporary curtailment or suspension of
purchases is necessary to comply with applicable provisions of federal
securities laws.

     5. Failure to Complete Open-Market Purchases During Purchase Period. If
the Agent is unable to invest the full dividend amount in open-market
purchases during the purchase period because the market discount has shifted
to a market premium or otherwise, the Agent will invest the uninvested portion
of the dividend amount in newly issued shares at the close of business on the
last purchase date as described in paragraph 4; except that the Agent may not
acquire newly issued shares after the valuation date under the foregoing
circumstances unless it has received a legal opinion that registration of such
shares is not required under the Securities Act of 1933 or unless the shares
to be issued are registered under such Act.

<PAGE>


     6. Acquisition of Newly-Issued Shares. In the event that all or part of
the dividend amount is to be invested in newly issued shares, you shall
automatically receive such newly-issued shares of Common Stock, including
fractions, for my account, and the number of additional newly-issued shares of
Common Stock to be credited to my account shall be determined by dividing the
dollar amount of the dividend on my shares to be invested in newly-issued
shares by the net asset value per share of Common Stock on the date the shares
are issued (the valuation date in the case of an initial market premium or the
last purchase date in case the Agent is unable to complete open-market
purchases during the purchase period); provided, that the maximum discount
from the then current market price per share on the date of issuance shall not
exceed 5%.

     7. Manner of Making Open-Market Purchases. In the event that the dividend
amount is to be invested in shares of Common Stock acquired in open-market
purchases, you shall apply the amount of such dividend on my shares (less my
pro rata share of brokerage commissions incurred with respect to your
open-market purchases) to the purchase on the open-market of shares of the
Common Stock for my account. Open-market purchases may be made on any
securities exchange where the Common Stock is traded, in the over-the-counter
market or in negotiated transactions and may be on such terms as to price,
delivery and otherwise as you shall determine. My funds held by you uninvested
will not bear interest, and it is understood that, in any event, you shall
have no liability in connection with any inability to purchase shares within
30 days after the initial date of such purchase as herein provided, or with
the timing of any purchases affected. You shall have no responsibility as to
the value of the Common Stock acquired for my account. For the purposes of
cash investments you may commingle my funds with those of other shareholders
of the Fund for whom you similarly act as Agent, and the average price
(including brokerage commissions) of all shares purchased by you as Agent in
the open market shall be the price per share allocable to me in connection
with open-market purchases.

     8. Meaning of Market Price and Net Asset Value. For all purposes of the
Plan: (a) the market price of the Common Stock on a particular date shall be
the last sales price on the New York Stock Exchange (the "Exchange") on that
date, or, if there is no sale on the Exchange on that date, then the mean
between the closing bid and asked quotations for such stock on the Exchange on
such date and (b) net asset value per share of the Common Stock on a
particular date shall be as determined by or on behalf of the Fund.

     9. Registration of Shares Acquired Pursuant to the Plan. You may hold my
shares of Common Stock acquired pursuant to the Plan, together with the shares
of other shareholders of the Fund acquired pursuant to the Plan, in
noncertificated form in your name or that of your nominee. You will forward to
me any proxy solicitation material and will vote any shares so held for me
only in accordance with the proxy returned by me to the Fund. Upon my written
request, you will deliver to me, without charge, a certificate or certificates
for the full shares held by you for my account.

     10. Confirmations. You will confirm to me each acquisition made for my
account as soon as practicable but not later than 60 days after the date
thereof.


                                      2

<PAGE>


     11. Fractional Interests. Although I may from time to time have an
undivided fractional interest (computed to three decimal places) in a share of
the Fund, no certificates for a fractional share will be issued. However,
dividends and distributions on fractional shares will be credited to my
account. In the event of termination of my account under the Plan, you will
adjust for any such undivided fractional interest in cash at the market value
of the Fund's shares at the time of termination less the pro rata expense of
any sale required to make such an adjustment.

     12. Stock Dividends or Share Purchase Rights. Any stock dividends or
split shares distributed by the Fund on shares held by you for me will be
credited to my account. In the event that the Fund makes available to its
shareholders rights to purchase additional shares or other securities, the
shares held for me under the Plan will be added to other shares held by me in
calculating the number of rights to be issued to me.

     13. Service Fee. Your service fee for handling capital gains
distributions or income dividends will be paid by the Fund. I will be charged
for my pro rata share of brokerage commissions on all open market purchases.

     14. Termination of Account. I may terminate my account under the Plan by
notifying you in writing. Such termination will be effective immediately if my
notice is received by you not less than ten days prior to any dividend or
distribution record date; otherwise such termination will be effective on the
first trading day after the payment date for such dividend or distribution
with respect to any subsequent dividend or distribution. The Plan may be
terminated by you or the Fund upon notice in writing mailed to me at least 90
days prior to any record date for the payment of any dividend or distribution
by the Fund. Upon any termination you will cause a certificate or certificates
for the full shares held for me under the Plan and cash adjustment for any
fraction to be delivered to me without charge. If I elect by notice to you in
writing in advance of such termination to have you sell part or all of my
shares and remit the proceeds to me, you are authorized to deduct brokerage
commissions for this transaction from the proceeds.

     15. Amendment of Plan. These terms and conditions may be amended or
supplemented by you or the Fund at any time or times but, except when
necessary or appropriate to comply with applicable law or the rules or
policies of the Securities and Exchange Commission or any other regulatory
authority, only by mailing to me appropriate written notice at least 90 days
prior to the effective date thereof. The amendment or supplement shall be
deemed to be accepted by me unless, prior to the effective date, thereof, you
receive written notice of the termination of my account under the Plan. Any
such amendment may include an appointment by you in your place and stead of a
successor Agent under these terms and conditions, with full power and
authority to perform all or any of the acts to be performed by the Agent under
these terms and conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will be authorized
to pay to such successor Agent, for my account, all dividends and
distributions payable on Common Stock of the Fund held in my name or under the
Plan for retention or application by such successor Agent as provided in these
terms and conditions.

     16. Extent of Responsibility of Agent. You shall at all times act in good
faith and agree to use your best efforts within reasonable limits to insure
the accuracy of all services

                                      3

<PAGE>

performed under this Agreement and to comply with applicable law, but assume
no responsibility and shall not be liable for loss or damage due to errors
unless such error is caused by your negligence, bad faith, or will willful
misconduct or that of your employees.

     17. Governing Law. These terms and conditions shall be governed by the
laws of the State of New York without regard to its conflicts of laws
provisions.




                                      4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(G)
<SEQUENCE>14
<FILENAME>efc4-1273_5567898ex992g.txt
<TEXT>
                                                                   Exhibit (g)




                         INVESTMENT ADVISORY AGREEMENT


          AGREEMENT made this 8th day of September, 1988, by and between
MUNIVEST FUND, INC., a Maryland corporation (hereinafter referred to as the
"Fund"), and FUND ASSET MANAGEMENT, INC., a Delaware corporation (hereinafter
referred to as the "Investment Adviser").

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, the Fund is engaged in business as a closed-end investment
company registered under the Investment Company Act of 1940, as amended
(hereinafter referred to as the "Investment Company Act"); and

          WHEREAS, the Investment Adviser is engaged principally in rendering
management and investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940; and

          WHEREAS, the Fund desires to retain the Investment Adviser to
provide management and investment advisory services to the Fund in the manner
and on the terms hereinafter set forth; and

          WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Fund on the terms and conditions
hereinafter set forth;

          NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Investment Adviser hereby agree as
follows:

                                  ARTICLE I
                                  ---------

                       Duties of the Investment Adviser
                       --------------------------------


<PAGE>

          The Fund hereby employs the Investment Adviser to act as a manager
and investment adviser of the Fund and to furnish, or arrange for affiliates
to furnish, the management and investment advisory services described below,
subject to the policies of, review by and overall control of the Board of
Directors of the Fund, for the period and on the terms and conditions set
forth in this Agreement. The Investment Adviser hereby accepts such employment
and agrees during such period, at its own expense, to render, or arrange for
the rendering of, such services and to assume the obligations herein set forth
for the compensation provided for herein. The Investment Adviser and its
affiliates shall for all purposes herein be deemed to be independent
contractors and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Fund in any way or otherwise be
deemed agents of the Fund.

          (a) Management Services. The Investment Adviser shall perform (or
arrange for the performance by affiliates of) the management and
administrative services necessary for the operation of the Fund including
administering shareholder accounts and handling shareholder relations. The
Investment Adviser shall provide the Fund with office space, facilities,
equipment and necessary personnel and such other services as the Investment
Adviser, subject to review by the Board of Directors, shall from time to time
determine to be necessary or useful to perform its obligations under this
Agreement. The Investment Adviser shall also, on behalf of the Fund, conduct
relations with custodians, depositories, transfer agents, dividend disbursing
agents, other shareholder servicing agents, pricing agents, accountants,
attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers,
banks and such other persons in any such other capacity deemed to be necessary
or desirable. The Investment Adviser shall generally monitor the Fund's
compliance with investment policies and restrictions as set forth in filings
made by the Fund


                                      2
<PAGE>

under the Federal securities laws. The Investment Adviser shall make reports
to the Board of Directors of its performance of obligations hereunder and
furnish advice and recommendations with respect to such other aspects of the
business and affairs of the Fund as it shall determine to be desirable.

          (b) Investment Advisory Services. The Investment Adviser shall
provide the Fund with such investment research, advice and supervision as the
latter may from time to time consider necessary for the proper supervision of
the assets of the Fund, shall furnish continuously an investment program for
the Fund and shall determine from time to time which securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall
be held in the various securities in which the Fund invests, options, futures,
options on futures or cash, subject always to the restrictions of the Articles
of Incorporation and By-Laws of the Fund, as amended from time to time, the
provisions of the Investment Company Act and the statements relating to the
Fund's investment objectives, investment policies and investment restrictions
as the same are set forth in filings made by the Fund under the Federal
securities laws. The Investment Adviser shall make decisions for the Fund as
to the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Board of Directors at any time, however, make any
definite determination as to investment policy and notify the Investment
Adviser thereof in writing, the Investment Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Investment
Adviser shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies determined as provided above,
and in particular to place all orders for the purchase or sale of portfolio
securities for the Fund's account with brokers or


                                      3
<PAGE>


dealers selected by it, and to that end, the Investment Adviser is authorized
as the agent of the Fund to give instructions to the Custodian of the Fund as
to deliveries of securities and payments of cash for the account of the Fund.
In connection with the selection of such brokers or dealers and the placing of
such orders with respect to assets of the Fund, the Investment Adviser is
directed at all times to seek to obtain execution and prices within the policy
guidelines determined by the Board of Directors and set forth in filings made
by the Fund under the Federal securities laws. Subject to this requirement and
the provisions of the Investment Company Act, the Securities Exchange Act of
1934, as amended, and other applicable provisions of law, the Investment
Adviser may select brokers or dealers with which it or the Fund is affiliated.

                                  ARTICLE II
                                  ----------

                      Allocation of Charges and Expenses
                      ----------------------------------

          (a) The Investment Adviser. The Investment Adviser assumes and shall
pay for maintaining the staff and personnel necessary to perform its
obligations under this Agreement, and shall at its own expense, provide the
office space, facilities, equipment and necessary personnel which it is
obligated to provide under Article I hereof, and shall pay all compensation of
officers of the Fund and all Directors of the Fund who are affiliated persons
of the Investment Adviser.

          (b) The Fund. The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund including, without limitation: taxes, expenses for
legal and auditing services, costs of printing proxies, stock certificates,
shareholder reports, prospectuses, charges of the Custodian, any Sub-Custodian
and Transfer Agent, expenses of portfolio transactions, Securities and
Exchange Commission fees, expenses of registering the shares under Federal,
state and foreign laws, fees and actual out-of-pocket expenses of Directors
who are not affiliated persons of the Investment Adviser, accounting and
pricing costs (including the calculation of the net


                                      4
<PAGE>


asset value), insurance, interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses, and other expenses properly payable
by the Fund. It is also understood that the Fund will reimburse the Investment
Adviser for its costs in providing accounting services to the Fund.


                                 ARTICLE III
                                 -----------

                    Compensation of the Investment Adviser
                    --------------------------------------

          (a) Investment Advisory Fee. For the services rendered, the
facilities furnished and expenses assumed by the Investment Adviser, the Fund
shall pay to the Investment Adviser at the end of each calendar month a fee
based upon the average weekly value of the net assets of the Fund at the
annual rate of 0.50 of 1.0% (0.50%) of the average weekly net assets of the
Fund (i.e., the average weekly value of the total assets of the Fund, minus
the sum of accrued liabilities of the Fund and accumulated dividends on shares
of outstanding preferred stock), commencing on the day following effectiveness
hereof. For purposes of this calculation, average weekly net assets is
determined at the end of each month on the basis of the average net assets of
the Fund for each week 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. It is understood
that the liquidation preference of any outstanding preferred stock (other than
accumulated dividends) is not considered a liability in determining the Fund's
average weekly net assets. If this Agreement becomes effective subsequent to
the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fee as set forth
above. Subject to the provisions of subsection (b) hereof, payment of the
Investment Adviser's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated by
subsection (b) hereof. During any period when


                                      5
<PAGE>


the determination of net asset value is suspended by the Board of Directors,
the average net asset value of a share for the last week prior to such
suspension shall for this purpose be deemed to be the net asset value at the
close of each succeeding week until it is again determined.

          (b) Expense Limitations. In the event the operating expenses of the
Fund, including amounts payable to the Investment Adviser pursuant to
subsection (a) hereof, for any fiscal year ending on a date on which this
Agreement is in effect exceed the expense limitations applicable to the Fund
imposed by applicable state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Investment Adviser
shall reduce its management and investment advisory fee by the extent of such
excess and, if required pursuant to any such laws or regulations, will
reimburse the Fund in the amount of such excess; provided, however, to the
extent permitted by law, there shall be excluded from such expenses the amount
of any interest, taxes, brokerage commissions and extraordinary (including but
not limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Whenever the
expenses of the Fund exceed a pro rata portion of the applicable annual
expense limitations, the estimated amount of reimbursement under such
limitations shall be applicable as an offset against the monthly payment of
the fee due to the Investment Adviser. Should two or more such expenses
limitations be applicable as at the end of the last business day of the month,
that expense limitation which results in the largest reduction in the
Investment Adviser's fee shall be applicable.

                                  ARTICLE IV
                                  ----------

               Limitation of Liability of the Investment Adviser
               -------------------------------------------------

          The Investment Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for any act
or omission in the management of the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its


                                      6
<PAGE>


duties, or by reason of reckless disregard of its obligations and duties
hereunder. As used in this Article IV, the term "Investment Adviser" shall
include any affiliates of the Investment Adviser performing services for the
Fund contemplated hereby and directors, officers and employees of the
Investment Adviser and such affiliates.

                                   ARTICLE V
                                   ---------

                     Activities of the Investment Adviser
                     ------------------------------------

          The services of the Investment Adviser to the Fund are not to be
deemed to be exclusive: the Investment Adviser and any person controlled by or
under common control with the Investment Adviser (for purposes of the Article
V referred to as "affiliates") are free to render services to others. It is
understood that Board of Directors, officers, employees and shareholders of
the Fund are or may become interested in the Investment Adviser and its
affiliates, as directors, officers, employees, partners, and shareholders or
otherwise and that directors, officers, employees, partners, and shareholders
of the Investment Adviser and its affiliates are or may become similarly
interested in the Fund, and that the Investment Adviser and directors,
officers, employees, partners, and shareholders of its affiliates may become
interested in the Fund as shareholder or otherwise.

                                  ARTICLE VI
                                  ----------

                  Duration and Termination of this Agreement
                  ------------------------------------------

          This Agreement shall become effective as of the date first above
written and shall remain in force until August 31, 1990 and thereafter, but
only so long as such continuance is specifically approved at least annually by
(i) the Board of Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund, and (ii) a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on
such approval.



                                      7
<PAGE>


          This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund, or by the Investment Adviser, on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.

                                  ARTICLE VII
                                  -----------

                         Amendments of this Agreement
                         ----------------------------

          This Agreement may be amended by the parties only if such amendment
is specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.

                                 ARTICLE VIII
                                 ------------

                         Definitions of Certain Terms
                         ----------------------------

          The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act of 1940 and the Rules and Regulations thereunder, subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act.

                                  ARTICLE IX
                                  ----------

                                 Governing Law
                                 -------------

          This Agreement shall be construed in accordance with laws of the
State of New York and the applicable provisions of the Investment Company Act.
To the extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.



                                      8
<PAGE>


          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.


                                        MUNIVEST FUND, INC.



                                        By:
                                            ------------------------------------
                                                     {Authorized Signatory)


                                        FUND ASSET MANAGEMENT, INC.



                                        By:
                                            ------------------------------------
                                                     {Authorized Signatory)






                                      9
<PAGE>

                  SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
                                     WITH
                             FUND ASSET MANAGEMENT


     As of January 1, 1994 Fund Asset Management was reorganized as a limited
partnership, formally known as Fund Asset Management, L.P. ("FAM"). The
general partner of FAM is Princeton Services, Inc. and the limited partners
are Fund Asset Management, Inc. and Merrill Lynch & Co, Inc. Pursuant to Rule
202 (a) (I)-1 under the Investment Advisors Act of 1940 and Rule 2a-6 under
the Investment Company Act of 1940, such reorganization did not constitute an
assignment of this investment advisory agreement since it did not involve a
change of control or management of the investment adviser. Pursuant to the
requirements of Section 205 of the investment Advisers Act of 1940, however,
Fund Asset Management hereby supplements this investment advisory agreement by
undertaking to advise you of any change in the membership of the partnership
within a reasonable time after any such change occurs.

                                        By:
                                              ---------------------------------

Dated:  January 3, 1994



                                      10

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(H)(1)
<SEQUENCE>15
<FILENAME>efc4-1273_5567016exh992h1.txt
<TEXT>

                                                                Exhibit (h)(1)

==============================================================================



                              MUNIVEST FUND, INC.


                           (a Maryland corporation)


                                  $75,000,000
                        Auction Market Preferred Stock


                            3,000 Shares, Series F

                  (Liquidation Preference $25,000 Per Share)


                              PURCHASE AGREEMENT



                            Dated:          , 2004



==============================================================================






<PAGE>



                               TABLE OF CONTENTS

                                                                          Page

SECTION 1.  Representations and Warranties...................................3

   (a)  Representations and Warranties by the Fund
        and the Adviser......................................................3

   (b)  Additional Representations of the Adviser............................9

   (c)  Officers' Certificates..............................................10

SECTION 2.  Sale and Delivery to the Underwriter; Closing...................10

   (a)  Purchase Price......................................................10

   (b)  Payment.............................................................11

   (c)  Denominations; Registration.........................................11

SECTION 3.  Covenants of the Fund...........................................11

   (a)  Compliance with Securities Regulations and Commission Requests......11

   (b)  Filing of Amendments................................................12

   (c)  Delivery of Registration Statements.................................12

   (d)  Delivery of Prospectus..............................................12

   (e)  Continued Compliance with Securities Laws...........................12

   (f)  Blue Sky Qualifications.............................................13

   (g)  Rule 158............................................................13

   (h)  Use of Proceeds.....................................................13

   (i)  Subchapter M........................................................13

   (j)  Restrictions on Sale of Shares......................................13

   (k)  Reporting Requirements..............................................13

   (l)  Rule 462(b) Registration Statement..................................14

   (m) No Manipulation of Market for the
Shares......................................................................14

SECTION 4.  Covenants of the Underwriter....................................14

SECTION 5.  Payment of Expenses.............................................14

   (a)  Expenses............................................................14

   (b)  Termination of Agreement............................................14

SECTION 6.  Conditions of Underwriter's Obligations.........................15

   (a)  Effectiveness of Registration Statement.............................15

   (b)  Opinion of Counsel for the Fund and the Underwriter.................15


                                      i

<PAGE>


   (c)  Opinion of Senior Attorney of the Adviser...........................15

   (d)  Officers' Certificates..............................................15

   (e)  Accountant's Comfort Letter.........................................16

   (f)  Bring-down Comfort Letter...........................................16

   (g)  Ratings Letters.....................................................16

   (h) Asset Coverage.......................................................16

   (i)  Additional Documents................................................16

   (j)  Termination of Agreement............................................16

SECTION 7.  Indemnification.................................................17

   (a)  Indemnification of the Underwriter..................................17

   (b)  Indemnification of Fund, Adviser, General Partner,
        and Directors and Officers..........................................17

   (c)  Actions against Parties, Notification...............................18

   (d)  Settlement without Consent if Failure to Reimburse..................18

SECTION 8.  Contribution....................................................19

SECTION 9.  Representations, Warranties and Agreements
            to Survive Delivery.............................................20

SECTION 10.  Termination of Agreement.......................................20

   (a)  Termination; General................................................20

   (b)  Liabilities.........................................................20

SECTION 11.  Notices 21

SECTION 12.  Parties 21

SECTION 13.  Governing Law and Time.........................................21

SECTION 14.  Effect of Headings.............................................21



                                      ii

<PAGE>




EXHIBITS
Exhibit A   -   Form of Opinion of Fund's Counsel
Exhibit B   -   Form of Opinion of Senior Attorney of the Investment Adviser
Exhibit C   -   Form of Accountant's Comfort Letter


                                     iii



<PAGE>



                              MUNIVEST FUND, INC.
                           (a Maryland corporation)

                                  $75,000,000
                        Auction Market Preferred Stock


                            3,000 Shares, Series F



                  (Liquidation Preference $25,000 Per Share)

                              PURCHASE AGREEMENT

                                                                       , 2004

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
            Incorporated
4 World Financial Center
New York, New York  10080

Ladies and Gentlemen:

        MuniVest Fund, Inc., a Maryland corporation (the "Fund"), and Fund
Asset Management, L.P., a Delaware limited partnership (the "Adviser"), each
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated (the "Underwriter" or "Merrill Lynch"), with respect to
the issue and sale by the Fund and the purchase by the Underwriter of 3,000
shares of Auction Market Preferred Stock, Series F ("Series F AMPS"), with a
par value of $.10 per share and a liquidation preference $25,000 per share
plus an amount equal to accumulated but unpaid dividends thereon (whether or
not earned or declared), of the Fund (together, the "Shares").

        The Fund understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered.

        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
"Investment Company Act"), and a registration statement on Form N-2 (Nos.
333-       , 811-5611), including the related preliminary prospectus and
preliminary statement of additional information, for the registration of the
Shares under the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act, and the rules and regulations of the Commission under
the 1933 Act and the Investment Company Act (together, the "Rules and
Regulations"), and has filed such amendments to such registration statement on
Form N-2, if any, and such amended preliminary prospectuses and preliminary
statements of additional information as may have been required to



<PAGE>


the date hereof. Promptly after execution and delivery of this Agreement, the
Fund will either (i) prepare and file a prospectus and statement of additional
information in accordance with the provisions of paragraph (c) of Rule 497
("Rule 497(c)") of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") or a certificate in accordance with the
provisions of paragraph (j) of Rule 497 ("Rule 497(j)") of the 1933 Act
Regulations, (ii) prepare and file a prospectus and statement of additional
information in accordance with the provisions of Rule 430A ("Rule 430A") of
the 1933 Act Regulations and paragraph (h) of Rule 497 ("Rule 497(h)") of the
1933 Act Regulations, or (iii) if the Fund has elected to rely upon Rule 434
("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 497(h).
The information included in any such prospectus and statement of additional
information or in any such Term Sheet, as the case may be, that was omitted
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to
as "Rule 434 Information." Each prospectus and statement of additional
information used before such registration statement became effective, and any
prospectus and statement of additional information that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus/statement." Such
registration statement, including the exhibits thereto and schedules thereto,
if any, at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus and final statement of additional information in the form first
furnished to the Underwriter for use in connection with the offering of the
Shares is herein called the "Prospectus." If Rule 434 is relied on, the term
"Prospectus" shall refer to the preliminary prospectus/statement dated
_________ ___, 2004, together with the applicable Term Sheet and all
references in this Agreement to the date of such Prospectus shall mean the
date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary
prospectus/statement, the Prospectus, or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").

        All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated"
in the Registration Statement, any preliminary prospectus/statement, or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information
which is incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement, any preliminary prospectus or the Prospectus shall be deemed to
mean and include the filing of any document under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), which is incorporated by reference in
the Registration Statement, such preliminary prospectus/statement, or the
Prospectus, as the case may be.



                                      2


<PAGE>


        SECTION 1.  Representations and Warranties.

        (a) Representations and Warranties by the Fund and the Adviser. The
Fund and the Adviser each severally represents and warrants to the Underwriter
as of the date hereof, as of the Closing Time referred to in Section 2(c)
hereof and as of the Date of Delivery (if any) referred to in Section 2(b)
hereof, and agrees with the Underwriter, as follows:

                  (i) Compliance with Registration Requirements. The Fund meets
         the requirements for use of Form N-2 under the 1933 Act. Each of the
         Registration Statement and any Rule 462(b) Registration Statement
         has become effective under the 1933 Act and no stop order suspending
         the effectiveness of the Registration Statement or any Rule 462(b)
         Registration Statement has been issued under the 1933 Act and no
         proceedings for that purpose have been instituted or are pending or,
         to the knowledge of the Fund or the Adviser, are contemplated by the
         Commission, and any request on the part of the Commission for
         additional information has been complied with. If required, the Fund
         has received any orders exempting the Fund from any provisions of
         the Investment Company Act.

                  At the respective times the Registration Statement, any Rule
         462(b) Registration Statement and any post-effective amendments
         thereto became effective and at the Closing Time the Registration
         Statement, the Rule 462(b) Registration Statement and any amendments
         or supplements thereto complied and will comply in all material
         respects with the requirements of the 1933 Act, the Investment
         Company Act and the Rules and Regulations and did not 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. Neither the Prospectus, nor any
         amendments or supplements thereto, at the time the Prospectus or any
         amendments or supplements thereto were issued and at the Closing Time
         included or will include an untrue statement of a material fact or
         omitted or will 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. The representations and
         warranties in this subsection shall not apply to statements in or
         omissions from the Registration Statement or the 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 in the Prospectus. If Rule 434 is used, the
         Fund will comply with the requirements of Rule 434 and the Prospectus
         shall not be "materially different," as such term is used in Rule
         434, from the prospectus included in the Registration Statement at
         the time it became effective.

                  Each preliminary prospectus/statement and the prospectus and
         statement of additional information filed as part of the Registration
         Statement as originally filed or as part of any amendment thereto, or
         filed pursuant to Rule 497(c) or Rule 497(h) under the 1933 Act,
         complied when so filed in all material respects with the Rules and
         Regulations and each preliminary prospectus/statement and the
         Prospectus delivered to the Underwriter for use in connection with
         this offering was identical to the electronically transmitted copies
         thereof filed with the Commission pursuant to EDGAR, except to the
         extent permitted by Regulation S-T.


                                      3



<PAGE>


                  If a Rule 462(b) Registration Statement is required in
         connection with the offering and sale of the Shares, the Fund has
         complied or will comply with the requirement of Rule 111, under the
         1933 Act Regulations relating to the payment of filing fees thereof.

                  (ii) Independent Accountants. The accountants who certified
         the financial statements and supporting schedules, if any, included
         or incorporated by reference in the Registration Statement are
         independent public accountants as required by the 1933 Act and the
         Rules and Regulations.

                  (iii) Financial Statements. The financial statements,
         included or incorporated by reference in the Registration Statement
         and Prospectus, together with the related schedules and notes,
         present fairly the financial position of the Fund at the date
         indicated and said statements have been prepared in conformity with
         generally accepted accounting principles ("GAAP") applied on a
         consistent basis throughout the period involved. The supporting
         schedules, if any, included or incorporated by reference in the
         Registration Statement present fairly, in accordance with GAAP, the
         information required to be stated therein. The information in the
         Prospectus under the headings "Financial Highlights,"
         "Capitalization," "Portfolio Composition" and "Description of Capital
         Stock" has been fairly presented.

                  (iv) No Material Adverse Change in Business. Since the
         respective dates as of which information is given in the
         Registration Statement and in the Prospectus, except as otherwise
         stated therein, (A) there has been no material adverse change in the
         condition, financial or otherwise, or in the earnings, business
         affairs or business prospects of the Fund, whether or not arising in
         the ordinary course of business (a "Material Adverse Effect"), (B)
         there have been no transactions entered into by the Fund, other than
         those in the ordinary course of business, which are material with
         respect to the Fund and (C) except for regular monthly dividends on
         the outstanding shares of common stock, par value $.10 per share
         (the "Common Stock"), of the Fund and periodic distributions on the
         outstanding shares of Auction Market Preferred Stock, with a
         liquidation preference of $25,000 per share (the "Outstanding
         AMPS"), of the Fund pursuant to the terms of the Outstanding AMPS,
         and special year end distributions on the Common Stock and
         Outstanding AMPS related to the Fund's qualification as a regulated
         investment company under Subchapter M of the Internal Revenue Code
         of 1986, as amended ("Subchapter M of the Code"), 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) Good Standing of the Fund. The Fund has been duly
         organized and is validly existing as a corporation in good standing
         under the laws of the State of Maryland and has corporate power and
         authority to own, lease and operate its properties and to conduct
         its business as described in the Prospectus and to enter into and
         perform its obligations under this Agreement; and 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, whether by reason of the ownership or leasing of property
         or the conduct of business, except where the failure so to qualify
         or to be in good standing would not result in a Material Adverse
         Effect.


                                      4

<PAGE>


                  (vi) Subsidiaries. The Fund has no subsidiaries.

                  (vii) Officers and Directors. No person is serving or acting
          as an officer, director or investment adviser of the Fund except in
          accordance with the provisions of the Investment Company Act and the
          Rules and Regulations and the Investment Advisers Act of 1940, as
          amended (the "Advisers Act"), and the rules and regulations of the
          Commission promulgated under the Advisers Act (the "Advisers Act
          Rules and Regulations"). Except as disclosed in the Registration
          Statement and the Prospectus (or any amendment or supplement to
          either of them), no director of the Fund is an "interested person"
          (as defined in the Investment Company Act) of the Fund or an
          "affiliated person" (as defined in the Investment Company Act) of
          the Underwriter.

                  (viii) Capitalization. The authorized, issued and outstanding
          capital stock of the Fund is as set forth in the Prospectus under
          the caption "Description of Capital Stock." All issued and
          outstanding shares of Common Stock and Outstanding AMPS have been
          duly authorized and validly issued and are fully paid and
          non-assessable, except as provided for in the Fund's charter, and
          have been offered and sold or exchanged by the Fund in compliance
          with all applicable laws (including without limitation, federal and
          state securities laws); none of the outstanding shares of Common
          Stock or Outstanding AMPS of the Fund was issued in violation of the
          preemptive or other similar rights of any securityholder of the
          Fund.

                  (ix) Investment Company Act. The Fund is registered with the
          Commission under the Investment Company 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, to the knowledge of the Fund and the
          Adviser, or threatened by the Commission.

                  (x) Authorization of Agreement. This Agreement has been duly
          authorized, executed and delivered by the Fund.

                  (xi) Authorization and Description of Shares. The Shares to
          be purchased by the Underwriter from the Fund 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
          this Agreement will be validly issued, fully paid and
          non-assessable; the Shares conform to all statements relating
          thereto contained in the Prospectus and such description conforms to
          the rights set forth in the instruments defining the same; no holder
          of the Shares will be subject to personal liability by reason of
          being such a holder; and the issuance of the Shares is not subject
          to the preemptive or other similar rights of any securityholder of
          the Fund.

                  (xii) Absence of Defaults and Conflicts. The Fund is not in
          violation of its charter or by-laws or in default in the performance
          or observance of any obligation, agreement, covenant or condition
          contained in any material contract, indenture, mortgage, deed of
          trust, loan or credit agreement, note, lease or other agreement or
          instrument to which the Fund is a party or by which it or its
          properties may be bound, or


                                      5


<PAGE>


          to which any of the property or assets of the Fund is subject
          (collectively, "Agreements and Instruments"), except for such
          defaults that would not result in a Material Adverse Effect; and the
          execution, delivery and performance of this Agreement, the
          Investment Advisory Agreement, the Custody Agreement, the Auction
          Agent Agreement and the Letter of Representations referred to in the
          Registration Statement (as used herein, the "Advisory Agreement",
          the "Custody Agreement," the "Auction Agreement" and the "Letter of
          Representations," respectively) and the consummation of the
          transactions contemplated in this Agreement and in the Registration
          Statement (including the issuance and sale of the Shares and the use
          of the proceeds from the sale of the Shares as described in the
          Prospectus under the caption "Use of Proceeds") and compliance by
          the Fund with its obligations under this Agreement have been duly
          authorized by all necessary corporate action and do not and will
          not, whether with or without the giving of notice or passage of time
          or both, conflict with or constitute a breach of, or a default or
          Repayment Event (as defined below) under, or result in the creation
          or imposition of any lien, charge or encumbrance upon any property
          or assets of the Fund pursuant to the Agreements and Instruments
          (except for such conflicts, breaches or defaults or liens, charges
          or encumbrances that would not result in a Material Adverse Effect),
          nor will such action result in any violation of the provisions of
          the charter or the by-laws of the Fund, or any applicable law,
          statute, rule, regulation, judgment, order, writ or decree of any
          government, government instrumentality or court, domestic or
          foreign, having jurisdiction over the Fund or any of its assets,
          properties or operations. As used herein, a "Repayment Event" means
          any event or condition which gives the holder of any note, debenture
          or other evidence of indebtedness (or any person acting on such
          holder's behalf) the right to require the repurchase, redemption or
          repayment of all or a portion of such indebtedness by the Fund.

                  (xiii) Authorization of Agreements. Each of this Agreement,
          the Advisory Agreement and the Custody Agreement has been duly
          authorized, executed and delivered by the Fund, and each complies
          with all applicable provisions of the Investment Company Act. Each
          of the Auction Agreement and the Letter of Representations has 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 equitable principles.

                  (xiv) Absence of Proceedings. There is no action, suit,
          proceeding, inquiry or investigation before or brought 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 is required to be disclosed in the
          Registration Statement (other than as disclosed therein), or which
          might reasonably be expected to result in a Material Adverse Effect,
          or which might reasonably be expected to materially and adversely
          affect the properties or assets of the Fund or the consummation of
          the transactions contemplated in this Agreement or the performance
          by the Fund of its obligations hereunder; the aggregate of all
          pending legal or governmental proceedings to which the Fund is a
          party or of which any of its respective property or assets is the
          subject which are not described in the Registration Statement,
          including ordinary routine


                                      6


<PAGE>


          litigation incidental to the business, could not reasonably be
          expected to result in a Material Adverse Effect.

                  (xv) Subchapter M Compliance. 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 Code, and intends to qualify as
          a regulated investment company under Subchapter M of the Code.

                  (xvi) Distribution of Offering Materials. The Fund has not
          distributed and, prior to the later to occur of (A) the Closing Time
          and (B) completion of the distribution of the Shares, will not
          distribute any offering material in connection with the offering and
          sale of the Shares other than the Registration Statement, a
          preliminary prospectus, the Prospectus or other materials, if any,
          permitted by the 1933 Act or the Investment Company Act or the Rules
          and Regulations.

                  (xvii) Accounting Controls. The Fund maintains a system of
          internal accounting controls sufficient to provide reasonable
          assurances that (A) transactions are executed in accordance with
          management's general or specific authorization and with the
          applicable requirements of the Investment Company Act, the Rules and
          Regulations and the Code; (B) transactions are recorded as necessary
          to permit preparation of financial statements in conformity with
          generally accepted accounting principles and to maintain
          accountability for assets and to maintain compliance with the books
          and records requirements under the Investment Company Act and the
          Rules and Regulations; (C) access to assets is permitted only in
          accordance with the management's general or specific authorization;
          and (D) the recorded accountability for assets is compared with
          existing assets at reasonable intervals and appropriate action is
          taken with respect to any differences.

                  (xviii) Absence of Undisclosed Payments. To the Fund's
          knowledge, neither the Fund nor any employee or agent of the Fund
          has made any payment of funds of the Fund or received or retained
          any funds, which payment, receipt or retention of funds is of a
          character required to be disclosed in the Prospectus.

                  (xix) Material Agreements. This Agreement, the Advisory
          Agreement, the Custody Agreement and the Auction Agent Agreement
          have each been duly authorized by all requisite action on the part
          of the Fund and executed and delivered by the Fund, as of the dates
          noted therein, and each complies with all applicable provisions of
          the Investment Company Act in all material respects. Assuming due
          authorization, execution and delivery by the other parties thereto
          with respect to the Advisory Agreement, the Custody Agreement and
          the Auction Agent Agreement, each of the Advisory Agreement, the
          Custody Agreement and the Auction Agent Agreement constitutes a
          valid and binding agreement of the Fund, enforceable in accordance
          with its terms, except as affected by bankruptcy, insolvency,
          fraudulent conveyance, reorganization, moratorium and other similar
          laws relating to or affecting creditors' rights generally, general
          equitable principles (whether considered in a proceeding in equity
          or at law) and an implied covenant of good faith and fair dealing
          and except as rights to indemnification or contribution thereunder
          may be limited by federal or state laws.



                                      7


<PAGE>


                 (xx) Registration Rights. There are no persons with
          registration rights or other similar rights to have any securities
          registered pursuant to the Registration Statement or otherwise
          registered by the Fund under the 1933 Act.

                  (xxi) Accuracy of Exhibits. There are no contracts or
          documents which are required to be described in the Registration
          Statement or the Prospectus or to be filed as exhibits thereto by
          the 1933 Act, the Investment Company Act or the Rules and
          Regulations which have not been so described and filed as required.

                  (xxii) Possession of Intellectual Property. The Fund owns or
          possesses, has the right to use or can acquire on reasonable terms,
          adequate patents, patent rights, licenses, inventions, copyrights,
          know-how (including trade secrets and other unpatented and/or
          unpatentable proprietary or confidential information, systems or
          procedures), trademarks, service marks, trade names or other
          intellectual property (collectively, "Intellectual Property")
          necessary to carry on the business now operated by the Fund, and the
          Fund has not received any notice or is not otherwise aware of any
          infringement of or conflict with asserted rights of others with
          respect to any Intellectual Property or of any facts or
          circumstances which would render any Intellectual Property invalid
          or inadequate to protect the interest of the Fund therein, and which
          infringement or conflict (if the subject of any unfavorable
          decision, ruling or finding) or invalidity or inadequacy, singly or
          in the aggregate, would result in a Material Adverse Effect.

                  (xxiii) Absence of Further Requirements. No filing with, or
          authorization, approval, consent, license, order, registration,
          qualification or decree of, any court or governmental authority or
          agency is necessary or required for the performance by the Fund of
          its obligations hereunder, in connection with the offering, issuance
          or sale of the Shares under this Agreement or the consummation of
          the transactions contemplated by this Agreement, except such as have
          been already obtained or as may be required under the 1933 Act, the
          1934 Act or the Investment Company Act or the Rules and Regulations
          and foreign or state securities laws or under the rules of the NASD
          (formerly, the National Association of Securities Dealers, Inc.).

                  (xxiv) Possession of Licenses and Permits. The Fund possesses
          such permits, licenses, approvals, consents and other authorizations
          (collectively, "Governmental Licenses") issued by the appropriate
          federal, state, local or foreign regulatory agencies or bodies
          necessary to conduct the business now operated by it; the Fund is in
          compliance with the terms and conditions of all such Governmental
          Licenses, except where the failure so to comply would not, singly or
          in the aggregate, have a Material Adverse Effect; all of the
          Governmental Licenses are valid and in full force and effect, except
          when the invalidity of such Governmental Licenses or the failure of
          such Governmental Licenses to be in full force and effect would not
          have a Material Adverse Effect; and the Fund has not received any
          notice of proceedings relating to the revocation or modification of
          any such Governmental Licenses which, singly or in the aggregate, if
          the subject of an unfavorable decision, ruling or finding, would
          result in a Material Adverse Effect.




                                      8
<PAGE>


                  (xxv) NYSE Listing. The Fund's shares of Common Stock are
          duly listed on the New York Stock Exchange ("NYSE").

                  (xxvi) Ratings. The Shares have been, or prior to the
          Closing Date will be, assigned a rating of Aaa by Moody's Investors
          Service, Inc. ("Moody's") and AAA by Standard & Poor's ("S&P").

                  (xxvii) Leverage. The Fund has no liability for borrowed
          money, including under any reverse repurchase agreement.

          (b) Additional Representations of the Adviser. The Adviser represents
and warrants to the Underwriter as of the date hereof and as of the
Representation Date as follows:

                  (i) Organization and Authority of Adviser. The Adviser has
          been duly organized as a limited partnership under the laws of the
          State of Delaware, with power and authority to conduct its business
          as described in the Registration Statement and the Prospectus.

                  (ii) Investment Advisers Act. The Adviser is duly registered
          as an investment adviser under the Investment Advisers Act of 1940,
          as amended (the "Investment Advisers Act"), and is not prohibited by
          the Investment Advisers Act or the Investment Company Act, or the
          rules and regulations under such acts, from acting under the
          Advisory Agreement for the Fund as contemplated by the Registration
          Statement and the Prospectus.

                  (iii) Description of Adviser. The description of the Adviser
          in the Registration Statement and the Prospectus (and any amendment
          or supplement to either of them) complied and complies in all
          material respects with the provisions of the 1933 Act, the
          Investment Company Act, the Advisers Act, the Rules and Regulations
          and the Advisers Act Rules and Regulations and is true and correct
          and does not contain any untrue statement of a material fact or omit
          to state any material fact required to be stated therein or
          necessary in order to make the statements therein, in light of the
          circumstances under which they were made, not misleading.

                  (iv) Capitalization. The Adviser has the financial resources
          available to it necessary for the performance of its services and
          obligations as contemplated in the Registration Statement, the
          Prospectus, this Agreement and under the Advisory Agreement.

                  (v) Authorization of Agreements. 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 equitable
          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



                                      9
<PAGE>



          or the 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,
          the certificate of formation, the operating agreement, or other
          organizational documents of the Adviser, or the Adviser's knowledge
          by any law, order, decree, 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; and no consent, approval,
          authorization or order of any court or governmental authority or
          agency is required for the consummation by the Adviser of the
          transactions contemplated by this Agreement and the Advisory
          Agreement, except as have been obtained or may be required under the
          1933 Act, the Investment Company Act, the 1934 Act or state
          securities laws.

                  (vi) No Material Adverse Change. Since the respective dates
          as of which information is given in the Registration Statement and
          the Prospectus, except as otherwise stated therein, there has not
          occurred any event which should reasonably be expected to have a
          material adverse effect on the ability of the Adviser to perform its
          respective obligations under this Agreement and the Advisory
          Agreement.

                  (vii) Absence of Proceedings. There is no action, suit,
          proceeding, inquiry or investigation before or brought by any court
          or governmental agency or body, domestic or foreign, now pending,
          or, to the knowledge of the Adviser, threatened against or affecting
          the Adviser or any "affiliated person" of the Adviser (as such term
          is defined in the Investment Company Act) or any partners, trustees,
          officers or employees of the foregoing, whether or not arising in
          the ordinary course of business, which might reasonably be expected
          to result in any material adverse change in the condition, financial
          or otherwise, or earnings, business affairs or business prospects of
          the Adviser, materially and adversely affect the properties or
          assets of the Adviser or materially impair or adversely affect the
          ability of the Adviser to function as an investment adviser or
          perform its obligations under the Advisory Agreement, or which is
          required to be disclosed in the Registration Statement and the
          Prospectus.

                  (viii) Absence of Violation or Default. The Adviser is not
          in violation of its certificate of formation, its operating
          agreement or other organizational documents or in default under any
          agreement, indenture or instrument, where such violation or default
          would reasonably be expected to have a Material Adverse Effect on
          the Adviser's ability to function as an investment adviser or
          perform its obligations under the Advisory Agreement.

          (c) Officers' Certificates. Any certificate signed by any officer of
the Fund or any officer of the Adviser delivered to the Underwriter or to
counsel for the Fund and 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) Purchase Price. 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 to the



                                      10
<PAGE>




Underwriter and the Underwriter agrees to purchase from the Fund the Shares
at the price per share set forth in Schedule A.

          (b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the offices of Sidley Austin
Brown & Wood LLP, 787 Seventh Avenue, New York, New York 10019, or at such
other place as shall be agreed upon by the Underwriter and the Fund, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day following the date hereof,
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 herein being referred to as "Closing Time").

          Payment shall be made to the Fund by wire transfer of immediately
available funds to a bank account designated by the Fund, against delivery to
the Underwriter of certificates for the Shares to be purchased by it.

          (c) Denominations; Registration. The Shares shall be represented by
certificates 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.

          SECTION 3.   Covenants of the Fund.  The Fund covenants with the
                       Underwriter as follows:

          (a) Compliance with Securities Regulations and Commission Requests.
The Fund, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Underwriter immediately,
and confirm the notice in writing, (i) if any post-effective amendment to the
Registration Statement shall have become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (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 of any order preventing or suspending the use of
any preliminary prospectus/statement, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes, 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 Investment Company Act or the 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
such stop order or order of suspension or revocation is issued, to obtain the
lifting thereof at the earliest possible moment. The Fund will promptly effect
the filings necessary pursuant to Rule 497(c), Rule 497(j) or Rule 497(h) and
will take such steps as it deems necessary to ascertain promptly whether the
certificate transmitted for filing under Rule 497(j) or the form of prospectus
and statement of additional information transmitted for filing under Rule
497(c) or Rule 497(h) was received for filing by the Commission and, in the
event



                                      11
<PAGE>



that it was not, it will promptly file such certificate or prospectus and
statement of additional information.

          (b) Filing of Amendments. The Fund will give the Underwriter notice
of its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment or filing under Rule
462(b)), any Term Sheet or any amendment, supplement or revision to either the
prospectus or statement of additional information included in the Registration
Statement at the time it became effective or to the Prospectus, whether
pursuant to the Investment Company Act, the 1933 Act, or otherwise, and will
furnish the Underwriter with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Underwriter or counsel to the
Underwriter and the Fund shall object.

          (c) Delivery of Registration Statements. The Fund has furnished or
will deliver to the Underwriter and counsel to the Underwriter and the Fund,
without charge, signed copies of the notification of registration on Form N-8A
and Registration Statement as originally filed and of each amendment thereto,
(including exhibits filed therewith, or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Underwriter a conformed copy, without charge, of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for the Underwriter. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriter will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.

          (d) Delivery of Prospectus. The Fund has delivered to the
Underwriter, without charge, as many copies of each preliminary
prospectus/statement as the Underwriter reasonably requested, and the Fund
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Fund will furnish to the Underwriter, without charge, 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. The Prospectus and any amendments or
supplements thereto furnished to the Underwriter will be identical to the
electronically transmitted copies thereof field with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.

          (e) Continued Compliance with Securities Laws. The Fund will comply
with the 1933 Act, the Investment Company Act and the Rules and Regulations so
as to permit the completion of the distribution of the Shares as contemplated
in this Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Shares, any event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel to the Underwriter and the Fund, to
amend the Registration Statement or amend or supplement any Prospectus in
order that the Prospectus will not include any untrue statements of material
fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in
the opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Fund will
promptly prepare and file with the Commission, subject to Section 3(b), such
amendment or



                                      12
<PAGE>



supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectus comply with such
requirements, and the Fund will furnish to the Underwriter such number of
copies of such amendment or supplement as the Underwriter may reasonably
request.

          (f) Blue Sky Qualifications. The Fund will use its best efforts, in
cooperation with the Underwriter, to qualify the Shares for offering and sale
under the applicable securities laws of such states and other jurisdictions as
the Underwriter may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Fund shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. In each jurisdiction in which the Shares
have been so qualified, the Fund will file such statements and reports as may
be required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.

          (g) Rule 158. The Fund will timely file such reports pursuant to the
1933 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

          (h) Use of Proceeds. The Fund will use the net proceeds received by
it from the sale of the Shares in the manner specified in the Prospectus under
"Use of Proceeds."

          (i) Subchapter M. The Fund will use its best efforts to maintain its
qualification as a regulated investment company under Subchapter M of the
Code.

          (j) Restrictions on Sale of Shares. During a period of 180 days from
the date of the Prospectus, the Fund will not, without the prior written
consent of Merrill Lynch, (i) directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any senior security of the Fund, as defined
in Section 18 of the Investment Company Act, or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of senior securities, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of senior securities,
in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares
to be sold hereunder or (B) transactions as contemplated in the Registration
Statement where the Fund has segregated cash, cash equivalents or liquid
securities at the Fund's custodian having a market value at all times at least
equal to the amount of such senior securities.

          (k) Reporting Requirements. The Fund, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the Investment Company Act and the 1934 Act within




                                      13
<PAGE>


the time periods required by the Investment Company Act and the Rules and
Regulations and the 1934 Act and the rules and regulations of the Commission
thereunder, respectively.

          (l) Rule 462(b) Registration Statement. If the Fund elects to rely
upon Rule 462(b), the Fund shall file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Fund shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the 1933 Act.

          (m) No Manipulation of Market for the Shares. The Fund will not
(a) take, directly or indirectly, any action designed to cause or to result
in, or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund to facilitate the sale
or resale of the Shares, and (b) until the Closing Date (i) sell, bid for or
purchase the Shares or pay any person (other than the Underwriter) any
compensation for soliciting purchases of the Shares or (ii) pay or agree to
pay to any person any compensation for soliciting another to purchase any
other securities of the Fund (other than payments to broker-dealers in
connection with the auctiors of the Outstanding AMPS).

          SECTION 4. Covenants of the Underwriter. The Underwriter covenants
and agrees with the Fund that 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 listing of Existing Holders (as defined in the
Prospectus) of Shares, the number of shares held by each such Existing Holder
and the number of Shares it is holding as Underwriter as of the date of such
notice.

          SECTION 5.        Payment of Expenses.

          (a) Expenses. The Fund will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriter of
this Agreement and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Shares, (iii) the
preparation, issuance and delivery of the certificates for the Shares to the
Underwriter, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Shares to the
Underwriter, (iv) the fees and disbursements of the Fund's counsel,
accountants and other advisors, (v) the qualification of the Shares under the
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel to
the Underwriter and the Fund in connection therewith, (vi) the printing and
delivery to the Underwriter of copies of each preliminary
prospectus/statement, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the fees and expenses of any transfer agent or
registrar for the Shares, and (viii) the fees charged by rating agencies
rating the Shares.

          (b) Termination of Agreement. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6 or Section 10(a)(i)
hereof, the Fund or the Adviser shall reimburse, or arrange for an affiliate
to reimburse, the Underwriter for all of its out-of-




                                      14
<PAGE>



pocket expenses, including the reasonable fees and disbursements of counsel to
the Fund and the Underwriter.

          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 contained in
Section 1 hereof, or in the certificates of any officer of the Fund and the
Adviser delivered pursuant to the provisions hereof, to the performance by the
Fund and the Adviser of their respective covenants and obligations hereunder,
and to the following further conditions:

          (a) Effectiveness of Registration Statement. The Registration
Statement including any Rule 462(b) Registration Statement has become
effective 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 and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriter and
the Fund. Either (i) a certificate has been filed with the Commission in
accordance with Rule 497(j) or a prospectus and statement of additional
information have been filed with the Commission in accordance with Rule
497(c), or (ii) a prospectus and statement of additional information
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 497(h) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with
the requirements of Rule 430A) or, if the Fund has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 497(h).

          (b) Opinion of Counsel for the Fund and the Underwriter. At Closing
Time, the Underwriter shall have received the favorable opinion, dated as of
Closing Time, of Sidley Austin Brown & Wood LLP, counsel to the Fund and the
Underwriter, to the effect set forth in Exhibit A hereto.

          (c) Opinion of Senior Attorney of the Adviser. At Closing Time, the
Underwriter shall have received the favorable opinion, dated as of Closing
Time, of Andrew I. Donohue, Esq., General Counsel of the Adviser, or another
senior attorney of the Adviser, in form and substance satisfactory to counsel
to the Underwriter, to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Underwriter may reasonably request.

          (d) Officers' Certificates. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund, whether or not arising in the ordinary course
of business, and the Underwriter shall have received (A) a certificate of the
President or a Vice President of the Fund, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of Closing
Time, (iii) the Fund has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission and (B) a
certificate



                                      15
<PAGE>


of the President or a Vice President of the Adviser, dated as of Closing Time,
to the effect that (i) the representations and warranties in Sections 1(a) and
1(b) hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, and (ii) the Adviser has complied
with all agreements and satisfied all conditions on its part to be performed
or satisfied at or prior to Closing Time.

          (e) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Underwriter shall have received from Ernst & Young LLP a
letter, dated such date, in form and substance satisfactory to the Underwriter
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus, to the effect set forth in Exhibit C hereto and
to such further effect as counsel to the Underwriter may reasonably request.

          (f) Bring-down Comfort Letter. At Closing Time, the Underwriter
shall have received from Ernst & Young LLP 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 three business days prior to Closing
Time.

          (g) Ratings Letters. Subsequent to the execution and delivery of
this Agreement and prior to Closing Time, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change that indicates
anything other than a stable outlook, in the rating accorded any securities of
or guaranteed by the Fund by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) under
the 1933 Act; and at Closing Time, S&P and Moody's shall have confirmed by
letter that the Shares have been rated AAA and Aaa, respectively, by such
agencies.

          (h) Asset Coverage. As of the Closing Date and assuming the receipt
of the net proceeds from the sale of the Shares, the 1940 Act AMPS Asset
Coverage and the AMPS Basic Maintenance Amount (each as defined in the Fund's
Charter) each will be met.

          (i) Additional Documents. At Closing Time, counsel to the Fund and
the Underwriter shall have been furnished with such documents and opinions as
it may reasonably require for the purpose of enabling it to pass upon the
issuance and sale of the Shares as herein contemplated, 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 in connection with the issuance and sale of the Shares as
herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriter and counsel to the Fund and the Underwriter.

          (j) Termination of Agreement. 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



                                      16
<PAGE>


Section 5 and except that Sections 1, 7, 8 and 9 shall survive any such
termination and remain in full force and effect.

          SECTION 7.  Indemnification.

          (a) Indemnification of the Underwriter. 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 or Section 25 of the 1934 Act and any director,
officer, employee or affiliate thereof 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
          Rule 430A Information and the Rule 434 Information, 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 included in any
          preliminary prospectus/statement 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 any 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, provided that (subject to Section 7(d) below)
          any such settlement is effected with the written consent of the
          indemnifying party; and

               (iii) against any and all expense whatsoever, as incurred
          (including the fees and disbursements of counsel chosen by the
          Underwriter) reasonably incurred in investigating, preparing or
          defending against any litigation, or any 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 shall 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), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus/statement or the Prospectus (or any
amendment or supplement thereto).

          (b) Indemnification of Fund, Adviser, General Partner, and Directors
and Officers. The Underwriter agrees to indemnify and hold harmless the Fund,
the Adviser, the directors of



                                      17
<PAGE>



the Fund, the general partner of the Adviser, 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 or
Section 20 of the 1934 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) including the Rule 430A Information and the Rule
434 Information, if applicable, or in any preliminary prospectus/statement 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/statement or the Prospectus (or any
amendment or supplement thereto).

          (c) Actions against Parties, Notification. 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 such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 7(a) above, counsel to the indemnified parties shall be selected by
the Underwriter, and, in the case of parties indemnified pursuant to Section
7(b) above, counsel to the indemnified parties shall be selected by the Fund
and the Adviser. An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. 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. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 7 or Section 8 hereof (whether
or not the indemnified parties are actual or potential parties thereto),
unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

          (d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.




                                      18
<PAGE>



          SECTION 8. Contribution. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Fund and the Adviser on the one hand and the Underwriter on the other hand
from the offering of the Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Fund and
the Adviser on the one hand and of the Underwriter on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

          The relative benefits received by the Fund and the Adviser on the
one hand and the Underwriter on the other hand in connection with the offering
of the Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Shares pursuant to this Agreement (before deducting expenses) received by the
Fund, and the total underwriting commission received by the Underwriter, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is
used, the corresponding location on the Term Sheet, bear to the aggregate
initial public offering price of the Shares as set forth on such cover.

          The relative fault of the Fund and the Adviser on the one hand and
the Underwriter on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Fund and the Adviser or by the Underwriter and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

          The Fund, the Adviser and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

          Notwithstanding the provisions of this Section 8, the Underwriter
shall not 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 the Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.




                                      19
<PAGE>



          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 8, each person, if any, who controls
the Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 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 and the Adviser within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, shall have the same rights to contribution
as the Fund and the Adviser.

          SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Fund or of 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) Termination; General. The Underwriter may terminate this
Agreement by notice to the Fund, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, 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 the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Underwriter, impracticable or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares, or (iii) if trading in any securities of the Fund has been suspended
or materially limited by the Commission or the NYSE or such other national
securities exchange upon which the Fund's securities trade, or if trading
generally on the NYSE or the American Stock Exchange or in the Nasdaq National
Market System has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by any of said exchanges or by such system or
by order of the Commission, the NASD or any other governmental authority, or a
material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States or (iv) if a banking
moratorium has been declared by either Federal or New York authorities.

          (b) Liabilities. 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 hereof, and provided further that
Sections 1, 7, 8 and 9 shall survive such termination and remain in full force
and effect.



                                      20
<PAGE>



          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 telecommunication. Notices to the
Underwriter shall be directed to Merrill Lynch & Co. Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated at 4 World Financial Center, New York, New
York 10080, Attention: Equity Capital Markets; notices to the Fund and the
Adviser shall be directed to 800 Scudders Mill Road, Plainsboro, New Jersey
08536, Attention: Donald C. Burke.

          SECTION 12. Parties. This 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 is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriter, the Fund, the Adviser and their respective successors
and the controlling persons and officers, directors and general partner
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 all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the Underwriter, the Fund and the Adviser 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
merely by reason of such purchase.

          SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

          SECTION 14. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.




                                      21
<PAGE>



          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 and the Adviser in accordance with its
terms.

                                       Very truly yours,

                                       MUNIVEST FUND, INC.


                                       By:
                                          ---------------------------------
                                           Authorized Officer



                                       FUND ASSET MANAGEMENT, L.P.

                                       By: PRINCETON SERVICES, INC.,
                                             General Partner


                                       By:
                                          ---------------------------------
                                           Authorized Officer


CONFIRMED AND ACCEPTED,
  as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
            INCORPORATED

By:
     --------------------------------
     Authorized Signatory






                                      22
<PAGE>



                                  SCHEDULE A



                              MUNIVEST FUND, INC.
                           (a Maryland corporation)

                                  $75,000,000


                        Auction Market Preferred Stock

                            3,000 Shares, Series F




                  (Liquidation Preference $25,000 per share)


         1. The initial public offering price per share for the Shares,
determined as provided in Section 2 hereof shall be $25,000 plus accumulated
dividends, if any, from the date of original issue.

         2. The purchase price per share for the Shares to be paid by the
Underwriter shall be $24,750 plus accumulated dividends, if any, from the date
of original issue, being an amount equal to the initial public offering price
set forth above less $250 per share.

         3. The dividend rate for the Series F AMPS for the initial dividend
period ending [              , 2004] shall be [     ]%.





                                      23
<PAGE>




                                                                     Exhibit A



                       FORM OF OPINION OF FUND'S COUNSEL
                          TO BE DELIVERED PURSUANT TO
                                 SECTION 6(b)


1.      The Fund has been duly incorporated 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 to conduct its business as described in the Prospectus and
to enter into and perform its obligations under the Purchase Agreement.

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, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Fund, whether or not arising in the ordinary course
of business (a "Material Adverse Effect").

4.      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 shares of Common Stock of the Fund and the Outstanding
AMPS have been duly authorized and validly issued and are fully paid and
nonassessable.

5.      The Shares to be purchased by the Underwriter from the Fund have been
duly authorized for issuance and sale to the Underwriter pursuant to the
Purchase Agreement and, when issued and delivered by the Fund pursuant to the
Purchase Agreement against payment of the consideration set forth in the
Purchase Agreement, will be validly issued and fully paid and non-assessable
and no holder of the Shares is or will be subject to personal liability by
reason of being such a holder.

6.      The issuance of the Shares is not subject to the preemptive or other
similar rights of any securityholder of the Fund.

7.      To the best of our knowledge, the Fund does not have any subsidiaries.

8.      The Purchase Agreement has been duly authorized, executed and delivered
by the Fund and complies with all applicable provisions of the Investment
Company Act.

9.      The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the certificate pursuant to Rule 497(j) or the Prospectus pursuant to Rule
497(c) or Rule 497(h), as the case may be, has been made in the manner and
within the time period required by Rule 497(j), Rule 497(c) or Rule




                                      A-1
<PAGE>


497(h), as the case may be; and, to the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or threatened by the
Commission.

10.     The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus, and each amendment or supplement to the
Registration Statement and the Prospectus, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included or incorporated by reference therein or omitted therefrom, as to
which we need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act, the Investment Company Act and the
Rules and Regulations.

11.     The form of certificate(s) used to evidence each of the Shares complies
in all material respects with all applicable statutory requirements and with
any applicable requirements of the charter and by-laws of the Fund. To the
best of our knowledge, there is not pending or threatened any action, suit,
proceeding, inquiry or investigation, to which the Fund is a party, or to
which the property of the Fund is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets thereof
or the consummation of the transactions contemplated in the Purchase Agreement
or the performance by the Fund of its obligations thereunder, other than those
disclosed in the Prospectus.

12.     The information in the Prospectus under "Description of AMPS,"
"Description of Capital Stock," and "Taxes" and in the Registration Statement
under Item 29, to the extent that it constitutes matters of law, summaries of
legal matters, the Fund's charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.

13.     To the best of our knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.

14.     All descriptions in the Prospectus of contracts and other documents to
which the Fund is a party are accurate in all material respects; to the best
of our knowledge, there are no franchises, 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 or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.

15.     To the best of our knowledge, the Fund is not in violation of its
charter or by-laws and no default by the Fund exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by reference
as an exhibit to the Registration Statement.



                                      A-2
<PAGE>



16.     No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign (other than under the 1933 Act, the 1934 Act,
the Investment Company Act, the Rules and Regulations, which have been
obtained, or as may be required under the securities or blue sky laws of the
various states, as to which we need express no opinion) is necessary or
required in connection with the due authorization, execution and delivery of
the Purchase Agreement, the Advisory Agreement, the Custody Agreement, the
Auction Agreement and the Letter of Representations or for the offering,
issuance, sale or delivery of the Shares.

17.     The Advisory Agreement and the Custody Agreement have each been duly
authorized and approved by the Fund and comply as to form in all material
respects with all applicable provisions of the Investment Company Act, and
each has been duly executed by the Fund.

18.     Each of the Auction Agent Agreement and the Letter of Representations
has 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 equitable principles.

19.     The Fund is registered with the Commission under the Investment
Company 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
Investment Company Act and the Rules and Regulations to make the public
offering and consummate the sale of the Shares pursuant to the Purchase
Agreement; the provisions of the charter and the by-laws of the Fund comply as
to form in all material respects with the requirements of the Investment
Company Act; and, to the best of our knowledge and information, no order of
suspension or revocation of such registration under the Investment Company
Act, pursuant to Section 8(e) of the Investment Company Act, has been issued
or proceedings therefor initiated or threatened by the Commission.

20.     The execution, delivery and performance of the Purchase Agreement and
the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Shares, and the use of the proceeds from the sale of the Shares as described
in the Prospectus under the caption "Use of Proceeds") and compliance by the
Fund with its obligations under the Purchase Agreement do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Purchase Agreement) 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, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, 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
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Fund, or any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any




                                      A-3
<PAGE>


government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Fund or any of its properties, assets or operations.

         Nothing has come to our attention that has caused us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which we need make no
statement), at the time such Registration Statement or any such amendment
became effective, 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 or any amendment
or supplement thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom, as to which we need make no statement), at the time the Prospectus
was issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, included or includes an untrue statement of a material
fact or omitted or omits 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 rendering such opinion, such counsel may rely as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates and written statements of responsible officers of and accountants
for the Fund and the Adviser and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).





                                      A-4
<PAGE>






                                                                    Exhibit B

           FORM OF OPINION OF THE GENERAL COUNSEL OR SENIOR ATTORNEY
                   OF THE INVESTMENT ADVISER TO BE DELIVERED
                           PURSUANT TO SECTION 6(c)

         (1) The Adviser has been duly organized as a limited partnership
under the laws of the State of Delaware, with power and authority to conduct
its business as described in the Registration Statement and in the Prospectus.

         (2) The Adviser is duly registered as an investment adviser under the
Investment Advisers Act and is not prohibited by the Investment Advisers Act
or the Investment Company 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 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 the giving of
notice or the 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 securities association having
jurisdiction over the Adviser or its properties or operations.

         (4) To the best of his knowledge and information, the description of
the Adviser in the Registration Statement and in 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.



                                      B-1

<PAGE>




                                                                     Exhibit C

                             FORM OF ACCOUNTANTS'
                    COMFORT LETTER PURSUANT TO SECTION 6(e)

         (1) We are independent public accountants with respect to the Fund
within the meaning of the 1933 Act, Investment Company Act and the applicable
rules and regulations thereunder adopted by the Commission;

         (2) In our opinion the financial statements audited by us and
included or incorporated by reference in the Registration Statement and the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, the Investment Company Act and the
related rules and regulations adopted by the Commission;

         Such accountants shall also state that 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, made 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 included or incorporated by reference in the
Registration Statement do not comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, the Investment Company
Act and of the Rules and Regulations applicable to unaudited interim financial
statements included or incorporated by reference in registration statements or
are not in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial statements
included or incorporated by reference in the Registration Statement, and (B)
during the period from the date of the unaudited financial statements included
or incorporated by reference in the Registration Statement to a specified date
not more than three days prior to the date of the Purchase Agreement, there
was any change in the capital stock or net assets of the Fund (other than by
reason of the issuance of shares of common stock in connection with the Fund's
dividend reinvestment plan, as specified in such letter) or any increase in
the long-term debt of the Fund, as compared with amounts shown on the
unaudited financial statements included or incorporated by reference in the
Registration Statement, except for changes which the Registration Statement
discloses have occurred or may occur; and in addition, 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 previously have been
specified by such accountants 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.


                                      C-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(K)(1)
<SEQUENCE>16
<FILENAME>efc4-1273_5568185ex992k1.txt
<TEXT>
                                                                Exhibit (k)(1)

          AGREEMENT, made as of September 29, 1988, between Munivest Fund,
Inc., a corporation organized under the laws of the State of Maryland
(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 President, any
Vice President, the Secretary, the Treasurer, the Comptroller, any Assistant
Comptroller, any Assistant Vice President, any Assistant Treasurer, and any
other person, whether or not an officer or employee of the Customer, 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, and any person reasonably believed by the Bank to be such a person.

          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


<PAGE>

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:

               (a)  A certified copy of the Certificate of Incorporation or
other documents 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, as such Certificate may be
amended from time to time.

               (e)  Specimen Share certificates 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)  Copies of the Customer's Registration Statement, as amended
to date, and the most recently filed Post-Effective Amendment thereto, filed
by the Customer with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, together with any applications filed in
connection therewith; 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


                                       2
<PAGE>

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 the following documents 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

               (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 of such
governmental or regulatory authority required by law as a prerequisite to the
issuance or reduction of such Shares, as the case may be, and an opinion of
counsel for the Customer that no other order or consent is required; and

               (c)  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 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


                                      3
<PAGE>

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 not 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
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).

          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. 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


                                      4
<PAGE>

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
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.

                                  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 Sectary,
either (1) 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, if any,
sufficient for the Bank to make the payment, if any, 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


                                      5
<PAGE>

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.

          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 or 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.



                                      6
<PAGE>

                                 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 the 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 is
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 of 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 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 faith and without
negligence or wilful 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
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 wilful
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 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 wilful misconduct or in reliance upon (i) any


                                      7
<PAGE>

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 attorney's fees, or 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 section 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 taken 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-negotiated 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.

          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 which written notification from
the owner of the lost, stolen or destroyed Share certificate within a
reasonable time after he


                                      8
<PAGE>

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 endeavor to notify the
Customer and 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) its reasonable
out-of-pocket expenses (including legal expenses and attorney's fees) incurred
in connection with this Agreement and its performance hereunder, and (ii) the
compensation set forth in Schedule I.

          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 its on behalf of the Customer, until the Bank actually receives
and collects such funds.



                                      9
<PAGE>

          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 or any Assistant 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 or any
Assistant 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 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 30
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 other 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 90
Washington Street, New York, New York 10015 or at such other place as the Bank
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 and authorized or
approved by a resolution of


                                      10
<PAGE>

the Board of Directors of the Customer, except that any duly authorized
Officer may amend any Certificate naming Officers authorized to execute and
deliver Certificates, instructions, notices or other instruments, and that the
Secretary may amend any Certificate listing the shares of capital stock of the
Customer for which the Bank performs Services hereunder.

          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 Customer without the prior
written consent of the Bank.

          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.

















                                      11
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective corporate officers, thereunto duly authorized
and their respective corporate seals to be hereunto affixed, as of the day and
year first above written.


Attest:                                  _____________________________________

                                         By:
- --------------------------------------   --------------------------------------
                                         Title:  Authorized Signatory


Attest:                                  THE BANK OF NEW YORK

                                         By:
- --------------------------------------   --------------------------------------
                                         Title:  Authorized Signatory




                                      12
<PAGE>


STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF NEW YORK      )

          On this 26th day of September, 1988, before me personally appeared
                 , to me known who, being by me duly sworn, said that he/she
is a                          of THE BANK OF NEW YORK, one of the corporations
described in and which executed the foregoing instrument, that he/she knows
the seal of said corporation, that the seal affixed to said instrument is such
corporate seal, that it was so affixed by authority of the Board of Directors
of said corporation, and that he/she signed his/her name thereto by like
authority.

                                        _______________________________________
                                                     Notary Public




                                      13
<PAGE>




STATE OF NEW YORK       )
                        ) ss.:
COUNTY OF NEW YORK      )

          On this          day of                , before me personally
appeared                                         , to me known who, being by
me duly sworn, said that he/she is a
of                                     , one of the corporations described in
and which executed the foregoing instrument, that he/she knows the seal of
said corporation, that the seal affixed to said instrument is such corporate
seal, that it was so affixed by authority of the Board of Directors of said
corporation, and that he/she signed his/her name thereto by like authority.


                                        _______________________________________
                                                     Notary Public




                                      14
<PAGE>

                                 FEE PROPOSAL
                                      FOR
                              MUNIVEST FUND, INC.
                                 COMMON STOCK



ACCOUNT MAINTENANCE......................................................$3.82

CERTIFICATE OR STATEMENT FEE.............................................$1.20

The account maintenance fee is an annual charge and is billed monthly at the
rate of $0.318 per shareholder account of record. We do not charge for closed
accounts. The certificate or statement fee is for the issuance and
registration of all stock certificates, including transfers received in the
mail and over the window. The minimum annual fee is $15,000.00.

                       ACCOUNT MAINTENANCE FEE INCLUDES:
                       --------------------------------

o    Maintain shareholders name and address file and process changes.

o    Record all certificate or book entry transactions.

o    Answer shareholders' inquires.

o    Address, insert and mail up to three quarterly reports and one annual
     report; material must be adaptable to mechanical equipment.

o    Address, insert and mail proxy cards and standard proxy material for
     annual meeting; material must be adaptable to mechanical equipment.

o    Tabulate proxies with two proposals per card (each additional proposal
     $0.05). There is no additional charge for tabulating broker search cards.

o    Provide shareholder list and final voted list as of annual meeting record
     date.

o    Provide hard copy daily transfer reports.

o    File IRS Form 1099 and 1096 covering dividends paid; including Form 1042s
     and 1042 NRA Tax.

o    Solicit Taypayer identification numbers on new accounts.



<PAGE>

                              Additional Charges
                              ------------------

Each Dividend Check........................................................$0.50

Processing each legal transfer..............................................5.00

Replacement of each lost, stolen or destroyed stock certificate,
and the recording of stock transfers and the policing of
all stop transfers including "Letter Stock"................................15.00

Replacement of dividend checks..............................................1.50

                          Dividend Reinvestment Plan
                          --------------------------

For each investment under the Plan.........................................$0.50

For each cash payment processed under the Plan..............................1.25

For each Plan liquidation...................................................2.50



















                                      2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(K)(4)
<SEQUENCE>17
<FILENAME>efc4-1273_5567309exh992k4.txt
<TEXT>

                                                                Exhibit (k)(4)

==============================================================================

                            AUCTION AGENT AGREEMENT

                                    between

                            MUNIVEST FUND, INC.

                                      and

                             THE BANK OF NEW YORK

                       Dated as of ___________ __, 2004

                                  Relating to

                        AUCTION MARKET PREFERRED STOCK

                                   ("AMPS"),

                                   Series F

                                      of

                            MUNIVEST FUND, INC.



==============================================================================


<PAGE>


     THIS AUCTION AGENT AGREEMENT, dated as of ________ ___, 2004, is between
MUNIVEST FUND, INC. , a Maryland corporation (the "Company"), and THE BANK
OF NEW YORK, a New York banking corporation.

     The Company proposes to duly authorize and issue 3,000 shares of Auction
Market Preferred Stock, Series F ("Series F AMPS") with a par value of $.10
per share and a liquidation preference of $25,000 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 F AMPS are sometimes referred to as the "AMPS." A separate Auction (as
defined below) will be conducted for each series of AMPS. The Company desires
that The Bank of New York perform certain duties as agent in connection with
each Auction of shares of AMPS (in such capacity, the "Auction Agent"), and as
the transfer agent, registrar, dividend disbursing agent and redemption agent
with respect to the shares of AMPS (in such capacity, the "Paying Agent"),
upon the terms and conditions of this Agreement, and the Company hereby
appoints The Bank of New York 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:

I.   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 that will act on behalf of a
          Bidder.

          (c) "Articles Supplementary" shall mean the Articles Supplementary
          of the Company, establishing the powers, preferences and rights of
          the AMPS, filed on __________ ___, 2004 with 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 10 of the Articles Supplementary.


                                      2


<PAGE>


          (f) "Authorized Officer" shall mean each Vice President, Assistant
          Vice President, and Assistant Treasurer of the Auction Agent
          assigned to the Dealing and Trading Group of its Corporate Trust
          Department, and every other officer or employee of the Auction Agent
          designated as an "Authorized Officer" for purposes hereof in a
          written 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.

          (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 written 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 hereof.

          (j) "Settlement Procedures" shall mean the Settlement Procedures
          attached as Exhibit A to the Broker-Dealer Agreement.

     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
          Eastern time.

II.  THE AUCTION.

     2.1. Purpose; Incorporation by Reference of Auction Procedures and
          Settlement Procedures.


                                      3


<PAGE>


          (a) The Articles Supplementary provide that the Applicable Rate on
          shares of Series F AMPS 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 The Bank of New York 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 in
          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 set forth fully herein. In the
          case of any conflict between the terms of any document incorporated
          herein by reference and the terms hereof, the Auction Agent is,
          subject to its obligations as set forth in Section 6.1, authorized
          to perform its duties according to the terms hereof, and shall have
          no liability for so doing.

     2.2. Preparation for Each Auction; Maintenance of Registry of Existing
          Holders.

          (a) As of the date hereof, the Company shall provide the Auction
          Agent with a list of the Broker-Dealers 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 a list of Broker-Dealers with whom it has
          signed such Broker-Dealer Agreements, and shall endeavor to 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 Business 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
          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


                                      4


<PAGE>


          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) The provisions contained in paragraph 2 of the Articles
          Supplementary concerning Special Dividend Periods and the
          notification of a Special Dividend Period will be followed by the
          Company and, to the extent applicable, the Auction Agent, 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 set forth fully herein.

          (d) (i) On each Auction Date, the Auction Agent shall determine the
          Reference Rate and the Maximum Applicable Rate. 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 of the Maximum Applicable Rate.

               (ii) If the Reference Rate is the applicable LIBOR Rate and
          such rate is to be based on rates supplied by LIBOR Dealers and one
          or more of the LIBOR Dealers shall not provide a quotation for the
          determination of the applicable LIBOR Rate, the Auction Agent
          promptly shall notify the Company so that the Company can determine
          whether to select a Substitute LIBOR Dealer or Substitute LIBOR
          Dealers to provide the quotation or quotations not being supplied by
          any LIBOR Dealer or LIBOR Dealers. The Company promptly shall advise
          the Auction Agent of any such selection. If the Company does not
          select any such Substitute LIBOR Dealer or Substitute LIBOR Dealers,
          then the rates shall be supplied by the remaining LIBOR Dealer or
          LIBOR 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 Rating Agency or successor rating agency) referred to
          in the definition of the Maximum Applicable Rate, subject to the
          provisions of paragraph 12 of the Articles Supplementary, thereby
          resulting in any change in the corresponding applicable percentage
          or corresponding applicable spread for the AMPS, as set forth in
          said definition (the "Percentage or Spread"), the Company shall
          notify the Auction Agent in writing of such change in the Percentage
          or Spread prior to 9:00 A.M. on the Auction Date for AMPS next
          succeeding such change. The Percentage for the AMPS on the date of
          this Agreement is as specified in paragraph 10(a)(vii) of the
          Articles Supplementary. The Auction Agent shall be entitled to rely
          on the last Percentage or Spread of which it has received notice
          from the Company (or, in the absence of such notice, the Percentage
          or Spread set forth in the preceding sentence) in determining the
          Maximum Applicable Rate as set forth in Section 2.2(d)(i) hereof.


                                      5


<PAGE>


          (e) The Auction Agent shall maintain by series a current registry of
          the Existing Holders of the shares of each series of AMPS 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
          Business Days following the date of the 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.

          (f) 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 promptly shall 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 such
          series of AMPS 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 that 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. In the absence
          of receiving any such information with respect to an Existing
          Holder, from such Existing Holder's Agent Member or otherwise, the
          Auction Agent may continue to treat such Existing Holder as having
          ownership of the number of shares of such series of AMPS shown in
          the Auction Agent's registry of Existing Holders.

               (i) The Auction Agent shall register a transfer of the
          ownership of shares of a series of AMPS from an Existing Holder to
          another Existing Holder, or to another Person if permitted by the
          Company, only if (A) such transfer is made pursuant to an Auction or
          (B) if such transfer is made other than pursuant to an Auction, the
          Auction Agent has been notified of such transfer in writing in a
          notice substantially in the form of Exhibit C to the Broker-Dealer
          Agreements, by such Existing Holder or by the Agent Member of such
          Existing Holder. 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 Existing Holders of any shares
          of AMPS if the Auction Agent has been notified in writing, in a
          notice substantially in the form of Exhibit D 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


                                      6


<PAGE>


          purchaser failed to make payment to such Person upon delivery to the
          purchaser of such shares.

          (g) The Auction Agent may, but shall not be obligated, to 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
          Beneficial Owners 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, however, that the
          Auction Agent reserves the right and is authorized to disclose any
          such information if (i) it is ordered to do so by a court of
          competent jurisdiction or a regulatory body, judicial or
          quasi-judicial agency or authority having the authority to compel
          such disclosure, (ii) it is advised by its counsel that its failure
          to do so would be unlawful or (iii) failure to do so would expose
          the Auction Agent to loss, liability, claim, damage or expense for
          which it has not received indemnity or security satisfactory to it.

     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 withheld unreasonably. 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(d)(i) hereof.

     9:30 A.M. - 1:00 P.M.          Auction Agent assembles information
                                    communicated to it by Broker-Dealers as
                                    provided in Paragraph 10(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 10(d)(i) of the
                                    Articles Supplementary.

     By approximately               Auction Agent advises the Company of the
     3:00 P.M.                      results of the Auction as provided in
                                    Paragraph 10(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 10(e) of the
                                    Articles Supplementary.


                                      7


<PAGE>


                                    Auction Agent gives notice of the Auction
                                    results as set forth in 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 other mutually
acceptable electronic means 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 Federal Funds or similar same-day
          funds an amount in cash equal to (i) in the case of any Auction Date
          immediately preceding a 7-Day 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) $25,000
          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 Special 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 may designate an Affiliate or 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 from time to
          time shall enter into such Broker-Dealer Agreements as the Company
          shall request.

          (e) Subject to Section 2.2(a), the Auction Agent shall maintain a
          list of Broker-Dealers.

     2.6. Ownership of Shares of AMPS and Submission of Bids by the Company
          and its 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 Broker-Dealer may submit a Sell Order or Bid on
behalf of a Beneficial Owner or a Potential Beneficial Owner. 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 a Beneficial Owner of any
shares of AMPS. Any shares of a series of AMPS redeemed, purchased or
otherwise acquired (i) by the Company shall not be reissued, except in
accordance with the requirements of the


                                      8


<PAGE>


Securities Act of 1933, as amended, 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 which shall not be in excess of four years), and such records,
in reasonable detail, shall accurately and fairly reflect the actions taken by
the Auction Agent hereunder. The Company agrees to keep confidential any
information regarding the customers of any Broker-Dealer received from the
Auction Agent in connection with this Agreement or any Auction, 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, provided that the Company reserves
the right to disclose any such information if it is advised by its counsel
that its failure to do so would (i) be unlawful or (ii) expose it to
liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to the Company. 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,
provided that such agent, accountant or counsel may reserve the right to
disclose any such information if it is advised by its counsel that its failure
to do so would (i) be unlawful or (ii) expose it to liability, unless the
Broker-Dealer shall have offered indemnification satisfactory to such agent,
accountant or counsel. The Auction Agent shall have no liability in connection
with allowing access to the Company's books, records, documents and other
information pursuant to the terms of this Section 2.7 to the Company, its
agents, independent public accountants and counsel.

III. THE AUCTION AGENT AS PAYING AGENT.

     3.1. The Paying Agent.

     The Board of Directors of the Company has adopted a resolution appointing
The Bank of New York as transfer agent, registrar, dividend disbursing agent
and redemption agent for the Company in connection with any shares of AMPS (in
such capacity, the "Paying Agent"). The Paying Agent hereby accepts such
appointment and agrees to act in accordance with its standard procedures and
the provisions of the Articles Supplementary which are specified herein with
respect to the shares of AMPS and as set forth in this Section 3.


                                      9


<PAGE>


     3.2. The Company's Notices to the Paying Agent.

     Whenever any shares of AMPS are to be redeemed, the Company promptly
shall deliver to the Paying Agent a Notice of Redemption upon the terms set
forth in Section 4(c) of the Articles Supplementary, which will be mailed by
the Company to each Holder at least five Business Days prior to the date such
Notice of Redemption is required to be mailed pursuant to the Articles
Supplementary. The Paying Agent shall have no responsibility to confirm or
verify the accuracy of any such Notice.

     3.3. The Company to Provide Funds for Dividends and Redemptions.

          (a) Not later than noon on each Dividend Payment Date, the Company
          shall deposit with the Paying Agent an aggregate amount of Federal
          Funds or similar same-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 a Notice of Redemption, then by noon
          of the date fixed for redemption, the Company shall deposit in trust
          with the Paying Agent an aggregate amount of Federal Funds or
          similar same-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.

     3.4. Disbursing Dividends and Redemption Price.

     After receipt of the Federal Funds or similar same-day funds and
instructions from the Company described in Sections 3.3(a) and (b) above, the
Paying Agent shall pay to the Holders (or former Holders) entitled thereto (i)
on each corresponding Dividend Payment Date, dividends on the shares of AMPS
and (ii) on any date fixed for redemption, the redemption price of any shares
of AMPS called for redemption. 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 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 a 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 a Notice of Redemption.


                                      10


<PAGE>


IV.  THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.

     4.1. Original Issue of Stock Certificates.

     On the Date of Original Issue for any share of AMPS, 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. The Company will give the Auction Agent prior written notice
and instruction as to the issuance and redemption of AMPS.

     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, at
the Company's request, may be registered for transfer or exchange, and new
certificates thereupon shall be issued in the name of the designated
transferee or transferees, upon surrender of the old certificate 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 or exchange or funds necessary for the payment of
such taxes.

     4.3. Removal of Legend.

     Any request for removal of a legend indicating a restriction on transfer
from a certificate 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 may be 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, Stolen or Destroyed 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 by 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, stolen or destroyed 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 provisions of applicable law and the
By-Laws and resolutions of the Company.


                                      11


<PAGE>


     4.5. Disposition of Canceled Certificates; Record Retention.

     The Paying Agent shall retain stock certificates which have been canceled
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, upon
written request by the Company, shall 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 request by the Company at
any time during this two-year period, the Paying Agent shall deliver to the
Company the canceled certificates and accompanying documentation. The Company,
at its expense, shall 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 also
shall undertake to furnish to the Securities and Exchange Commission, upon
demand, either at their principal office or at any regional office, complete,
correct and current hard copies of any and all such records.

     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; provided, however, that the Auction Agent reserves the right and
is authorized to permit such inspection if (i) it is ordered to do so by a
court of competent jurisdiction or a regulatory body, judicial or
quasi-judicial agency or authority having the authority to compel such
disclosure, (ii) it is advised by its counsel that its failure to do so would
be unlawful or (iii) failure to do so would expose the Auction Agent to loss,
liability, claim, damage or expense for which it has not received indemnity or
security satisfactory to it.

     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 written request by the Company.


                                      12


<PAGE>


V.   REPRESENTATIONS AND WARRANTIES.

     5.1. Representations and Warranties of the Company.

     The Company represents and warrants to the Auction Agent that:

               (i) the Company is duly organized and is validly existing as a
          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, 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 the certificates 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) at the time of the offering of the shares of each series
          of AMPS, the shares offered will be 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 will be required in connection with the issuance
          of the shares of each series of AMPS, except such action as required
          by applicable state securities or insurance laws, all of which
          action will 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


                                      13


<PAGE>


               (viii) no taxes are payable upon or in respect of the execution
          of this Agreement or will be payable upon or in respect of the
          issuance of the shares of each series of AMPS.

     5.2. Representations and Warranties of the Auction Agent.

     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.

VI.  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
          specifically provided by this Agreement. The Auction Agent owes no
          duties to any person other than the Company by reason of this
          Agreement.

          (b) The Auction Agent undertakes to perform such duties and only
          such duties as are set forth specifically in this Agreement, and no
          implied covenants or obligations shall be read into this Agreement
          against the Auction Agent.

          (c) In the absence of willful misconduct or negligence on its part,
          the Auction Agent shall not be liable for any action taken, suffered
          or omitted by it 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 the absence of
          willful misconduct unless the Auction Agent shall have been
          negligent in ascertaining (or failing to ascertain) the pertinent
          facts.

          (d) The Auction Agent shall not be responsible or liable for any
          failure or delay in the performance of its obligations under this
          Agreement arising out of or caused, directly or indirectly, by
          circumstances beyond its reasonable control, including, without
          limitation, acts of God; earthquakes; fires, floods; wars; civil or
          military disturbances; sabotage; acts of terrorism; epidemics;
          riots; interruptions, loss or malfunctions of utilities; computer
          (hardware or software) or communications services; accidents; labor
          disputes; acts of civil or military authority or governmental
          actions; it being understood that the Auction Agent shall use
          reasonable efforts which are consistent with accepted practices in
          the banking industry to resume performance as soon as practicable
          under the circumstances. In no event shall the Auction Agent be
          responsible or liable for special, indirect or consequential loss or
          damage of any kind whatsoever (including, but not limited to, loss
          of profit), even if the Auction Agent has been advised of the
          likelihood of such loss or damage and regardless of the form of
          action.


                                      14


<PAGE>


     6.2. Rights of the Auction Agent.

          (a) The Auction Agent may rely upon, and shall be protected in
          acting or refraining from acting upon, any communication authorized
          hereby and 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 with 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. The Auction
          Agent shall be under no liability for interest on any money received
          by it hereunder except as otherwise agreed in writing with the
          Company.

          (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 the
adequacy of this Agreement, the Broker-Dealer Agreements or the AMPS.

     6.4. Compensation, Expenses and Indemnification.

          (a) The Company shall pay to the Auction Agent reasonable
          compensation for all services rendered by it under this Agreement
          and under the Broker-Dealer Agreements as shall be agreed by the
          Auction Agent and the Company from time to time as shall be set
          forth in a separate writing signed by the Company and the Auction
          Agent, subject to adjustments if the AMPS no longer are held of
          record by the Securities Depository or its nominee or if there shall
          be such other change as shall increase materially the Auction
          Agent's obligations hereunder or under 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 of the Broker-Dealer Agreements (including the
          reasonable compensation, expenses and disbursements of its agents
          and counsel), except any expense, disbursement or advance
          attributable to its negligence or willful misconduct.


                                      15


<PAGE>


          (c) The Company shall indemnify the Auction Agent for, and hold it
          harmless against, any loss, liability or expense incurred without
          negligence or willful misconduct on its part arising out of or in
          connection with its agency under this Agreement and under the
          Broker-Dealer Agreements, including the costs and expenses of
          defending itself against any claim of 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 willful
          misconduct.

VII. 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
          shall have 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 date 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, deliver
          promptly 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, transfer promptly to the Company or to any
          successor auction agent any funds deposited by the Company with the
          Auction Agent (whether in its capacity as Auction Agent or as Paying
          Agent) pursuant to this Agreement which have not been distributed
          previously by the Auction Agent in accordance with this Agreement.

          (c) If the AMPS shall no longer settle through an electronic book
          entry system, the Auction Agent (but not necessarily the Paying
          Agent) shall cease to perform its duties hereunder, and under any
          Broker-Dealer Agreement.

     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


                                      16


<PAGE>


communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given to such party at its address or
telecopier number set forth below:

      If to the Company,              MUNIVEST FUND, INC.
      addressed to:                   800 Scudders Mill Road
                                      Plainsboro, New Jersey 08536

                                      Attention:  Treasurer
                                      Telephone No.: (609) 282-2800
                                      Telecopier No.: (609) 282-3472

      If to the Auction               The Bank of New York
      Agent, addressed to:            Corporate Trust-Dealing and Trading Group
                                      101 Barclay Street, 7W
                                      New York, New York 10286

                                      Attention: Auction Desk
                                      Telephone No.: (212) 815-3450
                                      Telecopier No.: (212) 815-3440

or such other address or telecopier number as such party hereafter may 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.

     7.5. Amendment; Waiver.

          (a) This Agreement shall not be deemed or construed to be modified,
          amended, rescinded, canceled 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. If any such change in the
          Articles Supplementary materially increases the Auction Agent's
          obligations hereunder, the Company shall obtain the written consent
          to the Auction Agent prior to the effective date of such change.


                                      17


<PAGE>


          (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. 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 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 withheld unreasonably.

     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.


                                      18


<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.

                                       MUNIVEST FUND, INC.



                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:



                                    THE BANK OF NEW YORK



                                    By:
                                       ---------------------------------------
                                       Name:
                                       Title:



                                      19

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2(K)(6)
<SEQUENCE>18
<FILENAME>efc4-1273_556704ex992k6.txt
<TEXT>
                                                                Exhibit (k)(6)


                               [OBJECT OMITTED]

             Book-Entry-Only Auction-Rate/Money Market Preferred/
                     and Remarketed Preferred Securities


                           Letter of Representations
                 [To be Completed by Issuer and Trust Company]

                              MUNIVEST FUND, INC.
             ----------------------------------------------------
                               [Name of Issuer]

                             The Bank of New York
             ----------------------------------------------------
                            [Name of Trust Company]

                                                           __________ , 2004

                                                                    [Date]

Attention:  General Counsel's Office
The Depository Trust Company
55 Water Street 49th Floor
New York, NY  10041-0099

         Re:  MUNIVEST FUND, INC.
              Issuance of Auction Market Preferred Stock ("AMPS"), Series
              F (#626295703)
              [Issue description, including CUSIP number (the "Securities")]

Ladies and Gentlemen:

     This letter sets forth our understanding with respect to certain matters
relating to the Securities. Trust Company shall act as transfer agent,
registrar, dividend disbursing agent, redemption agent or other such agent
with respect to the Securities. The Securities have been issued pursuant to a
prospectus, private placement memorandum, or other such document authorizing
the issuance of the Securities dated             , 2004 (the "Document").
*____________________________________ is distributing the Securities through
   ["Underwriter/Placement Agent"]
the Depository Trust Company ("DTC").


         The Depository Trust Company is herein referred to as "DTC".

* Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated

     To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities, Issuer
and Trust Company make the following representations to DTC:

     1. Prior to closing on the Securities on _______, 2004 there shall be
deposited with DTC one or more Security certificates registered in the name of
DTC's nominee, Cede & Co., which represents 100% of the offering value of the
Securities. Said certificate(s) shall remain in DTC's custody as provided in
the Document. If, however, the aggregate principal amount of the Securities
exceeds $400 million, one certificate shall be issued with respect to each
$400 million of principal amount and an additional certificate shall be issued
with respect to any remaining principal amount. Each Security certificate
shall bear the following legend:

                    Unless this certificate is presented by an authorized
               representative of The Depository Trust Company, a New York
               corporation ("DTC"), to Issuer or its agent for registration of
               transfer, exchange, or payment, and any certificate issued is
               registered in the name of Cede & Co. or in such other name as
               is requested by an authorized representative of DTC (and any
               payment is made to Cede & Co. or to such other entity as is
               requested by an authorized representative of DTC), ANY
               TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
               OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
               hereof, Cede & Co., has an interest herein.

     2. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its participants ("Participants") or to any person having an
interest in the Securities any information contained in the Security
certificate(s); and (b) acknowledges that neither DTC's Participants nor any
person having an interest in the Securities shall be deemed to have notice of
the provisions of the Security certificate(s) by virtue of submission of such
certificate(s) to DTC.

     3. In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer shall establish a record date for such purposes
(with no provision for revocation of consents or votes by subsequent holders)
and shall send notice of such record date to DTC no fewer than 15 calendar
days in advance of such record date. Notices to DTC pursuant to this Paragraph
by telecopy shall be directed to DTC's Reorganization Department, Proxy Unit
at (212) 855-5181 or (212) 855-5182. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (212) 855-5202. Notices to DTC pursuant
to this Paragraph, by mail or by any other means, shall be sent to:

                          Supervisor, Proxy Unit
                          Reorganization Department
                          The Depository Trust Company
                          55 Water Street 50th Floor
                          New York, NY  10041-0099



                                      2

<PAGE>



     4. In the event of a full or partial redemption of the Securities, Issuer
or Trust Company shall send a notice to DTC specifying: (a) the number of
Securities to be redeemed; and (b) the date such notice is to be distributed
to Security holders (the "Publication Date"). Such notice shall be sent to DTC
by a secure means (e.g., legible telecopy, registered or certified mail,
overnight 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
before or, if possible, two business days before the Publication Date. Issuer
or Trust Company shall forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission for multiple
CUSIP numbers (if applicable) which includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such notice shall
have a method to verify subsequently the use of such means and the timeliness
of such notice.) The Publication Date shall be no fewer than 30 days nor more
than 60 days prior to the redemption date. Notices to DTC pursuant to this
Paragraph by telecopy shall be directed to DTC's Call Notification Department
at (516) 227-4164 or (516) 227-4190. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (516) 227-4070. Notices to DTC pursuant
to this Paragraph, by mail or by any other means, shall be sent to:

                          Manager, Call Notification Department
                          The Depository Trust Company
                          711 Stewart Avenue
                          Garden City, NY  11530-4719

     5. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Trust
Company to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions by telecopy shall be directed
to DTC's Reorganization Department at (212) 855-5488. If the party sending the
notice does not receive a telecopy receipt from DTC confirming that the notice
has been received, such party shall telephone (212) 855-5290. Notices to DTC
pursuant to this Paragraph, by mail or by any other means, shall be sent to:

                          Manager, Reorganization Department
                          Reorganization Window
                          The Depository Trust Company
                          55 Water Street 50th Floor
                          New York, NY  10041-0099

     6. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.

     7. The Document indicates that the dividend rate for the Securities may
vary from time to time. Absent other existing arrangements with DTC, Issuer or
Trust Company shall give DTC notice of each such change in the dividend rate,
on the same day that the new rate is determined, by telephoning DTC's Dividend
Announcement Section at (212) 855-4550, or by telecopy sent to (212) 855-4555.
Such verbal or telecopy notice shall be followed by prompt written
confirmation sent by a secure means (e.g., legible telecopy, registered or
certified mail, overnight delivery) in a timely manner designed to assure that
such notice is in DTC's possession

                                      3

<PAGE>

no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Agent shall
forward such notice either in a separate secure transmission for each CUSIP
number or in a secure transmission for multiple CUSIP numbers (if applicable)
which includes a manifest or list of each CUSIP number submitted in that
transmission. (The party sending such notice shall have a method to verify
subsequently the use and timeliness of such notice.) Notices to DTC pursuant
to this Paragraph, by mail or by any other means, shall be sent to:

                          Manager, Announcements
                          Dividend Department
                          The Depository Trust Company
                          55 Water Street 25th Floor
                          New York, NY  10041-0099

     8. The Document indicates that each purchaser of Securities must sign a
purchaser's letter which contains provisions restricting transfer of the
Securities purchased. Issuer and Trust Company acknowledge that as long as
Cede & Co. is the sole record owner of the Securities, Cede & Co. shall be
entitled to all voting rights applicable to the Securities and to receive the
full amount of all dividends, liquidation proceeds, and redemption proceeds
payable with respect to the Securities, even if the credits of Securities to
the DTC accounts of any DTC Participant result from transfers or failures to
transfer in violation of the provisions of the purchaser's letter. Issuer and
Trust Company acknowledge that DTC shall treat any Participant having
Securities credited to its DTC accounts as entitled to the full benefits of
ownership of such Securities. Without limiting the generality of the preceding
sentence, Issuer and Trust Company acknowledge that DTC shall treat any
Participant having Securities credited to its DTC accounts as entitled to
receive dividends, distributions, and voting rights, if any, in respect of
Securities and, subject to Paragraphs 12 and 13, to receive certificates
evidencing Securities if such certificates are to be issued in accordance with
Issuer's certificate of incorporation. (The treatment by DTC of the effects of
the crediting by it of Securities to the accounts of Participants described in
the preceding two sentences shall not affect the rights of Issuer,
participants in auctions relating to the Securities, purchasers, sellers, or
holders of Securities against any Participant.) DTC shall not have any
responsibility to ascertain whether any transfer of Securities is made in
accordance with the provisions of the purchaser's letter.

     9. Issuer or Trust Company shall provide a written notice of dividend
payment and distribution information to DTC as soon as the information is
available. Issuer or Trust Company shall provide this information to DTC
electronically, as previously arranged by Issuer or Trust Company and DTC, as
soon as the information is available. If electronic transmission has not been
arranged, absent any other arrangements between Issuer or Trust Company and
DTC, such information shall be sent by telecopy to DTC's Dividend Department
at (212) 855-4555 or (212) 855-4556, and receipt of such notices shall be
confirmed by telephoning (212) 855-4550. Notices to DTC pursuant to this
Paragraph, by mail or by any other means, shall be addressed as indicated in
Paragraph 7.

     10. Dividend payments and distributions shall be received by Cede & Co.,
as nominee of DTC, or its registered assigns, in same-day funds no later than
2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m.
(Eastern Time) on the payment date, dividend and distribution payments due
Trust Company, or at such earlier time as may be required by Trust Company to
guarantee that DTC shall receive payment in same-day funds no later than


                                      4
<PAGE>

2:30 p.m. (Eastern Time) on the payment date. Absent any other arrangements
between Issuer or Trust Company and DTC, such funds shall be wired to the
Dividend Deposit Account number that will be stamped on the signature page
hereof at the time DTC executes this Letter of Representations.

     11. Issuer or Trust Company shall provide DTC, no later than 12:00 noon
(Eastern Time) on each payment date, automated notification of CUSIP-level
detail. If the circumstances prevent the funds paid to DTC from equaling the
dollar amount associated with the detail payments by 12:00 noon (Eastern
Time), Issuer or Trust Company must provide CUSIP-level reconciliation to DTC
no later than 2:30 p.m. (Eastern Time). Reconciliation must be provided by
either automated means or written format. Such reconciliation notice, if sent
by telecopy, shall be directed to DTC's Dividend Department at (212) 855-4633,
and receipt of such reconciliation notice shall be confirmed by telephoning
(212) 855-4430.

     12. Redemption payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns, in same-day funds no later than 2:30 p.m.
(Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m. (Eastern
Time) on the payment date all such redemption payments due Trust Company, or
at such earlier time as required by Trust Company to guarantee that DTC shall
receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on
the payment date. Absent any other arrangements between Issuer or Trust
Company and DTC, such funds shall be wired to the Redemption Deposit Account
number that will be stamped on the signature page hereof at the time DTC
executes this Letter of Representations.

     13. Reorganization payments and CUSIP-level detail resulting from
corporate actions (such as tender offers, remarketings, or mergers) shall be
received by Cede & Co., as nominee of DTC, or its registered assigns, in
same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date.
Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment date all such
reorganization payments due Trust Company, or at such earlier time as required
by Trust Company to guarantee that DTC shall receive payment in same-day funds
no later than 2:30 p.m. (Eastern Time) on the payment date. Absent any other
arrangements between Issuer or Trust Company and DTC, such funds shall be
wired to the Reorganization Deposit Account number that will be stamped on the
signature page hereof at the time DTC executes this Letter of Representations.

     14. DTC may direct Issuer or Trust Company to use any other number or
address as the number or address to which notices or payments may be sent.

     15. In the event of a redemption acceleration, or any similar transaction
(e.g., tender made and accepted in response to Issuer's or Trust Company's
invitation) necessitating a reduction in the number of Securities outstanding,
or an advance refunding of part of the Securities outstanding DTC, in its
discretion: (a) may request Issuer or Trust Company to issue and authenticate
a new Security certificate; or (b) may make an appropriate notation on the
Security certificate indicating the date and amount of such reduction in the
number of Securities outstanding, except in the case of final redemption, in
which case the certificate will be presented to Issuer or Trust Company prior
to payment, if required.

     16. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trust
Company shall notify DTC of the

                                      5

<PAGE>

availability of certificates. In such event, Issuer or Trust Company shall
issue, transfer, and exchange certificates in appropriate amounts, as required
by DTC and others.

     17. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Trust Company (at which time DTC will confirm with Issuer or Trust
Company the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request, Issuer and Trust Company shall cooperate
fully with DTC by taking appropriate action to make available one or more
separate certificates evidencing Securities to any DTC Participant having
Securities credited to its DTC accounts.

     18. Issuer hereby authorizes DTC to provide to Trust Company listings of
Participants' holdings, known as Security Position Listings ("SPLs") with
respect to the Securities from time to time at the request of Trust Company.
Issuer also authorizes DTC, in the event of a partial redemption of
Securities, to provide Trust Company, upon request, with the names of those
Participants whose positions in Securities have been selected for redemption
by DTC. DTC will use its best efforts to notify Trust Company of those
Participants whose positions in Securities have been selected for redemption
by DTC. Issuer authorizes and instructs Trust Company to provide DTC with such
signatures, examples of signatures, and authorizations to act as may be deemed
necessary or appropriate by DTC to permit DTC to discharge its obligations to
its Participants and appropriate regulatory authorities. DTC charges a
customary fee for such SPLs. This authorization, unless revoked by Issuer,
shall continue with respect to the Securities while any Securities are on
deposit at DTC, until and unless Trust Company shall no longer be acting. In
such event, Issuer shall provide DTC with similar evidence, satisfactory to
DTC, of the authorization of any successor thereto so to act. Requests for
SPLs shall be directed to the Proxy Unit of DTC's Reorganization Department at
(212) 855-5181 or (212) 855-5182. Receipt of such requests shall be confirmed
by telephoning (212) 855-5202. Delivery by mail or by any other means, with
respect to such SPL request, shall be directed to the address indicated in
Paragraph 3.

     19. Nothing herein shall be deemed to require Trust Company to advance
funds on behalf of Issuer.

     20. This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts together shall constitute but one and the
same instrument.

     21. This Letter of Representations shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
principles of conflicts of law.

     22. The sender of each notice delivered to DTC pursuant to this Letter of
Representations is responsible for confirming that such notice was properly
received by DTC.

     23. Issuer recognizes that DTC does not in any way undertake to, and
shall not have any responsibility to, monitor or ascertain the compliance of
any transactions in the Securities with the following, as amended from time to
time: (a) any exemptions from registration under the Securities Act of 1933;
(b) the Investment Company Act of 1940; (c) the Employee Retirement Income
Security Act of 1974; (d) the Internal Revenue Code of 1986; (e) any rules of


                                      6

<PAGE>


any self-regulatory organizations (as defined under the Securities Exchange
Act of 1934); or (f) any other local, state, or federal laws or regulations
thereunder.

     24. Issuer and Trust Company shall comply with the applicable
requirements stated in DTC's Operational Arrangements, as they may be amended
from time to time. DTC's Operational Arrangements are posted on DTC's website
at "www.DTC.org."

     25. The following rider(s), attached hereto, are hereby incorporated into
this Letter of Representations:

                                  Schedule A
- ------------------------------------------------------------------------------
                                  Schedule B
- ------------------------------------------------------------------------------
                                  Schedule C
- ------------------------------------------------------------------------------


                                      7

<PAGE>





Notes:

A. If there is a Trust Company (as defined
in this Letter of Representations), Trust
Company, as well as Issuer, must sign this
Letter. If there is no Trust Company, in
signing this Letter Issuer itself undertakes
to perform all of the obligations set forth
herein.

B. Schedule B contains statements that DTC
believes accurately describe DTC, the method
of effecting book-entry transfers of
securities distributed through DTC, and
certain related matters.

                                     Very truly yours,


                                     MUNIVEST FUND, INC.
                                     ---------------------------------------
                                                                    [Issuer]

                                     By:____________________________________
                                          [Authorized Officer's Signature]

                                     THE BANK OF NEW YORK
                                     -----------------------------------
                                                  [Trust Company]

                                     By:____________________________________
                                          [Authorized Officer's Signature]



Received and Accepted:
THE DEPOSITORY TRUST COMPANY



By:_________________________






cc:  Underwriter
     Underwriter's Counsel




                                      8

<PAGE>



                                                                     SCHEDULE A
                                                                     ----------

         MUNIVEST FUND, INC.; Auction Market Preferred Stock, Series F
         -------------------------------------------------------------

         -------------------------------------------------------------
                               [Describe Issue]



CUSIP Number                    Share Total               Value ($Amount)
- ------------                    -----------              ---------------
Series F (#626295703)              3,000                    75,000,000


                                       9


<PAGE>



                                                                    SCHEDULE B

                       SAMPLE OFFERING DOCUMENT LANGUAGE
                      DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
                      -----------------------------------
                  (Prepared by DTC--bracketed material may be
                      applicable only to certain issues)

     1. The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Security certificate
will be issued for each issue of the Securities, each in the aggregate
principal amount of such issue, and will be deposited with DTC. [If, however,
the aggregate principal amount of [any] issue exceeds $400 million, one
certificate will be issued with respect to each $400 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount of such issue.]

     2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants ("Direct
Participants") deposit with DTC. DTC also facilitates the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic computerized book-entry changes in
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange LLC, and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The Rules applicable to DTC and its Direct and
Indirect Participants are on file with the Securities and Exchange Commission.

     3. Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each
Security ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Securities are to be accomplished by entries made
on the books of Direct and Indirect Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Securities, except in the event that
use of the book-entry system for the Securities is discontinued.

     4. To facilitate subsequent transfers, all Securities deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other


                                      10

<PAGE>

name as may be requested by an authorized representative of DTC. The deposit
of Securities with DTC and their registration in the name of Cede & Co. or
such other nominee do not effect any change in beneficial ownership. DTC has
no knowledge of the actual Beneficial Owners of the Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.

     5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. [Beneficial Owners of
Securities may wish to take certain steps to augment transmission to them of
notices of significant events with respect to the Securities, such as
redemptions, tenders, defaults, and proposed amendments to the security
documents. Beneficial Owners of Securities may wish to ascertain that the
nominee holding the Securities for their benefit has agreed to obtain and
transmit notices to Beneficial Owners, or in the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and
request that copies of the notices be provided directly to them.]

     [6. Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine
by lot the amount of the interest of each Direct Participant in such issue to
be redeemed.]

     7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent
or vote with respect to the Securities. Under its usual procedures, DTC mails
an Omnibus Proxy to Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).

     8. Redemption proceeds, distributions, and dividend payments on the
Securities will be made to Cede & Co., or such other nominee as may be
requested by an authorized representative of DTC. DTC's practice is to credit
Direct Participants' accounts, upon DTC's receipt of funds and corresponding
detail information from Issuer or Agent on payable date in accordance with
their respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility
of such Participant and not of DTC, Agent, or Issuer, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividends to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.

     [9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to [Tender/Remarketing] Agent,
and shall effect delivery of such Securities by causing the Direct Participant
to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical


                                      11

<PAGE>

delivery of Securities in connection with an optional tender or a mandatory
purchase will be deemed satisfied when the ownership rights in the Securities
are transferred by Direct Participants on DTC's records and followed by a
book-entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC
account.]

     10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Agent. Under such circumstances, in the event that a successor
securities depository is not obtained, Security certificates are required to
be printed and delivered.

     11. Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.

     12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.




                                      12

<PAGE>



                                                                    SCHEDULE C
                                                                    ----------



                               [OBJECT OMITTED]



    Representations for Securities Held with a Custodian on Behalf of DTC--
                to be included in DTC Letter of Representations
                -----------------------------------------------

     The Security certificate(s) shall remain in Agent's1 custody as a
"Balance Certificate" subject to the provisions of the Balance Certificate
Agreement between Agent and DTC currently in effect.

     On each day on which Agent is open for business and on which it receives
an instruction originated by a DTC participant ("Participant") through DTC's
Deposit/Withdrawal at Custodian ("DWAC") system to increase the Participant's
account by a specified number of shares, units, or obligations (a "Deposit
Instruction"), Agent shall, no later than 6:30 p.m. (Eastern Time) that day,
either approve or cancel the Deposit Instruction through the DWAC system.

     On each day on which Agent is open for business and on which it receives
an instruction originated by a Participant through the DWAC system to decrease
the Participant's account by a specified number of shares, units, or
obligations (a "Withdrawal Instruction"), Agent shall, no later than 6:30 p.m.
(Eastern Time) that day, either approve or cancel the Withdrawal Instruction
through the DWAC system.

     Agent agrees that its approval of a Deposit or Withdrawal Instruction
shall be deemed to be the receipt by DTC of a new reissued or reregistered
certificated security on registration of transfer to the name of Cede & Co.
for the quantity of securities evidenced by the Balance Certificate after the
Deposit or Withdrawal Instruction is effected.

     Agent shall be defined as Depositary, Trustee, Trust Company, Issuing
Agent and/or Paying Agent as such definition applies in the DTC Letter of
Representations to which this rider may be attached.




- --------
1    Agent shall be defined as Depositary, Trustee, Trust Company, Issuing
     Agent and/or Paying Agent as such definition applies in the DTC Letter of
     Representations to which this rider may be attached.


                                      13

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
