<DOCUMENT>
<TYPE>EX-99.B3
<SEQUENCE>3
<FILENAME>dex99b3.txt
<DESCRIPTION>SECOND AMENDED AND RESTATED BY LAWS OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                     Exhibit b.3

                           SECOND AMENDED AND RESTATED
                                     BYLAWS
                                       of
                         PIMCO FLOATING RATE INCOME FUND

                         (Dated as of October 28, 2003)

                                   ARTICLE 1
             Agreement and Declaration of Trust and Principal Office

     1.1 Principal Office of the Trust. A principal office of the Trust shall be
located in New York, New York. The Trust may have other principal offices within
or without Massachusetts as the Trustees may determine or as they may authorize.

     1.2 Agreement and Declaration of Trust. These Second Amended and Restated
Bylaws shall be subject to the Agreement and Declaration of Trust, as amended or
restated from time to time (the "Declaration of Trust"), of PIMCO Floating Rate
Income Fund, the Massachusetts business trust established by the Declaration of
Trust (the "Trust"). Capitalized terms used in these Bylaws and not otherwise
defined herein shall have the meanings given to such terms in the Declaration of
Trust.

                                   ARTICLE 2
                              Meetings of Trustees

     2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the Shareholders (as defined in the Declaration
of Trust).

     2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman, the President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Secretary or an Assistant
Secretary or by the officer or the Trustees calling the meeting.

     2.3 Notice. It shall be sufficient notice to a Trustee of a special meeting
to send notice by mail at least forty-eight hours, or by telegram, telex or
telecopy or other electronic facsimile transmission method at least twenty-four
hours, before the meeting addressed to the Trustee at his or her usual or last
known business or residence address or to give notice to him or her in person or
by telephone at least twenty-four hours before the meeting. Notice of a meeting

<PAGE>

need not be given to any Trustee if a written waiver of notice, executed by him
or her, before or after the meeting, is filed with the records of the meeting,
or to any Trustee who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.

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

                                   ARTICLE 3
                                    Officers

     3.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers including a
Chairman, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may but need not be a Trustee or a
Shareholder. Any two or more offices may be held by the same person.

     3.2 Election. The President, the Treasurer, and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at the same meeting at which the President, Treasurer
and Secretary are elected, or at any other time. Vacancies in any office may be
filled at any time.

     3.3 Tenure. The Chairman of the Trustees, if one is elected, the President,
the Treasurer and the Secretary shall hold office until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed with or without cause or becomes disqualified. Each
other officer shall hold office and each agent of the Trust shall retain
authority at the pleasure of the Trustees.

     3.4 Powers. Subject to the other provisions of these Bylaws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.

     3.5 Chairman; President; Vice President. Unless the Trustees otherwise
provide, the Chairman or, if there is none or in the absence of the Chairman,
the President shall preside at all meetings of the Shareholders and of the
Trustees. The President shall be the chief executive officer. Any Vice President
shall have such duties and powers as may be designated from time to time by the
Trustees or the President.

     3.6 Treasurer; Assistant Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser, sub-adviser

                                      -2-

<PAGE>

or manager, or transfer, shareholder servicing or similar agent, be in charge of
the valuable papers, books of account and accounting records of the Trust, and
shall have such other duties and powers as may be designated from time to time
by the Trustees or by the President. Any Assistant Treasurer shall have such
duties and powers as may be designated from time to time by the Trustees or the
President.

     3.7 Secretary; Assistant Secretary. The Secretary shall record all
proceedings of the Shareholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office of the
Trust. In the absence of the Secretary from any meeting of the Shareholders or
Trustees, an Assistant Secretary, or if there be none or if he or she is absent,
a temporary secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books. Any Assistant Secretary shall have such duties
and powers as may be designated from time to time by the Trustees or the
President.

     3.8 Resignations. Any officer may resign at any time by written instrument
signed by him or her and delivered to the Chairman, if any, the President or the
Secretary, or to a meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no officer
resigning and no officer removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
on account of such removal.

                                   ARTICLE 4
                                   Committees

     4.1 Quorum; Voting. Except as provided below or as otherwise specifically
provided in the resolutions constituting a Committee of the Trustees and
providing for the conduct of its meetings, a majority of the members of any
Committee of the Trustees shall constitute a quorum for the transaction of
business, and any action of such a Committee may be taken at a meeting by a vote
of a majority of the members present (a quorum being present) or evidenced by
one or more writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting.

     With respect to a Valuation Committee of the Trustees, one or more of the
Committee members shall constitute a quorum for the transaction of business.

     Except as specifically provided in the resolutions constituting a Committee
of the Trustees and providing for the conduct of its meetings, Article 2,
Section 2.3 of these Bylaws relating to special meetings shall govern the notice
requirements for Committee meetings, except that it shall be sufficient notice
to a Valuation Committee of the Trustees to send notice by telegram, telex or
telecopy or other electronic means (including by telephone voice-message or
e-mail) at least fifteen minutes before the meeting.

                                      -3-

<PAGE>

                                   ARTICLE 5
                                     Reports

     5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.

                                   ARTICLE 6
                                   Fiscal Year

     6.1 General. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer, and the subsequent fiscal
years shall end on such date in subsequent years.

                                   ARTICLE 7
                                      Seal

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

                                   ARTICLE 8
                               Execution of Papers

     8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other obligations made,
accepted or endorsed by the Trust shall be executed by the President, any Vice
President, the Treasurer or by whomever else shall be designated for that
purpose by vote of the Trustees, and need not bear the seal of the Trust.

                                   ARTICLE 9
                         Issuance of Share Certificates

     9.1 Share Certificates. Except as provided in Article 11 hereof, each
Shareholder shall be entitled to a certificate stating the number of Shares (as
defined in the Declaration of Trust) owned by him or her, in such form as shall
be prescribed from time to time by the Trustees. Such certificates shall be
signed by the President or any Vice President and by the Treasurer or any
Assistant Treasurer. Such signatures may be by facsimile if the certificate is
signed by a transfer agent, or by a registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose facsimile
signature has been placed on such

                                      -4-

<PAGE>

certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issuance.

     Notwithstanding the foregoing, in lieu of issuing certificates for Shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such Shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.

     9.2   Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.

     9.3   Issuance of New Certificates to Pledgee. A pledgee of Shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of pledgor shall be stated thereon,
who alone shall be liable as a Shareholder and entitled to vote thereon.

     9.4   Discontinuance of Issuance of Certificates. Notwithstanding anything
to the contrary in this Article 9, the Trustees may at any time discontinue the
issuance of share certificates and may, by written notice to each Shareholder,
require the surrender of share certificates to the Trust for cancellation. Such
surrender and cancellation shall not affect the ownership of Shares in the
Trust.

                                   ARTICLE 10
                    Shareholders' Voting Powers and Meetings

     10.1 Voting Powers. The Shareholders shall have power to vote only (i) for
the election or removal of Trustees as provided in Article IV, Sections 1 and 3
of the Declaration of Trust and Article 11 hereto, (ii) with respect to any
Manager or sub-adviser as provided in Article IV, Section 8 of the Declaration
of Trust to the extent required by the 1940 Act, (iii) with respect to certain
transactions and other matters to the extent and as provided in Article V,
Sections 2 and 3 of the Declaration of Trust and Article 11 hereto, (iv) with
respect to any termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust (for the avoidance of any
doubt, Shareholders shall have no separate right to vote with respect to the
termination of the Trust or a series or class of Shares if the Trustees
(including the Continuing Trustees) exercise their right to terminate the Trust
or such series or class pursuant to clauses (ii) or (y) of Article IX, Section 4
of the Declaration of Trust), (v) with respect to any amendment of the
Declaration of Trust to the extent and as provided in Article IX, Section 7 of
the Declaration of Trust and Articles 11 and 12 hereto, (vi) to the same extent
as the stockholders of a Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (vii) with respect to such additional matters relating to the
Trust as may be required by law, the Declaration of Trust, these Bylaws or any
registration of the Trust

                                      -5-

<PAGE>

with the Securities and Exchange Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote,
except as otherwise provided in the Declaration of Trust, these Bylaws, or
required by applicable law. Except as otherwise provided in the Declaration of
Trust or in respect of the terms of a class of preferred shares of beneficial
interest of the Trust as reflected in these Bylaws or required by applicable
law, all Shares of the Trust then entitled to vote shall be voted in the
aggregate as a single class without regard to classes or series of Shares. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. The placing of a Shareholder's name on a proxy
pursuant to telephonic or electronically transmitted instructions obtained
pursuant to procedures reasonably designed to verify that such instructions have
been authorized by such Shareholder shall constitute execution of such proxy by
or on behalf of such Shareholder. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares of a particular class or series are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration of Trust or these Bylaws to be taken by Shareholders as to such
class or series.

     10.2 Voting Power and Meetings. Except as provided in the next sentence,
regular meetings of the Shareholders for the election of Trustees and the
transaction of such other business as may properly come before the meeting shall
be held, so long as Common Shares are listed for trading on the New York Stock
Exchange, on at least an annual basis, on such day and at such place as shall be
designated by the Trustees. In the event that such a meeting is not held in any
annual period if so required, whether the omission be by oversight or otherwise,
a subsequent special meeting may be called by the Trustees and held in lieu of
such meeting with the same effect as if held within such annual period. Special
meetings of the Shareholders or any or all classes or series of Shares may also
be called by the Trustees from time to time for such other purposes as may be
prescribed by law, by the Declaration of Trust or by these Bylaws, or for the
purpose of taking action upon any other matter deemed by a majority of the
Trustees and a majority of the Continuing Trustees to be necessary or desirable.
A special meeting of Shareholders may be held at any such time, day and place as
is designated by the Trustees. Written notice of any meeting of Shareholders,
stating the date, time, place and purpose of the meeting, shall be given or
caused to be given by a majority of the Trustees and a majority of the
Continuing Trustees at least seven days before such meeting to each Shareholder
entitled to vote thereat by leaving such notice with the Shareholder at his or
her residence or usual place of business or by mailing such notice, postage
prepaid, to the Shareholder's address as it appears on the records of the Trust.
Such notice may be given by the Secretary or an Assistant Secretary or by any
other officer or agent designated for such purpose by the Trustees. Whenever
notice of a meeting is required to be given to a Shareholder under the
Declaration of Trust or these Bylaws, a written waiver thereof, executed before
or after the meeting by such Shareholder or his or her attorney thereunto
authorized and filed with the records of the meeting, shall be deemed equivalent
to such notice. Notice of a meeting need not be given to any Shareholder who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to such

                                      -6-

<PAGE>

Shareholder. No ballot shall be required for any election unless required by a
Shareholder present or represented at the meeting and entitled to vote in such
election. Notwithstanding anything to the contrary in this Section 10.2, no
matter shall be properly before any annual or special meeting of Shareholders
and no business shall be transacted thereat unless in accordance with Section
10.6 of these Bylaws.

     10.3 Quorum and Required Vote. Except when a larger quorum is required by
any provision of law or the Declaration of Trust or these Bylaws, thirty percent
(30%) of the Shares entitled to vote on a particular matter shall constitute a
quorum for the transaction of business at a Shareholders' meeting, except that
where any provision of law or the Declaration of Trust or these Bylaws permits
or requires that holders of any class or series of Shares shall vote as an
individual class or series, then thirty percent (30%) (unless a larger quorum is
required as specified above) of Shares of that class or series entitled to vote
shall be necessary to constitute a quorum for the transaction of business by
that class or series. Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of further notice.
Except when a different vote is required by any provision of law or the
Declaration of Trust or these Bylaws, a plurality of the quorum of Shares
necessary for the transaction of business at a Shareholders' meeting shall
decide any questions and a plurality of Shares voted shall elect a Trustee,
provided that where any provision of law or of the Declaration of Trust or these
Bylaws permits or requires that the holders of any class or series of Shares
shall vote as an individual class or series, then a plurality of the quorum of
Shares of that class or series necessary for the transaction of business by that
class or series at a Shareholders' meeting shall decide that matter insofar as
that class or series is concerned.

     10.4 Action by Written Consent. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.

     10.5 Record Dates. For the purpose of determining the Shareholders who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to receive payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not more than 90 days
before the date of any meeting of Shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for determining
the Shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only Shareholders of record on such record date shall have the
right notwithstanding any transfer of Shares on the books of the Trust after the
record date; or without fixing such record date the Trustees may for any of such
purposes close the register or transfer books for all or any part of such
period.

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

                                      -7-

<PAGE>

          (a) As used in this Section 10.6, the term "annual meeting" refers to
     any annual meeting of Shareholders as well as any special meeting held in
     lieu of an annual meeting as described in the first two sentences of
     Section 10.2 of these Bylaws, and the term "special meeting" refers to all
     meetings of Shareholders other than an annual meeting or a special meeting
     in lieu of an annual meeting.

          (b) The matters to be considered and brought before any annual or
     special meeting of Shareholders shall be limited to only such matters,
     including the nomination and election of Trustees, as shall be brought
     properly before such meeting in compliance with the procedures set forth in
     this Section 10.6. Only persons who are nominated in accordance with the
     procedures set forth in this Section 10.6 shall be eligible for election as
     Trustees, and no proposal to fix the number of Trustees shall be brought
     before an annual or special meeting of Shareholders or otherwise transacted
     unless in accordance with the procedures set forth in this Section 10.6,
     except as may be otherwise provided in these Bylaws with respect to the
     right of holders of preferred shares of beneficial interest, if any, of the
     Trust to nominate and elect a specified number of Trustees in certain
     circumstances.

          (c) For any matter to be properly before any annual meeting, the
     matter must be (i) specified in the notice of meeting given by or at the
     direction of a majority of the Trustees and a majority of the Continuing
     Trustees pursuant to Section 10.2 of these Bylaws, (ii) otherwise brought
     before the meeting by or at the direction of a majority of the Continuing
     Trustees (or any duly authorized committee thereof), or (iii) brought
     before the meeting in the manner specified in this Section 10.6(c) by a
     Shareholder of record entitled to vote at the meeting or by a Shareholder
     (a "Beneficial Owner") that holds Shares entitled to vote at the meeting
     through a nominee or "street name" holder of record and that can
     demonstrate to the Trust such indirect ownership and such Beneficial
     Owner's entitlement to vote such Shares, provided that the Shareholder was
     the Shareholder of record or the Beneficial Owner held such Shares at the
     time the notice provided for in this Section 10.6(c) is delivered to the
     Secretary.

          In addition to any other requirements under applicable law and the
     Declaration of Trust and these Bylaws, persons nominated by Shareholders
     for election as Trustees and any other proposals by Shareholders may be
     properly brought before an annual meeting only pursuant to timely notice
     (the "Shareholder Notice") in writing to the Secretary. To be timely, the
     Shareholder Notice must be delivered to or mailed and received at the
     principal executive offices of the Trust not less than forty-five (45) nor
     more than sixty (60) days prior to the first anniversary date of the date
     on which the Trust first mailed its proxy materials for the prior year's
     annual meeting; provided, however, with respect to the annual meeting to be
     held in the calendar year 2004, the Shareholder Notice must be so delivered
     or mailed and so received on or before July 1, 2004; provided further,
     however, if and only if the annual meeting is not scheduled to be held
     within a period that commences thirty (30) days before the first
     anniversary date of the annual meeting for the preceding year and ends
     thirty (30) days after such anniversary date (an annual meeting date
     outside such period being referred to herein as an "Other Annual Meeting
     Date"), such Shareholder Notice must be given in the manner provided herein
     by the later of the

                                      -8-

<PAGE>

     close of business on (i) the date forty-five (45) days prior to such Other
     Annual Meeting Date or (ii) the tenth (10/th/) business day following the
     date such Other Annual Meeting Date is first publicly announced or
     disclosed.

          Any Shareholder desiring to nominate any person or persons (as the
     case may be) for election as a Trustee or Trustees of the Trust shall
     deliver, as part of such Shareholder Notice: (i) a statement in writing
     setting forth (A) the name, age, date of birth, business address, residence
     address and nationality of the person or persons to be nominated; (B) the
     class or series and number of all Shares of the Trust owned of record or
     beneficially by each such person or persons, as reported to such
     Shareholder by such nominee(s); (C) any other information regarding each
     such person required by paragraphs (a), (d), (e) and (f) of Item 401 of
     Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A)
     under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
     adopted by the Securities and Exchange Commission (or the corresponding
     provisions of any regulation or rule subsequently adopted by the Securities
     and Exchange Commission or any successor agency applicable to the Trust);
     (D) any other information regarding the person or persons to be nominated
     that would be required to be disclosed in a proxy statement or other
     filings required to be made in connection with solicitation of proxies for
     election of Trustees or directors pursuant to Section 14 of the Exchange
     Act and the rules and regulations promulgated thereunder; and (E) whether
     such Shareholder believes any nominee is or will be an "interested person"
     of the Trust (as defined in the Investment Company Act of 1940, as amended)
     and, if not an "interested person," information regarding each nominee that
     will be sufficient for the Trust to make such determination; and (ii) the
     written and signed consent of the person or persons to be nominated to be
     named as nominees and to serve as Trustees if elected. In addition, the
     Trustees may require any proposed nominee to furnish such other information
     as they may reasonably require or deem necessary to determine the
     eligibility of such proposed nominee to serve as a Trustee. Any Shareholder
     Notice required by this Section 10.6(c) in respect of a proposal to fix the
     number of Trustees shall also set forth a description of and the text of
     the proposal, which description and text shall state a fixed number of
     Trustees that otherwise complies with applicable law, these Bylaws and the
     Declaration of Trust.

          Without limiting the foregoing, any Shareholder who gives a
     Shareholder Notice of any matter proposed to be brought before a
     Shareholder meeting (whether or not involving nominees for Trustees) shall
     deliver, as part of such Shareholder Notice: (i) the description of and
     text of the proposal to be presented; (ii) a brief written statement of the
     reasons why such Shareholder favors the proposal; (iii) such Shareholder's
     name and address as they appear on the Trust's books; (iv) any other
     information relating to the Shareholder that would be required to be
     disclosed in a proxy statement or other filings required to be made in
     connection with the solicitation of proxies with respect to the matter(s)
     proposed pursuant to Section 14 of the Exchange Act and the rules and
     regulations promulgated thereunder; (v) the class or series and number of
     all Shares of the Trust owned beneficially and of record by such
     Shareholder; (vi) any material interest of such Shareholder in the matter
     proposed (other than as a Shareholder); (vii) a

                                      -9-

<PAGE>

     representation that the Shareholder intends to appear in person or by proxy
     at the Shareholder meeting to act on the matter(s) proposed; (viii) if the
     proposal involves nominee(s) for Trustees, a description of all
     arrangements or understandings between the Shareholder and each proposed
     nominee and any other person or persons (including their names) pursuant to
     which the nomination(s) are to be made by the Shareholder; and (ix) in the
     case of a Beneficial Owner, evidence establishing such Beneficial Owner's
     indirect ownership of, and entitlement to vote, Shares at the meeting of
     Shareholders. As used in this Section 10.6, Shares "beneficially owned"
     shall mean all Shares which such person is deemed to beneficially own
     pursuant to Rules 13d-3 and 13d-5 under the Exchange Act.

          (d) For any matter to be properly before any special meeting, the
     matter must be specified in the notice of meeting given by or at the
     direction of a majority of the Trustees and a majority of the Continuing
     Trustees pursuant to Section 10.2 of these Bylaws. In the event the Trust
     calls a special meeting for the purpose of electing one or more Trustees,
     any Shareholder may nominate a person or persons (as the case may be) for
     election to such position(s) as specified in the Trust's notice of meeting
     if and only if the Shareholder provides a notice containing the information
     required in the Shareholder Notice to the Secretary required with respect
     to annual meetings by Section 10.6(c) hereof, and such notice is delivered
     to or mailed and received at the principal executive office of the Trust
     not later than the close of business on the tenth (10th) day following the
     day on which the date of the special meeting and of the nominees proposed
     by the Trustees to be elected at such meeting are publicly announced or
     disclosed.

          (e) For purposes of this Section 10.6, a matter shall be deemed to
     have been "publicly announced or disclosed" if such matter is disclosed in
     a press release reported by the Dow Jones News Service, Associated Press or
     comparable national news service, in a document publicly filed by the Trust
     with the Securities and Exchange Commission, or in a Web site accessible to
     the public maintained by the Trust or by its investment adviser or an
     affiliate of such investment adviser with respect to the Trust.

          (f) In no event shall an adjournment or postponement (or a public
     announcement thereof) of a meeting of Shareholders commence a new time
     period (or extend any time period) for the giving of notice as provided in
     this Section 10.6.

          (g) The person presiding at any meeting of Shareholders, in addition
     to making any other determinations that may be appropriate to the conduct
     of the meeting, shall have the power and duty to (i) determine whether a
     nomination or proposal of other matters to be brought before a meeting and
     notice thereof have been duly made and given in the manner provided in this
     Section 10.6 and elsewhere in these Bylaws and the Declaration of Trust and
     (ii) if not so made or given, to direct and declare at the meeting that
     such nomination and/or such other matters shall be disregarded and shall
     not be considered. Any determination by the person presiding shall be
     binding on all parties absent manifest error.

                                      -10-

<PAGE>

          (h) Notwithstanding anything to the contrary in this Section 10.6 or
     otherwise in these Bylaws, unless required by federal law, no matter shall
     be considered at or brought before any annual or special meeting unless
     such matter has been approved for these purposes by a majority of the
     Continuing Trustees and, in particular, no Beneficial Owner shall have any
     rights as a Shareholder except as may be required by federal law.
     Furthermore, nothing in this Section 10.6 shall be construed as creating
     any implication or presumption as to the requirements of federal law.

                                   ARTICLE 11
        Statement Creating Five Series of Auction Market Preferred Shares

     A series of Auction Market Preferred Shares, Series T: 2,800 preferred
shares of beneficial interest, par value $.00001 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 Shares, Series T." Each share of Auction Market
Preferred Shares, Series T (sometimes referred to herein as "Series T AMPS") may
be issued on a date to be determined by the Board of Trustees of the Trust or
pursuant to their delegated authority; has an Initial Dividend Rate and an
Initial Dividend Payment Date as shall be determined in advance of the issuance
thereof by the Board of Trustees of the Trust or pursuant to their delegated
authority; and has such other preferences, voting powers, limitations as to
dividends, qualifications and terms and conditions of redemption as are set
forth in these Bylaws. The Series T AMPS shall constitute a separate series of
preferred shares of beneficial interest of the Trust, and each share of Series T
AMPS shall be identical.

     A series of Auction Market Preferred Shares, Series W: 2,800 preferred
shares of beneficial interest, par value $.00001 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 Shares, Series W." Each share of Auction Market
Preferred Shares, Series W (sometimes referred to herein as "Series W AMPS") may
be issued on a date to be determined by the Board of Trustees of the Trust or
pursuant to their delegated authority; has an Initial Dividend Rate and an
Initial Dividend Payment Date as shall be determined in advance of the issuance
thereof by the Board of Trustees of the Trust or pursuant to their delegated
authority; and has such other preferences, voting powers, limitations as to
dividends, qualifications and terms and conditions of redemption as are set
forth in these Bylaws. The Series W AMPS shall constitute a separate series of
preferred shares of beneficial interest of the Trust, and each share of Series W
AMPS shall be identical.

     A series of Auction Market Preferred Shares, Series TH: 2,800 preferred
shares of beneficial interest, par value $.00001 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 Shares, Series TH." Each share of Auction Market
Preferred Shares, Series TH (sometimes referred to herein as "Series TH AMPS")
may be issued on a date to be determined by the Board of Trustees of the Trust
or pursuant to their delegated authority; has an Initial Dividend Rate and an
Initial Dividend Payment Date as shall be determined in advance of the issuance
thereof by the Board of Trustees of the Trust or pursuant to their delegated
authority; and has such other preferences, voting powers, limitations

                                      -11-

<PAGE>

as to dividends, qualifications and terms and conditions of redemption as are
set forth in these Bylaws. The Series TH AMPS shall constitute a separate series
of preferred shares of beneficial interest of the Trust, and each share of
Series TH AMPS shall be identical.

     11.1 Definitions. (a) Unless the context or use clearly indicates another
or different meaning or intent, in Article 11 of these Bylaws the following
terms have the following meanings, whether used in the singular or plural:

     "Accountant's Confirmation" has the meaning set forth in Section 11.7(c) of
these Bylaws.

     "Additional Trustees" has the meaning set forth in Section 11.5(b) of these
Bylaws.

     "ADR" has the meaning set forth in paragraph (iii) of the definition of
"Fitch Eligible Assets."

     "Affiliate" means any Person known to the Auction Agent to be controlled
by, in control of, or under common control with, the Trust.

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

     "AMPS" means the Series T AMPS, the Series W AMPS and the Series TH AMPS.

     "Applicable Percentage" has the meaning set forth in Section 11.10(a)(vii)
of these Bylaws.

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

     "Applicable Spread" has the meaning set forth in Section 11.10(a)(vii) of
these Bylaws.

     "Approved Foreign Nations" has the meaning set forth in the definition of
"Fitch Eligible Assets."

     "Approved Price" means the "fair value" as determined by the Trust in
accordance with the valuation procedures adopted from time to time by the Board
of Trustees of the Trust and for which the Trust receives a mark-to-market price
(which, for the purpose of clarity, shall not mean Market Value) from an
independent source at least semi-annually.

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

     "Auction Agent" means Deutsche Bank Trust Company Americas unless and until
another commercial bank, trust company or other financial institution appointed
by a resolution

                                      -12-

<PAGE>

of the Board of Trustees of the Trust or a duly authorized committee thereof
enters into an agreement with the Trust to follow the Auction Procedures for the
purpose of determining the Applicable Rate and to act as transfer agent,
registrar, dividend paying agent and redemption agent for the AMPS.

     "Auction Date" has the meaning set forth in Section 11.10(a)(ii) of these
Bylaws.

     "Auction Procedures" means the procedures for conducting Auctions, as set
forth in Section 11.10 of these Bylaws.

     "Bank Loans" means direct purchases of, assignments of, participations in
and other interests in (a) any bank loan or (b) any loan made by an investment
bank, investment fund or other financial institution, provided that such loan
under this clause (b) is similar to those typically made, syndicated, purchased
or participated by a commercial bank or institutional loan investor in the
ordinary course of business.

     "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 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 pursuant to Section 11.10
of these Bylaws, that has been selected by the Trust 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 Section 11.10 of these Bylaws.

     "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 New
York City are authorized or obligated by law to close.

     "Canadian Bonds" has the meaning set forth in the definition of "Fitch
Eligible Assets."

     ""Catastrophe Bonds" means securities that entitle the holders thereof to
receive a fixed principal or similar amount and a specified return on such
amount, generally having the following characteristics: (1) the issuer of such
asset-backed security has entered into a swap, insurance contract or similar
arrangement with a counterparty pursuant to which such issuer agrees to pay
amounts to the counterparty upon the occurrence of certain specified events,
including: hurricanes, earthquakes and other events, and (2) payments on such
security depend primarily upon the occurrence and/or severity of such events.

     "Closing Transactions" has the meaning set forth in Section 11.8(a)(i) of
these Bylaws.

     "Common Shares" means the shares of beneficial interest designated as
common shares, par value $.00001 per share, of the Trust.

                                      -13-

<PAGE>

     "Cure Date" has the meaning set forth in Section 11.4(a)(ii) of these
Bylaws.

     "Date of Original Issue" means, with respect to any Auction Market
Preferred Share, the date on which the Trust first issues such share.

     "Debt Securities" has the meaning set forth in paragraph (vi) of the
definition of "Fitch Eligible Assets."

     "Declaration of Trust" means the Amended and Restated Agreement and
Declaration of Trust of the Trust dated August 14, 2003, as from time to time
amended and supplemented.

     "Deposit Securities" means cash and portfolio securities 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.

     "Discount Factor" means a Fitch Discount Factor or a Moody's Discount
Factor, as applicable.

     "Discounted Value" of any asset of the Trust means the quotient of the
Market Value of an Eligible Asset divided by the applicable Discount Factor,
provided that with respect to an Eligible Asset that is currently callable, the
Discounted Value will be equal to the quotient as calculated above or the call
price, whichever is lower, and that with respect to an Eligible Asset that is
prepayable, the Discounted Value will be equal to the quotient as calculated
above or the par value, whichever is lower.

     "Dividend Payment Date," with respect to AMPS, has the meaning set forth in
Section 11.2(b)(i) of these Bylaws.

     "Dividend Period" means the Initial Dividend Period, any Seven-Day Dividend
Period and any Special Dividend Period.

     "Eligible Asset" means a Fitch Eligible Asset (if Fitch Ratings is then
rating the AMPS), a Moody's Eligible Asset (if Moody's is then rating the AMPS)
and/or any asset included in the calculations used by any Rating Agency then
rating the AMPS for purposes of determining such Rating Agency's rating on the
AMPS, as applicable.

     "Existing Holder" means a Broker-Dealer, or any such other Person that may
be permitted by the Trust, that is listed as the holder of record of AMPS in the
Share Books.

     "Extension Period" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.

     "FHLB, FNMA and FFCB Debentures" has the meaning set forth in paragraph
(ix) of the definition of "Moody's Eligible Assets."

     "Fitch Discount Factor" means, for purposes of determining the Discounted
Value of any Fitch Eligible Asset, the percentage determined as follows. The
Fitch Discount Factor for any

                                      -14-

<PAGE>

Fitch Eligible Asset other than the securities set forth below will be the
percentage provided in writing by Fitch Ratings.

          (i) Debt Securities: The percentage determined by reference to the
     rating of the Debt Security with reference to the remaining term to
     maturity of the Debt Security (other than short-term Debt Securities
     covered by clause (iii) below), in accordance with the table set forth
     below.

<TABLE>
<CAPTION>
                                                   Fitch Rating Category
     Term to Maturity of Debt                                                      Not rated or
     Debt Security               AAA       AA         A          BBB        BB       below BB/1/
     -------------               ---       --         -          ---        --       -----------
     <S>                       <C>       <C>        <C>        <C>        <C>      <C>
     3 years or less (but
     longer than 1 year).....  106.38%   108.11%    109.89%    111.73%    129.87%     151.52%

     5 years or less (but
     longer than 3 years)....  111.11    112.99     114.94     116.96     134.24      151.52

     7 years or less (but
     longer than 5 years)....  113.64    115.61     117.65     119.76     135.66      151.52

     10 years or less (but
     longer than 7 years)....  115.61    117.65     119.76     121.95     136.74      151.52

     15 years or less (but
     longer than 10 years)...  119.76    121.95     124.22     126.58     139.05      151.52

     More than 15 years......  124.22    126.58     129.03     131.58     144.55      151.52
</TABLE>
     ------------
     /1/ If a security is not rated by Fitch Ratings but is rated by two other
     Rating Agencies, then the lower of the ratings on the security from the two
     other Rating Agencies will be used to determine the Fitch Discount Factor
     (e.g., where the S&P rating is A- and the Moody's rating is Baa1, a rating
     by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
     Ratings but is rated by only one other Rating Agency, then the rating on
     the security from the other Rating Agency will be used to determine the
     Fitch Discount Factor (e.g., where the only rating on a security is an S&P
     rating of AAA-, a rating by Fitch Ratings of AAA- will be used, and where
     the only rating on a security is a Moody's rating of Ba3, a rating by Fitch
     Ratings of BB- will be used). If a security is not rated by any Rating
     Agency, the Trust will use the percentage set forth under "Not rated or
     below BB" in this table.

          The Fitch Discount Factors presented in the immediately preceding
     table apply to Debt Securities that are Performing and have a Market Value
     determined by a Pricing Service or an Approved Price. The Fitch Discount
     Factor noted in the table above for a Debt Security not rated or rated
     below BB by Fitch Ratings shall apply to any non-Performing Debt Security
     with a price equal to or greater than $.20 per security. If a Debt Security
     does not have a Market Value determined by a Pricing Service or an Approved
     Price, a rating one rating category below the actual rating on the Debt
     Security will be used (e.g., where the actual rating is A-, the rating for
     Debt Securities rated BBB- will be used). The Fitch Discount Factor for a
     Debt Security issued by a limited partnership that is not a Rule 144A
     Security shall be the Discount Factor determined in accordance with the
     table set forth above multiplied by 105%.

                                      -15-

<PAGE>

          The Fitch Discount Factors presented in the immediately preceding
     table will also apply to (i) interest rate swaps and caps, whereby the
     rating of the counterparty to the swap or cap will be the rating used to
     determine the Fitch Discount Factor in the table; and (ii) TRACERs and
     TRAINs, whereby the ratings in the table will be applied to the underlying
     securities and the Market Value of each underlying security will be its
     proportionate amount of the Market Value of the TRACER or TRAIN. The Fitch
     Discount Factors presented in the immediately preceding table will also
     apply to corporate obligations backed by a guaranty, a letter of credit or
     insurance issued by a third party. If the third-party credit rating is the
     basis for the rating on the obligation, then the rating on the third party
     will be used to determine the Fitch Discount Factor in the table. The Fitch
     Discount Factors presented in the immediately preceding table will also
     apply to preferred trust certificates, the rating on which will be
     determined by the underlying debt instruments in the trust, unless such
     preferred trust certificates are determined by Fitch Ratings to qualify for
     a traditional equity discount factor, in which case the Fitch Discount
     Factor shall be 370%.

          (ii)Preferred shares: The percentage determined by reference to the
     rating of the preferred shares in accordance with the table set forth
     below.

                           Preferred Shares                      Discount Factor

      AAA Taxable Preferred ...................................       130%
      AA Taxable Preferred ....................................       133%
      A Taxable Preferred .....................................       135%
      BBB Taxable Preferred ...................................       139%
      BB Taxable Preferred ....................................       154%
      Not rated or below BB Taxable Preferred .................       161%
      Investment Grade DRD Preferred ..........................       164%
      Not rated or below Investment Grade DRD Preferred .......       200%/1/

     ------------
     /1/ If a security is not rated by Fitch Ratings but is rated by two other
     Rating Agencies, then the lower of the ratings on the security from the two
     other Rating Agencies will be used to determine the Fitch Discount Factor
     (e.g., where the S&P rating is A- and the Moody's rating is Baa1, a rating
     by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
     Ratings but is rated by only one other Rating Agency, then the rating on
     the security from the other Rating Agency will be used to determine the
     Fitch Discount Factor (e.g., where the only rating on a security is an S&P
     rating of AAA-, a rating by Fitch Rating of AAA- will be used, and where
     the only rating on a security is a Moody's rating of Ba3, a rating by Fitch
     Ratings of BB- will be used). If a security is not rated by any Rating
     Agency, the Trust will use the percentage set forth under "Not rated or
     below Investment Grade DRD Preferred" in this table.

          (iii) Short-term instruments: The Fitch Discount Factor applied to
     short-term portfolio securities, including without limitation Debt
     Securities with terms to maturity of one year or less, Short Term Money
     Market Instruments and municipal debt obligations with terms to maturity
     within the Fitch Exposure Period, will be (A) 100%, so long as such
     portfolio securities mature or have a demand feature at par exercisable
     within the Fitch Exposure Period; (B) 115%, so long as such portfolio
     securities neither mature nor have a demand feature exercisable at par
     within the Fitch Exposure Period; and (C) 125%, so long as such portfolio
     securities neither mature within the Fitch Exposure

                                      -16-

<PAGE>

     Period nor have a demand feature at par. A Fitch Discount factor of 100%
     will be applied to cash.

          (iv) U.S. Government Securities and U.S. Treasury Strips: The
     percentage determined by reference to the remaining term to maturity of the
     security in accordance with the table below.

          Time Remaining to Maturity                            Discount Factor
          --------------------------                            ---------------
          1 year or less                                           101.5%
          2 years or less (but longer than 1 year)                   103
          3 years or less (but longer than 2 years)                  105
          4 years or less (but longer than 3 years)                  107
          5 years or less (but longer than 4 years)                  109
          7 years or less (but longer than 5 years)                  112
          10 years or less (but longer than 7 years)                 114
          Greater than 10 years                                      122

          (v) Convertible securities: The Fitch Discount Factor applied to
     convertible securities will be (a) 200% for investment grade convertible
     securities and (b) 222% for below investment grade convertible securities
     so long as such convertible securities have neither (x) a conversion
     premium greater than 100% nor (y) a yield to maturity or yield to worst of
     greater than 15.00% above the corresponding Treasury curve.

          The Fitch Discount Factor applied to convertible securities which have
     conversion premiums of greater than 100% will be (a) 152% for investment
     grade convertible securities and (b) 179% for below investment grade
     convertible securities so long as such convertible securities do not have a
     yield to maturity or yield to worst of greater than 15.00% above the
     corresponding Treasury curve.

          The Fitch Discount Factor applied to convertible securities which have
     a yield to maturity or yield to worst of greater than 15.00% above the
     corresponding Treasury curve will be 370%.

          If a security is not rated by Fitch Ratings but is rated by two other
     Rating Agencies, then the lower of the ratings on the security from the two
     other Rating Agencies will be used to determine the Fitch Discount Factor
     (e.g., where the S&P rating is A- and the Moody's rating is Baa1, a rating
     by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
     Ratings but is rated by only one other Rating Agency, then the rating on
     the security from the other Rating Agency will be used to determine the
     Fitch Discount Factor (e.g., where the only rating on a security is an S&P
     rating of AAA, a rating by Fitch Ratings of AAA will be used, and where the
     only rating on a security is a Moody's rating of Ba3, a rating by Fitch
     Ratings of BB- will be used). If a security is not rated by any Rating
     Agency, the Trust will treat the security as if it were below investment
     grade.

                                      -17-

<PAGE>

          (vi) Rule 144A Securities: The Fitch Discount Factor applied to Rule
     144A Securities will be 110% of the Fitch Discount Factor which would apply
     were the securities registered under the Securities Act.

          (vii) Asset-backed and mortgage-backed securities: The percentage
     determined by reference to the asset type in accordance with the table set
     forth below.

<TABLE>
<CAPTION>
          Asset Type (with time remaining to maturity, if applicable)                Discount Factor
          ----------                                                                 ---------------
          <S>                                                                        <C>
          U.S. Treasury/agency securities (10 years or less) ......................       118%
          U.S. Treasury/agency securities (greater than 10 years) .................       127%
          U.S. agency sequentials (10 years or less) ..............................       128%
          U.S. agency sequentials (greater than 10 years) .........................       142%
          U.S. agency principal only securities ...................................       236%
          U.S. agency interest only securities
             (with Market Value greater than $.40) ...................................    696%
          U.S. agency interest only securities
             (with Market Value less than or equal to $.40) ..........................    214%
          AAA LockOut securities, interest only ...................................       236%
          U.S. agency planned amortization class bonds (10 years or less) .........       115%
          U.S. agency planned amortization class bonds (greater than 10 years) ....       136%
          AAA sequentials (10 years or less) ......................................       118%
          AAA sequentials (greater than 10 years) .................................       135%
          AAA planned amortization class bonds (10 years or less) .................       115%
          AAA planned amortization class bonds (greater than 10 years) ............       140%
          Jumbo mortgages rated AAA/1/ ............................................       123%
          Jumbo mortgages rated AA/1/ .............................................       130%
          Jumbo mortgages rated A/1/ ..............................................       136%
          Jumbo mortgages rated BBB/1/ ............................................       159%
          Commercial mortgage-backed securities rated AAA .........................       131%
          Commercial mortgage-backed securities rated AA ..........................       139%
          Commercial mortgage-backed securities rated A ...........................       148%
          Commercial mortgage-backed securities rated BBB .........................       177%
          Commercial mortgage-backed securities rated BB ..........................       283%
          Commercial mortgage-backed securities rated B ...........................       379%
          Commercial mortgage-backed securities rated CCC or not rated ............       950%
</TABLE>

          ------------
          /1/ Applies to jumbo mortgages, credit cards, auto loans, home equity
          loans, manufactured housing and prime mortgage-backed securities not
          issued by a U.S. agency or instrumentality.

          (viii)Bank Loans: The percentage determined by reference to the Fitch
     Loan Category in accordance with the table set forth below.

                        Fitch Loan Category           Discount Factor
                        -------------------           ---------------
                        A.........................          126%
                        B.........................          157
                        C.........................          184
                        D.........................          433

                                      -18-

<PAGE>

          (ix) REITs:

               (a) Common stock and preferred stock of REITs and other real
          estate companies:

<TABLE>
<CAPTION>
                                                                          Discount Factor
                                                                          ---------------
                   <S>                                                    <C>
                   REIT or other real estate company preferred stock             154%
                   REIT or other real estate company common stock                196%
</TABLE>

               (b) Corporate debt securities of REITs:

<TABLE>
<CAPTION>
          Term to Maturity   AAA      AA       A        BBB      BB       B        CCC
          ----------------   ---      --       -        ---      --       -        ---
          <S>                <C>      <C>      <C>      <C>      <C>      <C>      <C>
          1 year..........   111%     114%     117%     120%     121%     127%     227%
          2 year..........   116%     125%     125%     127%     132%     137%     137%
          3 year..........   121%     123%     127%     131%     133%     140%     225%
          4 year..........   126%     126%     129%     132%     136%     140%     164%
          5 year..........   131%     132%     135%     139%     144%     149%     185%
          7 year..........   140%     143%     146%     152%     159%     167%     228%
          10 year.........   141%     143%     147%     153%     160%     168%     232%
          12 year.........   144%     144%     150%     157%     165%     174%     249%
          15 year.........   148%     151%     155%     163%     172%     182%     274%
          20-30 year......   152%     156%     160%     169%     180%     191%     306%
</TABLE>

          If a security is not rated by Fitch Ratings but is rated by two other
     Rating Agencies, then the lower of the ratings on the security from the two
     other Rating Agencies will be used to determine the Fitch Discount Factor
     (e.g., where the S&P rating is A- and the Moody's rating is Baa1, a rating
     by Fitch Ratings of BBB+ will be used). If a security is not rated by Fitch
     Ratings but is rated by only one other Rating Agency, then the rating on
     the security from the other Rating Agency will be used to determine the
     Fitch Discount Factor (e.g., where the only rating on a security is an S&P
     rating of AAA, a rating by Fitch Ratings of AAA will be used, and where the
     only rating on a security is a Moody's rating of Ba3, a rating by Fitch
     Ratings of BB- will be used). If a security is not rated by any Rating
     Agency, the Trust will treat the security as if it were below investment
     grade.

          (x) Municipal debt obligations: The Fitch Discount Factor applied to
     municipal debt obligations will be the percentage determined by reference
     to the table set forth below.

                          Fitch Rating Category

     Fitch Exposure Period     AAA     AA      A      BBB     F1/1/   Unrated/2/
     ---------------------     ---     --      -      ---     -----   ----------

     7 weeks................   151%   159%    166%    173%     136%      225%
     8 weeks or less but
     greater than 7 weeks...   154    161     168     176      137       231
     9 weeks or less but
     greater than 8 weeks...   158    163     170     177      138       240

     ------------
     /1/ Municipal debt obligations rated by Fitch Ratings which do not mature
     or have a demand feature at par exercisable in 30 days and which do not
     have a long-term rating.
     /2/ If a security is not rated by Fitch Ratings but is rated by two other
     Rating Agencies, then the lower of the ratings on the security from the two
     other Rating Agencies will be used to determine the Fitch Discount

                                      -19-

<PAGE>

     Factor (e.g., where the S&P rating is A- and the Moody's rating is Baa1, a
     rating by Fitch Ratings of BBB+ will be used). If a security is not rated
     by Fitch Ratings but is rated by only one other Rating Agency, then the
     rating on the security from the other Rating Agency will be used to
     determine the Fitch Discount Factor (e.g., where the only rating on a
     security is an S&P rating of AAA-, a rating by Fitch Ratings of AAA- will
     be used, and where the only rating on a security is a Moody's rating of
     Ba3, a rating by Fitch Ratings of BB- will be used). If a security is not
     rated by any Rating Agency, the Trust will use the percentage set forth
     under "Unrated" in this table.

          (xi) Foreign Bonds: The Fitch Discount Factor (A) for a Foreign Bond
     the principal of which (if not denominated in U.S. dollars) is subject to a
     currency hedging transaction will be the Fitch Discount Factor that would
     otherwise apply to such Foreign Bonds in accordance with this definition
     and (B) for (1) a Foreign Bond the principal of which (if not denominated
     in U.S. dollars) is not subject to a currency hedging transaction and (2) a
     bond issued in a currency other than U.S. dollars by a corporation, limited
     liability company or limited partnership domiciled in, or the government or
     any agency, instrumentality or political subdivision of, a nation other
     than an Approved Foreign Nation, will be 370%.

          (xii) Structured Notes: The Fitch Discount Factor applied to
     Structured Notes will be (A) in the case of a corporate issuer, the Fitch
     Discount Factor determined in accordance with paragraph (i) under this
     definition, whereby the rating on the issuer of the Structured Note will be
     the rating on the Structured Note for purposes of determining the Fitch
     Discount Factor in the table in paragraph (i); and (B) in the case of an
     issuer that is the U.S. government or an agency or instrumentality thereof,
     the Fitch Discount Factor determined in accordance with paragraph (iii)
     under this definition.

          (xiii) Unhedged foreign investments: A discount factor of 105% shall
     be applied to the Market Value of unhedged foreign investments otherwise
     determined in accordance with the preceding paragraphs; provided, however,
     if the foreign issuer of such unhedged foreign investment is from a country
     whose sovereign debt rating in a non-local currency is not assigned a
     rating of `AA' or better by Fitch, a discount factor of 117% shall be
     applied to the Market Value thereof otherwise determined in accordance with
     the preceding paragraphs.

          (xiv) Catastrophe Bonds: The Fitch Discount Factor applied to
     Catastrophe Bonds will be 333.33%.

          "Fitch Eligible Assets" means

          (i) cash (including interest and dividends due on assets rated (A) BBB
     or higher by Fitch Ratings or the equivalent by another Rating Agency if
     the payment date is within five Business Days of the Valuation Date, (B) A
     or higher by Fitch Ratings or the equivalent by another Rating Agency if
     the payment date is within thirty days of the Valuation Date, and (C) A+ or
     higher by Fitch Ratings or the equivalent by another Rating Agency if the
     payment date is within the Fitch Exposure Period) and receivables for Fitch
     Eligible Assets sold if the receivable is due within five Business Days of
     the Valuation Date, and if the trades which generated such receivables are
     (A) settled through

                                      -20-

<PAGE>

         clearing house firms with respect to which the Trust has received prior
         written authorization from Fitch Ratings or (B) (1) with counterparties
         having a long-term debt rating of at least BBB- from Fitch Ratings or
         the equivalent from another Rating Agency or (2) with counterparties
         having a Short Term Money Market Instrument rating of at least F1+ by
         Fitch Ratings or the equivalent by another Rating Agency;

              (ii) preferred shares if (A) dividends on such preferred shares
         are cumulative, (B) such securities provide for the periodic payment of
         dividends thereon in cash in U.S. dollars or euros and do not provide
         for conversion or exchange into, or have warrants attached entitling
         the holder to receive common stock or its equivalent at any time over
         the respective lives of such securities, (C) the issuer of such a
         preferred shares has common stock listed on either the New York Stock
         Exchange or the American Stock Exchange, (D) the issuer of such
         preferred shares has a senior debt rating or preferred stock rating
         from Fitch Ratings of BBB- or higher or the equivalent rating by
         another Rating Agency and (E) the preferred shares are part of an issue
         that is at least $50 million;

              (iii) (A) common stocks (1) which are traded on the New York Stock
         Exchange or the American Stock Exchange or in the over-the-counter
         market, (2) which, if cash dividend paying, pay cash dividends in U.S.
         dollars, and (3) which may be sold without restriction by the Trust;
         provided, however, that (a) common stock which, while a Fitch Eligible
         Asset owned by the Trust, ceases paying any regular cash dividend will
         no longer be considered a Fitch Eligible Asset until 60 calendar days
         after the date of the announcement of such cessation, unless the issuer
         of the common stock has senior debt securities rated at least A- by
         Fitch and (b) the aggregate Market Value of the Trust's holdings of the
         common stock of any issuer in excess of 5% per U.S. issuer of the
         number of outstanding shares of such issuer times the Market Value of
         such common stock shall not be a Fitch's Eligible Asset; and (B) common
         stocks or their equivalent denominated in any currency other than the
         U.S. dollar and common stocks or their equivalent of issuers formed
         under the laws of jurisdictions other than the United States, its
         states and the District of Columbia for which there are
         dollar-denominated American Depository Receipts ("ADRs") which are
         traded in the United States on exchanges or over-the-counter and are
         issued by banks formed under the laws of the United States, its states
         or the District of Columbia; provided, however, that the aggregate
         Market Value of the Trust's holdings of securities denominated in
         currencies other than the U.S. dollar and ADRs in excess of 3% of the
         aggregate Market Value of the outstanding shares of common stock or its
         equivalent of such issuer or in excess of 10% of the Market Value of
         the Trust's Fitch Eligible Assets with respect to issuers formed under
         the laws of any single such non-U.S. jurisdiction other than Argentina,
         Australia, Brazil, Chile, France, Germany, Italy, Japan, Korea, Mexico,
         Spain or the United Kingdom (each an "Approved Foreign Nation," and
         collectively the "Approved Foreign Nations") or Canada shall not be a
         Fitch Eligible Asset;

              (iv) Short Term Money Market Instruments so long as (A) such
         securities are rated at least F1+ by Fitch Ratings or the equivalent by
         another Rating Agency, (B) in the case of demand deposits, time
         deposits and overnight funds, the supporting entity is rated at

                                      -21-

<PAGE>

         least A by Fitch Ratings or the equivalent by another Rating Agency, or

         (C) in all other cases, the supporting entity (1) is rated at least A
         by Fitch Ratings or the equivalent by another Rating Agency and the
         security matures within one month, (2) is rated at least A by Fitch
         Ratings or the equivalent by another Rating Agency and the security
         matures within three months or (3) is rated at least AA by Fitch
         Ratings or the equivalent by another Rating Agency and the security
         matures within six months;

              (v) U.S. Government Securities and U.S. Treasury Strips;

              (vi) debt securities if (A) such securities have been registered
         under the Securities Act or are restricted as to resale under federal
         securities laws but are eligible for resale pursuant to Rule 144A under
         the Securities Act as determined by the Trust's investment manager or
         portfolio manager acting pursuant to procedures approved by the Board
         of Trustees of the Trust; and (B) such securities are issued by (1) a
         U.S. corporation, limited liability company or limited partnership, (2)
         a corporation, limited liability company or limited partnership
         domiciled in an Approved Foreign Nation, (3) the government of any
         Approved Foreign Nation or any of its agencies, instrumentalities or
         political subdivisions (the debt securities of Approved Foreign Nation
         issuers being referred to collectively as "Foreign Bonds"), (4) a
         corporation, limited liability company or limited partnership domiciled
         in Canada or (5) the Canadian government or any of its agencies,
         instrumentalities or political subdivisions (the debt securities of
         Canadian issuers being referred to collectively as "Canadian Bonds").
         Foreign Bonds held by the Trust will qualify as Fitch Eligible Assets
         only up to a maximum of 20% of the aggregate Market Value of all assets
         constituting Fitch Eligible Assets. Similarly, Canadian Bonds held by
         the Trust will qualify as Fitch Eligible Assets only up to a maximum of
         20% of the aggregate Market Value of all assets constituting Fitch
         Eligible Assets. Notwithstanding the limitations in the two preceding
         sentences, Foreign Bonds and Canadian Bonds held by the Trust will
         qualify as Fitch Eligible Assets only up to a maximum of 30% of the
         aggregate Market Value of all assets constituting Fitch Eligible
         Assets. In addition, bonds which are issued in connection with a
         reorganization under U.S. federal bankruptcy law ("Reorganization
         Bonds") will be considered debt securities constituting Fitch Eligible
         Assets if (a) they provide for periodic payment of interest in cash in
         U.S. dollars or euros; (b) they do not provide for conversion or
         exchange into equity capital at any time over their lives; (c) they
         have been registered under the Securities Act or are restricted as to
         resale under federal securities laws but are eligible for trading under
         Rule 144A promulgated pursuant to the Securities Act as determined by
         the Trust's investment manager or portfolio manager acting pursuant to
         procedures approved by the Board of Trustees of the Trust; (d) they
         were issued by a U.S. corporation, limited liability company or limited
         partnership; and (e) at the time of purchase at least one year had
         elapsed since the issuer's reorganization. Reorganization Bonds may
         also be considered debt securities constituting Fitch Eligible Assets
         if they have been approved by Fitch Ratings, which approval shall not
         be unreasonably withheld. All debt securities satisfying the foregoing
         requirements and restrictions of this paragraph (vi) are herein
         referred to as "Debt Securities."

                                      -22-

<PAGE>

              (vii) asset-backed and mortgage-backed securities;

              (viii) Rule 144A Securities;

              (ix) Bank Loans;

              (x) municipal debt obligations;

              (xi) TRACERs, TRAINs and Structured Notes;

              (xii) interest rate swaps entered into according to International
         Swap Dealers Association standards if (A) the counterparty to the swap
         transaction has a short-term rating of not less than F1 from Fitch
         Ratings or the equivalent by another Rating Agency, or, if the swap
         counterparty does not have a short-term rating, the counterparty has a
         senior unsecured long-term debt rating of AA or higher from Fitch
         Ratings or the equivalent from another Rating Agency and (B) the
         original aggregate notional amount of the interest rate swap
         transaction or transactions is not greater than the liquidation
         preference of the Preferred Shares originally issued;

              (xiii) any common stock, preferred stock or any debt security of
         REITs or real estate companies;

              (xiv) Catastrophe Bonds; and

              (xv) unrated debt securities issued by an issuer which (A) has not
         filed for bankruptcy in the past three years; (B) is current on all
         interest and principal on its fixed income obligations; and (C) is
         current on all preferred stock dividends.

         Financial contracts, as such term is defined in Section 3(c)(2)(B)(ii)
of the 1940 Act, not otherwise provided for in this definition may be included
in Fitch Eligible Assets, but, with respect to any financial contract, only upon
receipt by the Trust of a writing from Fitch Ratings specifying any conditions
on including such financial contract in Fitch Eligible Assets and assuring the
Trust that including such financial contract in the manner so specified would
not affect the credit rating assigned by Fitch Ratings to the AMPS.

     In addition, portfolio holdings as described below must be within the
following diversification and issue size requirements in order to be included in
Fitch's Eligible Assets:

<TABLE>
<CAPTION>
         Security Rated At   Maximum Single      Maximum Single      Minimum Issue Size
         Least                 Issuer/1/         Industry/1/,/2/      ($ in million)/3/
         <S>                 <C>                 <C>                 <C>
              AAA                    100%               100%          $100
              AA-                     20                 75           100
              A-                      10                 50           100
              BBB-                    6                  25           100
              BB-                     4                  16           50
              B-                      3                  12           50
              CCC                     2                   8           50
</TABLE>

     ------------
     /1/ Percentages represent a portion of the aggregate market value of
     corporate debt securities.

                                      -23-

<PAGE>

     /2/ Industries are determined according to Fitch's Industry
     Classifications, as defined herein.
     /3/ Preferred stock has a minimum issue size of $50 million for all rating
     categories in the table.

         Where the Trust sells an asset and agrees to repurchase such asset in
the future, the Discounted Value of such asset will constitute a Fitch Eligible
Asset and the amount the Trust is required to pay upon repurchase of such asset
will count as a liability for the purposes of the Preferred Shares Basic
Maintenance Amount. Where the Trust purchases an asset and agrees to sell it to
a third party in the future, cash receivable by the Trust thereby will
constitute a Fitch Eligible Asset if the long-term debt of such other party is
rated at least A- by Fitch Ratings or the equivalent by another Rating Agency
and such agreement has a term of 30 days or less; otherwise the Discounted Value
of such purchased asset will constitute a Fitch Eligible Asset.

         Notwithstanding the foregoing, an asset will not be considered a Fitch
Eligible Asset to the extent that it has been irrevocably deposited for the
payment of (i)(A) through (i)(E) under the definition of Preferred Shares Basic
Maintenance Amount or to the extent it is subject to any Liens, except for (A)
Liens which are being contested in good faith by appropriate proceedings and
which Fitch Ratings has indicated to the Trust will not affect the status of
such asset as a Fitch Eligible Asset, (B) Liens for taxes that are not then due
and payable or that can be paid thereafter without penalty, (C) Liens to secure
payment for services rendered or cash advanced to the Trust by its investment
manager or portfolio manager, the Trust's custodian, transfer agent or registrar
or the Auction Agent and (D) Liens arising by virtue of any repurchase
agreement.

         "Fitch Exposure Period" means the period commencing on (and including)
a given Valuation Date and ending 49 days thereafter.

         "Fitch Hedging Transactions" has the meaning set forth in Section
11.8(f) of these Bylaws.

         "Fitch Industry Classifications" means, for the purposes of determining
Fitch Eligible Assets, each of the following industry classifications (or such
other classifications as Fitch Ratings may from time to time approve for
application to the AMPS):

         1.  Aerospace & Defense
         2.  Automobiles

         3.  Banking, Finance & Real Estate
         4.  Broadcasting & Media
         5.  Building & Materials
         6.  Business Services
         7.  Cable
         8.  Chemicals
         9.  Computers & Electronics
         10. Consumer Products
         11. Energy
         12. Environmental Services
         13. Farming & Agriculture
         14. Food, Beverage & Tobacco

                                      -24-

<PAGE>

         15. Gaming, Lodging & Restaurants
         16. Healthcare & Pharmaceuticals
         17. Industrial/Manufacturing
         18. Insurance
         19. Leisure & Entertainment
         20. Metals & Mining
         21. Miscellaneous
         22. Packaging and Containers
         23. Paper & Forest Products
         24. Retail
         25. Sovereign
         26. Structured Finance Obligations
         27. Supermarkets & Drugstores
         28. Telecommunications
         29. Textiles & Furniture
         30. Transportation
         31. Utilities

         The Trust shall use its discretion in determining which industry
classification is applicable to a particular investment.

         "Fitch Loan Category" means the following four categories (and, for
purposes of this categorization, the Market Value of a Fitch Eligible Asset
trading at par is equal to $1.00):

              (i) "Fitch Loan Category A" means Performing Bank Loans which have
         a Market Value or an Approved Price greater than or equal to $.90.

              (ii) "Fitch Loan Category B" means: (A) Performing Bank Loans
         which have a Market Value or an Approved Price of greater than or equal
         to $.80 but less than $.90; and (B) non-Performing Bank Loans which
         have a Market Value or an Approved Price greater than or equal to $.85.

              (iii) "Fitch Loan Category C" means: (A) Performing Bank Loans
         which have a Market Value or an Approved Price of greater than or equal
         to $.70 but less than $.80; (B) non-Performing Bank Loans which have a
         Market Value or an Approved Price of greater than or equal to $.75 but
         less than $.85; and (C) Performing Bank Loans without an Approved Price
         rated BB- or higher by Fitch Ratings. If a security is not rated by
         Fitch Ratings but is rated by two other Rating Agencies, then the lower
         of the ratings on the security from the two other Rating Agencies will
         be used to determine the Fitch Discount Factor (e.g., where the S&P
         rating is A- and the Moody's rating is Baa1, a rating by Fitch Ratings
         of BBB+ will be used). If a security is not rated by Fitch Ratings but
         is rated by only one other Rating Agency, then the rating on the
         security from the other Rating Agency will be used to determine the
         Fitch Discount Factor (e.g., where the only rating on a security is an
         S&P rating of AAA-, a rating by Fitch Ratings of AAA- will be used, and
         where the only rating on a security is a Moody's rating of Ba3, a
         rating by Fitch Ratings of BB- will be used).

                                      -25-

<PAGE>

              (iv) "Fitch Loan Category D" means Bank Loans not described in any
of the foregoing categories.

         Notwithstanding any other provision contained above, for purposes of
determining whether a Fitch Eligible Asset falls within a specific Fitch Loan
Category, to the extent that any Fitch Eligible Asset would fall within more
than one of the Fitch Loan Categories, such Fitch Eligible Asset shall be deemed
to fall into the Fitch Loan Category with the lowest applicable Fitch Discount
Factor.

         "Fitch Ratings" means Fitch, Inc., doing business as Fitch Ratings, or
its successors.

         "Foreign Bonds" has the meaning set forth in clause (vi) of the
definition of "Fitch Eligible Assets."

         "Forward Commitment" has the meaning set forth in Section 11.8(d) of
these Bylaws.

         "Holder" means a Person identified as a holder of record of AMPS in the
Share Register.

         "Independent Accountant" means a nationally recognized accountant, or
firm of accountants, that is, with respect to the Trust, an independent public
accountant or firm of independent public accountants under the Securities Act
and serving as such for the Trust.

         "Initial Dividend Payment Date" means, with respect to a series of
AMPS, the initial dividend payment date with respect to the Initial Dividend
Period as determined by the Board of Trustees of the Trust or pursuant to their
delegated authority with respect to such series.

         "Initial Dividend Period" has the meaning set forth in Section
11.2(c)(i) of these Bylaws.

         "Initial Dividend Rate" means, with respect to a series of AMPS, the
rate per annum applicable to the Initial Dividend Period for such series of
AMPS.

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

         "LIBOR Rate," on any Auction Date, means (i) the rate for deposits in
U.S. dollars for the designated Dividend Period, which appears on display page
3750 of Moneyline's Telerate Service ("Telerate Page 3750") (or such other page
as may replace that page on that service, or such other service as may be
selected by the LIBOR Dealer or its successors that are LIBOR Dealers) as of
11:00 a.m., London time, on the day that is the London Business Day preceding
the Auction Date (the "LIBOR Determination Date"), or (ii) if such rate does not
appear on Telerate Page 3750 or such other page as may replace such Telerate
Page 3750, (A) the LIBOR Dealer will 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

                                      -26-

<PAGE>

Dealer to the Reference Banks, (B) if at least two of the Reference Banks
provide such quotations, LIBOR Rate will equal such arithmetic mean of such
quotations, (C) if only one or none of the Reference Banks provide such
quotations, LIBOR Rate will 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 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, LIBOR Rate will be LIBOR Rate as determined on the previous
Auction Date. If the number of Dividend Period days will be (i) 7 or more but
fewer than 21 days, such rate will be the seven-day LIBOR rate; (ii) more than
21 but fewer than 49 days, such rate will be the one-month LIBOR rate; (iii) 49
or more but fewer than 77 days, such rate will be the two-month LIBOR rate; (iv)
77 or more but fewer than 112 days, such rate will be the three-month LIBOR
rate; (v) 112 or more but fewer than 140 days, such rate will be the four-month
LIBOR rate; (vi) 140 or more but fewer than 168 days, such rate will be the
five-month LIBOR rate; (vii) 168 or more but fewer than 189 days, such rate will
be the six-month LIBOR rate; (viii) 189 or more but fewer than 217 days, such
rate will be the seven-month LIBOR rate; (ix) 217or more but fewer than 252
days, such rate will be the eight-month LIBOR rate; (x) 252 or more but fewer
than 287 days, such rate will be the nine-month LIBOR rate; (xi)287 or more but
fewer than 315 days, such rate will be the ten-month LIBOR rate; (xii) 315 or
more but fewer than 343 days, such rate will be the eleven-month LIBOR rate; and
(xiii) 343 or more but fewer than 365 days, such rate will be the twelve-month
LIBOR rate.

         "Lien" means any material lien, mortgage, pledge, security interest or
security agreement of any kind.

         "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
(sometimes referred to as a "Long Term Special Rate Period").

         "Mandatory Redemption Price" means $25,000 per Auction Market Preferred
Share plus an amount equal to accumulated but unpaid dividends (whether or not
earned or declared) to (but not including) the date fixed for redemption.

         "Market Value" of any asset of the Trust shall be the market value
thereof determined by a Pricing Service. The Market Value of any asset shall
include any interest accrued thereon. A Pricing Service shall value portfolio
securities at the quoted bid prices or the mean between the

                                      -27-

<PAGE>

quoted bid and asked prices 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 a Pricing Service using methods
which include consideration of: yields or prices of securities of comparable
quality, type of issue, coupon, maturity and rating; indications as to value
from dealers; and general market conditions. A Pricing Service may employ
electronic data processing techniques and/or a matrix system to determine
valuations. In the event a Pricing Service is unable to value a security, the
security shall be valued at the lower of two bid quotations obtained by the
Trust 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. If two bid quotations are not readily available for any
securities, such securities shall be valued in good faith at fair value pursuant
to procedures approved by the Board of Trustees of the Trust. Futures contracts
and options are valued at the 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 in good faith pursuant to
procedures approved by the Board of Trustees of the Trust. All other assets will
be valued at fair value on a consistent basis using methods determined in good
faith by the Board of Trustees of the Trust.

         "Maximum Applicable Rate," with respect to AMPS, has the meaning set
forth in Section 11.10(a)(vii) of these Bylaws.

         "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 as
follows. The Moody's Discount Factor for any Moody's Eligible Asset other than
the securities set forth below will be the percentage provided in writing by
Moody's.

            (i) Convertible securities (including convertible preferred stock):
The percentage determined by reference to the sector groupings of the issuer of
the convertible security with reference to the rating of such security, in
accordance with the table set forth below.

Rating/1/                         Discount Factors/2/
---------                         -------------------
               Utility       Industrial         Financial      Transportation
               -------       ----------         ---------      --------------
Aaa             162%            256%               233%             250%
Aa               167            261                238               265
A                172            266                243               275
Baa              188            282                259               285
Ba               195            290                265               290
B                199            293                270               295
Unrated          300            300                300               300

         ---------
         /1/ Unless conclusions regarding liquidity risk as well as estimates of
         both the probability and severity of default for applicable Trust
         assets can be derived from other sources as well as combined with a
         number of sources, unrated fixed-income and convertible securities
         (which are securities that are not rated by any of Moody's, S&P or
         Fitch Ratings) are limited to 10% of Moody's Eligible Assets for
         purposes of

                                      -28-

<PAGE>

         calculations related to the Preferred Shares Basic Maintenance Amount.
         If a convertible security is not rated by any of Moody's, S&P or Fitch
         Ratings, the Trust will use the applicable percentage set forth in the
         row entitled "Unrated" in the table above. Ratings assigned by S&P
         and/or Fitch Ratings are generally accepted at face value. However,
         adjustments to face value may be made to particular categories of
         credits for which the ratings by S&P and/or Fitch Ratings do not seem
         to approximate a Moody's rating equivalent. Split-rated securities
         assigned by S&P and Fitch Ratings (i.e., these Rating Agencies assign
         different rating categories to the security) will be accepted at the
         lower of the two ratings.

         /2/ Discount factors are for Seven-week exposure period.

Upon conversion to common stock, the Discount Factors applicable to common stock
will apply:

Common Stocks            Utility            Industrial              Financial
-------------            -------            ----------              ---------
Seven week exposure       170%                 264%                    241%
period

              (ii) Corporate debt securities (non-convertible): The percentage
         determined by reference to the rating on such asset with reference to
         the remaining term to maturity of such asset, in accordance with the
         table set forth below.

<TABLE>
<CAPTION>
                                                                      Moody's Rating Category

     Term to Maturity of                                                                                  Below B and
                                                                                                          -----------
     Corporate Debt Security                        Aaa      Aa       A         Baa      Ba         B       Unrated/1/
     -----------------------                        ---      --       -         ---      --         -       -------
     <S>                                            <C>      <C>      <C>       <C>      <C>        <C>   <C>
     1 year or less                                 109%     112%     115%      118%     137%       150%      250%
     2 years or less (but longer than 1 year)       115      118      122       125      146        160       250
     3 years or less (but longer than 2 years)      120      123      127       131      153        168       250
     4 years or less (but longer than 3 years)      126      129      133       138      161        176       250
     5 years or less (but longer than 4 years)      132      135      139       144      168        185       250
     7 years or less (but longer than 5 years)      139      143      147       152      179        197       250
     10 years or less (but longer than 7 years)     145      150      155       160      189        208       250
     15 years or less (but longer than 10 years)    150      155      160       165      196        216       250
     20 years or less (but longer than 15 years)    150      155      160       165      196        228       250
     30 years or less (but longer than 20 years)    150      155      160       165      196        229       250
     Greater than 30 years                          165      173      181       189      205        240       250
</TABLE>

         /1/ Unless conclusions regarding liquidity risk as well as estimates of
         both the probability and severity of default for applicable Trust
         assets can be derived from other sources as well as combined with a
         number of sources as presented by the Trust to Moody's, securities
         rated below B by Moody's and, unrated fixed-income and convertible
         securities (which are securities that are not rated by any of Moody's,
         S&P or Fitch Ratings) are limited to 10% of Moody's Eligible Assets for
         purposes of calculations related to the Preferred Shares Basic
         Maintenance Amount. If a corporate debt security is not rated by any of
         Moody's, S&P or Fitch Ratings, the Trust will use the applicable
         percentage set forth under the column entitled "Below B and Unrated" in
         the table above. Ratings assigned by S&P and/or Fitch Ratings 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 ratings by S&P and/or Fitch Ratings do not seem to approximate a
         Moody's rating equivalent. Split-rated securities assigned by S&P and
         Fitch Ratings (i.e., these Rating Agencies assign different rating
         categories to the security) will be accepted at the lower of the two
         ratings.

         The Moody's Discount Factors presented in the immediately preceding
         table will also apply to Moody's Eligible Assets that are FHLB, FNMA
         and FFCB Debentures and to

                                      -29-

<PAGE>

         rated TRACERs and TRAINs, whereby the ratings in the table will be
         applied to the underlying securities and the Market Value of each
         underlying security will be its proportionate amount of the Market
         Value of the TRACER or TRAIN, provided that (i) the Moody's Discount
         Factor for any TRAIN or TRACER rated by Moody's will be the percentage
         determined, based on the Moody's rating of the TRAIN or TRACER, in
         accordance with the table set forth above and (ii) the Moody's
         Discount Factors determined from the table shall be multiplied by a
         factor of 120% for purposes of calculating the Discounted Value of
         TRAINs. The Moody's Discount Factors presented in the immediately
         preceding table will also apply to corporate debt securities that do
         not pay interest in U.S. dollars or euros. The Trust will consult with
         Moody's to determine incremental discount factors for non-U.S. dollar
         and non-euro denominated bonds.

              (iii)Preferred stock (other than convertible preferred stock,
         which is subject to paragraph (i) above): The Moody's Discount Factor
         for preferred stock shall be (A) for preferred stocks issued by a
         utility, 155%; (B) for preferred stocks of industrial and financial
         issuers, 209%; and (C) for auction rate preferred stocks, 350%.

              (iv) Short-term instruments: The Moody's Discount Factor applied
         to short-term portfolio securities, including without limitation
         short-term corporate debt securities, Short Term Money Market
         Instruments and short-term municipal debt obligations, will be (A)
         100%, so long as such portfolio securities mature or have a demand
         feature at par exercisable within the Moody's Exposure Period; (B)
         115%, so long as such portfolio securities do not mature within the
         Moody's Exposure Period, or have a demand feature at par not
         exercisable within the Moody's Exposure Period; and (C) 125%, if such
         securities are not rated by Moody's, so long as such portfolio
         securities are rated at least A-1+/AA or SP-1+/AA by S&P or Fitch
         Ratings and mature or have a demand feature at par exercisable within
         the Moody's Exposure Period. A Moody's Discount Factor of 100% will be
         applied to cash.

              (v) U.S. Government Securities and U.S. Treasury Strips: The
         percentage determined by reference to the remaining term to maturity of
         such asset, in accordance with the table set forth below.

<TABLE>
<CAPTION>
                                                       U.S. Government Securities    U.S. Treasury Strips
         Remaining Term to Maturity                          Discount Factor          Discount Factor
         --------------------------                          ---------------          ---------------
         <S>                                           <C>                           <C>
         1 year or less                                          107%                         107%
         2 years or less (but longer than 1 year)                113                          115
         3 years or less (but longer than 2 years)               118                          121
         4 years or less (but longer than 3 years)               123                          128
         5 years or less (but longer than 4 years)               128                          135
         7 years or less (but longer than 5 years)               135                          147
         10 years or less (but longer than 7 years)              141                          163
         15 years or less (but longer than 10 years)             146                          191
         20 years or less (but longer than 15 years)             154                          218
         30 years or less (but longer than 20 years)             154                          244
</TABLE>

              (vi) Rule 144A Securities: The Moody's Discount Factor applied to
         Rule 144A Securities for Rule 144A Securities whose terms include
         rights to registration under the

                                      -30-

<PAGE>

         Securities Act within one year and Rule 144A Securities which do not
         have registration rights within one year will be 120% and 130%,
         respectively, of the Moody's Discount Factor which would apply were
         the securities registered under the Securities Act.

                                      -31-

<PAGE>

       (vii) Bank Loans: The Moody's Discount Factor applied to senior Bank
Loans ("Senior Loans") shall be the percentage specified in accordance with the
table set forth below (or such lower percentages as Moody's may approve in
writing from time to time):

<TABLE>
<CAPTION>
                                                       Moody's Rating Category
                                                       -----------------------
                                                                          Caa and below (including
                                                                          ------------------------
            Type of Loan          Aaa-A      Baa and Ba/1/      B/1/     distressed and unrated)/1/
            ------------          -----      -------------      ----     --------------------------
       <S>                        <C>        <C>                <C>      <C>
       Senior Loans * $250 MM      118%           136%          149%               250%
       Non-Senior Loans *          128%           146%          159%               260%
       $250 MM
       Loans ** $250 MM            138%           156%          169%               270%
</TABLE>

       /1/ If a Senior Loan is not rated by any of Moody's, S&P or Fitch
       Ratings, the Trust will use the applicable percentage set forth under
       the column entitled "Caa and below (including distressed and unrated)"
       in the table above. Ratings assigned by S&P and/or Fitch Ratings are
       generally accepted by Moody's at face value. However, adjustments to
       face value may be made to particular categories of securities for which
       the ratings by S&P and/or Fitch Ratings do not seem to approximate a
       Moody's rating equivalent. Split-rated securities assigned by S&P and
       Fitch Ratings (i.e., these Rating Agencies assign different rating
       categories to the security) will be accepted at the lower of the two
       ratings; provided however, that, in a situation where a security is
       rated "B" (or equivalent) by a given Rating Agency and rated "Caa" (or
       equivalent) by another Rating Agency, the Trust will use the applicable
       percentage set forth under the column entitled "B" in the table above.

              (viii) Asset-backed and mortgage-backed securities: The Moody's
       Discount Factor applied to asset-backed securities shall be 131%. The
       Moody's Discount Factor applied to collateralized mortgage obligations,
       planned amortization class bonds and targeted amortization class bonds
       shall be determined by reference to the weighted average life of the
       security and whether cash flow is retained (i.e., controlled by a
       trustee) or excluded (i.e., not controlled by a trustee), in accordance
       with the table set forth below.

<TABLE>
<CAPTION>
       Remaining Term to Maturity                       Cash Flow Retained     Cash Flow Excluded
       --------------------------                       ------------------     ------------------
       <S>                                              <C>                    <C>
       3 years or less                                        133%                      141%
       7 years or less (but longer than 3 years)              142                       151
       10 years or less (but longer than 7 years)             158                       168
       20 years or less (but longer than 10 years)            174                       185
</TABLE>

              The Moody's Discount Factor applied to residential mortgage
       pass-throughs (including private-placement mortgage pass-throughs) shall
       be determined by reference to the coupon paid by such security and
       whether cash flow is retained (i.e., controlled by a trustee) or excluded
       (i.e., not controlled by a trustee), in accordance with the table set
       forth below.

*  Less than
** Greater than

                                      -32-

<PAGE>

               Coupon           Cash Flow Retained            Cash Flow Excluded
               ------           ------------------            ------------------
               5%                     166%                            173%
               6                      162                             169
               7                      158                             165
               8                      154                             161
               9                      151                             157
               10                     148                             154
               11                     144                             154
               12                     142                             151
               13                     139                             148
               adjustable             165                             172

       The Moody's Discount Factor applied to fixed-rate pass-throughs that are
       not rated by Moody's and are serviced by a servicer approved by Moody's
       shall be determined by reference to the table in the following paragraph
       (relating to whole loans).

              The Moody's Discount Factor applied to whole loans shall be
       determined by reference to the coupon paid by such security and whether
       cash flow is retained (i.e., controlled by a trustee) or excluded (i.e.,
       not controlled by a trustee), in accordance with the table set forth
       below.

               Coupon           Cash Flow Retained            Cash Flow Excluded
               ------           ------------------            ------------------
               5%                     172%                            179%
               6                      167                             174
               7                      163                             170
               8                      159                             165
               9                      155                             161
               10                     151                             158
               11                     148                             157
               12                     145                             154
               13                     142                             151
               adjustable             170                             177

              (ix) Municipal debt obligations: The Moody's Discount Factor
       applied to municipal debt obligations shall be the percentage determined
       by reference to the rating on such asset and the shortest Exposure Period
       set forth opposite such rating that is the same length as or is longer
       than the Moody's Exposure Period, in accordance with the table set forth
       below (provided that, except as provided in the following table, any
       municipal obligation:

                                      -33-

<PAGE>

<TABLE>
<CAPTION>
          Exposure Period        Aaa      Aa        A       Baa    Other     (V)MIG-1/1/    SP-1+/2/   Unrated/3/
          ---------------        ---      --        -       ---    -----     -----------    --------   ----------
       <S>                     <C>      <C>      <C>      <C>      <C>      <C>             <C>        <C>
       7 weeks                 151%     159%     166%     173%     187%      136%           148%       225%

       8 weeks or less but     154      161      168      176      190       137            149        231
       greater than seven
       weeks

       9 weeks or less but     158      163      170      177      192       138            150        240
       greater than eight
       weeks
</TABLE>

       ______________
       /1/ Municipal debt obligations not rated by Moody's but rated equivalent
       to MIG-1, (V)MIG-1, or P-1, by S&P and Fitch Ratings that have a
       maturity less than or equal to 49 days.

       /2/ Municipal debt obligations not rated by Moody's but rated equivalent
       to MIG-1, (V)MIG-1, or P-1 by S&P and Fitch Ratings that have a
       maturity greater than 49 days.

       /3/ Unless conclusions regarding liquidity risk as well as estimates of
       both the probability and severity of default for the corporation's or
       municipal issuer's assets can be derived from other sources as well as
       combined with a number of sources as presented by the Trust to Moody's
       securities rated below B by Moody's and unrated securities, which are
       securities rated by neither Moody's, S&P nor Fitch Ratings, are limited
       to 10% of Moody's Eligible Assets. If a municipal debt security is
       unrated by Moody's, S&P or Fitch, the Trust will use the percentage set
       forth under "Other" in the Municipal Debt Table. Ratings assigned by
       S&P or Fitch are generally accepted by Moody's at face value (e.g.,
       treating a rating of AAA by S&P or Fitch Ratings as Aaa for purposes of
       the table above and a rating of AA by S&P or Fitch Ratings as Aa for
       purposes of the table above. However, adjustments to face value may be
       made to particular categories of credits for which the ratings by S&P
       and/or Fitch Rating do not seem to approximate a Moody's rating
       equivalent. Split-rated securities assigned by S&P and Fitch Ratings
       (i.e., these Rating Agencies assign different rating categories to the
       security) will be accepted at the lower of the two ratings.

             (x) Structured Notes: The Moody's Discount Factor applied to
       Structured Notes will be (A) in the case of a corporate issuer, the
       Moody's Discount Factor determined in accordance with paragraph (ii)
       under this definition, whereby the rating on the issuer of the
       Structured Note will be the rating on the Structured Note for purposes
       of determining the Moody's Discount Factor in the table in paragraph
       (ii); and (B) in the case of an issuer that is the U.S. government or
       an agency or instrumentality thereof, the Moody's Discount Factor
       determined in accordance with paragraph (v) under this definition.

             The Moody's Discount Factor for any Moody's Eligible Asset other
       than the securities set forth above will be the percentage provided in
       writing by Moody's. Additionally, in order to merit consideration as a
       Moody's Eligible Asset, securities should be issued by entities which:
       (a) have not filed for bankruptcy within the past three years, (b) are
       current on all principal and interest in their fixed income
       obligations, (c) are current on all preferred stock dividends, and (d)
       possess a current, unqualified auditor's report without qualified,
       explanatory language.

                                      -34-

<PAGE>

       "Moody's Eligible Assets" means

              (i)   cash (including interest and dividends due on assets rated
       (A) Baa3 or higher by Moody's if the payment date is within five Business
       Days of the Valuation Date, (B) A2 or higher if the payment date is
       within thirty days of the Valuation Date, and (C) A1 or higher if the
       payment date is within the Moody's Exposure Period) and receivables for
       Moody's Eligible Assets sold if the receivable is due within five
       Business Days of the Valuation Date, and if the trades which generated
       such receivables are (A) settled through clearing house firms or (B) (1)
       with counterparties having a Moody's long-term debt rating of at least
       Baa3 or (2) with counterparties having a Moody's Short Term Money Market
       Instrument rating of at least P-1;

              (ii)  Short Term Money Market Instruments so long as (A) such
       securities are rated at least P-1, (B) in the case of demand deposits,
       time deposits and overnight funds, the supporting entity is rated at
       least A2, or (C) in all other cases, the supporting entity (1) is rated
       A2 and the security matures within one month, (2) is rated A1 and the
       security matures within three months or (3) is rated at least Aa3 and the
       security matures within six months; provided, however, that for purposes
       of this definition, such instruments (other than commercial paper rated
       by S&P or Fitch Ratings and not rated by Moody's) need not meet any
       otherwise applicable rating criteria of S&P or Fitch Ratings;

              (iii) U.S. Government Securities and U.S. Treasury Strips;

              (iv)  Rule 144A Securities;

              (v)   Senior Loans and other Bank Loans approved by Moody's;

              (vi)  Corporate debt securities if (A) such securities are rated
       Caa or higher by Moody's; (B) such securities provide for the periodic
       payment of interest in cash in U.S. dollars or euros, except that such
       securities that do not pay interest in U.S. dollars or euros shall be
       considered Moody's Eligible Assets if they are rated by Moody's, S&P or
       Fitch Ratings; (C) for securities which provide for conversion or
       exchange into equity capital at some time over their lives, the issuer
       must be rated at least B3 by Moody's and the discount factor will be
       250%; (D) for debt securities rated Ba1 and below, no more than 10% of
       the original amount of such issue may constitute Moody's Eligible Assets;
       (E) such securities have been registered under the Securities Act or are
       restricted as to resale under federal securities laws but are eligible
       for resale pursuant to Rule 144A under the Securities Act as determined
       by the Trust's investment manager or portfolio manager acting pursuant to
       procedures approved by the Board of Trustees, except that such securities
       that are not subject to U.S. federal securities laws shall be considered
       Moody's Eligible Assets if they are publicly traded; and (F) such
       securities are not subject to extended settlement.

              Notwithstanding the foregoing limitations, (x) corporate debt
       securities not rated at least Caa by Moody's or not rated by Moody's
       shall be considered to be Moody's Eligible Assets only to the extent the
       Market Value of such corporate debt securities does

                                      -35-

<PAGE>

       not exceed 10% of the aggregate Market Value of all Moody's Eligible
       Assets; provided, however, that if the Market Value of such corporate
       debt securities exceeds 10% of the aggregate Market Value of all Moody's
       Eligible Assets, a portion of such corporate debt securities (selected by
       the Trust) shall not be considered Moody's Eligible Assets, so that the
       Market Value of such corporate debt securities (excluding such portion)
       does not exceed 10% of the aggregate Market Value of all Moody's Eligible
       Assets; and (y) corporate debt securities rated by none of Moody's, S&P,
       or Fitch Ratings shall be considered to be Moody's Eligible Assets only
       to the extent such securities are issued by entities which (i) have not
       filed for bankruptcy within the past three years, (ii) are current on all
       principal and interest in their fixed income obligations, (iii) are
       current on all preferred stock dividends and (iv) possess a current,
       unqualified auditor's report without qualified, explanatory language.

              (vii) Convertible securities (including convertible preferred
       stock), provided that (A) the issuer of common stock must have a Moody's
       senior unsecured debt of Caa or better, or a rating of CCC or better by
       S&P or Fitch Ratings, (B) the common stocks must be traded on the New
       York Stock Exchange, the American Stock Exchange, or the NASDAQ, (C)
       dividends must be paid in U.S. dollars, (D) the portfolio of convertible
       bonds must be diversified as set forth in the table set forth below, (E)
       the company shall not hold shares exceeding the average weekly trading
       volume during the preceding month and (F) synthetic convertibles are
       excluded from asset eligibility.

<TABLE>
<CAPTION>
                             Convertible Bonds Diversification Guidelines
                             --------------------------------------------
     Type            Maximum Single Issuer (%)/1/    Maximum Single Industry (%)     Maximum Single State (%)/1/
     ----            ----------------------------    ---------------------------     ---------------------------
    <S>              <C>                             <C>                             <C>
    Utility                       4                               50                             7/2/
    Other                         6                               20                             n/a
</TABLE>

        ____________

        /1/ Percentage represent a portion of the aggregate market value and
        number of outstanding shares of the convertible stock portfolio.

        /2/ Utility companies operating in more than one state should be
        diversified according to the state in which they generate the largest
        part of their revenues. Publicly available information on utility
        company revenues by state is available from the Uniform Statistical
        Report (USR) or the Federal Energy Regulation Commission (FERC).

              (viii) Preferred stocks if (A) dividends on such preferred stock
       are cumulative, (B) such securities provide for the periodic payment of
       dividends thereon in cash in U.S. dollars or euros and do not provide for
       conversion or exchange into, or have warrants attached entitling the
       holder to receive, equity capital at any time over the respective lives
       of such securities, (C) the issuer of such a preferred stock has common
       stock listed on either the New York Stock Exchange, the American Stock
       Exchange or the NASDAQ, (D) the issuer of such a preferred stock has a
       senior debt rating from Moody's of Baa1 or higher or a preferred stock
       rating from Moody's of Baa3 or higher and (E) such preferred stock has
       paid consistent cash dividends in U.S. dollars or euros over the last
       three years or has a minimum rating of A1 (if the issuer of such
       preferred stock has other preferred issues outstanding that have been
       paying dividends consistently for the last three years, then a preferred
       stock without such a dividend history would also be eligible); provided,

                                      -36-

<PAGE>

       however, that convertible preferred stock shall be treated as convertible
       securities in accordance with paragraph (vii) above. In addition, the
       preferred stocks must have the following diversification requirements:
       (X) the preferred stock issue must be greater than $50 million and (Y)
       the minimum holding by the Trust of each issue of preferred stock is
       $500,000 and the maximum holding of preferred stock of each issue is $5
       million. In addition, preferred stocks issued by transportation companies
       will not be considered Moody's Eligible Assets;

              (ix)   Asset-backed and mortgage-backed securities:

                     (A) Asset-backed securities if (1) such securities are
              rated at least Aa3 by Moody's or at least AA by S&P or Fitch
              Ratings, (2) the securities are part of an issue that is $250
              million or greater, or the issuer of such securities has a total
              of $500 million or greater of asset-backed securities outstanding
              at the time of purchase of the securities by the Trust and (3) the
              expected average life of the securities is not greater than 4
              years;

                     (B) Collateralized mortgage obligations ("CMOs"), including
              CMOs with interest rates that float at a multiple of the change in
              the underlying index according to a pre-set formula, provided that
              any CMO held by the Trust (1) has been rated Aaa by Moody's or AAA
              by S&P or Fitch Ratings, (2) does not have a coupon which floats
              inversely, (3) is not portioned as an interest-only or
              principal-only strip and (4) is part of an issuance that had an
              original issue size of at least $100 million;

                     (C) Planned amortization class bonds ("PACs") and targeted
              amortization class bonds ("TACs") provided that such PACs or TACs
              are (1) backed by certificates of either the Federal National
              Mortgage Association ("FNMA"), the Government National Mortgage
              Association ("GNMA") or the Federal Home Loan Mortgage Corporation
              ("FHLMC") representing ownership in single-family first lien
              mortgage loans with original terms of 30 years, (2) part of an
              issuance that had an original issue size of at least $10 million,
              (3) part of PAC or TAC classes that have payment priority over
              other PAC or TAC classes, (4) if TACs, TACs that do not support
              PAC classes, and (5) if TACs, not considered reverse TACs (i.e.,
              do not protect against extension risk);

                     (D) Consolidated senior debt obligations of Federal Home
              Loan Banks ("FHLBs"), senior long-term debt of the FNMA, and
              consolidated systemwide bonds and FCS Financial Assistance
              Corporation Bonds of Federal Farm Credit Banks ("FFCBs")
              (collectively, "FHLB, FNMA and FFCB Debentures"), provided that
              such FHLB, FNMA and FFCB Debentures are (1) direct issuance
              corporate debt rated Aaa by Moody's, (2) senior debt obligations
              backed by the FHLBs, FFCBs or FNMA, (3) part of an issue entirely
              denominated in U.S. dollars and (4) not callable or exchangeable
              debt issues;

                     (E) Mortgage pass-throughs rated at least Aa by Moody's and
              pass-throughs issued prior to 1987 (if rated AA by S&P or Fitch
              Ratings and based on fixed-rate

                                      -37-

<PAGE>

              mortgage loans) by Travelers Mortgage Services, Citicorp
              Homeowners, Citibank, N.A., Sears Mortgage Security or RFC -
              Salomon Brothers Mortgage Securities, Inc., provided that (1)
              certificates must evidence a proportional, undivided interest in
              specified pools of fixed or adjustable rate mortgage loans,
              secured by a valid first lien, on one- to four-family residential
              properties and (2) the securities are publicly registered (not
              issued by FNMA, GNMA or FHLMC);

                     (F) Private-placement mortgage pass-throughs provided that
              (1) certificates represent a proportional undivided interest in
              specified pools of fixed-rate mortgage loans, secured by a valid
              first lien, on one- to four-family residential properties, (2)
              documentation is held by a trustee or independent custodian, (3)
              pools of mortgage loans are serviced by servicers that have been
              approved by FNMA or FHLMC and funds shall be advanced to meet
              deficiencies to the extent provided in the pooling and servicing
              agreements creating such certificates, and (4) pools have been
              rated Aa or better by Moody's; and

                     (G) Whole loans (e.g., direct investments in mortgages)
              provided that (1) at least 65% of such loans (a) have seasoning of
              no less than 6 months, (b) are secured by single-family detached
              residences, (c) are owner-occupied primary residences, (d) are
              secured by a first-lien, fully-documented mortgage, (e) are
              neither currently delinquent (30 days or more) nor delinquent
              during the preceding year, (f) have loan-to-value ratios of 80% or
              below, (g) carry normal hazard insurance and title insurance, as
              well as special hazard insurance, if applicable, (h) have original
              terms to maturity not greater than 30 years, with at least one
              year remaining to maturity, (i) have a minimum of $10,000
              remaining principal balance, (j) for loans underwritten after
              January 1, 1978, FNMA and/or FHLMC forms are used for fixed-rate
              loans, and (k) are whole loans and not participations; (2) for
              loans that do not satisfy the requirements set forth in the
              foregoing clause (1), (a) non-owner occupied properties represent
              no greater than 15% of the aggregate of either the adjustable-rate
              pool or the fixed-rate pool, (b) multi-family properties (those
              with five or more units) represent no greater than 15% of the
              aggregate of either the adjustable-rate pool or the fixed-rate
              pool, (c) condominiums represent no greater than 10% of the
              aggregate of either the adjustable-rate pool or the fixed-rate
              pool, and any condominium project must be 80% occupied at the time
              the loan is originated, (d) properties with loan-to-value ratios
              exceeding 80% represent no greater than 25% of the aggregate of
              either the adjustable-rate pool or the fixed-rate pool and that
              the portion of the mortgage on any such property that exceeds a
              loan-to-value ratio of 80% is insured with Primary Mortgage
              Insurance from an insurer rated at least Baa3 by Moody's and (e)
              loan balances in excess of the current FHLMC limit plus $75,000
              represent no greater than 25% of the aggregate of either the
              adjustable-rate pool or the fixed-rate pool, loan balances in
              excess of $350,000 represent no greater than 10% of the aggregate
              of either the adjustable-rate pool or the fixed-rate pool, and
              loan balances in excess of $1,000,000 represent no greater than 5%
              of the aggregate of either the adjustable-rate pool or the
              fixed-rate pool; (3) no greater than 5% of the pool of loans is
              concentrated in any one zip code; (4) the pool of loans contains
              at least 100 loans or $2 million in loans per servicer; (5) for
              adjustable-rate mortgages ("ARMs"), (a) any ARM is

                                      -38-

<PAGE>

              indexed to the National Cost of Funds index, the 11th District
              Cost of Funds index, the 1-year Treasury or the 6-month Treasury,
              (b) the margin over the given index is between .15% and .25% for
              either cost-of-funds index and between .175% and .325% for
              Treasuries, (c) the maximum yearly interest rate increase is 2%,
              (d) the maximum life-time interest rate increase is 6.25% and (e)
              ARMs may include Federal Housing Administration and Department of
              Veterans Affairs loans; and (6) for "teaser" loans, (a) the
              initial discount from the current ARM market rate is no greater
              than 2%, (b) the loan is underwritten at the market rate for ARMs,
              not the "teaser" rate, and (c) the loan is seasoned six months
              beyond the "teaser" period.

              (x)    Any municipal debt obligation that (A) pays interest in
       cash, (B) does not have a Moody's rating, as applicable, suspended by
       Moody's, and (C) is part of an issue of municipal debt obligations of at
       least $5,000,000, except for municipal debt obligations rated below A by
       Moody's, in which case the minimum issue size is $10,000,000;

              (xi)   Structured Notes, rated TRACERs and TRAINs;

              (xii)  Financial contracts, as such term is defined in Section
       3(c)(2)(B)(ii) of the 1940 Act, not otherwise provided for in this
       definition but only upon receipt by the Trust of a letter from Moody's
       specifying any conditions on including such financial contract in Moody's
       Eligible Assets and assuring the Trust that including such financial
       contract in the manner so specified would not affect the credit rating
       assigned by Moody's to the AMPS; and

              (xiii) Common stock, preferred stock or any debt security of REITs
       or real estate companies.

       In addition, portfolio holdings as described below must be within the
following diversification and issue size requirements in order to be included in
Moody's Eligible Assets:

<TABLE>
<CAPTION>
                               Maximum Single         Maximum Single         Minimum Issue Size
       Ratings /1/                 Issuer /2/,/3/        Industry /3/,/4/      ($ in million) /5/
       -----------                 ------                --------              --------------
       <S>                     <C>                    <C>                    <C>
       Aaa                          100%                   100%                     $100
       Aa                            20                     60                       100
       A                             10                     40                       100
       Baa                            6                     20                       100
       Ba                             4                     12                        50/6/
       B1-B2                          3                      8                        50/6/
       B3 or below                    2                      5                        50/6/
</TABLE>

       ____________
       /1/ Refers to the preferred stock and senior debt rating of the portfolio
       holding.
       /2/ Companies subject to common ownership of 25% or more are considered
       as one issuer.
       /3/ Percentages represent a portion of the aggregate Market Value of
       corporate debt securities.
       /4/ Industries are determined according to Moody's Industry
       Classifications, as defined herein.
       /5/ Except for preferred stock, which has a minimum issue size of $50
       million.
       /6/ Portfolio holdings from issues ranging from $50 million to $100
       million are limited to 20% of the Trust's total assets.

                                      -39-

<PAGE>

       Where the Trust sells an asset and agrees to repurchase such asset in the
future, the Discounted Value of such asset will constitute a Moody's Eligible
Asset and the amount the Trust is required to pay upon repurchase of such asset
will count as a liability for the purposes of the Preferred Shares Basic
Maintenance Amount. Where the Trust purchases an asset and agrees to sell it to
a third party in the future, cash receivable by the Trust 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 purchased asset will constitute a Moody's
Eligible Asset. For the purposes of calculation of Moody's Eligible Assets,
portfolio securities which have been called for redemption by the issuer thereof
shall be valued at the lower of Market Value or the call price of such portfolio
securities.

       Notwithstanding the foregoing, an asset will not be considered a Moody's
Eligible Asset to the extent that it (i) has been irrevocably deposited for the
payment of (i)(A) through (i)(E) under the definition of Preferred Shares Basic
Maintenance Amount or to the extent it is subject to any Liens, except for (A)
Liens which are being contested in good faith by appropriate proceedings and
which Moody's has indicated to the Trust will not affect the status of such
asset as a Moody's Eligible Asset, (B) Liens for taxes that are not then due and
payable or that can be paid thereafter without penalty, (C) Liens to secure
payment for services rendered or cash advanced to the Trust by its investment
manager or portfolio manager, the Trust's custodian, transfer agent or registrar
or the Auction Agent and (D) Liens arising by virtue of any repurchase
agreement, or (ii) has been segregated against obligations of the Trust in
connection with an outstanding derivative transaction.

       "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 Section
11.8(a) of these Bylaws.

       "Moody's Industry Classification" means, for the purposes of determining
Moody's Eligible Assets, each of the following industry classifications (or such
other classifications as Moody's may from time to time approve for application
to the AMPS):

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

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

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

       4.  Beverage, Food and Tobacco: Beer and Ale, Distillers, Wines and
           Liquors, Distributors, Soft Drink Syrup, Bottlers, Bakery, Mill
           Sugar, Canned Foods, Corn

                                      -40-

<PAGE>

       Refiners, Dairy Products, Meat Products, Poultry Products, Snacks,
       Packaged Foods, Candy, Gum, Seafood, Frozen Food, Cigarettes, Cigars,
       Leaf/Snuff, Vegetable Oil

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

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

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

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

       9.   Diversified/Conglomerate Manufacturing

       10.  Diversified/Conglomerate Service

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

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

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

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

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

       16.  Grocery: Grocery Stores, Convenience Food Stores

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

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

       19.  Hotels, Motels, Inns and Gaming

                                      -41-

<PAGE>

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

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

     22.  Machinery (non-agricultural, non-construction, non-electronic):
          Industrial, Machine Tools, Steam Generators

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

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

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

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

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

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

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

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

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

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

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

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

                                      -42-

<PAGE>

     "1940 Act Cure Date," with respect to the failure by the Trust to maintain
the 1940 Act Preferred Shares Asset Coverage (as required by these Bylaws) as of
the last Business Day of each month, means the last Business Day of the
following month.

     "1940 Act Preferred Shares 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 Trust which are shares of beneficial
interest, including 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 shares of beneficial interest of a closed-end investment
company as a condition of paying dividends on its common shares).

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

     "Non-Payment Period" means a period commencing on and including a Dividend
Payment Date or redemption date for which the Trust shall fail to (i) declare,
prior to the close of business on the second Business Day preceding such
Dividend Payment Date, for payment (to the extent permitted by Section
11.2(c)(i) of these Bylaws) 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 AMPS payable on such Dividend Payment Date, provided, however, that
if the Trust is not able to make such declaration in compliance with the
foregoing because an unforeseen event or unforeseen events causes or cause a day
that otherwise would have been a Business Day not to be a Business Day, then the
Trust may make such declaration on the Business Day immediately preceding the
Dividend Payment Date, if possible, or, if not possible, on the Dividend Payment
Date, and in such case the Trust shall not be deemed to have failed to declare a
dividend otherwise required to be declared, or (ii) deposit, irrevocably in
trust, in same-day funds, with the Auction Agent by 12:00 noon, New York City
time, (A) on such Dividend Payment Date the full amount of any cash dividend on
such shares payable (if declared) on such Dividend Payment Date or (B) on any
such redemption date for any AMPS called for redemption, the Mandatory
Redemption Price per share of such AMPS or, in the case of an optional
redemption, the Optional Redemption Price per share, and ending on and including
the Business Day on which, by 12:00 noon, New York City time, all unpaid cash
dividends and unpaid redemption prices shall have been so deposited or shall
have otherwise been made available to Holders in same-day funds; provided that a
Non-Payment Period shall not end unless the Trust 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
Share Books) and the Securities Depository. Notwithstanding the foregoing, the
failure by the Trust 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
Section 11.2(c)(i) of these Bylaws, shall not constitute a "Non-Payment Period."

     "Non-Payment Period Rate" means, initially, 300% of the applicable
Reference Rate, provided that the Board of Trustees of the Trust shall have the
authority to adjust, modify, alter or change from time to time the initial
Non-Payment Period Rate if the Board of Trustees of the Trust determines and
each of Fitch Ratings and Moody's (and any Substitute Rating Agency in

                                      -43-

<PAGE>

lieu of Fitch Ratings or Moody's in the event Fitch Ratings or Moody's shall not
rate the AMPS) advises the Trust in writing that such adjustment, modification,
alteration or change will not adversely affect its then current ratings on the
AMPS.

     "Normal Dividend Payment Date" has the meaning set forth in Section
11.2(b)(i) of these Bylaws.

     "Notice of Redemption" means any notice with respect to the redemption of
AMPS pursuant to Section 11.4 of these Bylaws.

     "Notice of Revocation" has the meaning set forth in Section 11.2(c)(iii) of
these Bylaws.

     "Notice of Special Dividend Period" has the meaning set forth in Section
11.2(c)(iii) of these Bylaws.

     "Optional Redemption Price" means $25,000 per Auction Market Preferred
Share 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 attributable to the designation of a Premium Call Period.

     "Outstanding" means, as of any date, (i) with respect to AMPS, AMPS
theretofore issued by the Trust except, without duplication, (A) any AMPS
theretofore canceled or delivered to the Auction Agent for cancellation, or
redeemed by the Trust, 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 Trust pursuant to Section 11.4(c) hereto and (B) any AMPS as to which the
Trust or any Affiliate (other than an Affiliate that is a Broker-Dealer) thereof
shall be a Beneficial Owner, provided that AMPS held by an Affiliate shall be
deemed outstanding for purposes of calculating the Preferred Shares Basic
Maintenance Amount and (ii) with respect to other preferred shares of beneficial
interest of the Trust, the meaning equivalent to that for AMPS as set forth in
clause (i).

     "Parity Shares" means the AMPS and each other outstanding series of
preferred shares of beneficial interest of the Trust 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.

     "Performing" means with respect to the issuer of any asset that is a Bank
Loan, Corporate Debt Security or other debt, the issuer of such investment is
not in default of any payment obligations in respect thereof.

     "Person" means and includes an individual, a corporation, a partnership, 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 AMPS but that wishes to purchase
such shares, or that is a Beneficial Owner that wishes to purchase additional
AMPS.

                                      -44-

<PAGE>

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

     "Preferred Share 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 AMPS
Outstanding on such date multiplied by $25,000, plus any redemption premium
applicable to AMPS then subject to redemption; (B) the aggregate amount of
dividends that will have accumulated at the respective Applicable Rates (whether
or not earned or declared) to (but not including) the first respective Dividend
Payment Dates for each series of AMPS Outstanding that follow such Valuation
Date (plus the aggregate amount of dividends, whether or not earned or declared,
that will have accumulated in respect of other outstanding preferred shares to,
but not including, the first respective dividend payment dates for such other
shares that follow such Valuation Date); (C) the aggregate amount of dividends
that would accumulate on shares of each series of AMPS Outstanding from such
first respective Dividend Payment Date therefor through the 49th day after such
Valuation Date, at the Maximum Applicable Rate (calculated as if such Valuation
Date were the Auction Date for the Dividend Period commencing on such Dividend
Payment Date) for a 7-Day Dividend Period of shares of such series to commence
on such Dividend Payment Date, multiplied by the Volatility Factor (except that
(1) if such Valuation Date occurs during a Non-Payment Period, the dividend for
purposes of calculation would accumulate at the then current Non-Payment Period
Rate and (2) for those days during the period described in this clause (C) in
respect of which the Applicable Rate in effect immediately prior to such
Dividend Payment Date will remain in effect, the dividend for purposes of
calculation would accumulate at such Applicable Rate in respect of those days);
(D) the amount of anticipated expenses of the Trust 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, any payables for portfolio securities of the Trust purchased
as of such Valuation Date and any liabilities incurred for the purpose of
clearing securities transactions) less (ii) the value (i.e., the face value of
cash, short-term securities rated MIG-1, VMIG-1 or P-1, and short-term
securities that are the direct obligation of the U.S. government, provided in
each case that such securities mature on or prior to the date upon which any of
(i)(A) through (i)(E) become payable, otherwise the Discounted Value) of any of
the Trust's assets irrevocably deposited by the Trust for the payment of any of
(i)(A) through (i)(E).

     "Preferred Share Basic Maintenance Cure Date," with respect to the failure
by the Trust to satisfy the Preferred Shares Basic Maintenance Amount (as
required by Section 11.7(a) of these Bylaws) as of a given Valuation Date, means
the sixth Business Day following such Valuation Date.

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

                                      -45-

<PAGE>

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

     "Pricing Service" means any pricing service designated by the Board of
Trustees of the Trust and approved by Fitch Ratings, Moody's or any Substitute
Rating Agency, as applicable, for purposes of determining whether the Trust has
Eligible Assets with an aggregate Discounted Value that equals or exceeds the
Preferred Shares Basic Maintenance Amount.

     "Quarterly Valuation Date" means the last Business Day of the last month of
each fiscal quarter of the Trust in each fiscal year of the Trust, commencing
October __, 2003.

     "Rating Agency" means a nationally recognized statistical rating
organization.

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

     "Reference Rate" means the LIBOR rate (for a Dividend Period of fewer than
365 days) or the applicable Treasury Index Rate (for a Dividend Period of 365
days or more).

     "REITs" means real estate investment trusts.

     "Reorganization Bonds" has the meaning set forth under the definition of
"Fitch Eligible Assets."

     "Request for Special Dividend Period" has the meaning set forth in Section
11.2(c)(iii) of these Bylaws.

     "Response" has the meaning set forth in Section 11.2(c)(iii) of these
Bylaws.

     "Rule 144A Securities" means securities which are restricted as to resale
under federal securities laws but are eligible for resale pursuant to Rule 144A
under the Securities Act as determined by the Trust's investment manager or
portfolio manager acting pursuant to procedures approved by the Board of
Trustees of the Trust.

     "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., or its successors.

     "Securities Act" means the Securities Act of 1933, as amended from time to
time.

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

     "Senior Loans" has the meaning set forth in paragraph (vii) of the
definition of "Moody's Discount Factor."

                                      -46-

<PAGE>

     "Series T AMPS" means the Auction Market Preferred Shares, Series T.

     "Series W AMPS" means the Auction Market Preferred Shares, Series W.

     "Series TH AMPS" means the Auction Market Preferred Shares, Series TH.

     "Seven-Day Dividend Period" means a Subsequent Dividend Period that (a)
consists of seven days or (b) would consist of seven days but for the fact that
the Dividend Payment Date which immediately follows, or the Dividend Payment
Date which falls within, such Subsequent Dividend Period is not a Business Day.

         "Share 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.

         "Share Register" means the register of Holders maintained on behalf of
the Trust by the Auction Agent in its capacity as transfer agent and registrar
for the AMPS.

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

     "Short Term Money Market Instruments" means the following types of
instruments if, on the date of purchase or other acquisition thereof by the
Trust, the remaining term to maturity thereof is not in excess of 180 days (or
270 days for instruments rated at least Aaa for purposes of determining Moody's
Eligible Assets):

          (i)   commercial paper rated either F-1 by Fitch Ratings or A-1 by S&P
     if such commercial paper matures in 30 days or P-1 by Moody's and either
     F-1+ by Fitch Ratings or A-1+ by S&P if such commercial paper matures in
     over 30 days;

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

          (iii) overnight funds;

          (iv)  U.S. Government Securities; and

          (v)   Eurodollar demand or time deposits in, or certificates of
     deposit of, the head office or the London branch office of a depository
     institution or trust company if the certificates of deposit, if any, and
     the long-term unsecured debt obligations (other than such obligations the
     ratings of which are based on the credit of a person or entity other than
     such depository institution or trust company) of such depository
     institution or trust company that have (1) credit ratings on each Valuation
     Date of at least P-1 from Moody's and either F-1+ from Fitch Ratings or
     A-1+ from S&P, in the case of commercial paper

                                      -47-

<PAGE>

     or certificates of deposit, and (2) credit ratings on each Valuation Date
     of at least Aa3 from Moody's and either AA from Fitch Ratings or AA- from
     S&P, in the case of long-term unsecured debt obligations; provided,
     however, that in the case of any such investment that matures in no more
     than one Business Day from the date of purchase or other acquisition by the
     Trust, all of the foregoing requirements shall be applicable except that
     the required long-term unsecured debt credit rating of such depository
     institution or trust company from Moody's, Fitch Ratings and S&P shall be
     at least A2, A-2 and A, respectively; and provided further, however, that
     the foregoing credit rating requirements shall be deemed to be met with
     respect to a depository institution or trust company if (1) such depository
     institution or trust company is the principal depository institution in a
     holding company system, (2) the certificates of deposit, if any, of such
     depository institution or trust company are not rated on any Valuation Date
     below P-1 by Moody's, F-1+ by Fitch Ratings or A-1+ by S&P and there is no
     long-term rating, and (3) the holding company shall meet all of the
     foregoing credit rating requirements (including the preceding proviso in
     the case of investments that mature in no more than one Business Day from
     the date of purchase or other acquisition by the Trust); and provided
     further, that the interest receivable by the Trust shall not be subject to
     any withholding or similar taxes.

     "Special Dividend Period" (sometimes referred to as a "Special Rate
Period") means a Short Term Dividend Period or a Long Term Dividend Period.

     "Specific Redemption Provisions" means, with respect to a Special Dividend
Period either, or both, of (i) a period (a "Non-Call Period") determined by the
Board of Trustees of the Trust, after consultation with the Auction Agent and
the Broker-Dealers, during which the AMPS subject to such Special Dividend
Period shall not be subject to redemption at the option of the Trust and (ii) a
period (a "Premium Call Period"), consisting of a number of whole years and
determined by the Board of Trustees of the Trust, after consultation with the
Auction Agent and the Broker-Dealers, during each year of which the AMPS subject
to such Special Dividend Period shall be redeemable at the Trust's option at a
price per share equal to $25,000, plus accumulated but unpaid dividends (whether
or not earned or declared) to (but not including) the date fixed for redemption,
plus a premium expressed as a percentage or percentages of $25,000, as
determined by the Board of Trustees of the Trust after consultation with the
Auction Agent and the Broker-Dealers.

     "Structured Notes" means privately negotiated debt obligations where the
principal and/or interest is determined by reference to the performance of a
benchmark asset or market (an "embedded index"), such as selected securities or
an index of securities, or the differential performance of two assets or
markets, such as indices reflecting bonds.

     "Subsequent Dividend Period" has the meaning set forth in Section
11.2(c)(i) of these Bylaws.

     "Substitute Rating Agency" means a Rating Agency selected by Merrill Lynch,
Pierce, Fenner and Smith Incorporated or its affiliates and successors, after
consultation with the Trust, to act as the substitute Rating Agency to determine
the credit ratings of the AMPS.

                                      -48-

<PAGE>

     "Sufficient Clearing Bids" has the meaning set forth in Section 11.10(d)(i)
of these Bylaws.

     "TRACERs" means traded custody receipts representing direct ownership in a
portfolio of underlying securities.

     "TRAINs" means Targeted Return Index Securities, which are trust
certificates comprised of bonds that are chosen to track a particular index.

     "Treasury Bill" means a direct obligation of the U.S. government having a
maturity at the time of issuance of 364 days or less.

     "Treasury Bonds" means United States Treasury Bonds or Notes.

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

     "Trust" means the PIMCO Floating Rate Income Fund.

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

     "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.

     "U.S. Treasury Strips" means securities based on U.S. Treasury Securities
created through the Separate Trading of Registered Interest and Principal of
Securities program.

     "Valuation Date" means, for purposes of determining whether the Trust is
maintaining the Preferred Shares Basic Maintenance Amount, the last Business Day
of each week commencing with the Date of Original Issue.

     "Volatility Factor" means 1.89.

     "Voting Period" has the meaning set forth in Section 11.5(b) of these
Bylaws.

                                      -49-

<PAGE>

     (b) The foregoing definitions of Accountant's Confirmation, Preferred
Shares Basic Maintenance Amount, Preferred Shares Basic Maintenance Cure Date,
Preferred Shares Basic Maintenance Report, Bank Loans, Closing Transactions,
Cure Date, Debt Securities, Deposit Securities, Discounted Value, Fitch Discount
Factor, Fitch Eligible Assets, Fitch Exposure Period, Fitch Hedging
Transactions, Fitch Industry Classifications, Forward Commitment, Independent
Accountant, Market Value, Maximum Applicable Rate, Moody's Advance Rate, Moody's
Discount Factor, Moody's Eligible Assets, Moody's Exposure Period, Moody's
Hedging Transactions, Moody's Industry Classification, Moody's Loan Category,
1940 Act Cure Date, 1940 Act Preferred Shares Asset Coverage, Performing, Senior
Loans, Short Term Money Market Instruments, Structured Notes, TRACERs, Treasury
Bill, Treasury Bonds, U.S. Government Securities, U.S. Treasury Securities, U.S.
Treasury Strips, Valuation Date and Volatility Factor (and any terms defined
within such definitions) have been determined by the Board of Trustees of the
Trust in order to obtain a rating of "AAA" from Fitch Ratings and a rating of
"Aaa" from Moody's on the AMPS on their Date of Original Issue; and the Board of
Trustees of the Trust shall have the authority, without shareholder approval, to
amend, alter or repeal from time to time the foregoing definitions (and any
terms defined within such definitions) and the restrictions and guidelines set
forth thereunder if Fitch Ratings, Moody's or any Substitute Rating Agency
advises the Trust in writing that such amendment, alteration or repeal will not
adversely affect its then current rating on the AMPS.

     11.2 Dividends.

          (a) The Holders of a particular series of AMPS shall be entitled to
     receive, when, as and if declared by the Board of Trustees of the Trust,
     out of funds legally available therefor, cumulative dividends each
     consisting of cash at the Applicable Rate and no more, payable on the
     respective dates set forth below. Dividends on the shares of each series of
     AMPS so declared and payable shall be paid in preference to and in priority
     over any dividends declared and payable on the Common Shares.

          (b) (i) Cash dividends on shares of each series of AMPS shall
     accumulate at the relevant Applicable Rate(s) from the Date of Original
     Issue and shall be payable, when, as and if declared by the Board of
     Trustees of the Trust, out of funds legally available therefor, commencing
     on the Initial Dividend Payment Date. Following the Initial Dividend
     Payment Date for a series of AMPS, dividends on that series of AMPS will be
     payable, at the option of the Trust, either (i) with respect to any
     Seven-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 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 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

                                      -50-

<PAGE>

     Dividend Period for a series of AMPS is scheduled to begin on the same day
     and end on the same day as a Dividend Period for another series of AMPS,
     then the last day of such Dividend Period for such other series of AMPS
     shall be the second Business Day next succeeding such scheduled day unless
     the Trust obtains the opinion of tax counsel referred to in this paragraph.
     Subject to the limitation in the next sentence, if for any reason a
     Dividend Payment Date cannot be fixed as described above, then the Board of
     Trustees of the Trust shall fix the Dividend Payment Date. However, no
     Dividend Period of any series of AMPS shall be co- extensive with any
     Dividend Period of any other series of AMPS unless the Trust has received
     an opinion of tax counsel that having such co-extensive periods will not
     affect the deductibility, for federal income tax purposes, of dividends
     paid on the different series of AMPS. The Board of Trustees of the Trust
     before authorizing a dividend may change a Dividend Payment Date if such
     change does not adversely affect the contract rights of the Holders of AMPS
     set forth in the Declaration of Trust or the Bylaws. The Initial Dividend
     Period, Seven-Day Dividend Periods and Special Dividend Periods with
     respect to a series of AMPS 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 Share Register as of 12:00 noon, New York City time, on the Business
       Day preceding the Dividend Payment Date. Dividends in arrears for any
       past Dividend Period may be declared and paid at any time, without
       reference to any regular Dividend Payment Date, to the Holders as they
       appear on the Share Register on a date, not exceeding 15 days prior to
       the payment date therefor, as may be fixed by the Board of Trustees of
       the Trust.

          (c) (i) During the period from and including the Date of Original
     Issue to but excluding the Initial Dividend Payment Date for a series of
     AMPS (the "Initial Dividend Period"), the Applicable Rate for such series
     of AMPS shall be the Initial Dividend Rate. Commencing on the Initial
     Dividend Payment Date for a series of AMPS, the Applicable Rate on that
     series 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.

          For a series of AMPS, the Applicable Rate for such series 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, but not after the end of, a Non-Payment Period
     shall be a Seven-Day Dividend Period. Except in the case of the willful
     failure of the Trust to pay a dividend on a Dividend Payment Date or to
     redeem any 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 Trust has declared such dividend payable on such Dividend Payment Date
     to the Holders of such 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 AMPS not paid to such Holders when due may be paid to such
     Holders in the same form

                                      -51-

<PAGE>

       of funds by 12:00 noon, New York City time, on any of the first three
       Business Days after such Dividend Payment Date or due date, as the case
       may be, provided that such amount is accompanied by a late charge
       calculated for such period of non-payment at the Non-Payment Period Rate
       applied to the amount of such non-payment based on the actual number of
       days comprising such period (excluding any days that would have been
       Business Days but for the occurrence of any unforeseen event or
       unforeseen events that caused such days not to be Business Days) divided
       by 365, and in such case such period shall not constitute a Non-Payment
       Period; provided, however, that the Trust shall not be required to pay
       any late charge if it declares a dividend on the Dividend Payment Date or
       the Business Day immediately preceding such Dividend Payment Date in
       accordance with clause (i) of the definition of "Non-Payment Period" and
       deposits payment for such dividend as contemplated by clause (ii)(A) of
       the definition of "Non-Payment Period" on or before the second Business
       Day succeeding the day on which the dividend was declared. In the case of
       a willful failure of the Trust to pay a dividend on a Dividend Payment
       Date or to redeem any 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, New York
       City time, on any Business Day shall be considered to have been made
       instead in the same form of funds and to the same person before 12:00
       noon, New York City time, on the next Business Day.

                    (ii)  The amount of dividends per share of any series of
           AMPS payable (if declared) on the Initial Dividend Payment Date, each
           Dividend Payment Date of each Seven-Day Dividend Period and each
           Dividend Payment Date of 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 a series 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.

                    (iii) The Trust may, at its sole option and to the extent
           permitted by law, by telephonic and written notice (a "Request for
           Special Dividend Period") to the Auction Agent and to each
           Broker-Dealer, request that the next succeeding Dividend Period for a
           series of AMPS be a number of days (other than seven), evenly
           divisible by seven and not fewer than fourteen 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 Trust may not
           give a Request

                                      -52-

<PAGE>

           for Special Dividend Period for a Dividend Period of greater than 28
           days (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 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 a series of 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 a series
           of AMPS. Upon receiving such Request for Special Dividend Period, the
           Broker-Dealer(s) shall jointly determine the Optional Redemption
           Price of the AMPS of the applicable series of AMPS during such
           Special Dividend Period and the Specific Redemption Provisions and
           shall give the Trust and the Auction Agent 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 of the applicable
           series, (5) the investment objective of the Trust, and (6) the
           Dividend Periods and dividend rates at which current and potential
           beneficial holders of the AMPS would remain or become beneficial
           holders. After providing the Request for Special Dividend Period to
           the Auction Agent and each Broker-Dealer as set forth above, the
           Trust 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, if any, as specified in
           the related Response and (iii) the Specific Redemption Provisions, if
           any, as specified in the related Response. The Trust also shall
           provide a copy of such Notice of Special Dividend Period to Fitch
           Ratings, Moody's and any Substitute Rating Agency. The Trust shall
           not give a Notice of Special Dividend Period and, if the Trust has
           given a Notice of Special Dividend Period, the Trust 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 Preferred Shares
           Asset Coverage is not satisfied or the Trust shall fail to maintain
           Fitch Eligible Assets and Moody's Eligible Assets each with an
           aggregate Discounted Value at least equal to the Preferred Shares
           Basic Maintenance Amount, on each of the two Valuation Dates
           immediately preceding the Business Day prior to the relevant Auction
           Date on an actual basis and on a pro forma basis giving effect to the
           proposed Special Dividend Period (using as a pro forma dividend rate
           with respect to such Special Dividend Period the dividend rate which
           the Broker-Dealers shall advise the Trust is an approximately equal
           rate for securities similar to the AMPS with an equal dividend
           period) or (y) sufficient funds for the payment of dividends payable
           on the immediately succeeding Dividend Payment Date have not been
           irrevocably deposited with the Auction Agent by the close of business
           on the third Business Day preceding the Auction Date immediately
           preceding such Dividend Payment

                                      -53-

<PAGE>

           Date. The Trust also shall provide a copy of such Notice of
           Revocation to Fitch Ratings, Moody's and any Substitute Rating
           Agency. If the Trust is prohibited from giving a Notice of Special
           Dividend Period as a result of any of the factors enumerated in
           clause (x) or (y) above or if the Trust gives a Notice of Revocation
           with respect to a Notice of Special Dividend Period for any series of
           AMPS, the next succeeding Dividend Period for that series will be a
           Seven-Day Dividend Period. In addition, in the event Sufficient
           Clearing Bids are not made in an Auction, or if an Auction is not
           held for any reason, such next succeeding Dividend Period will be a
           Seven-Day Dividend Period and the Trust 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 Seven-Day Dividend Period.
           If an Auction is not held because an unforeseen event or unforeseen
           events cause a day that otherwise would have been a Dividend Payment
           Date or an Auction Date not to be a Business Day, then the length of
           the Dividend Period relating to such Dividend Payment Date shall be
           extended by seven days (or a multiple thereof if necessary because of
           such unforeseen event or events) (an "Extension Period"), the
           Applicable Rate for such Extension Period shall be the Applicable
           Rate for the Dividend Period so extended and the Dividend Payment
           Date for such Dividend Period shall be the first Business Day next
           succeeding the end of such Extension Period.

                (d) (i) Holders shall not be entitled to any dividends, whether
       payable in cash, property or AMPS, in excess of full cumulative dividends
       as herein provided. Except for the late charge payable pursuant to
       Section 11.2(c)(i) hereof, no interest, or sum of money in lieu of
       interest, shall be payable in respect of any dividend payment on the AMPS
       that may be in arrears.

                    (ii) For so long as any AMPS are Outstanding, the Trust
           shall not declare, pay or set apart for payment any dividend or other
           distribution (other than a dividend or distribution paid in shares
           of, or options, warrants or rights to subscribe for or purchase,
           Common Shares or other shares of beneficial interest, if any, ranking
           junior to the AMPS as to dividends or upon liquidation) in respect of
           the Common Shares or any other shares of beneficial interest of the
           Trust ranking junior to or on a parity with the AMPS as to dividends
           or upon liquidation, or call for redemption, redeem, purchase or
           otherwise acquire for consideration any Common Shares or any other
           such junior shares (except by conversion into or exchange for shares
           of the Trust ranking junior to the AMPS as to dividends and upon
           liquidation) or any other such Parity Shares (except by conversion
           into or exchange for stock of the Trust ranking junior to or on a
           parity with the AMPS as to dividends and upon liquidation), unless
           (A) immediately after such transaction, the Trust shall have Fitch
           Eligible Assets and Moody's Eligible Assets each with an aggregate
           Discounted Value equal to or greater than the Preferred Shares Basic
           Maintenance Amount and the Trust shall maintain the 1940 Act
           Preferred Shares Asset Coverage, (B) full cumulative dividends on
           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 and (C) the
           Trust has redeemed the full number of AMPS required to be redeemed by
           any provision for mandatory redemption contained herein. Further, for
           so long as any AMPS are Outstanding, the

                                      -54-

<PAGE>

           Trust shall not declare, pay or set apart for payment any dividend or
           other distribution on any Parity Shares other than the AMPS unless
           contemporaneously herewith it declares, pays or sets apart for
           payment, as the case may be, the same proportionate share of
           dividends on the AMPS.

                (e) Each dividend shall consist of cash at the Applicable Rate.

                (f) No fractional AMPS shall be issued.

                (g) Solely for purposes of the proviso in clause (i) under the
       definition of "Non-Payment Period," the second parenthetical in the
       second sentence of the second paragraph of Section 11.2(c)(i) of these
       Bylaws and the last sentence of Section 11.2(c)(iii) of these Bylaws, any
       day on which banks in New York City generally are closed, for any reason,
       while the New York Stock Exchange remains open for trading and any day
       which otherwise would be a Business Day as defined in these Bylaws on
       which the Auction Agent is closed for business, for any reason, shall be
       considered a day which is not a Business Day.

           11.3 Liquidation Rights. Upon any liquidation, dissolution or winding
up of the Trust, whether voluntary or involuntary, the Holders of AMPS then
outstanding shall be entitled to receive, out of the assets of the Trust
available for distribution to shareholders, before any distribution or payment
is made upon any Common Shares or any other shares of beneficial interest
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. If upon any liquidation,
dissolution or winding up of the Trust, the amounts payable with respect to the
AMPS and any other Outstanding class or series of preferred shares of beneficial
interest of the Trust 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 have no right or claim to any of the remaining
assets of the Trust. A consolidation, merger or statutory share exchange of the
Trust with or into any other Trust 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 Trust shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Trust.

           11.4 Redemption.

                (a) AMPS shall be redeemable by the Trust as provided below:

                    (i)  To the extent permitted under the 1940 Act and
                Massachusetts law, upon giving a Notice of Redemption, the Trust
                at its option may redeem shares of any series 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 AMPS may be redeemed at the option of the
                Trust during (A) the Initial Dividend Period with respect to a
                series of shares or (B) a Non-Call Period to which such share is
                subject.

                                      -55-

<PAGE>

                    (ii) The Trust shall redeem, out of funds legally available
                therefor, at the Mandatory Redemption Price per share, AMPS to
                the extent permitted under the 1940 Act and Massachusetts law,
                on a date fixed by the Board of Trustees of the Trust, if the
                Trust fails to maintain Fitch Eligible Assets and Moody's
                Eligible Assets each with an aggregate Discounted Value equal to
                or greater than the Preferred Shares Basic Maintenance Amount as
                provided in Section 11.7(a) or to satisfy the 1940 Act Preferred
                Shares Asset Coverage as provided in Section 11.6 and such
                failure is not cured on or before the Preferred Shares Basic
                Maintenance Cure Date or the 1940 Act Cure Date (herein
                collectively referred to as a "Cure Date"), as the case may be.
                The number of AMPS to be redeemed shall be equal to the lesser
                of (i) the minimum number 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 preferred
                shares of beneficial interest of the Trust subject to redemption
                or retirement, would result in the Trust having Fitch Eligible
                Assets and Moody's Eligible Assets each with an aggregate
                Discounted Value equal to or greater than the Preferred Shares
                Basic Maintenance Amount or satisfaction of the 1940 Act
                Preferred Shares Asset Coverage, as the case may be, on such
                Cure Date (provided that, if there is no such minimum number of
                AMPS and other preferred shares of beneficial interest of the
                Trust the redemption of which would have such result, all AMPS
                and other preferred shares of beneficial interest of the Trust
                then Outstanding shall be redeemed), and (ii) the maximum number
                of AMPS, together with all other preferred shares of beneficial
                interest of the Trust 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
                AMPS required to be redeemed in accordance with the foregoing,
                the Trust shall allocate the number required to be redeemed
                which would result in the Trust having Fitch Eligible Assets and
                Moody's Eligible Assets each with an aggregate Discounted Value
                equal to or greater than the Preferred Shares Basic Maintenance
                Amount or satisfaction of the 1940 Act Preferred Shares Asset
                Coverage, as the case may be, pro rata among AMPS of all series
                and other preferred shares of beneficial interest of the Trust
                subject to redemption pursuant to provisions similar to those
                contained in this Section 11.4(a)(ii); provided that AMPS which
                may not be redeemed at the option of the Trust 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 remaining 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 remaining in such Non-Call Period. The
                Trust shall effect such redemption on a Business Day which is
                not later than 35 days after such Cure Date, except that if the
                Trust does not have funds legally available for the redemption
                of all of the required number of AMPS and other preferred shares
                of beneficial interest of the Trust which are subject to
                mandatory redemption or the Trust otherwise is unable to effect
                such redemption on or prior to 35 days after such Cure Date, the
                Trust shall redeem those 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.

                                      -56-

<PAGE>

                (b) Notwithstanding any other provision of this Section 11.4, no
       AMPS may be redeemed pursuant to Section 11.4(a)(i) of these Bylaws
       unless (i) all dividends in arrears on all remaining outstanding Parity
       Shares shall have been or are being contemporaneously paid or declared
       and set apart for payment, and (ii) redemption thereof would not result
       in the Trust's failure to maintain Fitch Eligible Assets or Moody's
       Eligible Assets with an aggregate Discounted Value equal to or greater
       than the Preferred Shares 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
       Trust shall deem fair and equitable.

                (c) Whenever AMPS are to be redeemed, the Trust, not less than
       17 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 AMPS to be redeemed and to the Auction Agent.
       The Notice of Redemption shall set forth (i) the redemption date, (ii)
       the amount of the redemption price, (iii) the aggregate number of AMPS of
       such series to be redeemed, (iv) the place or places where AMPS of such
       series 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 of these Bylaws
       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 Trust shall have deposited in trust
       with the Auction Agent, or segregated in an account at the Trust's
       custodian bank for the benefit of the Auction Agent, Deposit Securities
       (with a right of substitution) having an aggregate Discounted Value equal
       to the redemption payment (including any applicable premiums) for the
       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
       Trust shall default in making the redemption payment), all rights
       (including without limitation voting rights) of the Holders of such
       shares as shareholders of the Trust 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 Trust 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 Trust
       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 Trust for
       the redemption payment.

          11.5 Voting Rights.

                                      -57-

<PAGE>

                (a) General. Except as otherwise provided in the Declaration of
       Trust or Bylaws or as otherwise required by applicable law, each Holder
       of AMPS shall be entitled to one vote for each share held on each matter
       submitted to a vote of shareholders of the Trust, and the holders of
       Outstanding preferred shares of beneficial interest of the Trust,
       including AMPS, and of Common Shares shall vote together as a single
       class; provided that, at any meeting of the shareholders of the Trust
       held for the election of trustees, the holders of Outstanding preferred
       shares of beneficial interest of the Trust, including AMPS, shall be
       entitled, as a class, to the exclusion of the holders of all other
       securities and classes of shares of beneficial interest of the Trust, to
       elect two trustees of the Trust. Subject to Section 11.5(b) hereof, the
       holders of shares of beneficial interest of the Trust, including the
       holders of preferred shares of beneficial interest of the Trust,
       including AMPS, voting as a single class, shall elect the balance of the
       trustees.

                (b) Right to Elect Majority of Board of Trustees. Except as
       otherwise required by law, 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 trustees constituting the
       Board of Trustees of the Trust shall be automatically increased by the
       smallest number that, when added to the two trustees elected exclusively
       by the holders of preferred shares of beneficial interest of the Trust,
       including the AMPS, would constitute a majority of the Board of Trustees
       of the Trust as so increased by such smallest number; and the holders of
       preferred shares of beneficial interest of the Trust shall be entitled,
       voting separately as one class (to the exclusion of the holders of all
       other securities and classes of shares of beneficial interest of the
       Trust), to elect such smallest number of additional trustees (as so
       elected, the "Additional Trustees"), in addition to the two trustees 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 any outstanding
                preferred shares, including the 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 preferred shares of
                beneficial interest of the Trust, including the holders of AMPS,
                are entitled to elect a majority of the trustees of the Trust
                under the 1940 Act.

                    Upon the termination of a Voting Period, the voting rights
            described in this Section 11.5(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
            Section 11.5(b), the terms of the Additional Trustees shall
            terminate automatically, and the remaining Trustees shall constitute
            the Trustees of the Trust.

                                      -58-

<PAGE>

                (c) Right to Vote with Respect to Certain Other Matters. So long
       as any AMPS are Outstanding, the Trust shall not, without the affirmative
       vote or consent of the holders of a majority of the preferred shares of
       the Trust, including the AMPS, Outstanding at the time, voting separately
       as one class: (i) authorize, create or issue any class or series of
       shares of beneficial interest ranking prior to the AMPS or any other
       series of preferred shares of beneficial interest of the Trust with
       respect to payment of dividends or the distribution of assets upon
       dissolution, liquidation or winding up the affairs of the Trust;
       provided, however, that no vote is required to authorize the issuance of
       another series of AMPS or another class of preferred shares of beneficial
       interest of the Trust that is substantially identical in all respects to
       the AMPS; or (ii) amend, alter or repeal the provisions of the
       Declaration of Trust or Bylaws, whether by merger, consolidation or
       otherwise, so as to adversely affect any of the contract rights expressly
       set forth in the Declaration of Trust or Bylaws of holders of AMPS or any
       other preferred shares of beneficial interest of the Trust. To the extent
       permitted under the 1940 Act, in the event shares of more than one series
       of preferred shares of the Trust, including the AMPS, are outstanding,
       the Trust 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 Declaration of Trust or Bylaws of a Holder of a series of AMPS
       differently than those of a Holder of any other series of preferred
       shares of the Trust, including the AMPS, without the affirmative vote of
       the holders of at least a majority of the AMPS of each series adversely
       affected and Outstanding at such time (each such adversely affected
       series voting separately as a class). Unless a higher percentage is
       provided for under the Declaration of Trust or these Bylaws, the
       affirmative vote of the holders of a majority of the outstanding
       preferred shares of beneficial interest of the Trust, 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. To the extent permitted under the 1940
       Act, in the event shares of more than one series of AMPS are outstanding,
       with respect to any action requiring Shareholder approval pursuant to the
       operation of Section 2 or Section 3 of Article V of the Declaration of
       Trust, the affirmative vote of at least seventy-five percent of the AMPS
       of each series Outstanding at such time (each such series voting
       separately as a class) shall also be required. The class (and, where
       applicable, the series) vote of holders of preferred shares of beneficial
       interest of the Trust, including AMPS, described above will in each case
       be in addition to a separate vote of the requisite percentage of Common
       Shares and preferred shares of beneficial interest of the Trust,
       including AMPS, voting together as a single class, necessary to authorize
       the action in question.

                (d) Voting Procedures.

                     (i)   As soon as practicable after the accrual of any right
                of the holders of preferred shares of beneficial interest of the
                Trust to elect additional trustees as described in Section
                11.5(b) above, the Trust shall call a special meeting of such
                holders and instruct the Auction Agent and any other registrar
                for preferred shares of beneficial interest of the Trust other
                than AMPS 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 Trust
                fails to send such notice to the Auction Agent and any other
                applicable registrar, or if the Trust does not call such

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                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 at which trustees are to be
                elected, such holders, voting together as a class (to the
                exclusion of the holders of all other securities and classes of
                shares of beneficial interest of the Trust), shall be entitled
                to elect the number of Trustees prescribed in Section 11.5(b)
                above. At any such meeting or adjournment thereof in the absence
                of a quorum, a majority of such holders present in person or by
                proxy shall have the power to adjourn the meeting without
                notice, other than by an announcement at the meeting, to a date
                not more than 120 days after the original record date.

                     (ii)  Except as otherwise required by applicable law, 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 Bylaws, by the other
                provisions of the Declaration of Trust, by statute or otherwise,
                an Auction Market Preferred Share which is not Outstanding shall
                not be counted.

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

                     (iv)  Simultaneously with the termination of a Voting
                Period, the terms of office of the Additional Trustees shall
                automatically terminate, the remaining trustees shall constitute
                the trustees of the Trust and the voting rights of the Holders
                and such other holders to elect additional trustees pursuant to
                Section 11.5(b) above shall cease, subject to the provisions of
                the last sentence of Section 11.5(b).

                (e) Exclusive Remedy. Unless otherwise required by law, the
       Holders shall not have any rights or preferences other than those
       specifically set forth herein. The Holders shall have no preemptive
       rights or rights to cumulative voting. In the event that the Trust fails
       to pay any dividends on the AMPS, the exclusive remedy of the Holders
       shall be the right to vote for trustees pursuant to the provisions of
       this Section 11.5.

          11.6 1940 Act Preferred Shares Asset Coverage . The Trust shall
maintain, as of the last Business Day of each month in which any AMPS are
outstanding, the 1940 Act Preferred Shares Asset Coverage.

          11.7 Preferred Shares Basic Maintenance Amount.

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<PAGE>

                (a) So long as any AMPS are outstanding and any Rating Agency so
       requires, the Trust shall maintain, on each Valuation Date, and shall
       verify to its satisfaction that it is maintaining on such Valuation Date,
       Fitch Eligible Assets and Moody's Eligible Assets each having an
       aggregate Discounted Value equal to or greater than the Preferred Shares
       Basic Maintenance Amount. Upon any failure to maintain the required
       Discounted Value, the Trust will use its best efforts to alter the
       composition of its portfolio to retain a Discounted Value of both Fitch
       Eligible Assets and Moody's Eligible Assets at least equal to the
       Preferred Shares Basic Maintenance Amount on or prior to the Preferred
       Shares 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 Trust fails to satisfy
       the Preferred Shares Basic Maintenance Amount, the Trust shall complete
       and deliver to (i) the Auction Agent and (ii) Fitch Ratings, Moody's and
       any other Rating Agency then rating the AMPS the Discounted Value of
       whose Eligible Assets fails to satisfy the Preferred Shares Basic
       Maintenance Amount, as applicable, a complete Preferred Shares Basic
       Maintenance Report as of the date of such failure, which will be deemed
       to have been delivered to such recipient if the recipient receives a copy
       or telecopy, telex or other electronic transcription thereof and on the
       same day the Trust mails to the recipient for delivery on the next
       Business Day the complete Preferred Shares Basic Maintenance Report. The
       Trust will deliver a Preferred Shares Basic Maintenance Report to each
       applicable Rating Agency on or before 5:00 p.m., New York City time, on
       the third Business Day after a Valuation Date on which the Trust cures
       its failure to maintain Eligible Assets of each applicable Rating Agency
       with an aggregate Discounted Value equal to or greater than the Preferred
       Shares Basic Maintenance Amount or on which the Trust fails to maintain
       Eligible Assets of each applicable Rating Agency with an aggregate
       Discounted Value which exceeds the Preferred Shares Basic Maintenance
       Amount by 5% or more. The Trust will also deliver a Preferred Shares
       Basic Maintenance Report to the Auction Agent, Fitch Ratings and Moody's
       as of each Quarterly Valuation Date on or before the third Business Day
       after such date. Additionally, on or before 5:00 p.m., New York City
       time, on the third Business Day after the first day of a Special Dividend
       Period, the Trust will deliver a Preferred Shares Basic Maintenance
       Report to the Auction Agent, Fitch Ratings and Moody's. The Trust shall
       also provide Fitch Ratings or Moody's with a Preferred Shares Basic
       Maintenance Report when specifically requested by Fitch Ratings or
       Moody's, respectively.

                (c) Within ten Business Days after the date of delivery of a
       Preferred Shares Basic Maintenance Report in accordance with Section
       11.7(b) above relating to a Quarterly Valuation Date (except as described
       in the following sentence), the Independent Accountant will confirm in
       writing to the Auction Agent, Fitch Ratings and Moody's, (i) the
       mathematical accuracy of the calculations reflected in such Report (and
       in any other Preferred Shares Basic Maintenance Report, randomly selected
       by the Independent Accountant, that was delivered by the Trust during the
       quarter ending on such Quarterly Valuation Date), (ii) that, in such
       Report (and in such randomly selected Report), the Trust correctly
       determined the assets of the Trust which constitute Fitch Eligible Assets
       and Moody's Eligible Assets at such Quarterly Valuation Date in
       accordance with these Bylaws, (iii) that, in such Report (and in such
       randomly selected Report), the Trust determined whether the Trust had, at
       such Quarterly Valuation Date (and at the Valuation Date addressed in
       such randomly selected

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<PAGE>

     Report) in accordance with these Bylaws, Fitch Eligible Assets and Moody's
     Eligible Assets each with an aggregate Discounted Value at least equal to
     the Preferred Shares Basic Maintenance Amount, (iv) with respect to the
     ratings by S&P of Fitch Ratings on portfolio securities of the Trust, the
     issuer name, issue size and coupon rate, if any, listed in such Report,
     that the Independent Accountant has requested that S&P or Fitch Ratings
     verify such information and the Independent Accountant shall provide a
     listing in its letter of any differences, (v) with respect to the Fitch
     Ratings' ratings on portfolio securities of the Trust, the issuer name,
     issue size and coupon rate, if any, listed in such Report, that such
     information has been verified by Fitch Ratings (in the event such
     information is not verified by Fitch Ratings, the Independent Accountant
     will inquire of Fitch Ratings what such information is, and provide a
     listing in its letter of any differences), (vi) with respect to the Moody's
     ratings on portfolio securities of the Trust, the issuer name, issue size
     and coupon rate, if any, listed in such Report, that such information has
     been verified by Moody's (in the event such information is not verified by
     Moody's, the Independent Accountant will inquire of Moody's what such
     information is, and provide a listing in its letter of any differences) and
     (vii) with respect to the bid or mean price (or such alternative
     permissible factor used in calculating the Market Value) provided by the
     custodian of the Trust's assets to the Trust for purposes of valuing
     securities in the Trust's portfolio, the Independent Accountant has traced
     the price used in such Report to the bid or mean price listed in such
     Report as provided to the Trust and verified that such information agrees
     (in the event such information does not agree, the Independent Accountant
     will provide a listing in its letter of such differences) (such
     confirmation is herein called the "Accountant's Confirmation").
     Notwithstanding the foregoing sentence, the Independent Accountant will
     provide the confirmation described in the foregoing sentence with respect
     to Preferred Shares Basic Maintenance Reports delivered pursuant to the
     third sentence of Section 11.7(b) above only for such Preferred Shares
     Basic Maintenance Reports relating to the last fiscal quarter of each
     fiscal year.

          (d) Within ten Business Days after the date of delivery to the Auction
     Agent and any applicable Rating Agency of a Preferred Shares Basic
     Maintenance Report in accordance with Section 11.7(b) above relating to any
     Valuation Date on which the Trust failed to maintain Eligible Assets of
     such applicable Rating Agency with an aggregate Discounted Value equal to
     or greater than the Preferred Shares Basic Maintenance Amount, and relating
     to the AMPS Basic Maintenance Cure Date with respect to such failure, the
     Trust shall cause the Independent Accountant to provide to the Auction
     Agent and each applicable Rating Agency an Accountant's Confirmation as to
     such Preferred Shares Basic Maintenance Report.

          (e) If any Accountant's Confirmation delivered pursuant to
     subparagraph (c) or (d) of this Section 11.7 shows that an error was made
     in the Preferred Shares 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
     Fitch Eligible Assets or Moody's Eligible Assets of the Trust was
     determined by the Independent Accountant, the calculation or determination
     made by such Independent Accountant shall be final and conclusive and shall
     be binding on the Trust, and the Trust shall accordingly amend and deliver
     the Preferred Shares Basic Maintenance Report to the Auction Agent and each
     applicable Rating Agency promptly following receipt by the Trust of such
     Accountant's Confirmation.

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<PAGE>

          (f)  Within five Business Days after the Date of Original Issue of the
     AMPS, the Trust will complete and deliver to Moody's a Preferred Shares
     Basic Maintenance Report as of the close of business on such Date of
     Original Issue. Also, on or before 5:00 p.m., New York City time, on the
     first Business Day after any Common Shares are repurchased by the Trust,
     the Trust will complete and deliver to Fitch Ratings and Moody's a
     Preferred Shares Basic Maintenance Report as of the close of business on
     such date that Common Shares are repurchased.

      11.8 Certain Other Restrictions.

          (a)  For so long as any AMPS are rated by Moody's, the Trust will not
     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 AMPS by Moody's, except that the Trust may 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, any index approved by Moody's
     or Treasury Bonds, and purchase, write or sell exchange-traded call options
     on such financial futures contracts, any index approved by Moody's or
     Treasury Bonds (collectively "Moody's Hedging Transactions"), subject to
     the following limitations:

               (i)  the Trust will not engage in any Moody's Hedging Transaction
          based on any index approved by Moody's (other than transactions that
          terminate a futures contract or option held by the Trust by the
          Trust's taking the opposite position thereto ("Closing Transactions"))
          that would cause the Trust at the time of such transaction to own or
          have sold:

                    (A) outstanding financial futures contracts based on such
               index exceeding in number 10% (or such higher percentage as
               Moody's may approve) of the average number of daily traded
               financial futures contracts based on such index in the 30 days
               preceding the time of effecting such transaction as reported by
               The Wall Street Journal; or

                    (B) outstanding financial futures contracts based on any
               index approved by Moody's having a Market Value exceeding 50% (or
               such higher percentage as Moody's may approve) of the Market
               Value of all portfolio securities of the Trust constituting
               Moody's Eligible Assets owned by the Trust (other than Moody's
               Eligible Assets already subject to a Moody's Hedging
               Transaction);

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

                    (A) outstanding financial futures contracts based on
               Treasury Bonds with such contracts having an aggregate Market
               Value exceeding 20% (or such higher

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<PAGE>

               percentage as Moody's may approve) of the aggregate Market Value
               of Moody's Eligible Assets owned by the Trust and rated Aa or
               higher by Moody's (or, if not rated by Moody's but rated by S&P
               or Fitch Ratings, rated AAA by S&P or Fitch Ratings); or

                     (B) outstanding financial futures contracts based on
               Treasury Bonds with such contracts having an aggregate Market
               Value exceeding 80% of the aggregate Market Value of all
               portfolio securities of the Trust constituting Moody's Eligible
               Assets owned by the Trust (other than Moody's Eligible Assets
               already subject to a Moody's Hedging Transaction) and rated Baa
               or A by Moody's (or, if not rated by Moody's but rated by S&P or
               Fitch Ratings, rated A or AA by S&P or Fitch Ratings)

            (for purposes of the foregoing clauses (i) and (ii), the Trust shall
            be deemed to own the number of financial futures contracts that
            underlie any outstanding options written by the Trust);

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

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

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

               (vi)  the Trust (A) will not engage in options and futures
          transactions for leveraging or speculative purposes, except that an
          option or futures transaction shall not for these purposes be
          considered a leveraged position or speculative so long as the
          combination of the Trust'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 Trust's investment
          objectives and policies, in a security that is not an option or
          futures transaction, 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;
          and

               (vii) while the Trust may use options and futures transactions
          for hedging and risk management purposes, it will not enter into an
          option or futures transaction unless, after giving effect thereto, the
          Trust would continue to have Moody's Eligible Assets

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<PAGE>

          with an aggregate Discounted Value equal to or greater than the
          Preferred Shares Basic Maintenance Amount.

          (b) For purposes of determining whether the Trust has Moody's Eligible
     Assets with an aggregate Discounted Value that equals or exceeds the
     Preferred Shares Basic Maintenance Amount, the Discounted Value of Moody's
     Eligible Assets that the Trust 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 Trust 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 Trust;

              (ii)  assets subject to call options written by the Trust not
          meeting the requirements of clause (i) of this sentence shall have no
          value;

              (iii) assets subject to put options written by the Trust shall be
          valued at the lesser of (A) the exercise price and (B) the Discounted
          Value of the assets subject to the option;

              (iv)  futures contracts shall be valued at the lesser of (A)
          settlement price and (B) the Discounted Value of the assets subject to
          the futures contract, provided that, if a contract matures within 49
          days after the date as of which such valuation is made, where the
          Trust is the seller the contract may be valued at the settlement price
          and where the Trust is the buyer the contract may be valued at the
          Discounted Value of the assets subject to the futures contract; and

              (v)   where delivery may be made to the Trust with any security of
          a class of securities, the Trust shall assume that it will take
          delivery of the security with the lowest Discounted Value.

          (c) For purposes of determining whether the Trust has Moody's Eligible
     Assets with an aggregate Discounted Value that equals or exceeds the
     Preferred Shares Basic Maintenance Amount, the following amounts shall be
     subtracted from the aggregate Discounted Value of the Moody's Eligible
     Assets held by the Trust to the extent the relevant asset is a Moody's
     Eligible Asset:

              (i)   10% of the exercise price of a written call option;

              (ii)  the exercise price of any written put option;

              (iii) where the Trust is the seller under a financial futures
          contract, 10% of the settlement price of the financial futures
          contract;

              (iv)  where the Trust is the purchaser under a financial futures
          contract, any amounts payable by the Trust under such financial
          futures contract;

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<PAGE>

              (v)  the settlement price of the underlying financial futures
          contract if the Trust writes put options on a financial futures
          contract; and

              (vi) 105% of the Market Value of the underlying financial futures
          contract if the Trust writes call options on a financial futures
          contract and does not own the underlying contract.

          (d) For so long as any AMPS are rated by Moody's, the Trust will not
     enter into any "Forward Commitment," herein defined as any contract to
     purchase securities for a fixed price at a future date beyond customary
     settlement time (other than such contracts that constitute Fitch Hedging
     Transactions or Moody's Hedging Transactions, as applicable), except that
     the Trust may enter into Forward Commitments subject to the following
     limitations:

              (i)  for each Forward Commitment, the Trust will maintain with its
          custodian (A) cash, cash equivalents or short-term, fixed-income
          securities rated P-1, MIG-1 or VMIG-1 by Moody's or A-1 by S&P or
          Fitch Ratings and maturing in one year or less with a fair market
          value that equals or exceeds the amount by which the Trust's
          obligations under any Forward Commitments to which it is from time to
          time a party exceed obligations to the Trust arising from securities
          sales by the Trust that are scheduled to settle at a future date, or
          (B) long-term, fixed-income securities with a then current market
          value that equals or exceeds the amount by which the Trust's
          obligations under any Forward Commitments to which it is from time to
          time a party exceed obligations to the Trust arising from securities
          sales by the Trust that are scheduled to settle on a future date, or
          (C) a combination of assets described in (A) and (B) above that in the
          aggregate equals or exceeds the amount by which the Trust's
          obligations under any Forward Commitments to which it is from time to
          time a party exceed obligations to the Trust arising from securities
          sales by the Trust that are scheduled to settle on a future date; and

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

          For purposes of determining whether the Trust has Moody's Eligible
          Assets with an aggregate Discounted Value that equals or exceeds the
          Preferred Shares Basic Maintenance Amount, the Discounted Value of all
          Forward Commitments to which the Trust is a party and of all
          securities deliverable to the Trust pursuant to such Forward
          Commitments shall be zero.

          (e) For so long as any AMPS are Outstanding and Fitch Ratings or
     Moody's or both are rating such shares, the Trust, unless it has received
     written confirmation from Fitch Ratings or Moody's or both, as applicable,
     that such action would not impair the rating then assigned to the AMPS by
     Fitch Ratings or Moody's or both, as applicable, will not:

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<PAGE>

              (i)   borrow money except for the purpose of clearing transactions
          in portfolio securities (which borrowings under any circumstances
          shall be limited to an amount equal to 5% of the Market Value of the
          Trust'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 Fitch Eligible
          Assets or Moody's Eligible Assets, as applicable, to be less than the
          Preferred Shares Basic Maintenance Amount);

              (ii)  engage in short sales of securities;

              (iii) lend any securities;

              (iv)  issue any class or series of shares of beneficial interest
          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 Trust;

              (v)   merge or consolidate into or with any other corporation or
          entity; and

              (vi)  change any Pricing Service of the Trust.

          (f) For so long as any AMPS are rated by Fitch Ratings, the Trust will
     not 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 Fitch
     Ratings that engaging in such transactions would not impair the ratings
     then assigned to the AMPS by Fitch Ratings, except that the Trust may
     purchase or sell exchange-traded financial futures contracts based on any
     index approved by Fitch Ratings or Treasury Bonds, and purchase, write or
     sell exchange-traded put options on such financial futures contracts, any
     index approved by Fitch Ratings or Treasury Bonds and purchase, write or
     sell exchange-traded call options on such financial futures contracts, any
     index approved by Fitch Ratings or Treasury Bonds (collectively "Fitch
     Hedging Transactions"), subject to the following limitations:

              (i)   the Trust will not engage in any Fitch Hedging Transaction
          based on any index approved by Fitch Ratings (other than Closing
          Transactions) that would cause the Trust at the time of such
          transaction to own or have sold outstanding financial futures
          contracts based on such index exceeding in number 10% of the average
          number of daily traded financial futures contracts based on such index
          in the 30 days preceding the time of effecting such transaction as
          reported by The Wall Street Journal;

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

                    (A) outstanding financial futures contracts based on
              Treasury Bonds with such contracts having an aggregate Market
              Value exceeding 20% of the aggregate Market Value of Fitch
              Eligible Assets owned by the Trust and rated at least AA

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<PAGE>

               by Fitch Ratings (or, if not rated by Fitch Ratings, rated at
               least Aa by Moody's; or, if not rated by Moody's, rated AAA by
               S&P); or

                    (B) outstanding financial futures contracts based on
               Treasury Bonds with such contracts having an aggregate Market
               Value exceeding 40% of the aggregate Market Value of all Fitch
               Eligible Assets owned by the Trust (other than Fitch Eligible
               Assets already subject to a Fitch Hedging Transaction) and rated
               at least A or BBB by Fitch Ratings (or, if not rated by Fitch
               Ratings, rated at least Baa by Moody's; or, if not rated by
               Moody's, rated at least A or AA by S&P)

       (for purposes of the foregoing clauses (i) and (ii), the Trust shall be
       deemed to own futures contracts that underlie any outstanding options
       written by the Trust);

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

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

         (g)  For purposes of determining whether the Trust has Fitch Eligible
     Assets with an aggregate Discounted Value that equals or exceeds the
     Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch
     Eligible Assets that the Trust 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 Trust 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 Trust;

              (ii)  assets subject to call options written by the Trust not
         meeting the requirements of clause (i) of this sentence shall have no
         value;

              (iii) assets subject to put options written by the Trust shall be
         valued at the lesser of (A) the exercise price and (B) the Discounted
         Value of the assets subject to the option;

              (iv)  futures contracts shall be valued at the lesser of (A)
         settlement price and (B) the Discounted Value of the assets subject to
         the futures contract, provided that, if a contract matures within 49
         days after the date as of which such valuation is made, where the Trust
         is the seller the contract may be valued at the settlement price and
         where the Trust is the buyer the contract may be valued at the
         Discounted Value of the assets subject to the futures contract; and

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              (v)   where delivery may be made to the Trust with any security of
          a class of securities, the Trust shall assume that it will take
          delivery of the security with the lowest Discounted Value.

          (h) For purposes of determining whether the Trust has Fitch Eligible
     Assets with an aggregate Discounted Value that equals or exceeds the
     Preferred Shares Basic Maintenance Amount, the following amounts shall be
     subtracted from the aggregate Discounted Value of the Fitch Eligible Assets
     held by the Trust to the extent the relevant asset is a Fitch Eligible
     Asset:

              (i)   10% of the exercise price of a written call option;

              (ii)  the exercise price of any written put option;

              (iii) where the Trust is the seller under a financial futures
          contract, 10% of the settlement price of the financial futures
          contract;

              (iv)  where the Trust 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 Trust writes put options on a financial futures
          contract and does not own the underlying contract; and

              (vi)  105% of the Market Value of the underlying financial futures
          contracts if the Trust writes call options on a financial futures
          contract and does not own the underlying contract.

          (i) For so long as any AMPS are rated by Fitch Ratings, the Trust will
     not enter into any Forward Commitments, except that the Trust may enter
     into Forward Commitments subject to the following limitations:

              (i)   the Trust will maintain in a segregated account with its
          custodian cash, cash equivalents or short-term, fixed-income
          securities rated F1 or better by Fitch Ratings (or, if not rated by
          Fitch Ratings, rated P-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 Trust'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 Trust's obligations under any Forward Commitment to which it is
          from time to time a party; and

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

                                      -69-

<PAGE>

For purposes of determining whether the Trust has Fitch Eligible Assets with an
aggregate Discounted Value that equals or exceeds the Preferred Shares Basic
Maintenance Amount, the Discounted Value of all Forward Commitments to which the
Trust is a party and of all securities deliverable to the Trust pursuant to such
Forward Commitments shall be zero.

     11.9  Notice. All notices or communications, unless otherwise specified in
these Bylaws, 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.

     11.10 Auction Procedures.

           (a) Certain Definitions. As used in this Section 11.10, the following
  terms shall have the following meanings, unless the context otherwise
  requires:

           (i)   "AMPS" means the AMPS being auctioned pursuant to this Section
      11.10

           (ii)  "Auction Date" means the first Business Day preceding the first
      day of a Dividend Period.

           (iii) "Available AMPS" has the meaning specified in Section
      11.10(d)(i)(A) below.

           (iv)  "Bid" has the meaning specified in Section 11.10(b)(i)(B)
      below.

           (v)   "Bidder" has the meaning specified in Section 11.10(b)(i)(B)
      below.

           (vi)  "Hold Order" has the meaning specified in Section 11.10(b)(i)
      (B) below.

           (vii) "Maximum Applicable Rate" for any Dividend Period will be the
     greater of the Applicable Percentage of the Reference Rate or the
     Applicable Spread plus the Reference Rate. The Auction Agent will round
     each applicable Maximum Applicable Rate to the nearest one-thousandth
     (.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 (.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 "Applicable Percentage" shall be the percentage determined based
     on the lower of the credit ratings assigned on such date by Moody's and
     Fitch Ratings as follows:


                        Credit Ratings
        --------------------------------------              Applicable
            Moody's                 Fitch                   Percentage
        ----------------       ---------------              ----------
             Aaa                     AAA                        125%
           Aa3 to Aa1             AA- to AA+                    150%
            A3 to A1               A- to A+                     200%
          Baa3 to Baa1           BBB- to BBB+                   250%

                                      -70-

<PAGE>

         Ba1 and lower          BB+ and lower               300%

          The Applicable Percentage as so determined shall be further subject to
     upward but not downward adjustment in the discretion of the Board of
     Trustees of the Trust after consultation with the Broker-Dealers, provided
     that the Board of Trustees has received assurance from Moody's, Fitch
     Ratings and from any other Rating Agency then rating the APMS that such
     increase will not impair such Rating Agency's rating thereof, and further
     provided that immediately following any such increase the Trust would be in
     compliance with the Preferred Shares Basic Maintenance Amount. The Trust
     shall take all reasonable action necessary to enable Moody's or Fitch
     Ratings to provide a rating for each series of AMPS. If Moody's or Fitch
     Ratings shall not make such a rating available, Merrill Lynch, Pierce,
     Fenner and Smith Incorporated or its affiliates and successors, after
     consultation with the Trust, shall select another Rating Agency to act as a
     Substitute Rating Agency.

          "Applicable Spread" means the spread determined based on the credit
     rating assigned to the series of AMPS on such date by Moody's and Fitch
     Ratings as follows:

                 Credit Ratings
     ------------------------------------------     Applicable Spread over
           Moody's                 Fitch                Reference Rate
     -------------------   --------------------     ----------------------
             Aaa                    AAA                     125 bps
          Aa3 to Aa1            AA- to AA+                  150 bps
           A3 to A1              A- to A+                   200 bps
         Baa3 to Baa1          BBB- to BBB+                 250 bps
        Ba1 and lower          BB+ and lower                300 bps

          The Applicable Spread as so determined will be further subject to
     upward but not downward adjustment in the discretion of the Board of
     Directors after consultation with the Broker-Dealers, provided that that
     immediately following any such increase the Fund would be in compliance
     with the Preferred Shares Basic Maintenance Amount. The Fund will take all
     reasonable action necessary to enable either Moody's or Fitch to provide a
     rating for each series of AMPS. If neither Moody's nor Fitch will make such
     a rating available, the Fund will select another Rating Agency to act as a
     substitute Rating Agency.

          For purposes of this definition, the "prevailing rating" of shares of
     a series of AMPS will be (i) AAA if such shares have a rating of AAA by
     Moody's or Fitch or the equivalent of such ratings by such agencies or
     substitute rating agencies selected as provided below; (ii) if not AAA,
     then AA- if such shares have a rating of AA- or better by Moody's or Fitch
     or the equivalent of such ratings by such agencies or substitute rating
     agencies selected as provided below, (iii) if not AA- or higher, than A- if
     such shares have a rating of A- or better by Moody's or Fitch or the
     equivalent of such ratings by such agencies or substitute rating agencies
     selected as provided below, (iv) if not A- or higher

                                      -71-

<PAGE>

     then BBB- if such shares have a rating of BBB- or better by Moody's or
     Fitch or the equivalent of such ratings by such agencies or substitute
     rating agencies selected as provided below, (v) if not BBB- or higher, then
     below BBB-; provided, however, that if such shares are rated by only one
     rating agency, the prevailing rating will be determined without reference
     to the rating of any other rating agency.

         (viii) "Order" has the meaning specified in Section 11.10(b)(i)(B)
     below.

          (ix)  "Sell Order" has the meaning specified in Section 11.10(b)(i)(B)
     below.

          (x)   "Submission Deadline" means 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" has the meaning specified in Section 11.10(d)(i)
     below.

         (xii)  "Submitted Hold Order" has the meaning specified in Section
     11.10(d)(i) below.

         (xiii) "Submitted Order" has the meaning specified in Section
     11.10(d)(i) below.

         (xiv)  "Submitted Sell Order" has the meaning specified in Section
     11.10(d)(i) below.

         (xv)   "Sufficient Clearing Bids" has the meaning specified in Section
     11.10(d)(i) below.

         (xvi)  "Winning Bid Rate" has the meaning specified in Section
     11.10(d)(i)(C) below.

         (b) Orders by Beneficial Owners, Potential Beneficial Owners, Existing
Holders and Potential Holders.

             (i) Unless otherwise permitted by the Trust, 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 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:

                                      -72-

<PAGE>

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

                                    (2) the number of Outstanding AMPS, if any,
                           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 for such shares shall not be less than the
                           rate per annum specified by such Beneficial Owner;
                           and/or

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

                 (B) each Broker-Dealer, using a list of Potential Beneficial
             Owners that shall be maintained in good faith in a commercially
             reasonable manner 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 AMPS, if any, 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 Section 11.10(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 Section 11.10(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 Section 11.10(b)(i) is hereinafter referred
             to as a "Bid"; and an Order containing the information referred to
             in clause (A)(3) of this Section 11.10(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 a Beneficial Owner or an Existing Holder shall
         constitute an irrevocable offer to sell:

                                      -73-

<PAGE>

                    (1) the number of Outstanding 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 AMPS to be
               determined as set forth in Section 11.10(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 AMPS to be determined as
               set forth in Section 11.10(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 a Beneficial Owner or an Existing Holder
         shall constitute an irrevocable offer to sell:

                    (1) the number of Outstanding AMPS specified in such Sell
               Order; or

                    (2) such number or a lesser number of Outstanding AMPS to be
               determined as set forth in Section 11.10(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 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 AMPS to be
               determined as set forth in Section 11.10(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.

           (i) Each Broker-Dealer shall submit in writing or through the Auction
     Agent's auction processing system to the Auction Agent prior to the
     Submission Deadline on each Auction Date all Orders obtained by such
     Broker-Dealer, designating itself (unless otherwise permitted by the Trust)
     as an Existing Holder in respect of shares subject to Orders submitted or
     deemed submitted to it by Beneficial Owners and as a Potential Holder in
     respect of shares subject to Orders submitted to it by Potential Beneficial
     Owners, and 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 Trust);

                                      -74-

<PAGE>

               (B) the aggregate number of Outstanding AMPS that are the subject
          of such Order;

               (C) to the extent that such Bidder is a Beneficial Owner or an
          Existing Holder:

                         (1) the number of Outstanding AMPS, if any, subject to
                    any Hold Order placed by such Beneficial Owner or Existing
                    Holder;

                         (2) the number of Outstanding AMPS, if any, subject to
                    any Bid placed by such Beneficial Owner or Existing Holder
                    and the rate per annum specified in such Bid; and

                         (3) the number of Outstanding AMPS, if any, subject to
                    any Sell Order placed by such Beneficial Owner or 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 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 any Auction other than an Auction relating to a Special Dividend Period
     of 91 days or less) or a Sell Order (in the case of an Auction relating to
     a Special Dividend Period of longer than 91 days) to have been submitted on
     behalf of such Existing Holder covering the number of Outstanding 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 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 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 AMPS subject to such Hold Orders exceeds the number of
          Outstanding AMPS held by such Existing Holder, the number of AMPS
          subject to each of such Hold Orders shall be reduced pro rata so that
          such Hold Orders, in the aggregate, will cover exactly the number of
          Outstanding AMPS held by such Existing Holder;

                                      -75-

<PAGE>

               (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
          AMPS held by such Existing Holder over the number of AMPS subject to
          any Hold Order referred to in Section 11.10(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 Section 11.10(c)(iv)(A) above and of the
          foregoing portion of this Section 11.10(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 Section 11.10(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 AMPS held by such Existing
          Holder over the number of AMPS subject to Hold Orders referred to in
          Section 11.10(c)(iv)(A) and Bids referred to in Section
          11.10(c)(iv)(B); provided that if more than one Sell Order is
          submitted on behalf of any Existing Holder and the number of AMPS
          subject to such Sell Orders is greater than such excess, the number 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
          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 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.

          (vii) The Trust shall not be responsible for a Broker-Dealer's failure
     to act in accordance with the instructions of Beneficial Owners or
     Potential Beneficial Owners or failure to comply with the provisions of
     this Section 11.10.

      (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

                                      -76-

<PAGE>

     "Submitted Bid" or a "Submitted Sell Order," as the case may be, or, more
     generally, as a "Submitted Order") and shall determine:

               (A)  the excess of the total number of Outstanding AMPS over the
          number of Outstanding 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
          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 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 AMPS that are subject to
                    Submitted Sell Orders (if such excess or such equality
                    exists (other than because the number of Outstanding AMPS in
                    clause (1) above and this clause (2) are each zero because
                    all of the Outstanding 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 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 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 Section 11.10(d)(i), the Auction Agent shall advise the Trust
     of the Maximum Applicable Rate and, based on such determinations, the
     Applicable Rate for the next succeeding Dividend Period as follows:

                                      -77-

<PAGE>

               (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 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 AMPS are the subject of Submitted
          Hold Orders, that the Dividend Period next succeeding the Auction
          shall automatically be the same length as the immediately preceding
          Dividend Period and the Applicable Rate for the next succeeding
          Dividend Period shall be equal to 80% of the Reference Rate on the
          date of the Auction.

          (e)  Acceptance and Rejection of Submitted Bids and Submitted Sell
     Orders and Allocation of Shares. Existing Holders shall continue to hold
     the AMPS that are subject to Submitted Hold Orders, and, based on the
     determinations made pursuant to Section 11.10(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 Section 11.10(e)(iii) and Section 11.10(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 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 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 AMPS that are the subject of
             such Submitted Bid, unless the number of Outstanding AMPS subject
             to all such Submitted Bids shall be greater than the number of
             Outstanding AMPS ("Remaining Shares") equal to the excess of the
             Available AMPS over the number of Outstanding AMPS subject to
             Submitted Bids described in Section 11.10(e)(i)(B) and Section
             11.10(e)(i)(C), in which event the Submitted Bids of each such
             Existing Holder shall be accepted, and each such Existing Holder
             shall

                                      -78-

<PAGE>

             be required to sell Outstanding AMPS, but only in an amount equal
             to the difference between (1) the number of Outstanding AMPS then
             held by such Existing Holder subject to such Submitted Bid and (2)
             the number 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 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 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 AMPS obtained by multiplying (x) the difference between
             the Available AMPS and the number of Outstanding AMPS subject to
             Submitted Bids described in Section 11.10(e)(i)(B), Section
             11.10(e)(i)(C) and Section 11.10(e)(i)(D) by (y) a fraction the
             numerator of which shall be the number of Outstanding AMPS subject
             to such Submitted Bid and the denominator of which shall be the
             number of Outstanding 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 AMPS are subject to Submitted Hold
          Orders), subject to the provisions of Section 11.10(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 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 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 AMPS then held
             by such Existing Holder subject to such Submitted Bid or Submitted
             Sell Order and (2) the number of AMPS obtained by multiplying (x)
             the difference between the Available AMPS and the aggregate number
             of Outstanding AMPS subject to Submitted Bids described in Section
             11.10(e)(ii)(A) and Section 11.10(e)(ii)(B) by (y) a fraction the
             numerator of which shall be the number of Outstanding AMPS held by
             such Existing Holder subject to such Submitted Bid or Submitted
             Sell Order and the denominator of which shall be the

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<PAGE>

             number of Outstanding AMPS subject to all such Submitted Bids and
             Submitted Sell Orders. If all of the Outstanding shares of a series
             of AMPS are subject to Submitted Hold Orders, all Submitted Bids
             for shares of such series shall be rejected.

               (iii) If, as a result of the procedures described in Section
          11.10(e), any Existing Holder would be entitled or required to sell,
          or any Potential Holder would be entitled or required to purchase, a
          fraction of an Auction Market Preferred Share 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 AMPS to be purchased or sold
          by any Existing Holder or Potential Holder on such Auction Date so
          that each Outstanding Auction Market Preferred Share purchased or sold
          by each Existing Holder or Potential Holder on such Auction Date shall
          be a whole Auction Market Preferred Share.

               (iv)  If, as a result of the procedures described in Section
          11.10(e), any Potential Holder would be entitled or required to
          purchase less than a whole Auction Market Preferred Share on any
          Auction Date, the Auction Agent shall, in such manner as in its sole
          discretion it shall determine, allocate AMPS for purchase among
          Potential Holders so that only whole 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 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 AMPS to be purchased and
          the aggregate number of the Outstanding 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 AMPS.

           (f) Miscellaneous.

               (i)   To the extent permitted by applicable law, the Trust may
          in its sole discretion interpret the provisions of this Section 11.10
          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.

               (ii)  Unless otherwise permitted by the Trust, a Beneficial
          Owner or an Existing Holder (A) may sell, transfer or otherwise
          dispose of AMPS only pursuant to a Bid or Sell Order in accordance
          with the procedures described in this Section 11.10 or to or through a
          Broker-Dealer or to such other persons as may be permitted by the

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<PAGE>


          Trust, 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 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. The Trust may not submit an Order in any
          Auction.

               (iii) All of the Outstanding AMPS of a series shall be 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 Trust's option and upon
          its receipt of such documents as it deems appropriate, any AMPS may be
          registered in the Share 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.

      11.11 Securities Depository; Stock Certificates.

          (a) If there is a Securities Depository, all of the AMPS of each
   series shall be issued to the Securities Depository and registered in the
   name of the Securities Depository or its nominee. Certificates may be issued
   as necessary to represent AMPS. All such certificates shall bear a legend to
   the effect that such certificates are issued subject to the provisions
   restricting the transfer of AMPS contained in these Bylaws. Unless the Trust
   shall have elected, during a Non-Payment Period, to waive this requirement,
   the Trust will also issue stop-transfer instructions to the Auction Agent for
   the 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 AMPS of a series shall be
   the Non-Payment Period Rate or there is no Securities Depository, the Trust
   may at its option issue one or more new certificates with respect to such
   shares (without the legend referred to in Section 11.11(a)) registered in the
   names of the Beneficial Owners or their nominees and rescind the
   stop-transfer instructions referred to in Section 11.11(a) with respect to
   such shares.

                                   ARTICLE 12
                             Amendment to the Bylaws

     12.1 General. Except to the extent that the Declaration of Trust or
applicable law requires a vote or consent of Shareholders or a higher vote or
consent by the Trustees and/or the Continuing Trustees, these Bylaws may be
amended, changed, altered or repealed, in whole or part, only by resolution of a
majority of the Trustees and a majority of the Continuing Trustees then in
office at any meeting of the Trustees, or by one or more writings signed by such
Trustees and Continuing Trustees.

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     12.2 Article 11. Without limiting the provisions of Section 12.1, the Board
of Trustees of the Trust may, by resolution duly adopted, without shareholder
approval (except as otherwise required by Article 11 or required by applicable
law), amend Article 11 to (a) reflect any amendments thereto which the Board of
Trustees of the Trust is entitled to adopt pursuant to the terms of Article 11
without shareholder approval or (b) add additional series of AMPS or additional
shares of a series of AMPS (and terms relating thereto) to the series and AMPS
described herein, provided that the Board of Trustees shall not authorize,
create or issue an additional series of AMPS unless it has received assurance
from Moody's, Fitch Ratings and from any other Rating Agency then rating the
AMPS that such authorization, creation or issuance will not impair such Rating
Agency's then current rating thereof. Each such additional series and all such
additional AMPS shall be governed by the terms of Article 11.

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