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<SEC-DOCUMENT>0000919574-02-000064.txt : 20020414
<SEC-HEADER>0000919574-02-000064.hdr.sgml : 20020414
ACCESSION NUMBER:		0000919574-02-000064
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		12
FILED AS OF DATE:		20020125

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ALLIANCE NATIONAL MUNICIPAL INCOME FUND
		CENTRAL INDEX KEY:			0001162027

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-73130
		FILM NUMBER:		02516777

	BUSINESS ADDRESS:	
		STREET 1:		ALLIANCE CAPITAL MANAGEMENT LP
		STREET 2:		1345 AVE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10105
		BUSINESS PHONE:		2129692124

	MAIL ADDRESS:	
		STREET 1:		ALLIANCE CAPITAL MANAGEMENT LP
		STREET 2:		1345 AVE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10105

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ALLIANCE NATIONAL MUNICIPAL INCOME FUND
		CENTRAL INDEX KEY:			0001162027

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-10573
		FILM NUMBER:		02516778

	BUSINESS ADDRESS:	
		STREET 1:		ALLIANCE CAPITAL MANAGEMENT LP
		STREET 2:		1345 AVE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10105
		BUSINESS PHONE:		2129692124

	MAIL ADDRESS:	
		STREET 1:		ALLIANCE CAPITAL MANAGEMENT LP
		STREET 2:		1345 AVE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10105
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>n2a2_00250209am0.txt
<TEXT>



<PAGE>


      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
                       ON JANUARY 25, 2002
                   1933 ACT FILE NO. 333-73130
                 1940 ACT FILE NO. 811-10573
   ___________________________________________________________

            U.S. SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549

                            FORM N-2
                (CHECK APPROPRIATE BOX OR BOXES)

  / /   REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
           /X/      PRE-EFFECTIVE AMENDMENT NO. 2
              / /      POST-EFFECTIVE AMENDMENT NO.

                             AND/OR

    / /   REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
                           ACT OF 1940
                  /X/      AMENDMENT NO. 2

        EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER:

          ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
             ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
            (NUMBER, STREET, CITY, STATE, ZIP CODE):

                  1345 AVENUE OF THE AMERICAS
                    NEW YORK, NEW YORK 10105

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                         (212) 969-1000

    NAME AND ADDRESS (NUMBER, STREET, CITY, STATE, ZIP CODE)
                     OF AGENT FOR SERVICE:

                     EDMUND P. BERGAN, JR.

                ALLIANCE CAPITAL MANAGEMENT L.P.
                  1345 AVENUE OF THE AMERICAS
                  NEW YORK, NEW YORK 10105

                         WITH COPIES TO:

                      PATRICIA A. POGLINCO
                       SEWARD & KISSEL LLP
                     ONE BATTERY PARK PLAZA
                    NEW YORK, NEW YORK 10004




<PAGE>

                           SARAH COGAN
                   SIMPSON THACHER & BARTLETT
                      425 LEXINGTON AVENUE
                       NEW YORK, NY 10017

          APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
       AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
                  THIS REGISTRATION STATEMENT.

IF ANY SECURITIES BEING REGISTERED ON THIS FORM WILL BE OFFERED
ON A DELAYED OR CONTINUOUS BASIS IN RELIANCE ON RULE 415 UNDER
THE SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED IN
CONNECTION WITH A DIVIDEND REINVESTMENT PLAN, CHECK THE FOLLOWING
BOX.                                                         / /


CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

                             Proposed     Maximum
Title of         Proposed    Maximum      Aggregate
Securities       Amount      Offering     Amount of
Being            Being       Price        Offering   Registration
Registered       Registered  Per Unit     Price (1)  Fee

Common Stock,
$.001 par value  1,000       $15.00       $15,000    $3.75 (2)


The registrant hereby amends this Registration Statement under
the Securities Act of 1933 on such date or dates as may be
necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may
determine.



(1)   Estimated solely for the purpose of calculating the
      registration fee.

(2)   Previously paid pursuant to filing of the Registrant's
      Registration Statement on November 9, 2001.

<PAGE>

<PAGE>

PROSPECTUS

                                         Shares

                 Alliance National Municipal Income Fund, Inc.

                                 Common Shares

                               $15.00 per share

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

   Investment Objective.  The Fund is a newly organized, diversified,
closed-end management investment company. The Fund's investment objective is to
seek to provide high current income exempt from regular federal income tax. The
Fund cannot assure you that it will achieve its investment objective.

   Investment Policies.  Under normal market conditions, the Fund will invest
at least 80%, and normally substantially all, of its net assets in municipal
bonds paying interest that is exempt from regular federal income tax. Normally,
the Fund will invest at least 75% of its net assets in investment grade
municipal bonds (i.e., rated Baa or BBB or higher) or unrated municipal bonds
considered to be of comparable quality as determined by the Fund's investment
adviser. The Fund may invest up to 25% of its net assets in municipal bonds
rated below investment grade and unrated municipal bonds considered to be of
comparable quality as determined by the Fund's investment adviser. The Fund
intends to invest primarily in municipal bonds that pay interest that is not
subject to the federal alternative minimum tax, but may invest without limit in
municipal bonds paying interest that is subject to the federal alternative
minimum tax.

   Preferred Shares.  Within approximately one to three months after completion
of this offering of common shares, the Fund intends to offer preferred shares
representing approximately 40% of the Fund's capital immediately after the
issuance of such preferred shares. This issuance of preferred shares will
leverage your investment in the Fund's common shares. There can be no
assurance, however, that preferred shares representing such percentage of the
Fund's capital will be issued. The use of preferred shares to leverage the
Fund's common shares entails certain risks.

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

   Before buying any common shares you should read the discussion of the
material risks of investing in the Fund in "Risks" beginning on page 17. These
risks are summarized in "Prospectus Summary--Special Risk Considerations"
beginning on page 4.

   No Prior History.  Because the Fund is newly organized, its common shares
have no history of public trading. Shares of closed-end investment companies
frequently trade at discounts from their net asset values. This risk may be
greater for investors expecting to sell their shares in a relatively short
period after completion of the public offering. The common shares have been
approved for listing on the New York Stock Exchange, subject to notice of
issuance. The trading or "ticker" symbol of the common shares is "AFB."

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

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

<TABLE>
<CAPTION>
                                                    Per Share Total
                                                    --------- -----
            <S>                                     <C>       <C>
            Public Offering Price                    $ 15.00    $
            Sales Load                               $ 0.675    $
            Proceeds to the Fund                     $14.325    $
</TABLE>

   The Fund will pay organizational and offering expenses estimated at $
from the proceeds of the offering. Alliance Capital Management L.P., the Fund's
investment adviser, has agreed to pay the amount by which the aggregate of all
of the Fund's organizational expenses and all offering costs (other than the
sales load) exceeds $0.03 per share.

   The Underwriters expect to deliver the common shares to purchasers on or
about January 30, 2002.

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

                             Salomon Smith Barney

A.G. Edwards & Sons, Inc.        Prudential Securities              UBS Warburg

Gruntal & Co., L.L.C.                                    Legg Mason Wood Walker
                                                              Incorporated
                          Wells Fargo Van Kasper, LLC

January 24, 2002

<PAGE>

  (Continued from previous page)

   You should read this Prospectus, which contains important information about
the Fund, before deciding whether to invest and retain it for future reference.
A Statement of Additional Information, dated January 24, 2002, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in its entirety into this
Prospectus, which means that it is part of the Prospectus for legal purposes.
You can review the table of contents of the Statement of Additional Information
on page 32 of this Prospectus. You may request a free copy of the Statement of
Additional Information by calling (800) 227-4618 or by writing to the Fund at
1345 Avenue of the Americas, New York, New York 10105, or obtain a copy (and
other information regarding the Fund) from the Securities and Exchange
Commission web site (http://www.sec.gov).

   The Fund's common shares do not represent a deposit or obligation of, and
are not guaranteed or endorsed by, any bank or other insured depository
institution, and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.

   The Underwriters named in this Prospectus may purchase up to
additional common shares from the Fund within 45 days from the date of this
Prospectus under certain circumstances.

<PAGE>

   You should rely only on the information contained or incorporated by
reference in this Prospectus. The Fund has not, and the Underwriters have not,
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. The
Fund is not, and the Underwriters are not, making an offer of these securities
in any state where the offer is not permitted. You should not assume that the
information contained in this Prospectus is accurate as of any date other than
the date on the front of this Prospectus. The Fund's business, financial
condition, results of operations and prospects may have changed since that date.

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

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Prospectus Summary........................................................   1
Summary of Fund Expenses..................................................   7
The Fund..................................................................   9
Use of Proceeds...........................................................   9
The Fund's Investments....................................................   9
Preferred Shares and Related Leverage.....................................  15
Risks.....................................................................  17
Management of the Fund....................................................  19
Net Asset Value...........................................................  21
Dividends and Distributions...............................................  21
Dividend Reinvestment Plan................................................  22
Description of Shares.....................................................  23
Repurchase of Common Shares; Conversion to Open-End Fund..................  27
Tax Matters...............................................................  28
Underwriting..............................................................  29
Custodian and Transfer Agent..............................................  31
Legal Matters.............................................................  31
</TABLE>

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

   Until February 18, 2002 (25 days after the date of this Prospectus), all
dealers that buy, sell or trade the common shares, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition
to the dealers' obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.

<PAGE>

                              PROSPECTUS SUMMARY

   This is only a summary. You should review the more detailed information
contained in this Prospectus and the Statement of Additional Information
("SAI").

The Fund..............  Alliance National Municipal Income Fund, Inc. (the
                          "Fund") is a newly organized, diversified, closed-end
                          management investment company. The Fund's investment
                          objective is to seek to provide investors with high
                          current income exempt from regular federal income tax.

The Offering..........  The Fund is offering          shares of its common
                          stock, par value $.001 per share ("Common Shares"),
                          at $15.00 per share, through a group of underwriters
                          (the "Underwriters") led by Salomon Smith Barney
                          Inc., A.G. Edwards & Sons, Inc., Prudential
                          Securities Incorporated, UBS Warburg LLC, Gruntal &
                          Co., L.L.C., Legg Mason Wood Walker, Incorporated and
                          Wells Fargo Van Kasper, LLC. You must purchase at
                          least 100 shares. The Fund has given the Underwriters
                          an option to purchase up to          Common Shares to
                          cover orders in excess of          Common Shares. See
                          "Underwriting."

Investment Objective
  and Policies........  The Fund's investment objective is to seek to provide
                          high current income exempt from regular federal
                          income tax. Under normal conditions, the Fund will
                          seek to achieve its objective by investing
                          substantially all of its net assets in municipal
                          bonds that pay interest that, in the opinion of the
                          bond counsel to the issuer, is exempt from regular
                          federal income tax. As a matter of fundamental
                          policy, the Fund will normally invest at least 80% of
                          its net assets in municipal bonds paying interest
                          that is exempt from regular federal income tax. In
                          addition, the Fund will normally invest at least 75%
                          of its net assets in municipal bonds that, at the
                          time of investment, are of investment grade quality.
                          Investment grade quality municipal bonds are those
                          rated within the four highest grades (Baa or BBB or
                          better) by Moody's Investors Service, Inc.
                          ("Moody's"), Standard & Poor's Rating Service ("S&P")
                          or Fitch, Inc. ("Fitch"), or, if unrated, determined
                          to be of comparable quality by the Fund's investment
                          adviser, Alliance Capital Management L.P.
                          ("Alliance"). The Fund may invest up to 25% of its
                          net assets in municipal bonds that, at the time of
                          investment, are rated below investment grade by
                          Moody's, S&P or Fitch or, if unrated, determined to
                          be of comparable quality by Alliance. Municipal bonds
                          of below investment grade quality are regarded as
                          having predominantly speculative characteristics with
                          respect to the issuer's capacity to pay interest and
                          repay principal and are commonly referred to as "junk
                          bonds." Municipal bonds in the lowest investment
                          grade category may also be considered to possess some
                          speculative characteristics.

                        While the Fund intends to invest primarily in municipal
                          bonds that pay interest that is not subject to the
                          federal alternative minimum tax ("AMT"), it may
                          invest without limit in AMT-subject municipal bonds.
                          Investors who are subject to the AMT or would become
                          subject to the AMT by investing in Common Shares
                          should consult with their tax advisers before
                          purchasing Common Shares. See "Tax Matters."

                                      1

<PAGE>

                        The Fund may at times use certain types of investment
                          techniques in managing the Fund's portfolio, which
                          themselves may involve additional risks. The
                          techniques include investment derivatives, such as
                          futures contracts, options on futures contracts,
                          options, and interest rate swaps, caps and floors.

                        The Fund cannot assure you that it will attain its
                          investment objective. See "The Fund's Investments."

Proposed Offering of
  Preferred Shares....  Subject to market conditions, approximately one to
                          three months after completion of this offering, the
                          Fund intends to offer shares of preferred stock
                          ("Preferred Shares") representing approximately 40%
                          of the Fund's capital after their issuance. The
                          issuance of Preferred Shares will leverage your
                          investment in Common Shares. The use of leverage
                          entails special risks. There is no assurance that the
                          Fund will issue Preferred Shares or that, if issued,
                          the Fund's leveraging strategy will be successful.
                          See "Risks--Leverage Risk." Although the timing and
                          terms of the Preferred Shares offering will be
                          determined by the Fund's Board of Directors, it is
                          anticipated that the Preferred Shares will pay
                          dividends that would be adjusted periodically and
                          that the dividend rate will be set by auction,
                          remarketing or other procedures and will be based on
                          prevailing short-term rates.

                        The Fund will invest the net proceeds that it obtains
                          from selling the Preferred Shares in accordance with
                          the Fund's investment objective and policies. The
                          Fund anticipates that its portfolio investments will
                          produce yields higher than short-term debt securities
                          and that the spread between the short-term rates paid
                          by the Fund to holders of Preferred Shares
                          ("Preferred Shareholders"), and the rates received by
                          the Fund from its investments at longer-term rates
                          (minus the expenses associated with the Preferred
                          Shares) will provide holders of Common Shares
                          ("Common Shareholders") with a potentially higher
                          yield than if no Preferred Shares were issued. The
                          Fund cannot assure you that the issuance of Preferred
                          Shares will result in a higher yield on your Common
                          Shares. You should note that the use of leverage
                          entails certain risks for Common Shareholders,
                          including higher volatility of both the net asset
                          value ("NAV") and market value of the Common Shares.
                          Fluctuations in the dividend rates on the Preferred
                          Shares may affect the return to Common Shareholders.
                          If the Fund were fully invested and if the spread
                          between the respective yields on the Fund's portfolio
                          investments and short-term debt securities were to
                          decrease, then net investment income available for
                          distribution to Common Shareholders would decline.
                          See "Preferred Shares and Related Leverage" and
                          "Description of Shares--Preferred Shares."

Special Tax
  Considerations......  Because under normal circumstances the Fund will invest
                          substantially all of its net assets in municipal
                          bonds that pay interest that is exempt from regular
                          federal income tax, distributions of the Fund's
                          interest income that you receive will ordinarily be
                          exempt from regular federal income taxes. However, a
                          portion of such distributions may

                                      2

<PAGE>

                          be subject to the AMT because the Fund may invest in
                          AMT-subject municipal bonds. Net capital gain and
                          other taxable income, if any, earned by the Fund will
                          be allocated proportionately to Common Shareholders
                          and Preferred Shareholders based on the percentage of
                          total dividends paid to each class for that year.
                          Distributions of any such net capital gain or other
                          taxable income will be taxable to shareholders. See
                          "Tax Matters."

Investment Adviser....  Alliance will be the Fund's investment adviser. Subject
                          to the supervision of the Board of Directors,
                          Alliance will provide investment advisory services
                          and order placement facilities for the Fund. Alliance
                          will receive an annual fee, payable monthly, in a
                          maximum amount equal to .65% of the Fund's average
                          daily net assets. Alliance is a leading global
                          investment management firm supervising client
                          accounts with assets as of December 31, 2001 totaling
                          approximately $454 billion. Alliance provides
                          diversified investment management and related
                          services globally to a broad range of clients
                          including: institutional investors such as corporate
                          and public employee pension funds, endowment funds,
                          domestic and foreign institutions, and governments
                          and affiliates; private clients, consisting of high
                          net worth individuals, trusts and estates, charitable
                          foundations, partnerships, private and family
                          corporations, and other entities; individual
                          investors by means of retail mutual funds sponsored
                          by Alliance; and institutional investors by means of
                          in-depth research, portfolio strategy, trading and
                          brokerage-related services. See "Management of the
                          Fund."

Distributions.........  The Fund intends to distribute monthly its net
                          investment income to Common Shareholders. It is
                          expected that the first monthly dividend on the
                          Fund's Common Shares will be declared approximately
                          45 days, and paid approximately 60 to 90 days, after
                          completion of this offering. From and after issuance
                          of the Preferred Shares, monthly distributions to
                          Common Shareholders will consist of net investment
                          income remaining after the payment of dividends on
                          outstanding Preferred Shares, if any. Net capital
                          gains, if any, will be distributed at least annually
                          to Common Shareholders to the extent such net capital
                          gains are not necessary to satisfy the dividend,
                          redemption or liquidation preferences of any
                          Preferred Shares. If the Fund is unable to maintain
                          adequate asset coverage with respect to its Preferred
                          Shares, its ability to make distributions on its
                          Common Shares will be limited, which may have adverse
                          tax consequences for the Fund and Common
                          Shareholders. See "Dividends and Distributions" and
                          "Tax Matters."

Dividend Reinvestment
  Plan................  Under the Fund's Dividend Reinvestment Plan (the
                          "Plan"), Common Shareholders may elect to have all of
                          their dividends and other distributions from the Fund
                          automatically invested in additional Common Shares.
                          Shareholders whose Common Shares are held in the name
                          of a broker or nominee should contact such broker or
                          nominee to determine whether and how they may elect
                          to participate in the Plan. Common Shares acquired
                          under the Plan may be either newly issued or acquired
                          in the secondary market, as provided in the Plan. See
                          "Dividend Reinvestment Plan."

                                      3

<PAGE>

Repurchase of Shares..  The Fund may, from time to time, repurchase or make a
                          tender offer for its Common Shares in an attempt to
                          reduce or eliminate significant market discounts from
                          NAV. There can be no assurance that such repurchases
                          and tender offers will take place or that, if made,
                          they will result in the Fund's Common Shares trading
                          at a price that is equal to their NAV or reduce or
                          eliminate any market value discount. See "Repurchase
                          of Common Shares; Conversion to Open-End Fund."

Listing...............  The Common Shares have been authorized for listing on
                          the New York Stock Exchange, Inc. (the "Exchange"),
                          subject to notice of issuance. The trading or
                          "ticker" symbol of the Common Shares is "AFB." See
                          "Description of Shares--Common Shares."

Custodian and Transfer
  Agent...............  State Street Bank & Trust Company will serve as
                          custodian of the Fund's assets. Equiserve Trust
                          Company, N.A. will serve as transfer agent,
                          dividend-paying agent and registrar. See "Custodian
                          and Transfer Agent."

Market Price of Shares  Shares of closed-end investment companies frequently
                          trade at prices lower than their NAV. Shares of
                          closed-end investment companies like the Fund that
                          invest predominantly in investment grade municipal
                          bonds have during some periods traded at prices
                          higher than NAV and during other periods traded at
                          prices lower than NAV. The Fund cannot assure you
                          that Common Shares will trade at a price higher than
                          NAV in the future. NAV will be reduced immediately
                          following the offering by the sales load and the
                          amount of organization and offering expenses paid by
                          the Fund. See "Use of Proceeds." In addition to NAV,
                          the market price of the Common Shares may be affected
                          by such factors relating to the Fund and its
                          portfolio holdings as market supply of and demand for
                          Common Shares, the Fund's investment performance,
                          dividend levels (which are in turn affected by
                          expenses), dividend stability, and portfolio credit
                          quality and liquidity. See "Preferred Shares and
                          Related Leverage," "Risks," "Description of Shares,"
                          and "Repurchase of Common Shares; Conversion to
                          Open-End Fund" in this Prospectus, and the SAI under
                          "Repurchase of Fund Shares; Conversion to Open-End
                          Fund." The Common Shares are designed primarily for
                          long-term investors and you should not view the Fund
                          as a vehicle for trading purposes.

Special Risk
  Considerations......  No Operating History.  The Fund is a newly organized,
                          diversified, closed-end management investment company
                          with no history of operations.

                        Interest Rate Risk.  This is the risk that changes in
                          interest rates will adversely affect the yield or
                          value of the Fund's investments in municipal bonds.
                          Generally, when market interest rates fall, municipal
                          bond prices rise, and vice versa. Increases in market
                          interest rates will cause the municipal bonds in the
                          Fund's portfolio to decline in value. The prices of
                          longer-term municipal bonds generally fluctuate more
                          than prices of shorter-term municipal bonds as
                          interest rates change. Because the Fund will invest
                          primarily in long-term municipal bonds, the Common
                          Share NAV and market price

                                      4

<PAGE>

                          per share will fluctuate more in response to changes
                          in market interest rates than if the Fund invested
                          primarily in shorter-term municipal bonds. The Fund's
                          use of leverage will tend to increase Common Share
                          interest rate risk for the reasons discussed below
                          under "--Leverage Risk."

                        Credit Risk.  Credit risk is the risk that one or more
                          municipal bonds in the Fund's portfolio will decline
                          in price, or that its issuer will fail to pay
                          interest or principal when due, because the issuer of
                          the municipal bond experiences a decline in its
                          financial status. The Fund may invest up to 25%
                          (measured at the time of investment) of its net
                          assets in municipal bonds that are rated below
                          investment grade or, if unrated, determined to be of
                          comparable quality by Alliance. The prices of these
                          lower grade municipal bonds are more sensitive to
                          negative developments, such as a decline in the
                          issuer's revenues or a general economic downturn,
                          than are the prices of higher-grade municipal bonds.
                          Municipal bonds of below investment grade quality
                          (commonly referred to as "junk bonds") are
                          predominantly speculative with respect to the
                          issuer's capacity to pay interest and repay principal
                          when due and therefore involve a greater risk of
                          default. Municipal bonds in the lowest investment
                          grade category may also be considered to possess some
                          speculative characteristics by certain rating
                          agencies.

                        Leverage Risk.  The use of leverage through the
                          issuance of Preferred Shares creates an opportunity
                          for increased Common Share net income, but also
                          entails special risks for Common Shareholders. There
                          is no assurance that the Fund's leveraging strategy
                          will be successful. It is anticipated that dividends
                          on Preferred Shares will be based on shorter-term
                          municipal bond rates of return (which would be
                          redetermined periodically), and that the Fund will
                          invest the net proceeds of the Preferred Shares
                          offering in long-term, typically fixed rate,
                          municipal bonds. So long as the Fund's municipal bond
                          portfolio provides a higher rate of return (net of
                          Fund expenses) than the Preferred Shares dividend
                          rate, as reset periodically, the leverage will allow
                          Common Shareholders to receive a higher current rate
                          of return than if the Fund were not leveraged. If,
                          however, short-term rates rise, the Preferred Shares
                          dividend rate could exceed the rate of return on
                          long-term municipal bonds and other investments held
                          by the Fund that were acquired during periods of
                          generally lower interest rates, reducing return to
                          Common Shareholders.

                          Investment by the Fund in derivative instruments may
                          amplify the effects of leverage and, during periods
                          of rising interest rates, may adversely affect the
                          Fund's income and distributions to Common
                          Shareholders. See "The Fund's Investments" for a
                          discussion of derivative instruments. Preferred
                          Shares are expected to pay cumulative dividends,
                          which may tend to increase leverage risk. The use of
                          leverage involves two major types of risks for Common
                          Shareholders:

                              .  The likelihood of greater volatility of NAV
                                 and market price of Common Shares, because
                                 changes in the value of the

                                      5

<PAGE>

                                 Fund's municipal bond portfolio (including
                                 municipal bonds bought with proceeds of the
                                 Preferred Shares offering) are borne entirely
                                 by the Common Shareholders; and

                              .  The risks either that Common Share income will
                                 fall if the Preferred Shares dividend rate
                                 rises, or that Common Share income will
                                 fluctuate because the Preferred Shares
                                 dividend rate varies.

                          Because the management fees received by Alliance are
                          based on the total net assets of the Fund (including
                          assets acquired with the proceeds of the Preferred
                          Shares), Alliance has a financial incentive for the
                          Fund to issue Preferred Shares, which may create a
                          conflict of interest between Alliance and the Common
                          Shareholders.

                        Municipal Bond Market Risk.  This is the risk that
                          special factors, such as legislative changes and
                          local and business developments, may adversely affect
                          the yield or value of the Fund's investments in
                          municipal bonds or other municipal securities. The
                          amount of public information available about
                          municipal bonds is generally less than that for
                          corporate equities or bonds and the investment
                          performance of the Fund may therefore be more
                          dependent on the analytical abilities of Alliance
                          than would be a stock fund or taxable bond fund. The
                          secondary market for municipal bonds, particularly
                          below investment grade municipal bonds in which the
                          Fund may invest, also tends to be less developed and
                          less liquid than many other securities markets, which
                          may adversely affect the Fund's ability to sell its
                          municipal bonds at attractive prices.

                        Anti-Takeover Provisions.  The Fund's Charter (the
                          "Charter") and Bylaws (together, the "Charter
                          Documents") include provisions that could limit (i)
                          the ability of other entities or persons to acquire
                          control of the Fund; (ii) the Fund's freedom to
                          engage in certain transactions; or (iii) the ability
                          of the shareholders to amend the Charter Documents,
                          effect changes in the Fund's management, or convert
                          the Fund to open-end status. See "Description of
                          Shares--Certain Provisions of the Charter Documents."
                          These provisions in the Charter Documents could have
                          the effect of depriving the Common Shareholders of
                          opportunities to sell their Common Shares at a
                          premium over the then current market price of the
                          Common Shares.

                                      6

<PAGE>

                           SUMMARY OF FUND EXPENSES

   The following table shows estimated Fund expenses as a percentage of net
assets attributable to Common Shares and assumes the issuance of Preferred
Shares in an amount equal to 40% of the Fund's capital (after their issuance).
Footnote 2 to the table shows these estimated expenses as a percentage of total
net assets (attributable to both Common Shares and Preferred Shares).

<TABLE>
<S>                                                                    <C>
   Shareholder Transaction Expenses
       Sales Load Paid by You (as a percentage of offering price).....    4.5%
       Dividend Reinvestment Plan Fees................................ None(1)
</TABLE>

<TABLE>
<CAPTION>
                                                    Percentage of Net Assets
                                                Attributable to Common Shares(2)
                                                --------------------------------
<S>                                             <C>
   Annual Expenses
   Management Fees.............................               1.11%
   Other Expenses..............................                .38%
                                                              ----
   Total Annual Expenses.......................               1.49%
   Fee and Expense Reimbursement (Years 1-5)...               (.43)%(3)
                                                              ----
   Total Net Annual Expenses (Years 1-5).......               1.06%(3)
                                                              ====
</TABLE>
- --------
(1) You will pay brokerage charges if you direct the Plan Agent (as defined) to
    sell your Common Shares held in a dividend reinvestment account.

(2) Stated as percentages of the Fund's estimated total net assets attributable
    to Common Shares and assuming the issuance of Preferred Shares. Assuming
    the issuance of Preferred Shares in an amount equal to 40% of the Fund's
    capital (after their issuance), the Fund's estimated expenses would be as
    follows:

<TABLE>
<CAPTION>
                                           Percentage of
                                          Total Net Assets
                                          ----------------
<S>                                       <C>
Annual Expenses
Management Fees..........................        .65%
Other Expenses...........................        .23%
                                                ----
Total Annual Expenses....................        .88%
Fee and Expense Reimbursement (Years 1-5)       (.25)%(3)
                                                ----
Total Net Annual Expenses (Years 1-5)....        .63%(3)
                                                ====
</TABLE>

(3) Alliance has agreed to waive a portion of its fees or reimburse the Fund
    for expenses in the amount of .25% of average daily net assets for the
    first 5 full years of the Fund's operations, .20% of average daily net
    assets in year 6, .15% in year 7, .10% in year 8, and .05% in year 9.
    Without the reimbursement, "Total Annual Expenses" would be estimated to be
    1.49% of average daily net assets attributable to Common Shares and .88% of
    average daily net assets attributable to both Common and Preferred Shares.
    Alliance has agreed to pay (i) all organizational expenses and (ii)
    offering costs (other than sales load) that exceed $0.03 per Common Share
    (.20% of offering price) of the Fund.

   The purpose of the table above is to help you understand all fees and
expenses that you, as a Common Shareholder, would bear directly or indirectly.
The Other Expenses shown in the table and related footnotes are based on
estimated amounts for the Fund's first year of operations and assume that the
Fund issues approximately 16,666,666 Common Shares. See "Management of the
Fund" and "Dividend Reinvestment Plan."

                                      7

<PAGE>

   The following example illustrates the expenses (including the sales load of
$45) that you would pay on a $1,000 investment in Common Shares, assuming (1)
total net annual expenses of 1.06% of net assets attributable to Common Shares
in years 1 through 5, increasing to 1.49% in year 10 and (2) a 5% annual
return: (1)

<TABLE>
<CAPTION>
                        1 year 3 years 5 years 10 years
                        ------ ------- ------- --------
                        <S>    <C>     <C>     <C>
                         $55     $77    $101     $185
</TABLE>

   The example should not be considered a representation of future expenses or
the Fund's return. Actual expenses and return may be greater or less than that
shown.
- --------
(1) The example assumes that the estimated Other Expenses set forth in the
    Annual Expenses table are accurate, that fees and expenses increase as
    described below and that all dividends and distributions are reinvested at
    NAV. Actual expenses may be greater or less than those assumed. Moreover,
    the Fund's actual rate of return may be greater or less than the
    hypothetical 5% annual return shown in the example. Assuming the issuance
    of Preferred Shares in an amount equal to 40% of the Fund's capital after
    their issuance and otherwise on the assumptions in the example, the
    expenses you would pay would be: 1 year $51; 3 years $64; 5 years $79; and
    10 years $130. Assumes reimbursement of fees and expenses of .20% of
    average daily net assets in year 6, .15% in year 7, .10% in year 8, and
    .05% in year 9. Alliance has not agreed to reimburse the Fund for any
    portion of its fees and expenses beyond January 31, 2011. See "Management
    of the Fund--The Adviser" in the SAI.

                                      8

<PAGE>

                                   THE FUND

   The Fund is a newly organized, diversified, closed-end management investment
company registered under the 1940 Act. The Fund was organized as a Maryland
corporation on November 9, 2001. The Fund has no operating history. The Fund's
principal office is located at 1345 Avenue of the Americas, New York, New York
10105, and its telephone number is (212) 969-1000.

                                USE OF PROCEEDS

   The net proceeds of the offering of Common Shares will be approximately
$         (or $         if the Underwriters exercise the over-allotment option
in full) after payment of a portion of the estimated organizational and
offering costs payable by the Fund. Alliance has agreed to pay the amount by
which the aggregate of all of the Fund's organizational expenses and all
offering costs (other than the sales load) exceeds $0.03 per Common Share. The
Fund will invest the net proceeds of the offering in accordance with the Fund's
investment objective and policies as stated below. The Fund presently
anticipates that it will be able to invest substantially all of the net
proceeds in municipal bonds that meet its investment objective and policies
within three months after the completion of the offering. Pending such
investment, the Fund anticipates that the proceeds of the offering will be
primarily invested in high-quality short-term tax-exempt money market
securities or in high-quality municipal bonds with relatively low volatility
(such as pre-refunded and intermediate term securities) although the Fund may
invest in short-term taxable investments to the extent that suitable tax-exempt
investments are not available.

                            THE FUND'S INVESTMENTS

Investment Objective and Policies

  Investment Objective.

   The Fund's investment objective is to seek to provide high current income
exempt from regular federal income tax.

  Investment Policies.

   Under normal conditions, the Fund will seek to achieve its objective by
investing substantially all of its net assets in municipal bonds that pay
interest that, in the opinion of the bond counsel to the issuer, is exempt from
regular federal income tax. As a matter of fundamental policy, the Fund will
normally invest at least 80% of its net assets in municipal bonds paying
interest that is exempt from regular federal income taxes. The Fund will
normally invest at least 75% of its net assets in municipal bonds that at the
time of investment are of investment grade quality. Investment grade quality
municipal bonds are those rated within the four highest grades (Baa or BBB or
better) by Moody's, S&P or Fitch, or, if unrated, determined to be of
comparable quality by Alliance. The Fund may invest up to 25% of its net assets
in municipal bonds that, at the time of investment, are rated below investment
grade by Moody's, S&P or Fitch or, if unrated, determined to be of comparable
quality by Alliance. Municipal bonds of below investment grade quality are
regarded as having predominantly speculative characteristics with respect to
the issuer's capacity to pay interest and repay principal, and are commonly
referred to as "junk bonds." Municipal bonds in the lowest investment grade
category may also be considered to possess some speculative characteristics.

   The Fund's credit quality policies apply only at the time a security is
purchased, and the Fund is not required to dispose of a security in the event
that a rating agency or Alliance subsequently downgrades

                                      9

<PAGE>

its assessment of the credit characteristics of a particular issue. In
determining whether to retain or sell such a security, Alliance may consider
such factors as its assessment of the credit quality of the issuer of the
security, the price at which the security could be sold and the rating, if any,
assigned to the security by other rating agencies. A general description of
Moody's, S&P's and Fitch's ratings of municipal bonds is set forth in Appendix
A to the SAI.

   While the Fund intends to invest primarily in municipal bonds that pay
interest that is not subject to the AMT, it may invest without limit in
municipal bonds that pay interest that is subject to the AMT. Investors who are
subject to the AMT or would become subject to the AMT by investing in Common
Shares should consult with their tax advisers before purchasing Common Shares.
Special AMT rules apply to corporate holders of Common Shares. In addition, any
capital gain dividends will be subject to capital gains taxes. See "Tax
Matters."

   The Fund may also invest in securities of other open- or closed-end
investment companies that invest primarily in municipal bonds of the types in
which the Fund may invest directly. As a shareholder in an investment company,
the Fund would bear its ratable share of the investment company's expenses in
addition to the Fund's own expenses. See "--Other Investment Companies" below.

   The Fund may purchase municipal bonds that are subject to credit
enhancements, such as insurance, bank credit agreements, or escrow accounts.
The credit quality of companies that provide such credit enhancements will
affect the value of those securities. Although the insurance feature reduces
certain financial risks, the premiums for insurance and the higher market price
paid for insured obligations may reduce the Fund's income. Insurance generally
will be obtained from insurers with a claims-paying ability rated A or higher
by Moody's, S&P or Fitch. The insurance feature does not guarantee the market
value of the insured obligations or the NAV of the Common Shares.

   For temporary or for defensive purposes, including the period during which
the net proceeds of this offering are being invested, the Fund may invest up to
100% of its net assets in short-term investments including high quality,
short-term securities that may be either tax-exempt or taxable. The Fund
intends to invest in taxable short-term investments only in the event that
suitable tax-exempt short-term investments are not available at reasonable
prices and yields. Investments in taxable short-term investments would result
in a portion of your dividends being subject to federal income taxes. For more
information, see "Tax Matters" in the SAI.

   The Fund's investment objective, its policy of investing at least 80% of its
net assets in municipal bonds, and its investment restrictions (see "Investment
Restrictions" in the SAI) are fundamental and, under the 1940 Act, cannot be
changed without the approval of a "majority of the outstanding" voting shares
of the Fund. A "majority of the outstanding" voting shares of the Fund (whether
voting together as a single class or voting as a separate class) means (i) 67%
or more of such shares present at a meeting, if the holders of more than 50% of
those shares are present or represented by proxy, or (ii) more than 50% of such
shares, whichever is less. Subsequent to the issuance of Preferred Shares, the
Fund's investment objective and fundamental policies may not be changed without
the approval of a majority of the outstanding Common Shares and Preferred
Shares voting together and a majority of the outstanding Preferred Shares
voting separately by class. See "Description of Shares--Preferred
Shares--Voting Rights" below for additional information with respect to the
voting rights of Preferred Shareholders. Unless stated otherwise, the Fund's
investment policies are not fundamental and thus can be changed without a
shareholder vote. When an investment policy or restriction has a percentage
limitation, such limitation is applied at the time of investment. Changes in
the market value of securities in the Fund's portfolio after they are purchased
by the Fund will not cause the Fund to be in violation of such limitations.

Municipal Bonds

   Municipal bonds are typically classified as either general obligation or
revenue (or special tax) bonds and are typically issued to finance public
projects (such as roads or public buildings), to pay

                                      10

<PAGE>

general operating expenses, or to refinance outstanding debt. Municipal bonds
may also be issued for private activities, such as housing, medical and
educational facility construction, or for privately owned industrial
development and pollution control projects. General obligation bonds are backed
by the full faith and credit, or taxing authority, of the issuer and may be
repaid from any revenue source; revenue bonds may be repaid only from the
revenues of a specific facility or source. The Fund also may purchase municipal
bonds that represent lease obligations. These carry special risks because the
issuer of the bonds may not be obligated to appropriate money annually to make
payments under the lease. In order to reduce this risk, the Fund will only
purchase municipal bonds representing lease obligations when Alliance believes
the issuer has a strong incentive to continue making appropriations until
maturity.

   The yields on municipal bonds depend on a variety of factors, including
prevailing interest rates and the condition of the general money market and the
municipal bond market, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The market value of municipal bonds
will vary with changes in interest rate levels and as a result of changing
evaluations of the ability of their issuers to meet interest and principal
payments.

   The Fund will invest primarily in municipal bonds with long-term maturities
in order to maintain a weighted average maturity of 15-30 years, but the
weighted average maturity of obligations held by the Fund may be shortened,
depending on market conditions.

Other Municipal Securities

   The Fund intends to invest a substantial portion of its assets in
longer-term municipal bonds, but it may, although it does not currently intend
to do so, invest in municipal notes, which may be either general obligation or
revenue securities. These securities are intended to fulfill short-term capital
needs and generally have original maturities not exceeding one year.

   Municipal notes in which the Fund may invest include demand notes, which are
tax-exempt obligations that have stated maturities in excess of one year, but
permit the holder to sell back the security (at par) to the issuer within one
to seven days' notice. The payment of principal and interest by the issuer of
these obligations will ordinarily be guaranteed by letters of credit offered by
banks. The interest rate on a demand note may be based upon a known lending
rate, such as a bank's prime rate, and may be adjusted when such rate changes,
or the interest rate on a demand note may be a market rate that is adjusted at
specified intervals.

   Other short-term obligations constituting municipal notes include tax
anticipation notes, revenue anticipation notes, bond anticipation notes and
tax-exempt commercial paper. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income, sales, use and
business taxes. Revenue anticipation notes are issued in expectation of receipt
of other types of revenues. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most such
cases, long-term municipal bonds provide the money for the repayment of the
notes.

   Tax-exempt commercial paper is a short-term obligation with a stated
maturity of 365 days or less (however, issuers typically do not issue such
obligations with maturities longer than seven days). Such obligations are
issued by state and local municipalities to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term financing.

Derivatives

   The Fund may use derivatives. Derivatives are financial contracts whose
value depends on, or is derived from, the value of an underlying asset,
reference rate, or index. These assets, rates and indices

                                      11

<PAGE>

may include bonds, stocks, mortgages, commodities, interest rates, bond indices
and stock indices. Generally, there are four types of derivative
instruments--options, futures, forwards and swaps--from which virtually any
type of derivative transaction can be created. While the Fund does not
currently intend to utilize any of these types of derivative instruments, it
reserves the flexibility to use these techniques under appropriate
circumstances. Derivatives can be used to earn income or protect against risk,
or both. The Fund may use derivatives to earn income and enhance returns, to
hedge or adjust the risk profile of its investment portfolio, or to obtain
exposure to otherwise inaccessible markets. The Fund will generally use
derivatives primarily as direct investments in order to enhance yields. Each of
these uses entails greater risk than if derivatives were used solely for
hedging purposes. The successful use of derivatives depends upon Alliance's
ability to assess the risk that a derivative adds to the Fund's portfolio and
to forecast price and interest rate movements correctly. Since many derivatives
may have a leverage component, adverse changes in the value or level of the
underlying asset, rate or index can result in a loss substantially greater than
the amount invested in the derivative.

   Futures Contracts and Options on Futures Contracts. While the Fund does not
currently intend to do so, it may buy and sell futures contracts on municipal
securities or U.S. Government securities and contracts based on interest rates
or financial indices, including any index of municipal bonds or U.S. Government
securities.

   Options on futures contracts are options that call for the delivery of
futures contracts upon exercise. Options on futures contracts written or
purchased, and futures contracts purchased and sold, by the Fund will be traded
on U.S. exchanges and will be used only for hedging purposes.

   Interest Rate Transactions (Swaps, Caps, and Floors). While the Fund does
not currently intend to do so, it may enter into interest rate swap, cap, or
floor transactions primarily for hedging purposes, which may include preserving
a return or spread on a particular investment or portion of its portfolio or
protecting against an increase in the price of securities the Fund anticipates
purchasing at a later date. The Fund does not intend to use these transactions
in a speculative manner.

   Interest rate swaps involve the exchange by the Fund with another party of
their respective commitments to pay or receive interest (e.g., an exchange of
floating rate payments for fixed rate payments) computed based on a
contractually-based principal (or "notional") amount. Interest rate swaps are
entered into on a net basis (i.e., the two payment streams are netted out, with
the Fund receiving or paying, as the case may be, only the net amount of the
two payments). Interest rate caps and floors are similar to options in that the
purchase of an interest rate cap or floor entitles the purchaser, to the extent
that a specified index exceeds (in the case of a cap) or falls below (in the
case of a floor) a predetermined interest rate, to receive payments of interest
on a notional amount from the party selling the interest rate cap or floor. The
Fund may enter into interest rate swaps, caps, and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities.

Other Investment Companies

   The Fund may invest up to 10% of its net assets in securities of other open-
or closed-end investment companies that invest primarily in municipal bonds of
the types in which the Fund may invest directly. The Fund generally expects to
invest in other investment companies either during periods when it has large
amounts of uninvested cash, such as the period shortly after the Fund receives
the proceeds of the offering of its Common Shares or Preferred Shares, during
periods when there is a shortage of attractive, high-yielding municipal bonds
available in the market, or when Alliance believes that share prices of other
investment companies offer attractive values. As a shareholder in an investment
company, the Fund will bear its ratable share of that investment company's
expenses and would remain subject to payment of the Fund's advisory and other
fees with respect to assets so

                                      12

<PAGE>


invested. Common Shareholders would therefore be subject to duplicative
expenses to the extent that the Fund invests in other investment companies. In
addition, the securities of other investment companies may be leveraged and
subject to the same leverage risks described in this Prospectus, thus
effectively subjecting Common Shareholders to increased leverage. As discussed
under the section entitled "Risks," the NAV and market value of leveraged
shares will be more volatile and the yield to shareholders will tend to
fluctuate more than the yield generated by unleveraged shares. Alliance will
consider all relevant factors, including expenses and leverage, when evaluating
the investment merits of an investment in another investment company relative
to available municipal bond investments.


Repurchase Agreements

   While the Fund does not currently intend to do so, it may seek additional
income by investing in repurchase agreements pertaining only to U.S. Government
securities. A repurchase agreement arises when a buyer purchases a security and
simultaneously agrees to resell it to the vendor at an agreed-upon future date,
normally a day or a few days later. The resale price is greater than the
purchase price, reflecting an agreed-upon interest rate for the period the
buyer's money is invested in the security. Such agreements permit the Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. The Fund will require continual
maintenance of collateral in an amount equal to, or in excess of, the resale
price. If a vendor defaults on its repurchase obligation, the Fund would suffer
a loss to the extent that the proceeds from the sale of the collateral were
less than the repurchase price. If a vendor goes bankrupt, the Fund might be
delayed in, or prevented from, selling the collateral for its benefit. There is
no percentage restriction on the Fund's ability to enter into repurchase
agreements. The Fund may enter into repurchase agreements with member banks of
the Federal Reserve System or "primary dealers" (as designated by the Federal
Reserve Bank of New York).

Variable and Floating Rate Instruments

   Fixed-income securities may have fixed, variable, or floating rates of
interest. Variable and floating rate securities pay interest at rates that are
adjusted periodically, according to a specified formula. A "variable" interest
rate adjusts at predetermined intervals (e.g., daily, weekly, or monthly),
while a "floating" interest rate adjusts whenever a specified benchmark rate
(such as the bank prime lending rate) changes.

   The Fund may invest in variable rate demand notes, which are instruments
whose interest rates change on a specific date (such as coupon date or interest
payment date) or whose interest rates vary with changes in a designated base
rate (such as prime interest rate). This instrument is payable on demand and is
secured by letters of credit or other credit support agreements from major
banks.

   The Fund may invest in fixed-income securities that pay interest at a coupon
rate equal to a base rate, plus additional interest for a certain period of
time if short-term interest rates rise above a predetermined level or "cap."
The amount of such an additional interest payment typically is calculated under
a formula based on a short-term interest rate index multiplied by a designated
factor.

When-Issued, Delayed Delivery and Forward Commitment Transactions

   The Fund may purchase or sell municipal bonds on a forward commitment basis.
Forward commitments are forward contracts for the purchase or sale of
securities, including purchases on a "when-issued" basis or purchases or sales
on a "delayed delivery" basis. In some cases, a forward commitment may be
conditioned upon the occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt restructuring or
approval of a proposed financing by appropriate authorities (i.e., a "when, as
and if issued" trade).

                                      13

<PAGE>

   When forward commitments with respect to fixed-income securities are
negotiated, the price, which is generally expressed in yield terms, is fixed at
the time the commitment is made, but payment for and delivery of the securities
take place at a later date. Normally, the settlement date occurs within two
months after the transaction, but settlements beyond two months may be
negotiated. Securities purchased or sold under a forward commitment are subject
to market fluctuation, and no interest or dividends accrue to the purchaser
prior to the settlement date.

   The use of forward commitments may help the Fund protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, the Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling bond
prices. In periods of falling interest rates and rising bond prices, the Fund
might sell a security in its portfolio and purchase the same or a similar
security on a when-issued or forward commitment basis, thereby obtaining the
benefit of currently higher cash yields. No forward commitments will be made by
the Fund if, as a result, the Fund's aggregate forward commitments under such
transactions would be more than 10% of its total assets.

   The Fund's right to receive or deliver a security under a forward commitment
may be sold prior to the settlement date. The Fund will enter into forward
commitments, however, only with the intention of actually receiving securities
or delivering them, as the case may be. If the Fund, however, chooses to
dispose of the right to acquire a when-issued security prior to its acquisition
or dispose of its right to deliver or receive against a forward commitment, it
may realize a gain or incur a loss.

Zero Coupon Bonds

   Zero coupon bonds are debt securities that have been issued without interest
coupons or stripped of their unmatured interest coupons, and include receipts
or certificates representing interests in such securities. Such a security pays
no interest to its holder during its life. Its value to an investor consists of
the difference between its face value at the time of maturity and the price for
which it was acquired, which is generally an amount significantly less than its
face value. Even though the Fund does not receive any interest on zero coupon
bonds during their life, it nonetheless accrues income with respect to such
bonds and thus may have to dispose of portfolio securities under
disadvantageous circumstances in order to obtain cash needed to pay dividends
in amounts necessary to avoid unfavorable tax consequences. Zero coupon bonds
usually trade at a deep discount from their face or par value and are subject
to greater fluctuations in market value in response to changing interest rates
than debt obligations of comparable maturities and credit quality that make
current distributions of interest. On the other hand, because there are no
periodic interest payments to be reinvested prior to maturity, these securities
eliminate reinvestment risk and "lock in" a rate of return to maturity.

Future Developments

   The Fund may, following written notice to its shareholders, take advantage
of other investment practices which are not at present contemplated for use by
the Fund or which currently are not available but which may be developed, to
the extent such investment practices are both consistent with the Fund's
investment objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those involved in the
activities described above.

                                      14

<PAGE>

                     PREFERRED SHARES AND RELATED LEVERAGE

   Subject to market conditions, approximately one to three months after
completion of this offering, the Fund intends to offer Preferred Shares
representing approximately 40% of the Fund's capital after their issuance.
Preferred Shares would have complete priority over Common Shares upon
distribution of the Fund's assets. The issuance of Preferred Shares will
leverage your investment in Common Shares. The use of leverage entails special
risks. There is no assurance that the Fund will issue Preferred Shares or that,
if issued, the Fund's leveraging strategy will be successful. Although the
timing and other terms of the offering of the Preferred Shares will be
determined by the Fund's Board of Directors, it is anticipated that the
Preferred Shares will pay dividends that would be adjusted periodically and the
dividend rate will be set by auction, remarketing or other procedure and will
be based on prevailing short-term rates.


   The Fund will invest the net proceeds that it obtains from selling the
Preferred Shares in accordance with the Fund's investment objective and
policies. The Fund anticipates that the Fund's portfolio investments will
continue to produce yields higher than those on short-term debt securities and
that this spread, representing the difference between the short-term rates paid
by the Fund to Preferred Shareholders and the rates received by the Fund from
its investments at long-term rates (minus the expenses of the Preferred
Shares), will provide Common Shareholders with a potentially higher yield than
if no Preferred Shares were issued. The Fund cannot assure you that the
issuance of Preferred Shares will result in a higher yield on your Common
Shares. You should note that the use of leverage entails certain risks for
Common Shareholders, including higher volatility of both NAV and market value
of the Common Shares.


   Changes in the value of the Fund's municipal bond portfolio (including
municipal bonds bought with the proceeds of the Preferred Shares offering) will
be borne entirely by the Common Shareholders. If there is a net decrease (or
increase) in the value of the Fund's investment portfolio, the leverage will
decrease (or increase) the NAV per Common Share to a greater extent than if the
Fund were not leveraged. During periods in which the Fund is using leverage,
the management fees paid to Alliance will be higher than if the Fund did not
use leverage because the fees paid will be calculated on the basis of the
Fund's total net assets, including the proceeds from the issuance of the
Preferred Shares.

   For tax purposes, the Fund will be required, assuming issuance of Preferred
Shares, to allocate net capital gain and other taxable income, if any, between
the Common Shares and Preferred Shares in proportion to total dividends paid to
each class for the year in which the net capital gain or other taxable income
is realized. If net capital gain or other taxable income is allocated to
Preferred Shares (instead of solely tax-exempt income), the Fund may have to
pay higher total dividends to Preferred Shareholders or make dividend payments
intended to compensate Preferred Shareholders for the unanticipated
characterization of a portion of their dividends as taxable ("Gross-up
Dividends"). This may reduce the advantage of the Fund's leveraged structure to
Common Shareholders.

   Under the 1940 Act, the Fund is not permitted to issue Preferred Shares
unless immediately after such issuance the value of the Fund's total net assets
is at least 200% of the liquidation value of the outstanding Preferred Shares
(i.e., such liquidation value may not exceed 50% of the Fund's total net
assets). In addition, the Fund is not permitted to declare any cash dividend or
other distribution on its Common Shares unless, at the time of such
declaration, the value of the Fund's total net assets is at least 200% of such
liquidation value. If Preferred Shares are issued, the Fund intends, to the
extent possible, to purchase or redeem Preferred Shares from time to time to
the extent necessary in order to maintain asset coverage of any Preferred
Shares of at least 200%. If the Fund has Preferred Shares outstanding, two of
the Fund's Directors will be elected by the Preferred Shareholders, voting

                                      15

<PAGE>

separately as a class. The remaining Directors of the Fund will be elected by
Common Shareholders and Preferred Shares voting together as a single class. In
the event the Fund failed to pay dividends on Preferred Shares for two years,
Preferred Shareholders would be entitled to elect a majority of the Board of
Directors of the Fund.

   The Fund is likely to be subject to certain restrictions imposed by
guidelines of one or more rating agencies that may issue ratings for Preferred
Shares issued by the Fund. These guidelines may impose asset coverage or
portfolio composition requirements that are more stringent than those imposed
on the Fund by the 1940 Act. It is not anticipated that these guidelines will
impede Alliance from managing the Fund's portfolio in accordance with the
Fund's investment objective and policies.

   The Fund may borrow money for repurchase of its shares or as a temporary
measure for extraordinary or emergency purposes, including the payment of
dividends and the settlement of securities transactions which otherwise might
require untimely dispositions of Fund securities.

   Assuming that the Preferred Shares will represent approximately 40% of the
Fund's capital and pay dividends at an annual average rate of 2.50%, the income
generated by the Fund's portfolio (net of expenses) would have to exceed 1.00%
in order to cover such dividend payments. Of course, these numbers are merely
estimates, used for illustration. Actual Preferred Share dividend rates will
vary frequently and may be significantly higher or lower than the rate
identified above.

   The following table is designed to illustrate the effect of leverage on
Common Share total return, assuming investment portfolio returns (consisting of
income and changes in the value of the municipal bonds held in the Fund's
portfolio) of -10%, -5%, 0%, 5%, and 10%. These assumed investment portfolio
returns are hypothetical figures and are not necessarily indicative of the
investment portfolio returns expected to be experienced by the Fund. The table
further assumes the issuance of Preferred Shares representing 40% of the Fund's
total capital, a 5.25% yield on the Fund's investment portfolio, net of
expenses, and the Fund's currently projected annual Preferred Share dividend
rate of 2.50%.

<TABLE>
<S>                       <C>      <C>      <C>     <C>   <C>
Assumed Portfolio Return. (10.00)%  (5.00)%  0.00%  5.00% 10.00%
Common Share Total Return (18.33)% (10.00)% (1.67)% 6.67% 15.00%
</TABLE>

   Common Share total return is composed of two elements -- the Common Share
dividends paid by the Fund (the amount of which is largely determined by the
net investment income of the Fund after paying dividends on Preferred Shares)
and gains or losses on the value of the securities the Fund owns. The table
assumes that the Fund is more likely to suffer capital losses than to enjoy
capital appreciation. For example, to assume a total return of 0%, the Fund
must assume that the tax-exempt interest it receives on its municipal bond
investments is entirely offset by losses in the value of those bonds.

   Unless and until Preferred Shares are issued, the Common Shares would only
be leveraged, if at all, through the use of derivatives and short-term
borrowing.

                                      16

<PAGE>

                                     RISKS

   The NAV of the Common Shares will fluctuate with and be affected by, among
other things, interest rate risk, credit risk, leverage risk and derivatives
risk. An investment in Common Shares will be subject to, among other things,
market discount risk, municipal bond market risk, and inflation risk. These and
other risks are more fully described below.

Newly Organized

   The Fund is a newly organized, diversified, closed-end management investment
company and has no operating history.

Interest Rate Risk

   Interest rate risk is the risk that changes in interest rates will adversely
affect the yield or value of the Fund's investments in municipal bonds.
Generally, when interest rates fall, bond prices rise, and vice versa.
Increases in market interest rates will cause the municipal bonds in the Fund's
portfolio to decline in value. The prices of long-term municipal bonds
generally fluctuate more than prices of shorter-term municipal bonds as
interest rates change. Because the Fund will invest primarily in long-term
municipal bonds, the Common Share NAV and market price per share will fluctuate
more in response to changes in market interest rates than if the Fund invested
primarily in shorter-term municipal bonds. The Fund's use of leverage, as
described below, will tend to increase Common Share interest rate risk. The
Fund may utilize certain strategies for the purpose of reducing the interest
rate sensitivity of the portfolio and decreasing the Fund's exposure to
interest rate risk, although there is no assurance that it will do so or that
such strategies will be successful.

Credit Risk


   Credit risk is the risk that one or more municipal bonds in the Fund's
portfolio will decline in price or that the issuer will fail to pay interest or
principal when due, because the issuer of the bond experiences a decline in its
financial status. In general, lower-rated municipal bonds carry a greater
degree of risk that the issuer will lose its ability to make interest and
principal payments, which could have a negative impact on the Fund's NAV or
dividends. The Fund may invest up to 25% of its net assets in municipal bonds
that are rated below investment grade by Moody's, S&P or Fitch or that are
unrated but determined to be of comparable quality by Alliance. The prices of
these lower-grade municipal bonds are more sensitive to negative developments,
such as a decline in the issuer's revenues or a general economic downturn, than
are the prices of higher-grade securities. Municipal bonds of below investment
grade quality (commonly referred to as "junk bonds") are predominately
speculative with respect to the issuer's capacity to pay interest and repay
principal when due, and therefore involve a greater risk of default. Municipal
bonds in the lowest investment grade category may also be considered to possess
some speculative characteristics.


Leverage Risk

   The use of leverage through the issuance of Preferred Shares creates an
opportunity for increased Common Share net income, but also involves special
risks for Common Shareholders. There is no assurance that the Fund's leveraging
strategy involving Preferred Shares will be successful. If the Preferred Shares
are issued, the NAV and market value of Common Shares will be more volatile,
and the yield to Common Shareholders will tend to fluctuate with changes in the
shorter-term dividend rates on the Preferred Shares. The Fund anticipates that
the Preferred Shares, at least initially, would likely pay cumulative dividends
at rates determined over relatively shorter-term periods by providing for the
periodic redetermination of the dividend rate through an auction or remarketing
procedure. See "Description of Shares--Preferred Shares." Long-term municipal
bond rates of return are typically,

                                      17

<PAGE>


although not always, higher than shorter-term municipal bond rates of return.
If the dividend rate on the Preferred Shares approaches the net rate of return
on the Fund's investment portfolio, the benefit of leverage to Common
Shareholders would be reduced. If the dividend rate on the Preferred Shares
exceeds the net rate of return on the Fund's portfolio, the leverage will
result in a lower rate of return to Common Shareholders than if the Fund were
not leveraged. Because the long-term municipal bonds in the Fund's portfolio
will typically pay fixed rates of interest while the dividend rate on the
Preferred Shares will be adjusted periodically, this could occur even when both
long-term and short-term municipal rates rise. In addition, the Fund will pay
(and Common Shareholders will bear) any costs and expenses relating to the
issuance and ongoing maintenance of the Preferred Shares. Furthermore, if the
Fund has net capital gain or other taxable income that is allocated to
Preferred Shares (instead of solely tax-exempt income), the Fund may have to
pay higher total dividends or Gross-up Dividends to Preferred Shareholders,
which may reduce the advantage of the Fund's leveraged structure to Common
Shareholders without reducing the associated risk. See "Preferred Shares and
Related Leverage." Accordingly, the Fund cannot assure you that the issuance of
Preferred Shares will result in a higher yield or return to Common Shareholders.


   Similarly, any decline in the value of the Fund's investments will be borne
entirely by Common Shareholders. Therefore, if the market value of the Fund's
portfolio declines, the leverage will result in a greater decrease in NAV to
Common Shareholders than if the Fund were not leveraged. Such greater NAV
decrease will also tend to cause a greater decline in the market price for the
Common Shares. The Fund might be in danger of failing to maintain the required
200% asset coverage or of losing its ratings on the Preferred Shares or, in an
extreme case, the Fund's current investment income might not be sufficient to
meet the dividend requirements on the Preferred Shares. In order to counteract
such an event, the Fund might need to liquidate investments in order to fund a
redemption of some or all of the Preferred Shares. Liquidation at times of low
municipal bond prices may result in capital loss and may reduce returns to
Common Shareholders.

   While the Fund may from time to time consider reducing leverage in response
to actual or anticipated changes in interest rates in an effort to mitigate the
increased volatility of current income and NAV associated with leverage, there
can be no assurance that the Fund will actually reduce leverage in the future
or that any reduction, if undertaken, will benefit the Common Shareholders.
Changes in the future direction of interest rates are very difficult to predict
accurately. If the Fund were to reduce leverage based on a prediction about
future changes to interest rates, and that prediction turned out to be
incorrect, the reduction in leverage would likely operate to reduce the income
and/or total returns to Common Shareholders relative to the circumstance where
the Fund had not reduced leverage. The Fund may decide that this risk outweighs
the likelihood of achieving the desired reduction to volatility in income and
share price if the prediction were to turn out to be correct, and determine not
to reduce leverage as described above.

   The Fund may also invest in derivative instruments, which may amplify the
effects of leverage and, during periods of rising short-term interest rates,
may adversely affect the Fund's NAV per share and income and distributions to
Common Shareholders. See "The Fund's Investments" and the SAI under "Investment
Objective and Policies--Derivative Investments."

Derivatives Risk

   The Fund may use derivatives to achieve its investment objective. In
addition to the credit risk of the counterparty to a derivatives transaction,
derivatives involve the risk of difficulties in pricing and valuation and the
risks that changes in value of a derivative may not correlate perfectly with
relevant underlying assets, rate or indexes.

Market Discount Risk


   Shares of closed-end management investment companies frequently trade at a
discount from their NAV. See "Repurchase of Common Shares; Conversion to
Open-End Fund."


                                      18

<PAGE>

Municipal Bond Market Risk


   This is the risk that special factors, such as legislative changes and local
and business developments, may adversely affect the yield or value of the
Fund's investments in municipal bonds or other municipal securities. The amount
of public information available about the municipal bonds in the Fund's
portfolio is generally less than that for corporate equities or bonds, and the
investment performance of the Fund may therefore be more dependent on the
analytical abilities of Alliance than would be the case for a stock fund or
taxable bond fund. The secondary market for municipal bonds, particularly the
below investment grade municipal bonds in which the Fund may invest, also tends
to be less developed and less liquid than many other securities markets, which
may adversely affect the Fund's ability to sell its municipal bonds at
attractive prices.


   The ability of municipal issuers to make timely payments of interest and
principal may be diminished during general economic downturns and as
governmental cost burdens are reallocated among federal, state and local
governments. In addition, laws enacted in the future by Congress or state
legislatures or referenda could extend the time for payment of principal and/or
interest, or impose other constraints on enforcement of such obligations, or on
the ability of municipal issuers to levy taxes. Issuers of municipal bonds
might seek protection under the bankruptcy laws. In the event of bankruptcy of
such an issuer, the Fund could experience delays in collecting principal and
interest and the Fund may not, in all circumstances, be able to collect all
principal and interest to which it is entitled. To enforce its rights in the
event of a default in the payment of interest or repayment of principal, or
both, the Fund may take possession of and manage any assets securing the
issuer's obligations on such securities, which may increase the Fund's
operating expenses. Any income derived from the Fund's ownership or operation
of such assets may not be tax-exempt.

Reinvestment Risk

   Reinvestment risk is the risk that income from the Fund's municipal bond
portfolio will decline if and when the Fund invests the proceeds from matured,
traded or called municipal bonds at market interest rates that are below the
portfolio's current earnings rate. A decline in income could affect the Common
Shares' market price or the Fund's overall returns.

Inflation Risk

   Inflation risk is the risk that the value of assets or income from an
investment will be worth less in the future as inflation decreases the value of
money. As inflation increases, the real value of the Common Shares and
distributions can decline. In addition, during any periods of rising inflation,
Preferred Share dividend rates would likely increase, which would tend to
further reduce returns to Common Shareholders.

                            MANAGEMENT OF THE FUND

Directors and Officers

   The Fund's business and affairs are managed under the direction of the
Fund's Board of Directors. There are currently eight Directors of the Fund, one
of whom is an "interested person" (as defined in the 1940 Act) and seven of
whom are not "interested persons." The names and business addresses of the
Directors and officers of the Fund and their principal occupations and other
affiliations during the past five years are set forth under "Management of the
Fund" in the SAI.

Investment Advisory Services


   Alliance, 1345 Avenue of the Americas, New York, New York 10105, will be the
Fund's investment adviser. Alliance is a leading global investment management
firm supervising client accounts with assets as of December 31, 2001 totaling
approximately $454 billion. Alliance provides diversified investment management
and related services globally to a broad range of clients including:
institutional


                                      19

<PAGE>

investors such as corporate and public employee pension funds, endowment funds,
domestic and foreign institutions, and governments and affiliates; private
clients, consisting of high net worth individuals, trusts and estates,
charitable foundations, partnerships, private and family corporations, and
other entities; individual investors by means of retail mutual funds sponsored
by Alliance; and institutional investors by means of in-depth research,
portfolio strategy, trading and brokerage-related services.

   Alliance will provide investment advisory services and order placement
facilities for the Fund. For these services, the Fund will pay Alliance a
monthly advisory fee at an annual rate of .65% of the Fund's average daily net
assets and will also reimburse Alliance for the cost of providing certain
administrative services. Alliance has voluntarily agreed to waive a portion of
its fees or reimburse the Fund for certain expenses as described in "Summary of
Fund Expenses" above. In addition, Alliance has agreed to pay all
organizational and offering costs that exceed $0.03 per Common Share.

   The employees of Alliance principally responsible for the Fund's investment
program will be Mr. David M. Dowden and Mr. Terrance T. Hults. Mr. Dowden is a
Vice President of Alliance Capital Management Corporation ("ACMC"), the general
partner of Alliance, with which he has been associated since 1994 serving in
the capacity of management of municipal securities investments. Mr. Hults is a
Vice President of ACMC with which he has been associated since 1995 serving in
the capacity of management of municipal securities investments.

   The Fund's SAI includes more detailed information about Alliance and other
Fund service providers.

Legal Proceedings

   On April 25, 2001, an amended class action complaint entitled Miller et al.
v. Mitchell Hutchins Asset Management, Inc. et al. (the "amended Miller
complaint"), was filed in federal district court in the Southern District of
Illinois against Alliance, Alliance Fund Distributors, Inc. ("AFD") and other
defendants alleging violations of the 1940 Act and breaches of common law
fiduciary duty.

   The allegations in the amended Miller complaint concern six mutual funds
with which Alliance has investment advisory agreements, including the Alliance
Premier Growth Fund, Alliance Health Care Fund, Alliance Growth Fund, Alliance
Quasar Fund, The Alliance Fund and Alliance Disciplined Value Fund. The
principal allegations of the amended complaint are that (i) certain advisory
agreements concerning these funds were negotiated, approved and executed in
violation of the 1940 Act, in particular because certain directors of these
funds should be deemed interested persons under the 1940 Act, (ii) the
distribution plans for these funds were negotiated, approved and executed in
violation of the 1940 Act, and (iii) the advisory fees and distribution fees
paid to Alliance and AFD, respectively, are excessive and, therefore,
constitute a breach of fiduciary duty.

   Alliance and AFD believe that the plaintiffs' allegations are without merit
and intend to vigorously defend against these allegations. At the present time,
management of Alliance and AFD are unable to estimate the impact, if any, that
the outcome of this action may have on Alliance's results of operations or
financial condition.


   On December 7, 2001, a complaint entitled Benak v. Alliance Capital
Management L.P. and Alliance Premier Growth Fund ("Benak Complaint") was filed
in federal district court in the District of New Jersey against Alliance and
Alliance Premier Growth Fund ("Premier Growth Fund") alleging violation of the
1940 Act. On December 21, 2001, a complaint entitled Roy v. Alliance Capital
Management L.P. and Alliance Premier Growth Fund ("Roy Complaint") was filed in
federal district court in the Middle District of Florida, Tampa Division,
against Alliance and Premier Growth Fund alleging violation of the


                                      20

<PAGE>


1940 Act. The principal allegations of the Benak Complaint and the Roy
Complaint are that Alliance breached its duty of loyalty to Premier Growth Fund
because one of the directors of Alliance served as a director of Enron Corp.
("Enron") when Premier Growth Fund purchased shares of Enron and, as a
consequence thereof, the investment advisory fees paid to Alliance by the
Premier Growth Fund should be returned as a means of recovering for Premier
Growth Fund the losses plaintiffs alleged were caused by the alleged breach of
the duty of loyalty. Plaintiffs in the Benak Complaint and the Roy Complaint
seek recovery of fees paid by Premier Growth Fund to Alliance during the twelve
months preceding the lawsuit. Alliance believes the plaintiffs' allegations are
without merit and intends to vigorously defend against these allegations. At
the present time, management of Alliance is unable to estimate the impact, if
any, that the outcome of this action may have on Alliance's results of
operations or financial condition.







   The Fund is not a party to the above litigation and does not own bonds or
other securities of Enron. While Alliance has no knowledge of additional
litigation involving issues concerning Enron similar to those alleged in the
Benak Complaint or any other litigation, it is unable to conclude whether or
not additional actions may be filed or, if filed, to evaluate the impact of
these actions on Alliance's results of operations or financial condition.


                                NET ASSET VALUE

   The Fund intends to calculate and make available daily the NAV of its Common
Shares. The NAV per Common Share will be determined as of the close of trading
on the Exchange each day the Exchange is open. To calculate NAV, the Fund's
assets are valued and totaled, liabilities and the aggregate liquidation value
of the outstanding Preferred Shares, if any, are subtracted, and the balance,
called net assets attributable to Common Shares, is divided by the total number
of the Fund's Common Shares then outstanding.


   For purposes of this computation, portfolio securities are valued at their
current market value determined on the basis of market quotations, or, if such
quotations are not readily available, at fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund. However,
readily marketable fixed-income securities may be valued on the basis of prices
provided by a pricing service when such prices are believed by the Fund to
reflect the fair market value of such securities. The prices provided by a
pricing service take into account institutional size trading in similar groups
of securities and any developments related to specific securities. Short-term
investments having a maturity of 60 days or less will be generally valued at
amortized cost.


                          DIVIDENDS AND DISTRIBUTIONS

   The Fund intends to distribute all its net investment income. Dividends from
such net investment income will be declared and paid monthly to Common
Shareholders. The Fund expects that the first monthly dividend on its Common
Shares will be declared approximately 45 and paid approximately 60 to 90 days
after delivery of the shares offered hereby. From and after issuance of the
Preferred Shares, if any, monthly distributions of Common Shares will consist
of net investment income remaining after the payment of dividends on the
Preferred Shares. Net capital gains, if any, will be distributed at least
annually to Common Shareholders to the extent such net capital gains are not
necessary to satisfy the dividend, redemption or liquidation preferences of any
Preferred Shares. For tax purposes, the Fund will be required, assuming
issuance of Preferred Shares, to allocate net capital gain and other taxable
income, if any, between Common Shares and Preferred Shares in proportion to
total dividends paid to each class for the year in which such net capital gain
or other taxable income is realized. See "Tax

                                      21

<PAGE>

Matters." While any Preferred Shares are outstanding, the Fund may not declare
any cash dividend or other distribution on its Common Shares, unless, at the
time of such declaration, (a) all accrued Preferred Shares dividends have been
paid and (b) the NAV of the Fund's portfolio (determined after deducting the
amount of such dividend or other distribution) is at least 200% of the
liquidation value of the outstanding Preferred Shares (expected to equal the
original purchase price per share plus any accrued and unpaid dividends
thereon). This limitation on the Fund's ability to make distributions on its
Common Shares could under certain circumstances impair the ability of the Fund
to maintain its qualification for taxation as a regulated investment company.
See "Tax Matters."

                          DIVIDEND REINVESTMENT PLAN

   Pursuant to the Plan, all Common Shareholders whose shares are registered in
their own names may elect to have all distributions reinvested automatically in
additional Common Shares by Equiserve Trust Co., N.A. (the "Plan Agent"), as
agent under the Plan. Otherwise, the shareholder will receive distributions as
cash. Generally, Common Shareholders whose shares are held in the name of a
broker or nominee may elect to automatically have distributions reinvested by
the broker or the nominee in additional shares under the Plan. Common
Shareholders whose Common Shares are held in the name of a broker or nominee
should contact such broker or nominee to determine whether and how they may
participate in the Plan.

   The Plan Agent will furnish you with written information relating to the
Plan. Included in such information will be procedures for electing to
participate in the Plan. Common Shareholders whose shares are held in the name
of a broker or nominee should contact the broker or nominee for details. All
distributions to Common Shareholders who elect not to participate in the Plan
will be paid by check mailed directly to the record holder by or under the
direction of the Plan Agent, as the dividend paying agent.

   If the Board authorizes an income distribution or determines to make a
capital gain distribution payable either in shares or in cash, as Common
Shareholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive the equivalent in Common Shares of
the Fund valued as follows:

      (i) if the Common Shares are trading at NAV or at a premium above NAV at
   the time of valuation, the Fund will issue new shares at the greater of NAV
   or 95% of the then current market price; or

      (ii) if the Common Shares are trading at a discount from NAV at the time
   of valuation, the Plan Agent will receive the dividend or distribution in
   cash and apply it to the purchase of the Fund's Common Shares in the open
   market, on the Exchange or elsewhere, for the participants' accounts. Such
   purchase will be made on or shortly after the payment date for such dividend
   or distribution and in no event more than 30 days after such date except
   where temporary curtailment or suspension of purchase is necessary to comply
   with federal securities laws. If the market price exceeds the NAV of a
   Common Share before the Plan Agent has completed its purchases, the average
   purchase price per share paid by the Plan Agent may exceed the NAV of the
   Fund's Common Shares, resulting in the acquisition of fewer shares than if
   the dividend or distribution had been in shares issued by the Fund.

   The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant or, if applicable, a broker or nominee on behalf of a participant.
Each shareholder's proxy will include those shares purchased pursuant to the
Plan. Share certificates will not be issued in the name of individual Plan
participants.

                                      22

<PAGE>

   There is no direct charge to participants for reinvesting dividends and
capital gains distributions. The fees of the Plan Agent for handling the
reinvestment of dividends and capital gains distributions will be paid by the
Fund. There will be no brokerage charges with respect to Common Shares issued
directly by the Fund as a result of dividends or capital gains distributions
payable either in shares or in cash. However, each participant will bear a
pro-rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
or capital gains distributions paid in cash.

   The automatic reinvestment of income and capital gains distributions will
not relieve participants of any income tax that may be payable on such income
and capital gains distributions.

   Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any income or capital gains distributions paid subsequent to written
notice of the change sent to the Plan participant at least 90 days before the
date of such income or capital gain distribution. The Plan may also be amended
or terminated by the Plan Agent, with the Fund's prior consent, on at least 90
days' written notice to Plan participants. All correspondence concerning the
Plan should be directed by mail to the Plan Agent,       , at        or by
telephone at (800)           .

                             DESCRIPTION OF SHARES

Common Shares

   The Charter authorizes the issuance of up to 2,000,000,000 Common Shares,
$.001 par value per share. Upon completion of this offering,        Common
Shares, and no shares of Preferred Stock, will be issued and outstanding.
However, it is the intention of the Board of Directors, under a power contained
in the Charter, to classify and issue Preferred Shares with the voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as described in "--Preferred Shares" below. The Board
of Directors, without any action by the shareholders of the Fund, may amend the
Charter from time to time to increase or decrease the aggregate number of
shares of stock or the number of shares of stock of any class or series that
the Fund has the authority to issue. Under Maryland law, the Fund's
shareholders generally are not liable for the Fund's debts or obligations.

   All Common Shares offered by this Prospectus will be duly authorized, fully
paid, and nonassessable. Common Shareholders are entitled to receive dividends
when authorized by the Board of Directors out of assets legally available for
the payment of dividends. They are also entitled to share ratably in the Fund's
assets legally available for distribution to the Fund's shareholders in the
event of the Fund's liquidation, dissolution or winding up, after payment of or
adequate provision for all of the Fund's known debts and liabilities. These
rights are subject to the preferential rights of any other class or series of
the Fund's stock. At any time when the Fund's Preferred Shares are outstanding,
Common Shareholders will not be entitled to receive any distributions from the
Fund unless all accrued dividends on Preferred Shares have been paid, and
unless asset coverage (as defined in the 1940 Act) with respect to Preferred
Shares would be at least 200% after giving effect to such distributions. See
"--Preferred Shares" below.

   Each outstanding Common Share entitles the holder to one vote on all matters
submitted to a vote of shareholders, including the election of directors.
Except as provided with respect to the Preferred Shares, the Common
Shareholders will possess the exclusive voting power. See "--Preferred Shares"
below. There is no cumulative voting in the election of directors, which means
that, subject to the rights of Preferred Shareholders to separately elect
directors, the holders of a majority of the outstanding

                                      23

<PAGE>

shares entitled to vote in the election of directors can elect all of the
directors then standing for election and the holders of the remaining shares
will not be able to elect any directors.

   Common Shareholders have no preference, conversion, exchange, sinking fund,
redemption or appraisal rights and have no preemptive rights to subscribe for
any of the Fund's securities. All Common Shares will have equal dividend,
liquidation and other rights.

Power to Issue Additional Shares of Stock

   The Fund may increase the outstanding shares of stock without shareholder
approval, unless shareholder approval is required by applicable law or the
rules of any stock exchange or automated quotation system on which the Fund's
securities may be listed or traded.

   The Fund has no present intention of offering additional Common Shares
except under the Plan. See "Dividend Reinvestment Plan." Other offerings of the
Fund's Common Shares, if made, will require approval of its Board of Directors.
Any additional offering will be subject to the requirement of the 1940 Act that
such shares may not be sold at a price below the then NAV, exclusive of sales
load, except in connection with an offering to existing Common Shareholders or
with the consent of the holders of a majority of the Fund's outstanding Common
Shares.

   As of the date of this Prospectus, Alliance owned of record and beneficially
100% of the outstanding Common Shares of the Fund, and thus, until the public
offering of the Fund's Common Shares is completed, will control the Fund.

Preferred Shares

   The Charter authorizes the Board of Directors to classify any unissued
shares of stock in one or more classes or series, including Preferred Shares,
and to reclassify any previously classified but unissued shares of any series,
as authorized by the Board of Directors. Under the 1940 Act, the Fund is
permitted to have outstanding more than one series of Preferred Shares so long
as no single series has a priority over another series as to the distribution
of assets of the Fund or the payment of dividends. Common Shareholders have no
pre-emptive right to purchase any Preferred Shares that might be issued. It is
anticipated the NAV per share of the Preferred Shares will equal its original
purchase price per share plus accrued dividends per share.

   The Fund expects to make an offering of Preferred Shares (representing
approximately 40% of the Fund's capital immediately after the Preferred Shares
are issued) within approximately one to three months after completion of the
offering of Common Shares, subject to market conditions and to the Board's
determination to authorize the issuance of such shares. Although the terms of
the Preferred Shares, including their dividend rate, liquidation preference and
redemption provisions, will be determined by the Board of Directors (subject to
applicable law and the Fund's Charter), the Fund believes that it is likely
that the initial class of Preferred Shares will be structured to carry a
relatively short-term dividend rate, by providing for the periodic adjustment
of the dividend rate, through an auction, remarketing or other procedure. The
Fund also believes that it is likely that the liquidation preference, voting
rights and redemption provisions of the Preferred Shares will be as stated
below.

   Liquidation Preference.  In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Fund, the Preferred Shareholders
will be entitled to receive a preferential liquidating distribution (expected
to equal the original purchase price per share plus accrued and unpaid
dividends, whether or not declared) before any distribution of assets is made
to Common Shareholders. After payment of the full amount of the liquidating
distribution to which they are entitled, the Preferred Shareholders will not be
entitled to any further participation in any distribution of assets by the
Fund. A

                                      24

<PAGE>

consolidation or merger of the Fund with or into any corporation or
corporations or a sale of all or substantially all of the assets of the Fund
will not be deemed to be a liquidation, dissolution or winding up of the Fund.

   Voting Rights.  Except as otherwise indicated under "The Fund's
Investments--Investment Objective and Policies" in this Prospectus and except
as otherwise required by applicable law, Preferred Shareholders will have equal
voting rights with Common Shareholders (one vote per share, unless otherwise
required by the 1940 Act), and will vote together with Common Shareholders as a
single class.

   In connection with the election of the Fund's Directors, Preferred
Shareholders, voting as a separate class, will be entitled to elect two of the
Fund's Directors, and the remaining Directors will be elected by Common
Shareholders and Preferred Shareholders, voting together as a single class. The
Fund's Bylaws provide that, so long as any Preferred Shares are outstanding,
the Fund will not have less than six Directors. In the unlikely event that two
full years of accrued dividends are not paid on the Preferred Shares, the
Preferred Shareholders, voting as a separate class, will be entitled to elect a
majority of the Board of Directors of the Fund until all dividends in default
have been paid or declared and set apart for payment.

   Redemption, Purchase and Sale of Preferred Shares by the Fund.  The terms of
the Preferred Shares are expected to provide that they are redeemable by the
Fund in whole or in part at the original purchase price per share plus accrued
dividends per share, that the Fund may tender for or purchase Preferred Shares
and that the Fund may subsequently resell any shares so tendered or purchased.
Any redemption or purchase of Preferred Shares by the Fund will reduce the
leverage applicable to Common Shares, while any resale of shares by the Fund
will increase such leverage. See "Preferred Shares and Related Leverage."


   The discussion above describes the Board of Directors' present intention
with respect to an offering of Preferred Shares. If the Board of Directors
determines to proceed with such an offering, the terms of the Preferred Shares
may be the same as, or different from, the terms described above, subject to
applicable law and the Fund's Charter Documents. The Board of Directors,
without the approval of the Common Shareholders, may authorize an offering of
Preferred Shares or may determine not to authorize such an offering, and may
fix the terms of the Preferred Shares to be offered within the limits described
above.


Certain Provisions of the Charter Documents


   The Fund has provisions in its Charter Documents that could limit (i) the
ability of other entities or persons to acquire control of the Fund, (ii) the
Fund's freedom to engage in certain transactions, or (iii) the ability of the
Fund's shareholders to amend the Charter Documents, effect changes in the
Fund's management, or convert the Fund to open-end status. These provisions in
the Charter Documents may be regarded as "anti-takeover" provisions. Pursuant
to the Charter, at the first annual meeting of shareholders after this public
offering, the Board of Directors will be divided into three classes of
Directors. The initial terms of the first, second and third classes will expire
in 2003, 2004 and 2005, respectively. Beginning in 2003, Directors of each
class will be chosen for three-year terms upon the expiration of their current
terms and each year one class of Directors will be elected by the Fund's
shareholders. The Fund believes that classification of the Board of Directors
will help to assure the continuity and stability of the Fund's business
strategies and policies as determined by the Board of Directors.


   The classified board provision could have the effect of making the
replacement of incumbent Directors more time-consuming and difficult. At least
two annual meetings of shareholders, instead of one, will generally be required
to effect a change in a majority of the Board of Directors. Thus, the

                                      25

<PAGE>

classified board provision could increase the likelihood that incumbent
Directors will retain their positions. The staggered terms of Directors may
delay, defer, or prevent a tender offer or an attempt to change control of the
Fund, although the tender offer or change in control might be in the best
interest of the shareholders.

Removal of Directors


   A Director may be removed only for cause and only by the affirmative vote of
at least 75% of the votes entitled to be cast in the election of such director.
This provision, when coupled with the provision in the Charter authorizing only
the Board of Directors to fill vacant directorships, precludes shareholders
from removing incumbent Directors except for cause and by a substantial
affirmative vote.


Amendment to the Charter


   Certain provisions of the Charter, including its provisions on
classification of the Board of Directors and removal of Directors, may be
amended only by approval of the Board and the affirmative vote of the holders
of not less than 75% of all of the votes entitled to be cast on the matter.
Other provisions of the Charter may be amended by approval of the Board and the
affirmative vote of holders of a majority of the aggregate number of votes
entitled to be cast on the amendment. The required vote shall be in addition to
the vote of the holders of shares of the Fund otherwise required by law or any
agreement between the Fund and any national securities exchange.


Dissolution of the Company

   Subject to Board approval, the liquidation or dissolution of the Fund or an
amendment to the Charter to terminate the Fund must be approved by the
affirmative vote of the holders of not less than 75% of all of the votes
entitled to be cast on the matter. However, if a majority of the Continuing
Directors (as such term is defined below) approves the liquidation or
dissolution of the Fund, such action requires the affirmative vote of a
majority of the votes entitled to be cast on the matter.

Anti-takeover Effect of Certain Provisions of Maryland Law and of the Charter
and Bylaws

   The affirmative vote of 75% (which is higher than that required under
Maryland law or the 1940 Act) of the Fund's Common Shares, and, if issued,
Preferred Shares voting separately by class, will be required to authorize the
liquidation or dissolution of the Fund in the absence of approval of the
liquidation or dissolution by a majority of the Continuing Directors of the
Fund (defined for this purpose as those Directors who were either members of
the Board of Directors on the date of closing of the initial offering of Common
Shares or who subsequently become Directors and whose election or nomination is
approved by a majority of the Continuing Directors then on the Board). In
addition, the affirmative vote of 75% (which is higher than that required under
Maryland law or the 1940 Act) of the outstanding Common Shares, and, if issued,
Preferred Shares voting separately by class, is required generally to authorize
any of the following involving a corporation, person or entity that will be
directly, or indirectly through affiliates, the beneficial owner of more than
5% of the outstanding shares of the Fund (a "Principal Shareholder"), or to
amend the provisions of the Charter relating to such transactions:

      (i) merger, consolidation or statutory share exchange of the Fund with or
   into any Principal Shareholder;

      (ii) the issuance of any securities of the Fund to any Principal
   Shareholder for cash except upon (a) reinvestment of dividends pursuant to a
   dividend reinvestment plan of the Fund, (b) issuance of any securities of
   the Fund upon the exercise of any stock subscription rights distributed by
   the Fund, or (c) a public offering by the Fund registered under the
   Securities Act of 1933;

                                      26

<PAGE>

      (iii) the sale, lease or exchange of all or any substantial part of the
   assets of the Fund to any Principal Shareholder (except assets having an
   aggregate fair market value of less than $1,000,000, aggregating for the
   purpose of such computation all assets sold, leased or exchanged in any
   series of similar transactions within a twelve-month period); and


      (iv) the sale, lease or exchange to the Fund or any subsidiary thereof,
   in exchange for securities of the Fund, of any assets of any Principal
   Shareholders (except assets having an aggregate fair market value of less
   than $1,000,000 aggregating for the purposes of such computation all assets
   sold, leased or exchanged in any series of similar transaction within a
   twelve-month period).


   However, such vote would not be required when, under certain conditions, the
Continuing Directors approve the transactions described in (i)-(iv) above,
although in certain cases involving merger, consolidation or statutory shares
exchange or sale of all or substantially all of the Fund's assets, the
affirmative vote of a majority of the Common Shares, and, if issued, Preferred
Shares voting separately by class, would nevertheless be required. The
affirmative vote of 75% (which is higher than that required under Maryland law
or the 1940 Act) of the outstanding Common Shares, and, if issued, and
Preferred Shares voting separately by class, is required to convert the Fund to
an open-end investment company and to amend the Fund's Charter to effect any
such conversion. See "Repurchase of Common Shares; Conversion to Open-End Fund."

   The provisions of the Charter Documents described above could have the
effect of depriving the Common Shareholders of opportunities to sell their
shares at a premium over prevailing market prices by discouraging a third party
from seeking to obtain control of the Fund in a tender offer or similar
transaction. See "Repurchase of Common Shares; Conversion to Open-End Fund."
The overall effect of these provisions is to render difficult the
accomplishment of a merger or the assumption of control by a Principal
Shareholder. The Board of Directors of the Fund has considered the foregoing
anti-takeover provisions and concluded that they are in the best interests of
the Fund and its shareholders.

           REPURCHASE OF COMMON SHARES; CONVERSION TO OPEN-END FUND

   Shares of closed-end investment companies frequently trade at a discount
from NAV. The Fund may, from time to time, repurchase or make a tender offer
for its Common Shares, or convert to an open-end investment company in an
attempt to reduce or eliminate significant market discounts from NAV. Subject
to the Fund's policy with respect to borrowings, the Fund may incur debt to
finance repurchases and tenders. The Fund will comply with the 1940 Act asset
coverage requirements if such borrowings are made. Interest on such borrowing
will reduce the Fund's net income.

   The Fund anticipates that the market price of its Common Shares will
generally vary from NAV. The market price of the Fund's Common Shares will,
among other things, be determined by the relative demand for and supply of such
shares in the market, the Fund's investment performance, the Fund's
distributions, and investor perception of the Fund's overall attractiveness as
an investment as compared with other investment alternatives. Nevertheless, the
fact that the Fund's Common Shares may be the subject of repurchases or tender
offers at NAV from time to time may reduce the spread between market price and
NAV that might otherwise exist. There can be no assurance that share
repurchases, tender offers, or conversion to an open-end investment company
will take place or that, if they occur, they will result in the Fund's Common
Shares trading at a price that is equal to their NAV or reduce or eliminate any
market value discount.

                                      27

<PAGE>

   It should be recognized that any acquisition of Common Shares by the Fund
would decrease the total assets of the Fund and therefore have the effect of
increasing the Fund's expense ratio and may also require the redemption of a
portion of any outstanding Preferred Shares in order to maintain coverage
ratios. Because of the nature of the Fund's investment objective, policies and
portfolio, the Fund does not anticipate that repurchases and tenders should
have an adverse effect on the Fund's investment performance and does not
anticipate any material difficulty in disposing of portfolio securities in
order to consummate Common Share repurchases or tenders.

   Common Shares that have been purchased by the Fund will be returned to the
status of authorized but unissued Commons Shares. The purchase of Common Shares
by the Fund will reduce the Fund's NAV.

   If the Fund converted to an open-end investment company, it would be
required to redeem all Preferred Shares then outstanding (requiring that it
liquidate a portion of its investment portfolio), and the Common Shares would
no longer be listed on the Exchange. In contrast to a closed-end investment
company, shareholders of an open-end investment company may require the company
to redeem their shares at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their NAV, less any redemption charge
that is in effect at the time of the redemption.


   Before deciding whether to take any action if the Common Shares trade
significantly below NAV, the Board of Directors would consider all factors that
they deemed relevant. Such factors may include the extent and duration of the
discount, the liquidity of the Fund's portfolio, the impact of any action that
might be taken on the Fund or its shareholders, and market considerations.
Based on these considerations, even if the Fund's Common Shares should trade at
a significant discount for a significant period of time, the Board of Directors
may determine that no action should be taken. See the SAI under "Repurchase of
Fund Shares; Conversion to Open-End Fund" for a further discussion of possible
action to reduce or eliminate a discount to NAV.


                                  TAX MATTERS

   The following federal income tax discussion is based on the advice of Seward
& Kissel LLP, counsel to the Fund, and reflects provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing Treasury regulations,
rulings published by the Internal Revenue Service (the "Service"), and other
applicable authority, all as of the date of this Prospectus. These authorities
are subject to change by legislative or administrative action, possibly on a
retroactive basis. The following discussion is only a summary of some of the
important tax considerations generally applicable to investments in the Fund.
For more detailed information regarding tax considerations, see the SAI. There
may be other tax considerations applicable to particular investors. In
addition, income earned through an investment in the Fund may be subject to
state and local taxes.

   The Fund intends to qualify each year for taxation as a regulated investment
company eligible for treatment under the provisions of Subchapter M of the
Code. If the Fund so qualifies and satisfies certain annual distribution
requirements, the Fund will not be subject to federal income or excise taxes on
income distributed in a timely manner to its shareholders in the form of
dividends or capital gain distributions. As noted above, the Fund intends to
distribute to its shareholders all of its net investment income (and net
capital gain, if any) for each taxable year.

   Because the Fund primarily invests in municipal obligations the interest on
which is exempt from federal income tax, distributions to you out of tax-exempt
interest income earned by the Fund will not be subject to federal income tax
(other than the AMT). Any exempt-interest dividends derived from interest on
municipal securities subject to the AMT may be a specific preference item for
purposes of the federal individual and corporate AMT.

                                      28

<PAGE>

   The Fund's distributions of net income (including any short-term capital
gains) that are not tax-exempt will be taxable to you as ordinary income.
Distributions of long-term capital gains generally will be taxable to you as
long-term capital gains regardless of how long you have held your Common
Shares. The Fund will allocate distributions to shareholders that are treated
as tax-exempt interest and as long-term capital gain and ordinary income, if
any, among the Common Shares and Preferred Shares in proportion to total
dividends paid to each class for the year.

   Distributions are taxable to you in the manner discussed above even if the
distributions are paid from income or gains earned by the Fund before you
bought shares (and thus were included in the price you paid for the shares).

   The sale or exchange of Fund shares is a taxable transaction for federal
income tax purposes.

   Each year shortly after December 31, the Fund will send you tax information
stating the amount and type of all its distributions for the year. Consult your
tax adviser about the federal, state and local tax consequences of an
investment in the Fund in your particular circumstances.

                                 UNDERWRITING


   Salomon Smith Barney Inc., A.G. Edwards & Sons, Inc., Prudential Securities
Incorporated, UBS Warburg LLC, Gruntal & Co., L.L.C., Legg Mason Wood Walker,
Incorporated and Wells Fargo Van Kasper, LLC are acting as representatives of
the Underwriters named below. Subject to the terms and conditions stated in the
Fund's underwriting agreement dated January 24, 2002, each Underwriter named
below has severally agreed to purchase, and the Fund has agreed to sell to such
Underwriter, the number of Common Shares set forth opposite the name of such
Underwriter.


<TABLE>
<CAPTION>
                                                      Number of
               Underwriters                         Common Shares
               ------------                         -------------
               <S>                                  <C>
               Salomon Smith Barney Inc............
               A.G. Edwards & Sons, Inc............
               Prudential Securities Incorporated..
               UBS Warburg LLC.....................
               Gruntal & Co., L.L.C................
               Legg Mason Wood Walker, Incorporated
               Wells Fargo Van Kasper, LLC.........
                                                      ---------
                  Total............................
                                                      ---------
</TABLE>

   The underwriting agreement provides that the obligations of the Underwriters
to purchase the Common Shares included in this offering are subject to approval
of legal matters by counsel and to other conditions. The Underwriters are
obligated to purchase all the Common Shares (other than those covered by the
over-allotment option described below) if they purchase any of the Common
Shares.


   The Underwriters propose to offer some of the Common Shares directly to the
public at the public offering price set forth on the cover of this Prospectus
and some of the Common Shares to dealers at the public offering price less a
concession not to exceed $0.45 per Common Share. The sales load the Fund will
pay of $0.675 per Common Share is equal to 4.5% of the initial offering price.
The Underwriters may allow, and such dealers may reallow, a concession not to
exceed $0.10 per Common Share on sales to certain other dealers. If all of the
Common Shares are not sold at the initial offering price, the representatives
may change the public offering price and other selling terms. Investors must
pay for any Common Shares purchased on or before January 30, 2002. The
representatives have advised the Fund that the Underwriters do not intend to
confirm any sales to any accounts over which they exercise discretionary
authority.


                                      29

<PAGE>

   The Fund has granted to the Underwriters an option, exercisable for 45 days
from the date of this Prospectus, to purchase up to          additional Common
Shares at the public offering price less the sales load. The Underwriters may
exercise such option solely for the purpose of covering over-allotments, if
any, in connection with this offering. To the extent such option is exercised,
each Underwriter will be obligated, subject to certain conditions, to purchase
a number of additional Common Shares approximately proportionate to such
Underwriter's initial purchase commitment.

   The Fund and Alliance have each agreed that, for a period of 180 days from
the date of this Prospectus, they will not, without the prior written consent
of Salomon Smith Barney Inc., on behalf of the Underwriters, dispose of or
hedge any Common Shares or any securities convertible into or exchangeable for
Common Shares. Salomon Smith Barney Inc. in its sole discretion may release any
of the securities subject to these agreements at any time without notice.

   Prior to the offering, there has been no public market for the Common
Shares. Consequently, the initial public offering price for the Common Shares
was determined by negotiation among the Fund, Alliance and the representatives.
There can be no assurance, however, that the price at which the Common Shares
will sell in the public market after this offering will not be lower than the
price at which they are sold by the Underwriters or that an active trading
market in the Common Shares will develop and continue after this offering. As
noted above, shares of closed-end funds, such as the Fund, frequently trade at
a discount to NAV. The Common Shares have been authorized for listing on the
New York Stock Exchange, subject to notice of issuance.


   The Fund and Alliance have each agreed to indemnify the several Underwriters
or contribute to losses arising out of certain liabilities, including
liabilities under the Securities Act of 1933, as amended.


   Alliance has agreed to pay the amount by which the aggregate of all the
Fund's organizational expenses and all offering costs (other than the sales
load) exceed $0.03 per share.

   In connection with the requirements for listing the Common Shares on the
Exchange, the Underwriters have undertaken to sell lots of 100 or more Common
Shares to a minimum of 2,000 beneficial owners in the United States. The
minimum investment requirement is 100 Common Shares.

   Certain Underwriters may make a market in the Common Shares after trading in
the Common Shares has commenced on the Exchange. No Underwriter is, however,
obligated to conduct market-making activities and any such activities may be
discontinued at any time without notice, at the sole discretion of the
Underwriter. No assurance can be given as to the liquidity of, or the trading
market for, the Common Shares as a result of any market-making activities
undertaken by any Underwriter. This Prospectus is to be used by any Underwriter
in connection with the offering and, during the period in which a prospectus
must be delivered, with offers and sales of the Common Shares in market-making
transactions in the over-the-counter market at negotiated prices related to
prevailing market price at the time of the sale.

   The Underwriters have advised the Fund that, pursuant to Regulation M under
the Securities Exchange Act of 1934, as amended, certain persons participating
in the offering may engage in transactions, including stabilizing bids,
covering transactions or the imposition of penalty bids, which may have the
effect of stabilizing or maintaining the market price of the Common Shares at a
level above that which might otherwise prevail in the open market. A
"stabilizing bid" is a bid for or the purchase of the Common Shares on behalf
of an Underwriter for the purpose of fixing or maintaining the price of the
Common Shares. A "covering transaction" is a bid for or purchase of the Common
Shares on behalf of an Underwriter to reduce a short position incurred by the
Underwriters in

                                      30

<PAGE>

connection with the offering. A "penalty bid" is a contractual arrangement
whereby if, during a specified period after the issuance of the Common Shares,
the Underwriters purchase Common Shares in the open market for the account of
the underwriting syndicate and the Common Shares purchased can be traced to a
particular Underwriter or member of the selling group, the underwriting
syndicate may require the Underwriter or selling group member in question to
purchase the Common Shares in question at the cost price to the syndicate or
may recover from (or decline to pay to) the Underwriter or selling group member
in question any or all compensation (including, with respect to a
representative, the applicable syndicate management fee) applicable to the
Common Shares in question. As a result, an Underwriter or selling group member
and, in turn, brokers may lose the fees that they otherwise would have earned
from a sale of the Common Shares if their customer resells the Common Shares
while the penalty bid is in effect. The Underwriters are not required to engage
in any of these activities, and any such activities, if commenced, may be
discontinued at any time. These transactions may be effected on the Exchange or
otherwise.

   The Fund anticipates that from time to time the representatives of the
Underwriters and certain other Underwriters may act as brokers or dealers in
connection with the execution of the Fund's portfolio transactions after they
have ceased to be Underwriters and, subject to certain restrictions, may act as
brokers while they are Underwriters.

   Prior to the public offering of Common Shares, Alliance will purchase Common
Shares from the Fund in an amount satisfying the net worth requirements of
Section 14(a) of the 1940 Act.

   The principal business address of Salomon Smith Barney Inc. is 388 Greenwich
Street, New York, New York 10013.

                         CUSTODIAN AND TRANSFER AGENT

   The Fund's securities and cash will be held under a Custodian Agreement by
State Street Bank & Trust Company. The Fund's assets will be held under bank
custodianship in compliance with the 1940 Act. Equiserve Trust Company, N.A.
will act as the Fund's transfer agent, dividend-paying agent and registrar.

                                 LEGAL MATTERS

   Certain legal matters in connection with the Common Shares will be passed
upon for the Fund by Seward & Kissel LLP and for the Underwriters by Simpson
Thacher & Bartlett. Seward & Kissel LLP and Simpson Thacher & Bartlett will
rely upon the opinion of Ballard Spahr Andrews & Ingersoll, LLP for certain
matters of Maryland law.

                                      31

<PAGE>

                           TABLE OF CONTENTS FOR THE
                      STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<S>                                                     <C>
Use of Proceeds........................................
Investment Objective and Policies......................
Investment Restrictions................................
Management of the Fund.................................
Valuation of Securities................................
Portfolio Transactions.................................
Distributions..........................................
Description of Shares..................................
Certain Provisions in the Charter......................
Repurchase of Fund Shares; Conversion to Open-End Fund.
Tax Matters............................................
Performance Related and Comparative Information........
Custodian, Transfer Agent and Dividend Disbursing Agent
Independent Auditors...................................
Counsel................................................
Registration Statement.................................
Report of Independent Auditors.........................
Financial Statements...................................
   Appendix A--Bond Ratings............................
   Appendix B--Futures Contracts and Related Options...
</TABLE>

                                      32

<PAGE>

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

                                         Shares

                 Alliance National Municipal Income Fund, Inc.

                                 Common Shares

                                   --------

                              P R O S P E C T U S

                               January 24, 2002

                                   --------

                             Salomon Smith Barney

                           A.G. Edwards & Sons, Inc.

                             Prudential Securities

                                  UBS Warburg

                             Gruntal & Co., L.L.C.

                            Legg Mason Wood Walker
                                 Incorporated

                          Wells Fargo Van Kasper, LLC

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

<PAGE>


          ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.
               STATEMENT OF ADDITIONAL INFORMATION
                   January 28, 2002

         Alliance National Municipal Income Fund, Inc., a
Maryland corporation (the "Fund"), is a newly organized,
diversified, closed-end management investment company.

      This Statement of Additional Information ("SAI")
relating to common shares of the Fund ("Common Shares"), par
value $.001 per share, is not a prospectus, but should be read in
conjunction with the Fund's Prospectus dated January 28, 2002
(the "Prospectus").  This SAI does not include all information
that a prospective investor should consider before purchasing
Common Shares, and investors should obtain and read the
Prospectus prior to purchasing such shares.  A copy of the
Prospectus may be obtained without charge by calling (800) 227-
4618.  You may also obtain a copy of the Prospectus on the
Securities and Exchange Commission's ("SEC") web site
http://www.sec.gov). Capitalized terms used but not defined in
this SAI have the meanings ascribed to them in the
Prospectus.

                        TABLE OF CONTENTS

USE OF PROCEEDS
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT RESTRICTIONS
MANAGEMENT OF THE FUND
VALUATION OF SECURITIES
PORTFOLIO TRANSACTIONS
DISTRIBUTIONS
DESCRIPTION OF SHARES
CERTAIN PROVISIONS IN THE CHARTER
REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND
TAX MATTERS
PERFORMANCE RELATED AND COMPARATIVE INFORMATION
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
INDEPENDENT AUDITORS
COUNSEL
REGISTRATION STATEMENT
FINANCIAL STATEMENTS
APPENDIX A - Bond Ratings                                     A-1
APPENDIX B - Futures Contracts and Related Options            B-1


This Statement of Additional Information is dated January 28,
2002



<PAGE>

                         USE OF PROCEEDS

         The net proceeds of the offering of Common Shares of the
Fund will be approximately $[________] (or $[_______] if the
Underwriters exercise the over-allotment option in full) after
payment of organization and offering costs.

      The Fund will pay organizational and offering expenses
estimated at $[______] from the proceeds of the offering.
Alliance Capital Management L.P. ("Alliance" or the "Adviser"),
the Fund's investment adviser, has agreed to pay the amount by
which the aggregate of all organizational expenses and offering
costs (other than the sales load) exceeds $0.03 per Common Share.
Pending investment in municipal bonds that meet the Fund's
investment objective and policies, the net proceeds of the
offering will be primarily invested in high quality, short-term
tax-exempt money market securities or in high quality municipal
bonds with relatively low volatility (such as pre-refunded and
intermediate-term bonds), to the extent such securities are
available.  If necessary to invest fully the net proceeds of the
offering immediately, the Fund may also purchase, as temporary
investments or for defensive purposes, short-term tax-exempt or
taxable investments, the income on which is subject to regular
federal income tax, of the type described under "Investment
Objective and Policies -- Short-Term Investments/Temporary
Defensive Strategies."

                INVESTMENT OBJECTIVE AND POLICIES

         The investment objective and general investment policies
of the Fund are described in the Prospectus.  Additional
information concerning the characteristics of certain of the
Fund's investments is set forth below.

Municipal Bonds

         Municipal bonds share the attributes of debt/fixed
income securities in general, but are generally issued by states,
municipalities and other political subdivisions, agencies,
authorities and instrumentalities of states and multi-state
agencies or authorities.  Municipal bonds have two principal
classifications: general obligation bonds and revenue or special
obligation bonds .  General obligation bonds are secured by an
issuer's pledge of its faith, credit, and taxing power for the
payment of principal and interest.  They are payable from such
issuer's general revenues and not from any particular source.
Revenue or special obligation bonds are payable only from the
revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special
excise or other specific revenue source.  Tax-exempt private
activity bonds and industrial development bonds generally are


                                2



<PAGE>

also revenue bonds and thus are not payable from the issuer's
general revenues.  The credit and quality of private activity
bonds and industrial development bonds are usually related to the
credit of the corporate user of the facilities.  Payment of
interest on and repayment of principal of such bonds is the
responsibility of the corporate user (and/or any guarantor).

         The Fund will primarily invest in municipal bonds with
long-term maturities in order to maintain a weighted average
maturity of 15-30 years, but the average weighted maturity of
obligations held by the Fund may be shortened, depending on
market conditions.  As a result, the Fund's portfolio at any
given time may include both long-term and intermediate-term
municipal bonds.  Moreover, during temporary or defensive periods
(e.g., times when Alliance believes that temporary imbalances of
supply and demand or other temporary dislocations in the tax-
exempt bond market adversely affect the price at which long-term
or intermediate-term municipal bonds are available), and in order
to keep the Fund's cash fully invested, including the period
during which the net proceeds of the offering are being invested,
the Fund may invest any percentage of its net assets in short-
term investments including high quality, short-term securities
that may be either tax-exempt or taxable. See "Short-Term
Investments/Temporary Defensive Strategies."

         Also included within the general category of municipal
bonds in which the Fund may invest are participations in lease
obligations or installment purchase contract obligations of
municipal authorities or entities ("Municipal Lease
Obligations").  Although a Municipal Lease Obligation does not
constitute a general obligation of the municipality for which the
municipality's taxing power is pledged, a Municipal Lease
Obligation is ordinarily backed by the municipality's covenant to
budget for, appropriate and make the payments due under the
Municipal Lease Obligation.  However, certain Municipal Lease
Obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis.  In the case of
a "non-appropriation" lease, the Fund's ability to recover under
the lease in the event of non-appropriation or default will be
limited solely to the repossession of the leased property,
without recourse to the general credit of the lessee, and
disposition or releasing of the property might prove difficult.
There have been challenges to the legality of lease financing in
numerous states, and, from time to time, certain municipalities
have considered not appropriating money for lease payments.  In
deciding whether to purchase a Municipal Lease Obligation, the
Fund will consider all relevant factors including the financial
condition of the borrower, the merits of the project, the level
of public support for the project, and the legislative history of


                                3



<PAGE>

lease financing in the state.  These securities may be less
readily marketable than other municipal bonds.  The Fund may also
purchase unrated lease obligations if determined by Alliance to
be of comparable quality to rated securities in which the Fund is
permitted to invest.

         Some longer-term municipal bonds give the investor the
right to "put" or sell the security at par (face value) within a
specified number of days following the investor's request-
- -usually one to seven days.  This demand feature enhances a
security's liquidity by shortening its effective maturity and
enables it to trade at a price equal to or very close to par.  If
a demand feature terminates prior to being exercised, the Fund
would hold the longer-term security, which could experience
substantially more volatility.

         The Fund may invest in municipal bonds with credit
enhancements such as letters of credit, municipal bond insurance
and Standby Bond Purchase Agreements ("SBPAs").  Letters of
credit are issued by a third party, usually a bank, to enhance
liquidity and ensure repayment of principal and any accrued
interest if the underlying municipal bond should default.
Municipal bond insurance, which is usually purchased by the bond
issuer from a private, nongovernmental insurance company,
provides an unconditional and irrevocable guarantee that the
insured bond's principal and interest will be paid when due.
Insurance does not guarantee the price of the bond or the share
price of the Fund.  The credit rating of an insured bond reflects
the credit rating of the insurer, based on its claims-paying
ability.  The obligation of a municipal bond insurance company to
pay a claim extends over the life of each insured bond.  Although
defaults on insured municipal bonds have been low to date and
municipal bond insurers have met their claims, there is no
assurance this will continue.  A higher-than-expected default
rate could strain the insurer's loss reserves and adversely
affect its ability to pay claims to bondholders.  The number of
municipal bond insurers is relatively small, and not all of them
have the highest rating.  An SBPA is a liquidity facility
provided to pay the purchase price of bonds that cannot be re-
marketed.  The obligation of the liquidity provider (usually a
bank) is only to advance funds to purchase tendered bonds that
cannot be remarketed and does not cover principal or interest
under any other circumstances.  The liquidity provider's
obligations under the SBPA are usually subject to numerous
conditions, including the continued creditworthiness of the
underlying borrower.

         Unless otherwise indicated, all limitations applicable
to the Fund's investments (as stated above and elsewhere in this
SAI) apply only at the time a transaction is entered into.  Any
subsequent change in a rating assigned by any rating service to a


                                4



<PAGE>

security (or, if unrated, determined by Alliance to be of
comparable quality), or change in the percentage of the Fund's
assets invested in certain securities or other instruments, or
change in the average maturity or duration of the Fund's
investment portfolio, resulting from market fluctuations or other
changes in the Fund's total assets, will not require the Fund to
dispose of a particular investment.  In determining whether to
sell such a security, Alliance may consider such factors as its
assessment of the credit quality of the issuer of the security,
the price at which the security could be sold and the rating, if
any, assigned to the security by other rating agencies.  In the
event that ratings services assign different ratings to the same
security, Alliance will determine which rating it believes best
reflects the security's quality and risk at that time, which may
be the higher of the several assigned ratings.

         Municipal bonds are subject to credit and market risk.
Generally, prices of higher quality issues tend to fluctuate less
with changes in market interest rates than prices of lower
quality issues and prices of longer maturity issues tend to
fluctuate more than prices of shorter maturity issues.

         The Fund may purchase and sell portfolio investments to
take advantage of changes or anticipated changes in yield
relationships, markets or economic conditions.  The Fund may also
sell municipal bonds due to changes in Alliance's evaluation of
the issuer.  The secondary market for municipal bonds typically
has been less liquid than that for taxable debt/fixed income
securities, and this may affect the Fund's ability to sell
particular municipal bonds at then-current market prices,
especially in periods when other investors are attempting to sell
the same securities.

         Prices and yields on municipal bonds are dependent on a
variety of factors, including general money-market conditions,
the financial condition of the issuer, general conditions of the
municipal bond market, the size of a particular offering, the
maturity of the obligation and the rating of the issue.  A number
of these factors, including the ratings of particular issues, are
subject to change from time to time.  Information about the
financial condition of an issuer of municipal bonds may not be as
extensive as that which is made available by corporations whose
securities are publicly traded.

         Obligations of issuers of municipal bonds are subject to
the provisions of bankruptcy, insolvency, and other laws
affecting the rights and remedies of creditors, such as the
Federal Bankruptcy Code.  In addition, the obligations of such
issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for
payment of principal and/or interest, or imposing other


                                5



<PAGE>

constraints upon enforcement of such obligations or upon the
ability of municipalities to levy taxes.  There is also the
possibility that, as a result of litigation or other conditions,
the ability of any issuer to pay, when due, the principal or the
interest on its municipal bonds may be materially affected.

Short-Term Investments/Temporary Defensive Strategies

         For temporary or for defensive purposes, including the
period during which the net proceeds of the offering are being
invested, the Fund may invest up to 100% of its net assets in
short-term investments including high quality, short-term
securities that may be either tax-exempt or taxable.  The Fund
intends to invest in taxable short-term investments only in the
event that suitable tax-exempt short-term investments are not
available at reasonable prices and yields. Tax-exempt short-term
investments include various obligations issued by state and local
governmental issuers, such as tax-exempt notes (bond anticipation
notes, tax anticipation notes and revenue anticipation notes or
other such municipal bonds maturing in three years or less from
the date of issuance) and municipal commercial paper.  The Fund
will invest only in taxable short-term investments that are U.S.
Government securities or securities rated within the highest
grade by Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Service ("S&P") or Fitch, Inc. ("Fitch"), and
which mature within one year from the date of purchase or carry a
variable or floating rate of interest.  See Appendix A for a
general description of Moody's, S&P's and Fitch's ratings of
securities in such categories.  The Fund's taxable short-term
investments may include certificates of deposit issued by U.S.
banks with assets of at least $1 billion, or commercial paper or
corporate notes, bonds or debentures with a remaining maturity of
one year or less, or repurchase agreements.  To the extent the
Fund invests in taxable short-term investments, the Fund may not
achieve its investment objective of providing current income
exempt from federal income tax.

Other Municipal Securities

         Municipal notes in which the Fund may invest include
demand notes, which are tax-exempt obligations that have stated
maturities in excess of one year, but permit the holder to sell
back the security (at par) to the issuer within one to seven days
notice.  The payment of principal and interest by the issuer of
these obligations will ordinarily be guaranteed by letters of
credit offered by banks. The interest rate on a demand note may
be based upon a known lending rate, such as a bank's prime rate,
and may be adjusted when such rate changes, or the interest rate
on a demand note may be a market rate that is adjusted at
specified intervals.



                                6



<PAGE>

         Other short-term obligations constituting municipal
notes include tax anticipation notes, revenue anticipation notes,
bond anticipation notes and tax-exempt commercial paper.  Tax
anticipation notes are issued to finance working capital needs of
municipalities.  Generally, they are issued in anticipation of
various seasonal tax revenues, such as ad valorem, income, sales,
and use and business taxes.  Revenue anticipation notes are
issued in expectation of receipt of other types of revenues, such
as federal revenues available under the Federal Revenue Sharing
Programs.  Bond anticipation notes are issued to provide interim
financing until long-term financing can be arranged.  In most
such cases, the long-term bonds provide the money for the
repayment of the notes.

         Tax-Exempt Commercial Paper ("Municipal Paper") is a
short-term obligation with a stated maturity of 365 days or less
(however, issuers typically do not issue such obligations with
maturities longer than seven days).  Such obligations are issued
by state and local municipalities to finance seasonal working
capital needs or as short-term financing in anticipation of
longer-term financing.

         Certain municipal bonds may carry variable or floating
rates of interest whereby the rate of interest is not fixed but
varies with changes in specified market rates or indices, such as
a bank prime rate or a tax-exempt money market index.

         While the various types of notes described above as a
group represent the major portion of the tax-exempt note market,
other types of notes are available in the marketplace and the
Fund may invest in such other types of notes to the extent
permitted under its investment objective, policies and
limitations.  Such notes may be issued for different purposes and
may be secured differently from those mentioned above.

High Yield Securities ("Junk Bonds")

         Bonds of below investment grade quality (Ba/BB or below)
are commonly referred to as "high yield securities" or "junk
bonds." Issuers of bonds rated below investment grade are
regarded as having current capacity to make principal and
interest payments but are subject to business, financial or
economic conditions that could adversely affect such payment
capacity.  Municipal bonds rated Baa or BBB are considered
"investment grade" securities, although such bonds may be
considered to possess some speculative characteristics.
Municipal bonds rated AAA in which the Fund may invest may have
been so rated on the basis of the existence of insurance
guaranteeing the timely payment, when due, of all principal and
interest.



                                7



<PAGE>

         High yield securities are regarded as predominantly
speculative with respect to the issuer's continuing ability to
meet principal and interest payments and, therefore, carry
greater price volatility and principal and income risk, including
the possibility of issuer default and bankruptcy and increased
market price volatility.

         High yield securities may be more susceptible to real or
perceived adverse economic and competitive industry conditions
than investment grade securities.  A projection of an economic
downturn or of a period of rising interest rates, for example,
could cause a decline in high yield security prices because the
advent of a recession could lessen the ability of an issuer to
make principal and interest payments on its debt securities.  If
an issuer of high yield securities defaults, in addition to
risking payment of all or a portion of interest and principal,
the Fund may incur additional expenses to seek recovery.  Market
prices of high yield securities structured as zero-coupon bonds
are affected to a greater extent by interest rate changes, and
therefore tend to be more volatile than securities which pay
interest periodically and in cash.  Alliance seeks to reduce
these risks through diversification, credit analysis and
attention to current developments and trends in both the economy
and financial markets.

         The secondary market on which high yield securities are
traded may be less liquid than the market for higher-grade
securities.  Less liquidity in the secondary trading market could
adversely affect the price at which the Fund could sell a high
yield security, and could adversely affect the daily net asset
value of the shares.  Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the
values and liquidity of high yield securities, especially in a
thinly traded market.  When secondary markets for high yield
securities are less liquid than the market for higher grade
securities, it may be more difficult to value the securities
because such valuation may require more research, and elements of
judgment may play a greater role in the valuation because there
is less reliable objective data available.  During periods of
thin trading in these markets, the spread between bid and asked
prices is likely to increase significantly and the Fund may have
greater difficulty selling its portfolio securities.  The Fund
will be more dependent on Alliance's research and analysis when
investing in high yield securities.  Alliance seeks to minimize
the risks of investing in all securities through diversification,
in-depth credit analysis and attention to current developments in
interest rates and market conditions.

         A general description of Moody's, S&P's and Fitch's
ratings of municipal bonds is set forth in Appendix A hereto.
The ratings of Moody's, S&P and Fitch represent their opinions as


                                8



<PAGE>

to the quality of the municipal bonds they rate.  It should be
emphasized, however, that ratings are general and are not
absolute standards of quality.  Consequently, municipal bonds
with the same maturity, coupon and rating may have different
yields while obligations with the same maturity and coupon with
different ratings may have the same yield.  For these reasons,
the use of credit ratings as the sole method of evaluating high
yield securities can involve certain risks.  For example, credit
ratings evaluate the safety of principal and interest payments,
not the market value risk of high yield securities.  Also, credit
rating agencies may fail to change credit ratings in a timely
fashion to reflect events since the security was last rated.
Alliance does not rely solely on credit ratings when selecting
securities for the Fund and develops its own independent analysis
of issuer credit quality.

Variable and Floating Rate Securities

         Variable and floating rate securities provide for a
periodic adjustment in the interest rate paid on the obligations.
The terms of such obligations must provide that interest rates
are adjusted periodically based upon an interest rate adjustment
index as provided in the respective obligations.  The adjustment
intervals may be regular, and range from daily up to annually, or
may be event based, such as based on a change in the prime rate.

Derivative Instruments

      The Fund may enter into interest rate and index futures
contracts and purchase and sell options on such futures contracts
("futures options").  The Fund also may enter into swap
agreements with respect to interest rates and indexes of
securities.  While the Fund does not currently intend to utilize
any of these types of derivative instruments, it reserves the
flexibility to use these techniques under appropriate
circumstances and without limitation, except as described herein.
If other types of financial instruments, including other types of
options, futures contracts, or futures options are traded in the
future, the Fund may also determine to use those instruments.


         The value of some derivative instruments in which the
Fund may invest may be particularly sensitive to changes in
prevailing interest rates, and, like the other investments of the
Fund, the ability of the Fund to successfully utilize these
instruments may depend in part upon the ability of Alliance to
forecast interest rates and other economic factors correctly.  If
Alliance incorrectly forecasts such factors and has taken
positions in derivative instruments contrary to prevailing market
trends, the Fund could be exposed to the risk of loss.  The Fund
might not employ any of the strategies described below, and no


                                9



<PAGE>

assurance can be given that any strategy used will succeed.  If
Alliance incorrectly forecasts interest rates, market values or
other economic factors in utilizing a derivatives strategy for
the Fund, the Fund might have been in a better position if it had
not entered into the transaction.  Also, suitable derivative
transactions may not be available in all circumstances.  The use
of these strategies involves certain special risks, including a
possible imperfect correlation, or even no correlation, between
price movements of derivative instruments and price movements of
related investments.  While some strategies involving derivative
instruments can reduce the risk of loss, they can also reduce the
opportunity for gain or even result in losses by offsetting
favorable price movements in related investments or otherwise,
due to the possible inability of the Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable or
the possible need to sell a portfolio security at a
disadvantageous time because the Fund is required to maintain
asset coverage or offsetting positions in connection with
transactions in derivative instruments, and the possible
inability of the Fund to close out or to liquidate its
derivatives positions.  Income earned by the Fund from many
derivative strategies will be treated as capital gain and, if not
offset by net realized capital loss, will be distributed to
shareholders in taxable distributions.

Futures Contracts and Options on Futures Contracts

         While the Fund does not currently intend to do so, it
may enter into contracts for the purchase or sale for future
delivery of municipal securities or obligations of the U.S.
Government securities or contracts based on financial indices,
including an index of municipal securities or U.S. Government
securities ("futures contracts") and may purchase and write put
and call options to buy or sell futures contracts ("options on
futures contracts").  A "sale" of a futures contract means the
acquisition of a contractual obligation to deliver the securities
called for by the contract at a specified price on a specified
date.  A "purchase" of a futures contract means the incurring of
a contractual obligation to acquire the securities called for by
the contract at a specified price on a specified date.  The
purchaser of a futures contract on an index agrees to take or
make delivery of an amount of cash equal to the difference
between a specified dollar multiple of the value of the index on
the expiration date of the contract ("current contract value")
and the price at which the contract was originally struck.  No
physical delivery of the fixed-income securities underlying the
index is made.  Options on futures contracts written or
purchased, and futures contracts purchased or sold, by the Fund
will be traded on U.S. exchanges.  These investment techniques
will be used only to hedge against anticipated future changes in
interest rates which otherwise might either adversely affect the


                               10



<PAGE>

value of the securities held by the Fund or adversely affect the
prices of securities which a Fund intends to purchase at a later
date.

         The correlation between movements in the price of
futures contracts or options on futures contracts and movements
in the price of the securities hedged or used for cover will not
be perfect and could produce unanticipated losses.  If the value
of the index increases, the purchaser of the futures contract
thereon will be entitled to a cash payment.  Conversely, if the
value of the index declines, the seller of a futures contract
will be entitled to a cash payment.  In connection with its
purchase of index futures the Fund will deposit liquid assets
equal to the market value of the futures contract (less related
margin) in a segregated account with the Fund's custodian or a
futures margin account with a broker.  If Alliance were to
forecast incorrectly, the Fund might suffer a loss arising from
adverse changes in the current contract values of the bond
futures or index futures which it had purchased or sold.  A
Fund's ability to hedge its positions through transactions in
index futures depends on the degree of correlation between
fluctuations in the index and the values of the securities which
the Fund owns or intends to purchase, or general interest rate
movements.

         For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

Risks Associated with Futures and Futures Options.

         There are several risks associated with the use of
futures contracts and futures options as hedging techniques.  A
purchase or sale of a futures contract may result in losses in
excess of the amount invested in the futures contract.  There can
be no guarantee that there will be a correlation between price
movements in the hedging vehicle and in the Fund securities being
hedged.  In addition, there are significant differences between
the securities and futures markets that could result in an
imperfect correlation between the markets, causing a given hedge
not to achieve its objectives.  The degree of imperfection of
correlation depends on circumstances such as variations in
speculative market demand for futures and futures options on
securities, including technical influences in futures trading and
futures options, and differences between the financial
instruments being hedged and the instruments underlying the
standard contracts available for trading in such respects as
interest rate levels, maturities, and creditworthiness of
issuers.  A decision as to whether, when and how to hedge
involves the exercise of skill and judgment, and even a well-



                               11



<PAGE>

conceived hedge may be unsuccessful to some degree because of
market behavior or unexpected interest rate trends.

         Futures contracts on U.S. Government securities
historically have reacted to an increase or decrease in interest
rates in a manner similar to that in which the underlying U.S.
Government securities reacted.  To the extent, however, that the
Fund enters into such futures contracts, the value of such
futures may not vary in direct proportion to the value of the
Fund's holdings of municipal bonds.  Thus, the anticipated spread
between the price of the futures contract and the hedged security
may be distorted due to differences in the nature of the markets.
The spread also may be distorted by differences in initial and
variation margin requirements, the liquidity of such markets and
the participation of speculators in such markets.

         Futures exchanges may limit the amount of fluctuation
permitted in certain futures contract prices during a single
trading day.  The daily limit establishes the maximum amount that
the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of the current
trading session.  Once the daily limit has been reached in a
futures contract subject to the limit, no more trades may be made
on that day at a price beyond that limit.  The daily limit
governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may
work to prevent the liquidation of unfavorable positions.  For
example, futures prices have occasionally moved to the daily
limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial
losses.

         There can be no assurance that a liquid market will
exist at a time when the Fund seeks to close out a futures or a
futures option position, and the Fund would remain obligated to
meet margin requirements until the position is closed.  In
addition, many of the contracts discussed above are relatively
new instruments without a significant trading history.  As a
result, there can be no assurance that an active secondary market
will develop or continue to exist.

Interest Rate Transactions (Swaps, Caps, and Floors)

         While the Fund does not currently intend to do so, it
may enter into interest rate swaps and may purchase or sell
interest rate caps and floors.

         The Fund would enter into these transactions primarily
to preserve a return or spread on a particular investment or
portion of the Fund.  The Fund may also enter into these


                               12



<PAGE>

transactions to protect against price increases of securities
Alliance anticipates purchasing for the Fund at a later date. The
Fund does not intend to use these transactions in a speculative
manner.  Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or
receive interest, e.g., an exchange of floating rate payments for
fixed rate payments.  The purchase of an interest rate cap
entitles the purchaser, to the extent that a specified index
exceeds a predetermined interest rate, to receive payments of
interest on a contractually-based principal amount from the party
selling such interest rate cap.  The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified
index falls below a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount
from the party selling such interest rate floor.

      Interest rate swaps, caps and floors may be entered into
on either an asset-based or liability-based basis, depending upon
whether they are hedging their assets or their liabilities, and
will usually enter into interest rate swaps on a net basis, i.e.,
the two payment streams are netted out, with the Fund receiving
or paying, as the case may be, only the net amount of the two
payments.  The net amount of the excess, if any, of the Fund's
obligations over its entitlements with respect to each interest
rate swap will be accrued daily, and an amount of liquid assets
having an aggregate net asset value at least equal to the accrued
excess will be maintained in a segregated account by the
custodian. If the Fund enters into an interest rate swap on other
than a net basis, the Fund will maintain in a segregated account
with the custodian the full amount, accrued daily, of the Fund's
obligations with respect to the swap.  Alliance will monitor the
creditworthiness of counterparties on an ongoing basis. If there
were a default by such a counterparty, the Fund would have
contractual remedies.  The swap market has grown substantially in
recent years, with a large number of banks and investment banking
firms acting both as principals and agents utilizing standardized
swap documentation.  Alliance has determined that, as a result,
the swap market has become relatively liquid. Caps and floors are
more recent innovations for which standardized documentation has
not yet been developed and, accordingly they are less liquid than
swaps.  To the extent the Fund sells (i.e., writes) caps and
floors it will maintain in a segregated account with the
custodian liquid assets equal to the full amount, accrued daily,
of the Fund's obligations with respect to any caps or floors.

         The use of interest rate swaps is a highly specialized
activity which involves investment techniques and risks different
from those associated with ordinary Fund securities transactions.
If Alliance were incorrect in its forecasts of market values,
interest rates and other applicable factors, the investment
performance of the Fund would diminish compared with what they


                               13



<PAGE>

would have been if these investment techniques were not used.
Moreover, even if Alliance is correct in its forecasts, there is
a risk that the swap position may correlate imperfectly with the
price of the asset or liability being hedged.

         Interest rate swap transactions do not involve the
delivery of securities or other underlying assets of principal.
Accordingly, the risk of loss with respect to interest rate swaps
is limited to the net amount of interest payments that the Fund
is contractually obligated to make.  If the other party to an
interest rate swap defaults, the Fund's risk of loss consists of
the net amount of interest payments that the Fund contractually
is entitled to receive.  The Fund may purchase and sell (i.e.,
write) caps and floors without limitation, subject to the
segregated account requirement described above.

Repurchase Agreements

         While the Fund does not currently intend to do so, it
may seek additional income by investing in repurchase agreements
pertaining only to U.S. Government securities.  A repurchase
agreement arises when a buyer purchases a security and
simultaneously agrees to resell it to the vendor at an agreed-
upon future date, normally one day or a few days later.  The
resale price is greater than the purchase price, reflecting an
agreed-upon market rate which is effective for the period of time
the buyer's money is invested in the security and which is not
related to the coupon rate on the purchased security.  Such
agreements would permit the Fund to keep all of its assets at
work while retaining "overnight" flexibility in pursuit of
investments of a longer-term nature.  In addition, the Fund will
require continual maintenance of collateral held by the Fund's
custodian in an amount equal to, or in excess of, the market
value of the securities which are the subject of the agreement.
In the event that a vendor defaulted on its repurchase
obligation, the Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the
repurchase price.  In the event of a vendor's bankruptcy, the
Fund might be delayed in, or prevented from, selling the
collateral for its benefit. Repurchase agreements may be entered
into with member banks of the Federal Reserve System including
the Fund's custodian or "primary dealers" (as designated by the
Federal Reserve Bank of New York) in U.S. Government securities.
The Fund's current practice would be to enter into repurchase
agreements only with such primary dealers.

Illiquid Securities

         The Fund may invest in illiquid securities. Illiquid
securities include, among others, (a) direct placements or other
securities which are subject to legal or contractual restrictions


                               14



<PAGE>

on resale or for which there is no readily available market
(e.g., trading in the security is suspended or, in the case of
unlisted securities, market makers do not exist or will not
entertain bids or offers), (b) options purchased by the Fund
over-the-counter and the cover for options written by the Fund
over-the-counter, and (c) repurchase agreements not terminable
within seven days.  Securities that have legal or contractual
restrictions on resale but have a readily available market are
not deemed illiquid for purposes of this limitation.

         Illiquid securities generally include securities subject
to contractual or legal restrictions on resale because they have
not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), securities which are otherwise not
readily marketable and repurchase agreements having a maturity of
longer than seven days.  Securities which have not been
registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly
from the issuer or in the secondary market.

         Rule 144A under the Securities Act permits a broader
institutional trading market for securities otherwise subject to
restriction on resale to the general public.  Rule 144A
establishes a "safe harbor" from the registration requirements of
the Securities Act for resales of certain securities to qualified
institutional buyers.  An insufficient number of qualified
institutional buyers interested in purchasing certain restricted
securities held by the Fund, however, could affect adversely the
marketability of such Fund securities.

         Alliance, acting under the supervision of the Board of
Directors, will monitor the liquidity of restricted securities in
the Fund that are eligible for resale pursuant to Rule 144A.  In
reaching liquidity decisions, Alliance will consider, among
others, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers issuing
quotations to purchase or sell the security; (3) the number of
other potential purchasers of the security; (4) the number of
dealers undertaking to make a market in the security; (5) the
nature of the security (including its unregistered nature) and
the nature of the marketplace for the security (e.g., the time
needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer); and (6) any applicable
Commission interpretation or position with respect to such type
of securities.

Portfolio Trading and Turnover Rate

         Portfolio trading may be undertaken to accomplish the
investment objective of the Fund in relation to actual and
anticipated movements in interest rates.  In addition, a security


                               15



<PAGE>

may be sold and another of comparable quality purchased at
approximately the same time to take advantage of what Alliance
believes to be a temporary price disparity between the two
securities.  Temporary price disparities between two comparable
securities may result from supply and demand imbalances where,
for example, a temporary oversupply of certain bonds may cause a
temporarily low price for such bonds, as compared with other
bonds of like quality and characteristics.  The Fund may also
engage to a limited extent in short-term trading consistent with
its investment objective.  Securities may be sold in anticipation
of a market decline (a rise in interest rates) or purchased in
anticipation of a market rise (a decline in interest rates) and
later sold, or to recognize a gain.

         A change in the securities held by the Fund is known as
"portfolio turnover." Alliance manages the Fund without regard
generally to restrictions on portfolio turnover.  The use of
certain derivative instruments with relatively short maturities
may tend to exaggerate the portfolio turnover rate for the Fund.
Trading in fixed income securities does not generally involve the
payment of brokerage commissions, but does involve indirect
transaction costs.  The use of futures contracts may involve the
payment of commissions to futures commission merchants.  Higher
portfolio turnover involves correspondingly greater expenses to
the Fund, including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and
reinvestments in other securities. Transactions in the Fund's
portfolio securities may result in realization of taxable capital
gains (including short-term capital gains which are generally
taxed to shareholders at ordinary income tax rates).  The trading
costs and tax effects associated with portfolio turnover may
adversely affect the Fund's performance.

Other Investment Companies

      The Fund may invest in other investment companies either
during periods when it has large amounts of uninvested cash, such
as the period shortly after the Fund receives the proceeds of the
offering of its Common Shares or the Fund's preferred shares
("Preferred Shares"), during periods when there is a shortage of
attractive, high-yielding municipal bonds available in the
market, or when Alliance believes share prices of other
investment companies offer attractive values.  The Fund may
invest in investment companies that are advised by Alliance or
its affiliates to the extent permitted by applicable law and/or
pursuant to exemptive relief from the SEC.  As a stockholder in
an investment company, the Fund will bear its ratable share of
that investment company's expenses and would remain subject to
payment of the Fund's management and other fees with respect to
assets so invested.  Holders of Common Shares ("Common
Shareholders") would therefore be subject to duplicative expenses


                               16



<PAGE>

to the extent the Fund invests in other investment companies.  In
addition, the securities of other investment companies may also
be leveraged and will therefore be subject to the same leverage
risks described herein.  As described in the Fund's Prospectus in
the section entitled "Risks," the net asset value and market
value of leveraged shares will be more volatile and the yield to
shareholders will tend to fluctuate more than the yield generated
by unleveraged shares.  Alliance will consider all relevant
factors, including expenses and leverage, when evaluating the
investment merits of an investment in an investment company
relative to available municipal bond investments.

When-Issued, Delayed Delivery and Forward Commitment Transactions

         The Fund may purchase or sell municipal bonds on a
"forward commitment" basis.  When such transactions are
negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery
and payment for the securities take place at a later date.
Normally, the settlement date occurs within two months after the
transaction, but delayed settlements beyond two months may be
negotiated.  During the period between a commitment by the Fund
and settlement, no payment is made for the securities purchased
by the purchaser, and, thus, no interest accrues to the purchaser
from the transaction.  The use of forward commitments enables the
Fund to hedge against anticipated changes in interest rates and
prices.  For instance, in periods of rising interest rates and
falling bond prices, the Fund might sell municipal bonds which it
owned on a forward commitment basis to limit its exposure to
falling bond prices.  In periods of falling interest rates and
rising bond prices, the Fund might sell a municipal security held
by the Fund and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the
benefit of currently higher cash yields.  However, if Alliance
were to forecast incorrectly the direction of interest rate
movements, the Fund might be required to complete such when-
issued or forward transactions at prices less favorable than the
current market value.

         When-issued municipal securities and forward commitments
may be sold prior to the settlement date, but the Fund enters
into when-issued and forward commitment transactions only with
the intention of actually receiving or delivering the municipal
securities, as the case may be.  To facilitate such transactions,
the Fund's custodian bank will maintain, in a separate account of
the Fund, liquid assets having value equal to, or greater than,
any commitments to purchase municipal securities on a when-issued
or forward commitment basis and, with respect to forward
commitments to sell portfolio securities of the Fund, the
portfolio securities themselves.  If the Fund, however, chooses
to dispose of the right to acquire a when-issued security prior


                               17



<PAGE>

to its acquisition or dispose of its right to deliver or receive
against a forward commitment, it can incur a gain or loss.  When-
issued municipal securities may include bonds purchased on a
"when, as and if issued" basis under which the issuance of the
securities depends upon the occurrence of a subsequent event,
such as approval of a proposed financing by appropriate municipal
authorities.  Any significant commitment of Fund assets to the
purchase of securities on a "when, as and if issued" basis may
increase the volatility of the Fund's net asset value.  At the
time the Fund makes the commitment to purchase or sell a
municipal security on a when-issued or forward commitment basis,
it records the transaction and reflects the value of the security
purchased or, if a sale, the proceeds to be received, in
determining its net asset value.  No forward commitments will be
made by the Fund if, as a result, more than 10% of the value of
such Fund's total assets would be committed to such transactions.

Zero Coupon Bonds

         The Fund may invest in zero coupon bonds, which are debt
obligations that do not entitle the holder to any periodic
payments prior to maturity and are issued and traded at a
discount from their face amounts.  The discount varies depending
on the time remaining until maturity, prevailing interest rates,
liquidity of the security and perceived credit quality of the
issuer.  Even though the Fund does not receive any interest on
zero coupon bonds during their life, the Fund accrues income with
respect to such bonds and thus may have to dispose of portfolio
securities under disadvantageous circumstances in order to obtain
cash needed to pay dividends in amounts necessary to avoid
unfavorable tax consequences.  The market prices of zero coupon
bonds are generally more volatile than the market prices of
securities that pay interest periodically and are likely to
respond to changes in interest rates to a greater degree than do
securities having similar maturities and credit quality that do
pay periodic interest.

General

         The successful use of the foregoing investment
practices, all of which are highly specialized investment
activities, draws upon the Adviser's special skill and experience
with respect to such instruments and usually depends on the
Adviser's ability to forecast interest rate movements correctly.
Should interest rates move in an unexpected manner, the Fund may
not achieve the anticipated benefits of futures contracts,
options, interest rate transactions or forward commitment
contracts, or may realize losses and thus be in a worse position
than if such strategies had not been used.  Unlike many exchange-
traded futures contracts and options on futures contracts, there
are no daily price fluctuation limits with respect to forward


                               18



<PAGE>

contracts, and adverse market movements could therefore continue
to an unlimited extent over a period of time.  In addition, the
correlation between movements in the price of such instruments
and movements in the price of the securities hedged or used for
cover may not be perfect and could produce unanticipated losses.

         The Fund's ability to dispose of its position in futures
contracts, options, interest rate transactions and forward
commitment contracts will depend on the availability of liquid
markets in such instruments.  Markets for all these vehicles with
respect to municipal securities are relatively new and still
developing.  It is impossible to predict the amount of trading
interest that may exist in various types of futures contracts and
options on futures contracts.  No assurance can be given that the
Fund will be able to utilize these instruments effectively for
the purposes set forth above.  Furthermore, the Fund's ability to
engage in options and futures transactions may be limited by tax
considerations.

                     INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions

         Unless specified to the contrary, the Fund cannot change
its investment objective or fundamental policies without the
approval of the holders of a "majority of the outstanding" voting
shares of the Fund and of the holders of a "majority of the
outstanding" Preferred Shares, subsequent to their issuance,
voting as a separate class. A "majority of the outstanding"
shares (whether voting together as a single class or voting as a
separate class) means (i) 67% or more of such shares present at a
meeting, if the holders of more than 50% of those shares are
present or represented by proxy, or (ii) more than 50% of such
shares, whichever is less.

The Fund may not:

         (1)  Concentrate its investments in a particular
industry, as that term is used in the 1940 Act and as
interpreted, modified, or otherwise permitted by regulatory
authority having jurisdiction, from time to time.

         (2)  Purchase or sell real estate, although it may
purchase securities(including municipal bonds) secured by real
estate or interests therein, or securities issued by companies
which invest in real estate, or interests therein.

         (3)  Make loans except through (i) the purchase of debt
obligations in accordance with its investment objectives and
policies; or (ii) the use of repurchase agreements.



                               19



<PAGE>

         (4)  Purchase or sell commodities or commodities
contracts or oil, gas or mineral programs.  This restriction
shall not prohibit the Fund, subject to restrictions described in
the Prospectus and elsewhere in this SAI, from purchasing,
selling or entering into futures contracts, options on futures
contracts, forward contracts, or any interest rate, securities-
related or other hedging instruments, including swap agreements
and other derivative instruments, subject to compliance with any
applicable provisions of the federal securities or commodities
laws.

         (5)  Borrow money or issue any senior security, except
in accordance with provisions of the 1940 Act and specifically
the Fund may (a) borrow from a bank or other entity in a
privately arranged transaction and issue commercial paper, bonds,
debentures or notes, in series or otherwise, with such interest
rates, conversion rights and other terms and provisions as are
determined by the Fund's Board of Directors, if after such
borrowing or issuance there is asset coverage of at least 300% as
defined in the 1940 Act; and (b) issue Preferred Shares with such
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption as are determined by the
Fund's Board of Directors, if after such issuance there is asset
coverage of at least 200% as defined in the 1940 Act.

         (6)  Pledge, hypothecate, mortgage or otherwise encumber
its assets, except (i) to secure permitted borrowings, (ii) in
connection with initial and variation margin deposits relating to
futures contracts and (iii) any segregated accounts established
in accordance with its investment objective and policies.

         (7)  Act as an underwriter of securities of other
issuers, except to the extent that in connection with the
disposition of portfolio securities, it maybe deemed to be an
underwriter under the federal securities laws.

         The Fund's industry concentration policy does not
preclude it from focusing investments in issuers in a group of
related industries (such as different types of utilities).

                     MANAGEMENT OF THE FUND

Directors and Officers

         The business and affairs of the Fund are managed under
the direction of the Board of Directors.  The Directors and
officers of the Fund, their ages and their principal occupations
during the past five years are set forth below.  Each such
Director and officer is also a trustee, director or officer of
other registered investment companies sponsored by the Adviser.


                               20



<PAGE>

Unless otherwise specified, the address of each such person is
1345 Avenue of the Americas, New York, New York 10105.

Directors

         JOHN D. CARIFA* , 56, Chairman of the Board, is the
President, Chief Operating Officer and a Director of Alliance
Capital Management Corporation ("ACMC"), with which he has been
associated since prior to 1996.

         RUTH BLOCK, 70, was formerly an Executive Vice President
and the Chief Insurance Officer of The Equitable Life Assurance
Society of the United States; Chairman and Chief Executive
Officer of Evlico; a Director of Avon, Tandem Financial Group and
Donaldson, Lufkin & Jenrette Securities Corporation.  She is
currently a Director of Ecolab Incorporated (specialty chemicals)
and BP Amoco Corporation (oil and gas).  Her address is P.O. Box
4623, Stamford, Connecticut 06903.

         DAVID H. DIEVLER, 72, is an independent consultant.
Until December 1994 he was Senior Vice President of ACMC
responsible for mutual fund administration.  Prior to joining
ACMC in 1984 he was Chief Financial Officer of Eberstadt Asset
Management since 1968.  Prior to that he was a Senior Manager at
Price Waterhouse & Co., member of American Institute of Certified
Public Accountants since 1953.  His address is P.O. Box 167,
Spring Lake, New Jersey 07762.

         JOHN H. DOBKIN, 59, is a consultant.  Currently
President of the Board of Save Venice, Inc. (preservation
organization).  Formerly, he was a Senior Adviser (June 1999 -
June 2000) and President (December 1989 - May 1999) of Historic
Hudson Valley (historic preservation).   Previously, he was
Director of the National Academy of Design.  During 1988-92, he
was a Director and Chairman of the Audit Committee of ACMC.  His
address is P.O. Box 12, Annandale, New York 12504.

         WILLIAM H. FOULK, JR., 69, is an Investment Adviser and
an independent consultant.  He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1996.  He was
formerly Deputy Comptroller of the State of New York and, prior
thereto, Chief Investment Officer of the New York Bank for
Savings.  His address is Room 100, 2 Greenwich Plaza, Greenwich,
Connecticut 06830.


____________________

*      An "interested person" of the Fund as defined in the 1940
       Act.


                               21



<PAGE>

         DR. JAMES HESTER, 77, has been President of the Harry
Frank Guggenheim Foundation, with which he has been associated
since prior to 1996.  He was formerly President of New York
University and the New York Botanical Garden, Rector of the
United Nations University and Vice Chairman of the Board of the
Federal Reserve Bank of New York.  His address is 25 Cleveland
Lane, Princeton, New Jersey 08540.

         CLIFFORD L. MICHEL, 62, is Senior Counsel of the law
firm of Cahill Gordon & Reindel with which he has been associated
since prior to 1996.  He is President and Chief Executive Officer
of Wenonah Development Company (investments) and a Director of
Placer Dome, Inc. (mining).  His address is St. Bernard's Road,
Gladstone, New Jersey 07934.

         DONALD J. ROBINSON, 67, is Senior Counsel of the law
firm of Orrick, Herrington & Sutcliffe LLP since prior to 1996.
He was formerly a senior partner and a member of the Executive
Committee of that firm.  He was also a member of the Municipal
Securities Rulemaking Board and Trustee of the Museum of the City
of New York.  His address is 98 Hell's Peak Road, Weston, Vermont
05161.

Officers

         JOHN D. CARIFA, Director, Chairman and President (see
biographical information above).

         DAVID M. DOWDEN, 35, Vice President.  Vice President of
ACMC, with which he has been associated since prior to 1997.

         TERRANCE T. HULTS, 34, Vice President.  Vice President
of ACMC, with which he has been associated since prior to 1997.

         EDMUND P. BERGAN, JR., 51, Secretary.  Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Global Investor Services, Inc.
("AGIS"), with which he has been associated since prior to 1997.

         MARK D. GERSTEN, 51, Treasurer and Chief Financial
Officer.  Senior Vice President of AGIS, with which he has been
associated since prior to 1997.

         THOMAS R. MANLEY, 50, Controller.  Vice President of
ACMC, with which he has been associated since prior to 1997.

         ANDREW L. GANGOLF, 47, Assistant Secretary.  Senior Vice
President and Assistant General Counsel of AFD, with which he has
been associated since prior to 1997.




                               22



<PAGE>

         DOMENICK PUGLIESE, 40, Assistant Secretary.  Senior Vice
President and Assistant General Counsel of AFD, with which he has
been associated since prior to 1997.

      The Fund does not pay any fees to, or reimburse expenses
of, its Directors who are considered "interested persons" of the
Fund.


The Adviser

      Alliance, 1345 Avenue of the Americas, New York, New
York 10105, is the Fund's investment adviser.  The Adviser is a
leading global investment management firm supervising client
accounts with assets as of December 31, 2001 totaling
approximately $455 billion.  The Adviser provides diversified
investment management and related services globally to a broad
range of clients including: institutional investors such as
corporate and public employee pension funds, endowment funds,
domestic and foreign institutions and governments and affiliates;
private clients, consisting of high net worth individuals, trusts
and estates, charitable foundations, partnerships, private and
family corporations and other entities; individual investors by
means of retail mutual funds sponsored by the Adviser; and
institutional investors by means of in-depth research, portfolio
strategy, trading and brokerage-related services.

         Alliance Capital Management Corporation is the general
partner of the Adviser and an indirect wholly-owned subsidiary of
AXA Financial, Inc. ("AXA Financial").  As of September 30, 2001,
AXA, its wholly-owned subsidiaries, AXA Financial and The
Equitable Life Assurance Society of the United States
("Equitable") and some subsidiaries of Equitable (other than the
Adviser and its subsidiaries) were the beneficial owners of
approximately 51.7% of the issued and outstanding units of the
Adviser and approximately 2.1% of the issued and outstanding
units of Alliance Capital Management Holding L.P. ("Alliance
Holding").  Alliance Holding is an entity the business of which
consists of holding units of the Adviser and engaging in related
activities.  As of September 30, 2001, SCB Partners Inc., a
wholly-owned subsidiary of SCB Inc., was the owner of
approximately 16.4% of the issued and outstanding units of the
Adviser.  The business and assets of SCB Inc., formerly known as
Sanford C. Bernstein, Inc., were acquired by the Adviser on
October 2, 2000.

         As of September 30, 2001, AXA and its subsidiaries owned
all of the issued and outstanding shares of the common stock of
AXA Financial.  AXA Financial owns all of the issued and
outstanding shares of Equitable.  For insurance regulatory
purposes all shares of common stock of AXA Financial beneficially


                               23



<PAGE>

owned by AXA and its affiliates have been deposited into a voting
trust.

         AXA, a French company, is the holding company for an
international group of insurance and related financial services
companies.  AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance.  The
insurance operations are diverse geographically with activities
principally in Western Europe, North America, the Asia/Pacific
area, and, to a lesser extent, in Africa and South America.  AXA
is also engaged in asset management, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.

         Under the Advisory Agreement, Alliance furnishes advice
and recommendations with respect to the Fund's portfolio of
securities, order placement facilities and investments and
provides persons satisfactory to the Board of Directors to act as
officers and employees of the Fund.  Such officers and employees,
as well as certain Directors of the Fund may be employees of
Alliance or its affiliates.

         Alliance is, under the Advisory Agreement, responsible
for certain expenses incurred by the Fund, including, for
example, office space and certain other equipment, investment
advisory and administrative services, and any expenses incurred
in promoting the sale of Fund shares (other than the costs of
printing Fund prospectuses and other reports to shareholders and
fees related to registration with the SEC and with state
regulatory authorities).

      The Fund has, under the Advisory Agreement, assumed the
obligation for payment of all of its other expenses.  As to the
obtaining of clerical, accounting and other services not required
to be specifically provided to the Fund by Alliance under the
Advisory Agreement, the Fund may utilize personnel employed by
Alliance or its affiliates.  The Fund may employ its own
personnel or contract for services to be performed by third
parties.  In the event the Fund utilizes personnel employed by
Alliance or its affiliates (as expected), the services will be
provided to the Fund at no more than cost and the payments
specifically approved by the Fund's Board of Directors.

      Under the terms of the Advisory Agreement, the Fund pays
the Adviser a monthly advisory fee at an annual rate of .65% of
the Fund's average daily net assets.  Alliance has voluntarily
agreed to waive a portion of its fees or to reimburse the Fund
for fees and expenses in the amount of .25% of average daily net
assets for the first 5 full years of the Fund's operations, .20%
of average daily net assets in year 6, .15% in year 7, .10% in
year 8 and .05% in year 9.


                               24



<PAGE>

         The Adviser also provides administrative services to the
Fund.  These services include, among others, preparation and
dissemination of shareholder reports and proxy materials,
accounting and bookkeeping, calculation of net asset value,
monitoring compliance, and negotiating certain terms and
conditions of custodian and dividend disbursing services.

      The Advisory Agreement has been approved by the Fund's
Board of Directors and its initial shareholder.  The Advisory
Agreement by its terms continues in effect from year to year
after January 28, 2002 if such continuance is specifically
approved, at least annually, by a majority vote of the Directors
who neither are interested persons of the Fund nor have any
direct or indirect financial interest in the Advisory Agreement,
cast in person at a meeting called for the purpose of voting on
such approval.

         The Advisory Agreement may be terminated without penalty
on 60 days' written notice by a vote of a majority of the
outstanding voting securities, by a vote of the majority of the
Directors or by Alliance on 60 days' written notice, and will
automatically terminate in the event of assignment.  The Advisory
Agreement provides that Alliance shall not be liable under the
Advisory Agreement for any mistake of judgment, or in any event
whatsoever, except for lack of good faith, provided that Alliance
shall be liable to the Fund and security holders by reason of
willful misfeasance, bad faith or gross negligence or of reckless
disregard of its obligations and duties under the Advisory
Agreement.

         Certain other clients of Alliance may have investment
objectives and policies similar to those of the Fund.  Alliance
and any of its affiliates may, from time to time, make
recommendations which result in the purchase or sale of a
particular security by their other clients simultaneously with
the Fund.  If transactions on behalf of more than one client
during the same period increase the demand for securities being
purchased or the supply of securities being sold, there may be an
adverse effect on price or quantity. It is the policy of Alliance
and any of its affiliates to allocate advisory recommendations
and the placing of orders in a manner which is deemed equitable
by Alliance and any of its affiliates to the accounts involved,
including the Fund.  When two or more of the clients of Alliance
and any of its affiliates (including the Fund) are purchasing or
selling the same security on a given day from the same broker-
dealer, such transactions may be averaged as to price.

      The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is the investment adviser to the following registered
investment companies:  AFD Exchange Reserves, Alliance All-Asia


                               25



<PAGE>

Investment Fund, Inc., Alliance Balanced Shares, Inc., Alliance
Bond Fund, Inc., Alliance Capital Reserves,  Alliance Global
Dollar Government Fund, Inc., Alliance Global Small Cap Fund,
Inc., Alliance Global Strategic Income Trust, Inc., Alliance
Government Reserves, Alliance Greater China '97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Fund, Alliance International Premier Growth Fund,
Inc., Alliance Money Market Fund, Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance New
Europe Fund, Inc., Alliance North American Government Income
Trust, Inc., Alliance Premier Growth Fund, Inc., Alliance Quasar
Fund, Inc., Alliance Select Investor Series, Inc., Alliance
Technology Fund, Inc., Alliance Variable Products Series Fund,
Inc., Alliance Worldwide Privatization Fund, Inc.,
AllianceBernstein Disciplined Value Fund, Inc., AllianceBernstein
Real Estate Investment Fund, Inc., AllianceBernstein Utility
Income Fund, Inc., The Alliance Fund, Inc., The Alliance Funds,
The AllianceBernstein Trust, The Korean Investment Fund, Inc.,
Sanford C. Bernstein Fund, Inc. and EQ Advisors Trust, all
registered open-end investment companies; and to ACM Government
Opportunity Fund, Inc., ACM Income Fund, Inc., ACM Managed Dollar
Income Fund, Inc., ACM Managed Income Fund, Inc., ACM Municipal
Securities Income Fund, Inc., Alliance All-Market Advantage Fund,
Inc., Alliance California Municipal Income Fund, Inc., Alliance
New York Municipal Income Fund, Inc., Alliance World Dollar
Government Fund, Inc., Alliance World Dollar Government Fund II,
Inc., The Austria Fund, Inc., The Southern Africa Fund, Inc. and
The Spain Fund, Inc., all registered closed-end investment
companies.

Codes of Ethics

         The Fund and Alliance have each adopted codes of ethics
pursuant to Rule 17j-1 of the 1940 Act.  These codes of ethics
permit personnel subject to the codes to invest in securities,
including securities that may be purchased or held by the Fund.
Text-only versions of the codes of ethics can be viewed on line
or downloaded from the EDGAR Database on the SEC's web site at
http://www.sec.gov.  You may also review and copy those documents
by visiting the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 202-942-8090.  In addition, copies
of the codes of ethics may be obtained, after mailing the
appropriate duplicating fee, by writing to the SEC's Public
Reference Section, 450 5th Street, N.W., Washington, D.C. 20549-
0102 or by e-mail request at publicinfo@sec.gov.




                               26



<PAGE>

                     VALUATION OF SECURITIES

         The Fund intends to calculate and make available daily
the net asset value of its Common Shares.  The net asset value
per Common Share will be determined as of the close of trading on
the New York Stock Exchange (the "Exchange") each day the
Exchange is open.  To calculate net asset value, the Fund's
assets are valued and totaled, liabilities and the aggregate
liquidation value of the outstanding Preferred Shares, if any,
are subtracted, and the balance, called net assets attributable
to Common Shares, is divided by the total number of the Fund's
Common Shares then outstanding.

         In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the Exchange are valued,
except as indicated below, at the last sale price reflected on
the consolidated tape at the close of the Exchange on the
business day as of which such value is being determined.  If
there has been no sale on such day, the securities are valued at
the quoted bid prices on such day.  If no bid prices are quoted
on such day, then the security is valued at the mean of the bid
and asked prices at the close of the Exchange on such day as
obtained from one or more dealers regularly making a market in
such security.  Where a bid and asked price can be obtained from
only one such dealer, such security is valued at the mean of the
bid and asked price obtained from such dealer unless it is
determined that such price does not represent current market
value, in which case the security shall be valued in good faith
at fair value by, or in accordance with procedures established
by, the Board of Directors.  Securities for which no bid and
asked price quotations are readily available are valued in good
faith at fair value by, or in accordance with procedures
established by, the Board of Directors.  Readily marketable
securities not listed on the Exchange but listed on other
national securities exchanges, and portfolio securities not
traded on the Exchange but traded on one or more other national
securities exchanges are valued in accordance with these
procedures by reference to the principal exchange on which the
securities are traded.

         Readily marketable securities traded only in the over-
the-counter market, and debt securities listed on a U.S. national
securities exchange whose primary market is believed to be over-
the-counter, are valued at the mean of the bid and asked prices
at the close of the Exchange on such day as obtained from two or
more dealers regularly making a market in such security.  Where a
bid and asked price can be obtained from only one such dealer,


                               27



<PAGE>

such security is valued at the mean of the bid and asked price
obtained from such dealer unless it is determined that such price
does not represent current market value, in which case the
security shall be valued in good faith at fair value by, or in
accordance with procedures established by, the Board of
Directors.

         Listed put and call options purchased by the Fund are
valued at the last sale price.  If there has been no sale on that
day, such securities will be valued at the closing bid prices on
that day.

         Open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price.  If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used.

         U.S. Government securities and other debt instruments
having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or
by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days
(unless in either case the Board of Directors determines that
this method does not represent fair value).

         Fixed-income securities may be valued on the basis of
prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
The prices provided by a pricing service take into account many
factors, including institutional size trading in similar groups-
of securities and any developments related to specific
securities.

         All other assets of the Fund are valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors.

                     PORTFOLIO TRANSACTIONS

         Subject to the general supervision of the Board of
Directors of the Fund, the Adviser is responsible for the
investment decisions and the placing of the orders for portfolio
transactions for the Fund.  The Fund's portfolio transactions
occur primarily with issuers, underwriters or major dealers
acting as principals.  Such transactions are normally on a net
basis which do not involve payment of brokerage commissions.  The
cost of securities purchased from an underwriter usually includes
a commission paid by the issuer to the underwriters; transactions
with dealers normally reflect the spread between bid and asked
prices.  Premiums are paid with respect to options purchased by


                               28



<PAGE>

the Fund and brokerage commissions are payable with respect to
transactions in exchange-traded futures contracts.

         The Fund has no obligation to enter into transactions in
portfolio securities with any dealer, issuer, underwriter or
other entity.  In placing orders, it is the policy of the Fund to
obtain the best price and execution for its transactions.  Where
best price and execution may be obtained from more than one
dealer, the Adviser may, in its discretion, purchase and sell
securities through dealers who provide research, statistical and
other information to the Adviser.  Such services may be used by
the Adviser for all of its investment advisory accounts and,
accordingly, not all such services may be used by the Adviser in
connection with the Fund.  The supplemental information received
from a dealer is in addition to the services required to be
performed by the Adviser under the Advisory Agreement, and the
expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such information.  Consistent with the
Conduct Rules of the National Association of Securities Dealers,
Inc., and subject to seeking best price and execution, the Fund
may consider sales of its shares as a factor in the selection of
dealers to enter into portfolio transactions with the Fund.

         The Fund may deal in some instances in securities which
are not listed on a national stock exchange but are traded in the
over-the-counter market.  The Fund may also purchase listed
securities through the third market, i.e., from a dealer which is
not a member of the exchange on which a security is listed. Where
transactions are executed in the over-the-counter market or third
market, the Fund will seek to deal with the primary market
makers; but when necessary in order to obtain the best price and
execution, it will utilize the services of others.  In all cases,
the Fund will attempt to negotiate best execution.

         The Fund may from time to time place orders for the
purchase or sale of securities with Sanford C. Bernstein & Co.,
LLC ("SCB & Co."), an affiliate of Alliance.  In such instances,
the placement of orders  would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that SCB & Co. is an affiliate of Alliance.  With
respect to orders placed by SCB & Co. for execution on a national
securities exchange, commissions received must conform to Section
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which
permit an affiliated person of a registered investment company
(such as the Fund), or any affiliated person of such person, to
receive a brokerage commission from such registered investment
company provided that such commission is reasonable and fair
compared to the commissions received by other brokers in
connection with comparable transactions involving similar
securities during a comparable period of time.



                               29



<PAGE>

                          DISTRIBUTIONS

         The Fund intends to distribute all of its net investment
income, subject to the solvency requirements of Maryland law.  As
described in the Fund's Prospectus, initial distributions to
Common Shareholders are expected to be declared approximately 45
days, and paid approximately 60 to 90 days, from the completion
of the offering of the Common Shares, depending on market
conditions.  From and after issuance of the Preferred Shares,
monthly distributions to Common Shareholders will consist of net
investment income remaining after the payment of dividends on
Preferred Shares.  Net capital gains, if any, will be distributed
at least annually to Common Shareholders to the extent such net
capital gains are not necessary to satisfy the dividend,
redemption or liquidation preferences of Preferred Shares.

         For tax purposes, the Fund is currently required to
allocate net capital gain and other taxable income, if any,
between Common Shares and any Preferred Shares in proportion to
total dividends paid to each class for the year in which such net
capital gain or other taxable income is realized.  For
information relating to the impact of the issuance of Preferred
Shares on the distributions made by the Fund to Common
Shareholders, see the Fund's Prospectus under "Preferred Shares
and Related Leverage."

         While any Preferred Shares are outstanding, the Fund may
not declare any cash dividend or other distribution on its Common
Shares unless at the time of such declaration (1) all accumulated
dividends on the Preferred Shares have been paid and (2) the net
asset value of the Fund's portfolio (determined after deducting
the amount of such dividend or other distribution) is at least
200% of the liquidation value of any outstanding Preferred
Shares.  This latter limitation on the Fund's ability to make
distributions on its Common Shares could cause the Fund to incur
income and excise tax and, under certain circumstances, impair
the ability of the Fund to maintain its qualification for
taxation as a regulated investment company.  See "Tax Matters."

                      DESCRIPTION OF SHARES

Common Shares

         The Fund's charter (the "Charter") authorizes the
issuance of up to 2,000,000,000 Common Shares, $.001 par value
per share.  Upon completion of this offering, [_______] Common
Shares, and no Preferred Shares, will be issued and outstanding.
However, it is the intention of the Board of Directors, under a
power contained in the Charter, to classify and issue Preferred
Shares with the voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption


                               30



<PAGE>

as described in "-- Preferred Shares" below.  The Board of
Directors, without any action by the shareholders of the Fund,
may amend the Charter from time to time to increase or decrease
the aggregate number of shares of stock or the number of shares
of stock of any class or series that the Fund has the authority
to issue.  Under Maryland law, the Fund's shareholders generally
are not liable for the Fund's debts or obligations.

         All Common Shares offered by the Prospectus will be duly
authorized, fully paid and nonassessable.  Common Shareholders
are entitled to receive dividends when authorized by the Board of
Directors out of assets legally available for the payment of
dividends.  They are also entitled to share ratably in the Fund's
assets legally available for distribution to the Fund's
shareholders in the event of the Fund's liquidation, dissolution
or winding up, after payment of or adequate provision for all of
the Fund's known debts and liabilities.  These rights are subject
to the preferential rights of any other class or series of the
Fund's stock.  At any time when the Fund's Preferred Shares are
outstanding, Common Shareholders will not be entitled to receive
any distributions from the Fund unless all accrued dividends on
Preferred Shares have been paid, and unless asset coverage (as
defined in the 1940 Act) with respect to Preferred Shares would
be at least 200% after giving effect to such distributions.  See
"-- Preferred Shares" below.

         Each outstanding Common Share entitles the holder to one
vote on all matters submitted to a vote of shareholders,
including the election of directors.  Except as provided with
respect to the Preferred Shares, the Common Shareholders will
possess the exclusive voting power.  See "-- Preferred Shares"
below.  There is no cumulative voting in the election of
directors, which means that, subject to the rights of holders of
Preferred Shares ("Preferred Shareholders") to separately elect
directors, the holders of a majority of the outstanding shares
entitled to vote in the election of directors can elect all of
the directors then standing for election, and the holders of the
remaining shares will not be able to elect any directors.

         Common Shareholders have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have
no preemptive rights to subscribe for any of the Fund's
securities.  All Common Shares will have equal dividend,
liquidation and other rights.

         Under Maryland law, a Maryland corporation generally
cannot dissolve, amend its charter, merge, sell all or
substantially all of its assets, engage in a share exchange or
engage in similar transactions outside the ordinary course of
business, unless approved by the affirmative vote of shareholders
holding at least two-thirds of the shares entitled to vote on the


                               31



<PAGE>

matter.  However, a Maryland corporation may provide in its
charter for approval of these matters by a lesser percentage, but
not less than a majority of all of the votes entitled to be cast
on the matter.  The Fund's Charter provides for the approval of
such actions by the concurrence of a majority of the aggregate
number of votes entitled to be cast on the matter, subject to the
applicable requirements of the 1940 Act, or rules, regulations or
orders issued by the SEC under the 1940 Act, and pursuant to
certain exceptions in the Charter.

Power to Reclassify Shares of Stock

         The Charter authorizes the Board of Directors to
classify and reclassify any unissued shares into other classes or
series of stock.  Prior to issuance of shares of each class or
series, the Board is required by Maryland law and by the Charter
to set the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of
redemption for each class or series.

Power to Issue Additional Shares of Stock

         The Fund believes that the power to increase the
authorized shares of stock, to issue additional shares of stock
and to classify or reclassify unissued shares of stock and
thereafter to issue the classified or reclassified shares
provides it with increased flexibility in structuring possible
future financings and acquisitions and in meeting other needs
that might arise.  These actions can be taken without shareholder
approval, unless shareholder approval is required by applicable
law or the rules of any stock exchange or automated quotation
system on which the Fund's securities may be listed or traded.

      The Fund has been approved for listing of its Common
Shares on the Exchange.  The Fund will hold annual meetings of
shareholders.

      Shares of closed-end investment companies frequently
trade at prices lower than net asset value.  Shares of closed-end
investment companies like the Fund that invest predominantly in
investment grade municipal bonds have during some periods traded
at prices higher than net asset value and during other periods
traded at prices lower than net asset value.  There can be no
assurance that Common Shares or shares of other municipal funds
will trade at a price higher than net asset value in the future.
Net asset value will be reduced immediately following the
offering of Common Shares after payment of the sales load and
organization and offering expenses.  Net asset value generally
increases when interest rates decline, and decreases when
interest rates rise, and these changes are likely to be greater


                               32



<PAGE>

in the case of a fund having a leveraged capital structure.
Whether investors will realize gains or losses upon the sale of
Common Shares will not depend upon the Fund's net asset value but
will depend entirely upon whether the market price of the Common
Shares at the time of sale is above or below the original
purchase price for the shares.  Since the market price of the
Fund's Common Shares will be determined by factors beyond the
control of the Fund, the Fund cannot predict whether the Common
Shares will trade at, below, or above net asset value or at,
below or above the initial public offering price.  Accordingly,
the Common Shares are designed primarily for long-term investors,
and investors in the Common Shares should not view the Fund as a
vehicle for trading purposes.  See "Repurchase of Fund Shares;
Conversion to Open-End Fund" and the Fund's Prospectus under
"Preferred Shares and Related Leverage" and "The Fund's
Investments--Municipal Bonds."

Preferred Shares

         The Charter authorizes the Board of Directors to
classify any unissued shares of stock in one or more classes or
series, including Preferred Shares, and to reclassify any
previously classified but unissued shares of any series, as
authorized by the Board of Directors.  Preferred Shares may be
issued, in one or more classes or series with such par value and
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or
terms and conditions of redemption as determined by the Board of
Directors of the Fund, by action of the Board of Directors
without the approval of the Common Shareholders.

      The Fund expects to make an offering of Preferred Shares
(representing approximately 40% of the Fund's capital immediately
after the time the Preferred Shares are issued) within
approximately one to three months after completion of the
offering of Common Shares, subject to market conditions and to
the Board of Directors' continuing belief that leveraging the
Fund's capital structure through the issuance of Preferred Shares
is likely to achieve the benefits to the Common Shareholders
described in the Prospectus and this SAI.  Although the terms of
the Preferred Shares, including their dividend rate, voting
rights, liquidation preference and redemption provisions, will be
determined by the Board of Directors (subject to applicable law
and the Charter) if and when it authorizes a Preferred Shares
offering, the Fund expects that the initial series of Preferred
Shares would likely pay cumulative dividends at relatively
shorter-term periods (such as seven days) by providing for the
periodic adjustment of the dividend rate through an auction,
remarketing or other procedure.  The liquidation preference,
preference on distribution, voting rights and redemption



                               33



<PAGE>

provisions of the Preferred Shares are expected to be as stated
below.

      Limited Issuance of Preferred Shares.  Under the 1940
Act, the Fund could issue Preferred Shares with an aggregate
liquidation value of up to one-half of the value of the Fund's
total net assets, measured immediately after issuance of the
Preferred Shares.  "Liquidation value" means the original
purchase price of the shares being liquidated plus any accrued
and unpaid dividends.  In addition, the Fund is not permitted to
declare any cash dividend or other distribution on its Common
Shares if the liquidation value of the Preferred Shares is less
than one-half of the value of the Fund's total net assets
(determined after deducting the amount of such dividend or
distribution) immediately after the distribution.  If the Fund
sells all the Common Shares and Preferred Shares discussed in the
Prospectus, the liquidation value of the Preferred Shares is
expected to be approximately 40% of the value of the Fund's total
net assets.  The Fund intends to purchase or redeem Preferred
Shares, if necessary, to keep that fraction below one-half.

         Distribution Preference.  The Preferred Shares would
have complete priority over the Common Shares as to distribution
of assets.

         Liquidation Preference.  In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Fund, Preferred Shareholders will be entitled to
receive a preferential liquidating distribution (expected to
equal the original purchase price per share plus accumulated and
unpaid dividends thereon, whether or not earned or declared)
before any distribution of assets is made to Common Shareholders.
After payment of the full amount of the liquidating distribution
to which they are entitled, Preferred Shareholders will not be
entitled to any further participation in any distribution of
assets by the Fund.  A consolidation or merger of the Fund with
or into any trust or corporation or a sale of all or
substantially all of the assets of the Fund shall not be deemed
to be a liquidation, dissolution or winding up of the Fund.

      Voting Rights.  In connection with any issuance of
Preferred Shares, the Fund must comply with Section 18(i) of the
1940 Act which requires, among other things, that Preferred
Shares be voting shares.  Except as otherwise provided in the
Charter  or otherwise required by applicable law, Preferred
Shareholders will vote together with Common Shareholders as a
single class.

      In connection with the election of the Fund's Directors,
Preferred Shareholders, voting as a separate class, would also be
entitled to elect two of the Fund's Directors.  The remaining


                               34



<PAGE>

Directors would be elected by Common and Preferred Shareholders,
voting together as a single class.  In the unlikely event that
two full years of dividends are not paid on the Preferred Shares,
the holders of the outstanding Preferred Shares, voting as a
separate class, would be entitled to elect a majority of the
Fund's Directors until all dividends in default have been paid or
declared and set apart for payment.

      Unless a higher percentage is provided for under the
Charter or the Fund's By-laws (together, the "Charter
Documents"), the affirmative vote of the holders of a majority of
the outstanding Preferred Shares, voting as a separate class,
shall be required to approve any action requiring a vote of
security holders under Section 13(a) of the 1940 Act, including,
among other things, changes in the Fund's investment objective or
fundamental policies.  The affirmative vote of 75% (which is
higher than that required under Maryland law or the 1940 Act) of
the outstanding Common Shares and Preferred Shares, voting
separately by class, is required to convert the Fund from a
closed-end to an open-end fund.  The class or series vote of
Preferred Shareholders described above shall in each case be in
addition to any separate vote of the requisite percentage of
Common Shares and Preferred Shares necessary to authorize the
action in question.

         The foregoing voting provisions will not apply with
respect to the Fund's Preferred Shares if, at or prior to the
time when a vote is required, such shares shall have been (1)
redeemed or (2) called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.

         Redemption, Purchase and Sale of Preferred Shares by the
Fund.  The terms of the Preferred Shares may provide that they
are redeemable at certain times, in whole or in part, at the
original purchase price per share plus accumulated dividends,
that the Fund may tender for or purchase Preferred Shares and
that the Fund may subsequently resell any shares so tendered for
or purchased.  Any redemption or purchase of Preferred Shares by
the Fund will reduce the leverage applicable to Common Shares,
while any resale of shares by the Fund will increase such
leverage.

         The discussion above describes the Fund's Board of
Directors' present intention with respect to a possible offering
of Preferred Shares.  If the Board of Directors determines to
authorize such an offering, the terms of the Preferred Shares may
be the same as, or different from, the terms described above,
subject to applicable law and the Charter.





                               35



<PAGE>

                CERTAIN PROVISIONS IN THE CHARTER

         Pursuant to the Charter, at the first annual meeting of
shareholders after this public offering, the Board of Directors
will be divided into three classes of Directors.  The initial
terms of the first, second and third classes will expire in 2003,
2004 and 2005, respectively.  Beginning in 2003, Directors of
each class will be chosen for three-year terms upon the
expiration of their current terms and each year one class of
Directors will be elected by the shareholders.  The Fund believes
that classification of the Board of Directors will help to assure
the continuity and stability of our business strategies and
policies as determined by the Board of Directors.

      The classified board could have the effect of making the
replacement of incumbent Directors more time-consuming and
difficult.  At least two annual meetings of shareholders, instead
of one, will generally be required to effect a change in a
majority of the Board of Directors.  Thus, the classified board
provision could increase the likelihood that incumbent Directors
will retain their positions.  The staggered terms of Directors
may delay, defer or prevent a tender offer or an attempt to
change control of the Fund, even though the tender offer or
change in control might be in the best interest of the
shareholders.

Removal of Directors

      A Director may be removed only for cause and only by the
affirmative vote of at least 75% of the votes entitled to be cast
in the election of such Director.  This provision, when coupled
with the provision in the Charter authorizing only the Board of
Directors to fill vacant directorships, precludes shareholders
from removing incumbent Directors except for cause and by a
substantial affirmative vote.

Amendment to the Charter

         Certain provisions of the Charter, including its
provisions on classification of the Board of Directors and
removal of Directors, may be amended only by the affirmative vote
of the holders of not less than 75% of all of the votes entitled
to be cast on the matter.  Other provisions of the Charter may be
amended by a majority of the aggregate number of votes entitled
to be cast on the amendment.  The required vote shall be in
addition to the vote of the holders of shares of the Fund
otherwise required by law or any agreement between the Fund and
any national securities exchange.





                               36



<PAGE>

Dissolution of the Company

         Subject to Board approval, the liquidation or
dissolution of the Fund or an amendment to the Charter to
terminate the Fund must be approved by the affirmative vote of
the holders of not less than 75% of all of the votes entitled to
be cast on the matter.  However, if a majority of the Continuing
Directors (as such term is defined in the Charter) approves the
liquidation or dissolution of the Fund, such action requires the
affirmative vote of a majority of the votes entitled to be cast.

Other Charter Provisions

         The affirmative vote of 75% (which is higher than that
required under Maryland law or the 1940 Act) of the Fund's
outstanding Common Shares and Preferred Shares, voting separately
by class, is required generally to authorize any of the following
involving a corporation, person or entity that is directly, or
indirectly through affiliates, the beneficial owner of more than
5% of the outstanding shares of the Fund (a "Principal
Shareholder"), or to amend the provisions of the Charter relating
to such transactions:

         (i)  merger, consolidation or statutory share exchange
of the Fund with or into any Principal Shareholder;

         (ii)  the issuance of any securities of the Fund to any
Principal Shareholder for cash except upon (1) reinvestment of
dividends pursuant to a dividend reinvestment plan of the Fund or
(2) issuance of any securities of the Fund upon the exercise of
any stock subscription rights distributed by the Fund or (3) a
public offering by the Fund registered under the Securities Act;

         (iii)  the sale, lease or exchange of all or any
substantial part of the assets of the Fund to any Principal
Shareholder (except assets having an aggregate fair market value
of less than $1,000,000, aggregating for the purpose of such
computation all assets sold, leased or exchanged in any series of
similar transactions within a twelve-month period); or

         (iv)  the sale, lease or exchange to the Fund or any
subsidiary thereof, in exchange for securities of the Fund, of
any assets of any Principal Shareholder (except assets having an
aggregate fair market value of less than $1,000,000, aggregating
for the purposes of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-
month period).

      As noted, the voting provisions described above could
have the effect of depriving Common Shareholders of an
opportunity to sell their Common Shares at a premium over


                               37



<PAGE>

prevailing market prices by discouraging a third party from
seeking to obtain control of the Fund in a tender offer or
similar transaction.  In the view of the Fund's Board of
Directors, however, these provisions offer several possible
advantages, including: (1) requiring persons seeking control of
the Fund to negotiate with its management regarding the price to
be paid for the amount of Common Shares required to obtain
control; (2) promoting continuity and stability; and (3)
enhancing the Fund's ability to pursue long-term strategies that
are consistent with its investment objective and management
policies.  The Board of Directors has determined that the voting
requirements described above are in the best interests of the
Fund and its shareholders generally.

         The foregoing is intended only as a summary and is
qualified in its entirety by reference to the full text of the
Charter Documents, which have been filed as exhibits to the
Fund's registration statement on file with the SEC.

Liability of Directors

         Maryland law permits a Maryland corporation to include
in its charter a provision limiting the liability of its
directors and officers to the corporation and its shareholders
for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or
services or (b) active and deliberate dishonesty established by a
final judgment and which is material to the cause of action.  The
Charter contains such a provision which eliminates directors' and
officers' liability to the maximum extent permitted by Maryland
law.  Nothing in the Charter, however, protects a Director
against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office.

REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND

      The Fund is a closed-end investment company and as such
its shareholders will not have the right to cause the Fund to
redeem their shares.  Instead, the Fund's Common Shares will
trade in the open market at prices that will be a function of
several factors, including dividend levels (which are in turn
affected by expenses), net asset value, quality, average maturity
and call protection of its portfolio securities, price, dividend
stability, relative demand for and supply of such shares in the
market, general market and economic conditions and other factors.
Shares of a closed-end investment company may frequently trade at
prices lower than net asset value.  The Fund's Board of Directors
will regularly monitor the relationship between the market price
and net asset value of the Common Shares.  If the Common Shares


                               38



<PAGE>

were to trade at a significant discount to net asset value for an
extended period of time, the Board of Directors may consider the
repurchase by the Fund of its Common Shares or the making of a
tender offer for such shares.  There can be no assurance,
however, that the Fund will take any of these actions, or that
share repurchases or tender offers, if undertaken, will reduce
market discount.  The Fund has no present intention to repurchase
its Common Shares.

         Notwithstanding the foregoing, at any time when
Preferred Shares are outstanding, the Fund may not purchase,
redeem or otherwise acquire any of its Common Shares unless (1)
all accrued Preferred Shares dividends have been paid and (2) at
the time of such purchase, redemption or acquisition, the net
asset value of the Fund's portfolio (determined after deducting
the acquisition price of the Common Shares) is at least 200% of
the liquidation value of the outstanding Preferred Shares
(expected to equal the original purchase price per share plus any
accrued and unpaid dividends thereon).

      Subject to its investment limitations, the Fund may
borrow to finance the repurchase of shares or to make a tender
offer.  Interest on any borrowings to finance share repurchase
transactions or the accumulation of cash by the Fund in
anticipation of share repurchases or tenders will reduce the
Fund's net income.  Any share repurchase, tender offer or
borrowing by the Fund would have to comply with the Securities
Exchange Act of 1934, as amended, and the 1940 Act and the rules
and regulations thereunder.

      The Fund's Board of Directors may also from time to time
consider submitting for a shareholder vote  a proposal to convert
the Fund to an open-end investment company in an attempt to
reduce or eliminate the significant market discounts from net
asset value.  The Charter requires the affirmative vote or
consent of holders of at least seventy-five percent (75%) of each
class of the Fund's shares entitled to vote on the matter to
authorize a conversion of the Fund from a closed-end to an open-
end investment company.  This seventy-five percent (75%)
shareholder approval requirement is higher than is required under
the 1940 Act.

         If the Fund converted to an open-end company, it would
be required to redeem all Preferred Shares then outstanding
(requiring in turn that it liquidate a portion of its investment
portfolio), and the Fund's Common Shares would no longer be
listed on the  Exchange.  Shareholders of an open-end investment
company may require the company to redeem their shares on any
business day (except in certain circumstances as authorized by or
under the 1940 Act) at their net asset value, less such
redemption charge, if any, as might be in effect at the time of


                               39



<PAGE>

redemption.  In order to avoid maintaining large cash positions
or liquidating favorable investments to meet redemptions, open-
end companies typically engage in a continuous offering of their
shares.  Open-end companies are thus subject to periodic asset
in-flows and out-flows that can complicate portfolio management.

         The repurchase by the Fund of its shares at prices below
net asset value will result in an increase in the net asset value
of those shares that remain outstanding.  However, there can be
no assurance that share repurchases or tender offers at or below
net asset value will result in the Fund's shares trading at a
price equal to their net asset value.  Nevertheless, the fact
that the Fund's shares may be the subject of repurchase or tender
offers at net asset value from time to time, or that the Fund may
be converted to an open-end company, may reduce any spread
between market price and net asset value that might otherwise
exist.

         In addition, a purchase by the Fund of its Common Shares
would decrease the Fund's total assets which would likely have
the effect of increasing the Fund's expense ratio and may also
require the redemption of a portion of any outstanding Preferred
Shares in order to maintain coverage ratios.  Any purchase by the
Fund of its Common Shares at a time when Preferred Shares are
outstanding will increase the leverage applicable to the
outstanding Common Shares then remaining.  See the Fund's
Prospectus under "Risks--Leverage Risk."

      Before deciding whether to take any action if the Fund's
Common Shares trade significantly below net asset value, the
Board of Directors would consider all factors that they deemed
relevant.  Such factors may include the extent and duration of
the discount, the liquidity of the Fund's portfolio, the
relationship of the market price of the Common Shares to net
asset value, the extent to which the Fund's capital structure is
leveraged and the possibility of re-leveraging, the spread, if
any, between the yields on securities in the Fund's portfolio and
interest and dividend charges on Preferred Shares issued by the
Fund, the impact of any action that might be taken on the Fund or
its shareholders and general market and economic considerations.
Based on these considerations, even if the Fund's shares should
trade at a significant discount for a significant period of time,
the Board of Directors may determine thatno action should be
taken.

                           TAX MATTERS

         Taxation of the Fund.  The Fund intends to qualify each
year as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code").  In order
to qualify for the special tax treatment accorded regulated


                               40



<PAGE>

investment companies and their shareholders, the Fund must, among
other things:

         (a)  derive at least 90% of its gross income from
              dividends, interest, payments with respect to
              certain securities loans, gains from the sale of
              stock, securities or foreign currencies, or other
              income (including but not limited to gains from
              options, futures, or forward contracts) derived
              with respect to its business of investing in such
              stock, securities, or currencies;

         (b)  distribute with respect to each taxable year at
              least 90% of the sum of its taxable net investment
              income (which includes the excess, if any, of net
              short-term capital gains over net long-term capital
              losses) and its net tax-exempt income for such
              year; and

         (c)  diversify its holdings so that, at the end of each
              fiscal quarter of the Fund's taxable year, (i) at
              least 50% of the market value of the Fund's assets
              is represented by cash and cash items, U.S.
              Government securities, securities of other
              regulated investment companies, and other
              securities limited in respect of any one issuer to
              a value not greater than 5% of the value of the
              Fund's total assets and not more than 10% of the
              outstanding voting securities of such issuer, and
              (ii) not more than 25% of the value of the Fund's
              assets is invested in the securities (other than
              those of the U.S. Government or other regulated
              investment companies) of any one issuer or of two
              or more issuers which the Fund controls and which
              are engaged in the same, similar, or related trades
              or businesses.

If the Fund qualifies as a regulated investment company that is
accorded special tax treatment, the Fund will not be subject to
federal income tax on income distributed in a timely manner to
its shareholders in the form of dividends (including capital gain
dividends).

         If the Fund failed to qualify as a regulated investment
company accorded special tax treatment in any taxable year, the
Fund would be subject to tax on its taxable income at corporate
rates, and all distributions from earnings and profits, including
any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to shareholders as ordinary
income.  Such distributions generally would be eligible for the
dividends received deduction in the case of corporate


                               41



<PAGE>

shareholders.  In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest
and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax
treatment.

         The Fund may retain for investment its net capital gain.
However, if the Fund retains any net capital gain or any net
investment income, it will be subject to tax at regular corporate
rates on the amount retained. The Fund intends to distribute at
least annually to its shareholders all or substantially all of
its net tax-exempt interest and any net investment income and net
capital gain.

         If the Fund fails to distribute in a calendar year at
least an amount equal to the sum of 98% of its ordinary income
for such year and 98% of its capital gain net income for the one-
year period ending October 31 of such calendar year, plus any
undistributed ordinary income and capital gain net income from
previous years, the Fund will be subject to a 4% excise tax on
the undistributed amounts.  For this purpose, any income or gain
retained by the Fund that is subject to corporate tax will be
considered to have been distributed by year end.  A dividend paid
to shareholders in January of a year generally is deemed to have
been paid by the Fund on December 31 of the preceding year, if
the dividend was declared and payable to shareholders of record
on a date in October, November or December of that preceding
year.  The Fund intends generally to make distributions
sufficient to avoid imposition of the 4% excise tax.

         If at any time when Preferred Shares are outstanding the
Fund does not meet applicable asset coverage requirements, it
will be required to suspend distributions to Common Shareholders
until the requisite asset coverage is restored.  Any such
suspension may cause the Fund to pay the 4% federal excise tax
and may, in certain circumstances, prevent the Fund from
qualifying for treatment as a regulated investment company.  The
Fund may redeem Preferred Shares in an effort to comply with the
distribution requirement applicable to regulated investment
companies and to avoid income and excise taxes.  There can be no
assurance, however, that any such action would achieve such
objectives.

         Fund Distributions.  Distributions from the Fund (other
than exempt-interest dividends, as discussed below) will be
taxable to shareholders as ordinary income to the extent derived
from net investment income (which includes any net short-term
capital gains).  Distributions of net capital gain (that is, the
excess of net gains from the sale of capital assets held more
than one year over net losses from the sale of capital assets
held for not more than one year) will be taxable to shareholders


                               42



<PAGE>

as long-term capital gain, regardless of how long a shareholder
has held the shares in the Fund.  The Fund's distributions will
not qualify for the dividends received deduction for corporate
shareholders.

         Exempt-interest dividends.  The Fund will be qualified
to pay exempt-interest dividends to its shareholders only if, at
the close of each quarter of the Fund's taxable year, at least
50% of the total value of the Fund's assets consists of
obligations the interest on which is exempt from federal income
tax under Code Section 103(a).  Distributions from the Fund will
constitute exempt-interest dividends to the extent of the Fund's
tax-exempt interest income (net of expenses and amortized bond
premium).  Distributions that the Fund properly designates as
exempt-interest dividends are treated as interest excludable from
shareholders' gross income for federal income tax purposes,
although such distributions are required to be reported on the
shareholders' federal income tax returns and may be taxable for
state and local purposes.  Because the Fund intends to qualify to
pay exempt-interest dividends, the Fund may be limited in its
ability to enter into taxable transactions involving forward
commitments, repurchase agreements, financial futures and options
contracts on financial futures, tax-exempt bond indices and other
assets.

         The Fund designates distributions made to the share
classes as consisting of a portion of each type of income
distributed by the Fund.  The portion of each type of income
deemed received by each class of shareholders is equal to the
portion of total Fund dividends received by such class for that
taxable year.  Thus, the Fund will designate dividends paid as
exempt-interest dividends in a manner that allocates such
dividends between the Preferred and Common Shareholders in
proportion to the total dividends paid to each class during or
with respect to the taxable year, or otherwise as required by
applicable law.  Long-term capital gain distributions and other
income subject to regular federal income tax will similarly be
allocated between the two (or more) classes.

         Dividend and capital gains distributions will be taxable
as described above whether received in cash or in shares.  A
shareholder whose distributions are reinvested in shares will be
treated as having received a dividend equal to the fair market
value of the new shares issued to the shareholder, or the amount
of cash allocated to the shareholder for the purchase of shares
on its behalf.

         Part or all of the interest on indebtedness, if any,
incurred or continued by a shareholder to purchase or carry
shares of the Fund paying exempt-interest dividends is not
deductible. Under rules used by the Internal Revenue Service (the


                               43



<PAGE>

"Service") to determine when borrowed funds are considered used
for the purpose of purchasing or carrying particular assets, the
purchase of shares may be considered to have been made with
borrowed funds even though such funds are not directly traceable
to the purchase of shares.

         The Fund may invest in tax-exempt municipal securities
subject to the alternative minimum tax ("AMT").  Under current
federal income tax law, (i) interest on tax-exempt municipal
securities issued after August 7, 1986 which are "specified
private activity bonds" and the proportionate share of any
exempt-interest dividend paid by a regulated investment company
which receives interest from such specified private activity
bonds will be treated as an item of tax preference for purposes
of the AMT imposed on individuals and corporations although for
regular federal income tax purposes such interest will remain
fully tax-exempt, and (ii) interest on all tax-exempt obligations
and all exempt-interest dividends will be included in "adjusted
current earnings" of corporations for AMT purposes.

         In general, exempt-interest dividends, if any,
attributable to interest received on certain private activity
obligations and certain industrial development bonds will not be
tax-exempt to any shareholders who are "substantial users,"
within the meaning of Section 147(a) of the Code, of the
facilities financed by such obligations or bonds or who are
"related persons" of such substantial users.

         The Fund will inform investors within 60 days of the
Fund's taxable year-end of the percentage of its income
distributions designated as tax-exempt.  The percentage is
applied uniformly to all distributions made during the year.  The
percentage of income designated as tax-exempt for any particular
distribution may be substantially different from the percentage
of the Fund's income that was tax-exempt during the period
covered by the distribution.

         The Fund will allocate distributions to shareholders
that are treated as tax-exempt interest and as long-term capital
gain and ordinary income, if any, among the Common Shares and
Preferred Shares in proportion to total dividends paid to each
class for the year.

         Hedging Transactions.  If the Fund engages in hedging
transactions, including hedging transactions in options, futures
contracts, and straddles, or other similar transactions, it will
be subject to special tax rules (including constructive sale,
mark-to-market, straddle, wash sale, and short sale rules), the
effect of which may be to accelerate income to the Fund, defer
losses to the Fund, cause adjustments in the holding periods of
the Fund's securities, affect whether gains and losses realized


                               44



<PAGE>

by the Fund are ordinary or capital, convert long-term capital
gains into short-term capital gains or convert short-term capital
losses into long-term capital losses.  These rules could
therefore affect the amount, timing and character of
distributions to shareholders.  Income earned as a result of the
Fund's hedging activities will not be eligible to be treated as
exempt-interest dividends when distributed to shareholders.  The
Fund will endeavor to make any available elections and entries in
its books and records pertaining to such transactions in a manner
believed to be in the best interests of the Fund and its
shareholders.

         Return of Capital Distributions.  If the Fund makes a
distribution to you in excess of its current and accumulated
earnings and profits in any taxable year, the excess distribution
will be treated as a return of capital to the extent of your tax
basis in your shares, and thereafter as capital gain.  A return
of capital is not taxable, but it reduces your tax basis in your
shares, thus reducing any loss or increasing any gain on a
subsequent taxable disposition by you of your shares.

         Dividends and distributions on the Fund's shares are
generally subject to federal income tax as described herein ,
even though such dividends and distributions may economically
represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares
purchased at a time when the Fund's net asset value reflects
gains that are either unrealized, or realized but not
distributed.  Such realized gains may be required to be
distributed even when the Fund's net asset value also reflects
unrealized losses.  Distributions are taxable to a shareholder
even if they are paid from income or gains earned by the Fund
prior to the shareholder's investment (and thus included in the
price paid by the shareholder).

         Securities Issued or Purchased at a Discount.  The
Fund's investment in securities issued at a more than de minimis
discount and certain other obligations will (and investments in
securities purchased at a discount may) require the Fund to
accrue and distribute income not yet received.  In order to
generate sufficient cash to make the requisite distributions, the
Fund may be required to sell securities in its portfolio that it
otherwise would have continued to hold.

         Sale or Redemption of Shares.  The sale, exchange or
redemption of Fund shares will give rise to gain or loss in an
amount equal to the difference between the proceeds of the sale,
exchange or redemption and the shareholder's adjusted tax basis
in the shares.  Any gain or loss realized upon a taxable
disposition of shares held as a capital asset will be treated as
long-term capital gain or loss if the shares have been held for


                               45



<PAGE>

more than 12 months.  Otherwise, the gain or loss on the taxable
disposition of Fund shares held as a capital asset will be
treated as short-term capital gain or loss.  However, if a
shareholder sells shares at a loss within six months of purchase,
any loss will be disallowed for federal income tax purposes to
the extent of any exempt-interest dividends received on such
shares.  In addition, any loss realized upon a taxable
disposition of shares held for six months or less but not
disallowed as provided in the preceding sentence will be treated
as long-term, rather than short-term, to the extent of any long-
term capital gain distributions received by the shareholder with
respect to the shares.  All or a portion of any loss realized
upon a taxable disposition of Fund shares will be disallowed if
other substantially identical shares of the Fund are purchased
within 30 days before or after the disposition.  In such a case,
the basis of the newly purchased shares will be adjusted to
reflect the disallowed loss.

         From time to time the Fund may make a tender offer for
its Common Shares.  It is expected that the terms of any such
offer will require a tendering shareholder to tender all Common
Shares and dispose of all Preferred Shares held, or considered
under certain attribution rules of the Code to be held, by such
shareholder.  Shareholders who tender all Common Shares and
dispose of all Preferred Shares held, or considered to be held,
by them will be treated as having sold their shares and generally
will realize a capital gain or loss.  If a shareholder tenders
fewer than all of its Common Shares, or retains a substantial
portion of its Preferred Shares, such shareholder may be treated
as having received a taxable dividend upon the tender of its
Common Shares.  In such a case, there is a remote risk that non-
tendering shareholders will be treated as having received taxable
distributions from the Fund.  Likewise, if the Fund redeems some
but not all of the Preferred Shares held by a Preferred
Shareholder and such shareholder is treated as having received a
taxable dividend upon such redemption, there is a remote risk
that Common Shareholders and non-redeeming Preferred Shareholders
will be treated as having received taxable distributions from the
Fund.  To the extent that the Fund recognizes net gains on the
liquidation of portfolio securities to meet such tenders of
Common Shares, the Fund will be required to make additional
distributions to its shareholders.

         Backup Withholding.  The Fund generally is required to
withhold and remit to the U.S. Treasury a percentage of the
taxable dividends and other distributions paid to any non-
corporate shareholder who fails to properly furnish the Fund with
a correct taxpayer identification number (TIN), who has under-
reported dividend or interest income, or who fails to certify to
the Fund that he or she is not subject to such withholding.
Backup withholding is not an additional tax; any amounts withheld


                               46



<PAGE>

may be credited against the shareholder's U.S. federal income tax
liability.

         General.  The federal income tax discussion set forth
above is for general information only.  Prospective investors
should consult their tax advisers regarding the specific federal
tax consequences of purchasing, holding, and disposing of shares
of the Fund, as well as the effects of state, local and foreign
tax law and any proposed tax law changes.

         PERFORMANCE RELATED AND COMPARATIVE INFORMATION

         The suitability of an investment in Common Shares will
depend upon a comparison of the after-tax yield likely to be
provided from the Fund with that from comparable tax-exempt
investments (including those not subject to the AMT), and from
comparable fully taxable investments, in light of each such
investor's tax position.

         The Fund may quote certain performance-related
information and may compare certain aspects of its portfolio and
structure to other substantially similar closed-end funds as
categorized by Lipper Inc. ("Lipper"), Morningstar Inc. or other
independent services.  Comparison of the Fund to an alternative
investment should be made with consideration of differences in
features and expected performance.  The Fund may obtain data from
sources or reporting services, such as Bloomberg Financial and
Lipper, that the Fund believes to be generally accurate.

         The Fund may employ advertising or sales literature that
provides information relating to hypothetical yields on municipal
securities in the form of charts such as the following:


After-Tax Yields*

Assumed Hypothetical Taxable Yield     5.00%        5.50%   6.00%
National                               8.21%        9.03%   9.85%
California                             9.05%        9.96%  10.86%
New York                               9.19%        10.10% 11.02%

* Each of these examples assumes the maximum 38.6% federal income
tax rate.  The California example assumes 9.3% maximum state
income tax, and the New York example assumes the maximum 6.85%
New York State and 3.779% New York City tax rate.

         The Fund may disclose information concerning its
anticipated average maturity, which is 25 years, and average
ratings quality, which is AA.  These are expectations only and
will not necessarily be the Fund's actual average maturity or
ratings quality.


                               47



<PAGE>

         The Fund may employ advertising or sales literature that
provides a line graph or other presentation demonstrating the
historical long-term after-tax growth of an initial $100,000
investment in various asset classes.  For example, the Fund may
use a line graph showing the after-tax values of an investment in
these securities in 2000 beginning with an initial investment of
$100,000 in 1980, including Municipal Bonds-$551,385, Treasury
Bonds-$397,582, Corporate Bonds-$365,479, and Treasury Bills-
$209,824.

         The Fund, in its advertisements, may refer to pending
legislation from time to time and the possible impact of such
legislation on investors, investment strategy and related
matters.  This would include any tax proposals and their effect
on marginal tax rates and tax-equivalent yields.  At any time in
the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical
results will continue.

         Past performance is not indicative of future results.
At the time Common Shareholders sell their shares, they may be
worth more or less than their original investment.

     CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

         State Street Bank & Trust Company serves as custodian
for assets of the Fund.  The custodian performs custodial and
fund accounting services.

         Equiserve Trust Company, N.A. serves as the Fund's
transfer agent, registrar, dividend disbursing agent and
shareholder servicing agent, as well as agent for the Fund's
dividend reinvestment plan.

                      INDEPENDENT AUDITORS

         Ernst & Young LLP, 787 Seventh Avenue, New York, New
York 10019 serves as independent auditors for the Fund.

                             COUNSEL

         Seward & Kissel LLP, One Battery Park Plaza, New York,
New York, passes upon certain legal matters in connection with
shares offered by the Fund, and also acts as counsel to the Fund.
Seward & Kissel LLP will rely upon the opinion of Ballard Spahr
Andrews & Ingersoll, LLP for certain matters of Maryland law.







                               48



<PAGE>

                     REGISTRATION STATEMENT

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

































                               49



<PAGE>


                      FINANCIAL STATEMENTS
                         (unaudited)


Alliance National Municipal Income Fund, Inc.
Statement of Assets and Liabilities
January 17, 2002

Assets:
Cash                                      $100,005
Deferred offering costs                    500,000
                                          --------
Total assets                               600,005
                                          --------
Liabilities
Payable for offering costs                 500,000
                                          --------

Net Assets                                $100,005
                                          ========

Composition of Net Assets

Common stock, at par                      $      7
Additional paid-in capital                  99,998
                                          --------
                                          $100,005
                                          ========

Net asset value per share:
Equivalent to 6,667 shares of
common stock issued and
outstanding, par value $0.001,
2,000,000,000 shares authorized             $15.00
                                          ========


See notes to statement of assets and liabilities.














                               50



<PAGE>

Alliance National Municipal Income Fund, Inc.
Notes to Statement of Assets and Liabilities
January 17, 2002

Note A - Organization:

Alliance National Municipal Income Fund, Inc. (the "Fund") was
organized as a Maryland corporation on November 9, 2001.   The
Fund is registered under the Investment Company Act of 1940 as a
newly organized, diversified, closed-end management investment
company.  The Fund has had no operations to date, other than the
sale to Alliance Capital Management L.P. (the "Adviser") on
January 17, 2002 of 6,667 shares of common stock for $100,005
($15.00 per share).

Note B - Investment Advisory Agreement:

Under the terms of an Investment Advisory Agreement, the Fund
pays the Adviser a monthly fee at an annualized rate of .65% of
the Fund's average daily net assets.  The Adviser has agreed to
waive a portion of its fees or reimburse the Fund for expenses in
the amount of 0.25% of average daily net assets for the first 5
full years of the Fund's operations, 0.20% of average daily net
assets in year 6, 0.15% in year 7, 0.10% in year 8, and 0.05% in
year 9.

Note C - Organization Expenses and Offering Costs:

Based on an estimated Fund offering of 16,666,666 shares,
organization and offering costs are estimated to be $29,500 and
$501,780, respectively. Alliance Capital Management L.P., the
Fund's investment adviser, has agreed to pay the amount by which
the aggregate of all of the Fund's organizational expenses and
all offering costs (other than sales load) exceeds $0.03 per
share.  Such amount to be paid by the Adviser is estimated to be
$31,280.  The Fund will pay offering costs estimated at $500,000
from the proceeds of the offering. Offering costs paid by the
Fund will be charged as a reduction of paid-in capital at the
completion of the Fund offering.














                               51



<PAGE>

                    APPENDIX A: BOND RATINGS

Standard & Poor's Bond Ratings

         A Standard & Poor's municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to
a specific obligation.  Debt rated "AAA" has the highest rating
assigned by Standard & Poor's.  Capacity to pay interest and
repay principal is extremely strong.  Debt rated "AA" has a very
strong capacity to pay interest and to repay principal and
differs from the highest rated issues only in small degree.  Debt
rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
a debt of a higher rated category.  Debt rated "BBB" is regarded
as having an adequate capacity to pay interest and repay
principal.  Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest
and to repay principal for debt in this category than for higher
rated categories.

         Debt rated "BB," "B," "CCC" or "CC" is regarded, on
balance, as predominately speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of
the obligation.  "BB" indicates the lowest degree of speculation
and "CC" the highest degree of speculation.  While such debt will
likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to
adverse conditions.  The rating "C" is reserved for income bonds
on which no interest is being paid.  Debt rated "D" is in default
and payments of interest and/or repayment of principal are in
arrears.

         The ratings from "AAA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within
the major rating categories.

Moody's Bond Ratings

         Excerpts from Moody's description of its municipal bond
ratings: Aaa - judged to be the best quality, carry the smallest
degree of investment risk; Aa - judged to be of high quality by
all standards; A - possess many favorable investment attributes
and are to be considered as higher upper grade obligations; Baa -
considered as medium grade obligations, i.e., they are neither
highly protected nor poorly secured and have speculative
characteristics as well; Ba, B, Caa, Ca, C - protection of
interest and principal payments is questionable; Ba indicates
some speculative elements while Ca represents a high degree of
speculation and C represents the lowest rated class of bonds;


                               A-1



<PAGE>

Caa, Ca and C bonds may be in default.  Moody's applies numerical
modifiers 1, 2 and 3 in each generic rating classification from
Aa to B in its corporate bond rating system.  The modifier 1
indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks at the
lower end of its generic rating category.

Short-Term Municipal Loans

         Moody's highest rating for short-term municipal loans is
MIG-1/VMIG-1.  Moody's states that short-term municipal
securities rated MIG-1/VMIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the
market for refinancing, or both.  Loans bearing the MIG-2/VMIG-2
designation are of high quality, with margins of protection ample
although not so large as in the MIG-l/VMIG-1 group.

         S&P's highest rating for short-term municipal loans is
SP-1.  S&P states that short-term municipal securities bearing
the SP-1 designation have very strong or strong capacity to pay
principal and interest.  Those issues rated SP-1 which are
determined to possess overwhelming safety characteristics will be
given a plus (+) designation.  Issues rated SP-2 have
satisfactory capacity to pay principal and interest.

Other Municipal Securities

         "Prime-1" is the highest rating assigned by Moody's for
other short-term municipal securities and commercial paper, and
A-1+" and "A-1" are the two highest ratings for commercial paper
assigned by S&P (S&P does not rate short-term tax-free
obligations).  Moody's uses the numbers 1, 2 and 3 to denote
relative strength within its highest classification of "Prime,"
while S&P uses the number 1+, 1, 2 and 3 to denote relative
strength within its highest classification of "A."  Issuers rated
"Prime" by Moody's have the following characteristics: their
short-term debt obligations carry the smallest degree of
investment risk, margins of support for current indebtedness are
large or stable with cash flow and asset protection well assured,
current liquidity provides ample coverage of near-term
liabilities and unused alternative financing arrangements are
generally available.  While protective elements may change over
the intermediate or longer-term, such changes are most unlikely
to impair the fundamentally strong position of short-term
obligations.  Commercial paper issuers rated "A" by S&P have the
following characteristics: liquidity ratios are better than
industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of
borrowing, and basic earnings and cash flow are in an upward


                               A-2



<PAGE>

trend.  Typically, the issuer is a strong company in a well-
established industry and has superior management.

Fitch, Inc. International Long-Term Credit Ratings

Investment Grade

         AAA - Highest credit quality. 'AAA' ratings denote the
lowest expectation of credit risk. They are assigned only in case
of exceptionally strong capacity for timely payment of financial
commitments. This capacity is highly unlikely to be adversely
affected by foreseeable events.

         AA - Very high credit quality. 'AA' ratings denote a
very low expectation of credit risk. They indicate very strong
capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable events.

         A - High credit quality. 'A' ratings denote a low
expectation of credit risk. The capacity for timely payment of
financial commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or
in economic conditions than is the case for higher ratings.

         BBB - Good credit quality. 'BBB' ratings indicate that
there is currently a low expectation of credit risk. The capacity
for timely payment of financial commitments is considered
adequate, but adverse changes in circumstances and in economic
conditions are more likely to impair this capacity. This is the
lowest investment-grade category.

Speculative Grade

         BB - Speculative. 'BB' ratings indicate that there is a
possibility of credit risk developing, particularly as the result
of adverse economic change over time; however, business or
financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not
investment grade.

         B - Highly speculative. 'B' ratings indicate that
significant credit risk is present, but a limited margin of
safety remains. Financial commitments are currently being met;
however, capacity for continued payment is contingent upon a
sustained, favorable business and economic environment.

         CCC, CC, C - High default risk. Default is a real
possibility. Capacity for meeting financial commitments is solely
reliant upon sustained, favorable business or economic
developments. A 'CC' rating indicates that default of some kind
appears probable. 'C' ratings signal imminent default.


                               A-3



<PAGE>

         DDD, DD, D - Default. The ratings of obligations in this
category are based on their prospects for achieving partial or
full recovery in a reorganization or liquidation of the obligor.
While expected recovery values are highly speculative and cannot
be estimated with any precision, the following serve as general
guidelines.  'DDD' obligations have the highest potential for
recovery, around 90% - 100% of outstanding amounts and accrued
interest.  'DD' indicates potential recoveries in the range of
50% - 90% and 'D' the lowest recovery potential, i.e., below 50%.

         Entities rated in this category have defaulted on some
or all of their obligations. Entities rated 'DDD' have the
highest prospect for resumption of performance or continued
operation with or without a formal reorganization process.
Entities rated 'DD' and 'D' are generally undergoing a formal
reorganization or liquidation process; those rated 'DD' are
likely to satisfy a higher portion of their outstanding
obligations, while entities rated 'D' have a poor prospect of
repaying all obligations.

Fitch, Inc. International Short-Term Credit Ratings

         F1 - Highest credit quality. Indicates the strongest
capacity for timely payment of financial commitments; may have an
added "+" to denote any exceptionally strong credit feature.

         F2 - Good credit quality. A satisfactory capacity for
timely payment of financial commitments, but the margin of safety
is not as great as in the case of the higher ratings.

         F3 - Fair credit quality. The capacity for timely
payment of financial commitments is adequate; however, near-term
adverse changes could result in a reduction to non-investment
grade.

         B - Speculative. Minimal capacity for timely payment of
financial commitments, plus vulnerability to near-term adverse
changes in financial and economic conditions.

         C - High default risk. Default is a real possibility.
Capacity for meeting financial commitments is solely reliant upon
a sustained, favorable business and economic environment.

         D - Default. Denotes actual or imminent payment default.

Notes to Long-term and Short-term ratings:

"+" or "-" may be appended to a rating to denote relative status
within major rating categories. Such suffixes are not added to
the 'AAA' Long-term rating category, to categories below 'CCC',
or to Short-term ratings other than 'F1'.


                               A-4



<PAGE>

'NR' indicates that Fitch does not rate the issuer or issue in
question.

'Withdrawn': A rating is withdrawn when Fitch deems the amount of
information available to be inadequate for rating purposes, or
when an obligation matures, is called, or refinanced.

Rating Watch: Ratings are placed on Rating Watch to notify
investors that there is a reasonable probability of a rating
change and the likely direction of such change.  These are
designated as "Positive", indicating a potential upgrade,
"Negative", for a potential downgrade, or "Evolving", if ratings
may be raised, lowered or maintained.  Rating Watch is typically
resolved over a relatively short period.

A Rating Outlook indicates the direction a rating is likely to
move over a one to two-year period. Outlooks may be positive,
stable or negative.  A positive or negative Rating Outlook does
not imply a rating change is inevitable.  Similarly, companies
whose outlooks are 'stable' could be upgraded or downgraded
before an outlook moves to positive or negative if circumstances
warrant such an action.  Occasionally, Fitch may be unable to
identify the fundamental trend. In these cases, the Rating
Outlook may be described as evolving.

Further Rating Distinctions

         While ratings provide an assessment of the obligor's
capacity to pay debt service, it should be noted that the
definition of obligor expands as layers of security are added. If
municipal securities are guaranteed by third parties then the
"underlying" issuers as well as the "primary" issuer will be
evaluated during the rating process.  In some cases, depending on
the scope of the guaranty, such as bond insurance, bank letters
of credit or collateral, the credit enhancement will provide the
sole basis for the rating given.

Minimum Rating(s) Requirements

         For minimum rating(s) requirements for the Fund's
securities, please refer to "The Fund's Investments - Investment
Objectives and Policies" in the Prospectus.











                               A-5



<PAGE>

        APPENDIX B: FUTURES CONTRACTS AND RELATED OPTIONS

Futures Contracts

         The Fund may enter into contracts for the purchase or
sale for future delivery of municipal securities or U.S.
Government Securities, or contracts based on financial indices
including any index of municipal securities or U.S. Government
Securities.  U.S. futures contracts have been designed by
exchanges which have been designated "contracts markets" by the
Commodity Futures Trading Commission ("CFTC"), and must be
executed through a futures commission merchant, or brokerage
firm, which is a member of the relevant contract market.  Futures
contracts trade on a number of exchange markets, and, through
their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.

         At the same time a futures contract is purchased or
sold, the Fund must allocate cash or securities as a deposit
payment ("initial deposit").  It is expected that the initial
deposit would be approximately 1/2% to 5% of a contract's face
value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the
Fund would provide or receive cash that reflects any decline or
increase in the contract's value.

         At the time of delivery of securities pursuant to such a
contract, adjustments are made to recognize differences in value
arising from the delivery of securities with a different interest
rate from that specified in the contract.  In some (but not many)
cases, securities called for by a futures contract may not have
been issued when the contract was written.

         Although futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities.  The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month.  Such a transaction, which is
effected through a member of an exchange, cancels the obligation
to make or take delivery of the securities.  Since all
transactions in the futures market are made, offset or fulfilled
through a clearinghouse associated with the exchange on which the
contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.






                               B-1



<PAGE>

Interest Rate Futures

         The purpose of the acquisition or sale of a futures
contract, in the case of the Fund, which holds or intends to
acquire fixed-income securities, is to attempt to protect the
Fund from fluctuations in interest rates without actually buying
or selling fixed-income securities.  For example, if interest
rates were expected to increase, the Fund might enter into
futures contracts for the sale of debt securities.  Such a sale
would have much the same effect as selling an equivalent value of
the debt securities owned by the Fund.  If interest rates did
increase, the value of the debt securities in the Fund would
decline, but the value of the futures contracts to the Fund would
increase at approximately the same rate, thereby keeping the net
asset value of the Fund from declining as much as it otherwise
would have.  The Fund could accomplish similar results by selling
debt securities and investing in bonds with short maturities when
interest rates are expected to increase. However, since the
futures market is more liquid than the cash market, the use of
futures contracts as an investment technique allows the Fund to
maintain a defensive position without having to sell its
portfolio securities.

         Similarly, when it is expected that interest rates may
decline, futures contracts may be purchased to attempt to hedge
against anticipated purchases of debt securities at higher
prices.  Since the fluctuations in the value of futures contracts
should be similar to those of debt securities, a Fund could take
advantage of the anticipated rise in the value of debt securities
without actually buying them until the market had stabilized.  At
that time, the futures contracts could be liquidated and the Fund
could then buy debt securities on the cash market.  To the extent
the Fund enters into futures contracts for this purpose, the
assets in the segregated account maintained to cover the Fund's
obligations with respect to such futures contracts will consist
of cash, cash equivalents or high-quality liquid debt securities
from its portfolio in an amount equal to the difference between
the fluctuating market value of such futures contracts and the
aggregate value of the initial and variation margin payments made
by the Fund with respect to such futures contracts.

         The ordinary spreads between prices in the cash and
futures markets, due to differences in the nature of those
markets, are subject to distortions.  First, all participants in
the futures market are subject to initial deposit and variation
margin requirements.  Rather than meeting additional variation
margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal
relationship between the cash and futures markets.  Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking


                               B-2



<PAGE>

delivery.  To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus
producing distortion.  Third, from the point of view of
speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the
securities market.  Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions.  Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Adviser may still
not result in a successful transaction.

         In addition, futures contracts entail risks.  Although
the Fund believes that use of such contracts will benefit the
Fund, if the Adviser's investment judgment about the general
direction of interest rates is incorrect, the Fund's overall
performance would be poorer than if it had not entered into any
such contract.  For example, if the Fund has hedged against the
possibility of an increase in interest rates which would
adversely affect the price of debt securities held in its
portfolio and interest rates decrease instead, the Fund will lose
part or all of the benefit of the increased value of its debt
securities which it has hedged because it will have offsetting
losses in its futures positions.  In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell debt securities from its portfolio to meet daily variation
margin requirements.  Such sales of bonds may be, but will not
necessarily be, at increased prices which reflect the rising
market.  The Fund may have to sell securities at a time when it
may be disadvantageous to do so.

Options on Futures Contracts

         The Fund intends to purchase and write options on
futures contracts for hedging purposes.  The Funds are not
commodity pools and all transactions in futures contracts and
options on futures contracts engaged in by the Funds must
constitute bona fide hedging or other permissible transactions in
accordance with the rules and regulations promulgated by the
CFTC.  The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an
individual security.  Depending on the pricing of the option
compared to either the price of the futures contract upon which
it is based or the price of the underlying debt securities, it
may or may not be less risky than ownership of the futures
contract or underlying debt securities.  As with the purchase of
futures contracts, when the Fund is not fully invested it may
purchase a call option on a futures contract to hedge against a
market advance due to declining interest rates.

         The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the


                               B-3



<PAGE>

security which is deliverable upon exercise of the futures
contract or securities comprising an index.  If the futures price
at expiration of the option is below the exercise price, the Fund
that has written a call will retain the full amount of the option
premium which provides a partial hedge against any decline that
may have occurred in its portfolio holdings.  The writing of a
put option on a futures contract constitutes a partial hedge
against increasing prices of the security which is deliverable
upon the exercise of futures contract or securities comprising an
index.  If the futures price at the expiration of the option is
higher than the exercise price, the Fund that has written a put
will retain the full amount of the option premium which provides
a partial hedge against any increase in the price of securities
which it intends to purchase.  If a put or call option the Fund
has written is exercised, the Fund will incur a loss which will
be reduced by the amount of the premium it receives.  Depending
on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures
positions, the Fund's losses from existing options on futures may
to some extent be reduced or increased by changes in the value of
portfolio securities.

         The purchase of a put option on a futures contract is
similar in some respects to the purchase of protective put
options on portfolio securities.  For example, the Fund may
purchase a put option on a futures contract to hedge its
portfolio against the risk of rising interest rates.

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



















                               B-4



<PAGE>

                             PART C

ITEM 24.  FINANCIAL STATEMENTS AND EXHIBITS

1.    FINANCIAL STATEMENTS

      Registrant has not conducted any business as of the date of
      this filing, other than in connection with its
      organization.  Financial Statements indicating that the
      Registrant has met the net worth requirements of
      Section 14(a) of the 1940 Act will be filed by amendment to
      this Registration Statement.

2.    EXHIBITS.

(a)(1)  Amended Articles of Incorporation - Incorporated by
        reference to Exhibit (a) to Pre-Effective Amendment No. 1
        of the Registrant's Registration Statement on Form N-2
        (File Nos. 333-73130 and 811-10573) filed with the
        Securities and Exchange Commission on December 21,
        2001.

   (2)  Certificate of Correction - Filed herewith.

(b)     By-Laws - Filed herewith.

(c)     Not applicable.

(d)     Not applicable.

(e)     Dividend Reinvestment Plan - Filed herewith.

(f)     Not applicable

(g)     Form of Investment Advisory Agreement - Filed
        herewith.

(h (1)  Form of Underwriting Agreement - Filed herewith.

   (2)  Form of Master Agreement Among Underwriters - Filed
        herewith.

   (3)  Form of Master Selected Dealer Agreement - Filed
        herewith.

(i)     Not applicable

(j)     Form of Custodian Agreement - Filed herewith.

(k)(1)  Form of Transfer Agency Agreement - Filed herewith.



                               C-1



<PAGE>



   (2)  Form of Shareholder Inquiry Agency Agreement - Filed
        herewith.

(l)(1)  Opinion and Consent of Seward & Kissel LLP*

   (2)  Opinion and Consent of Ballard Spahr Andrews & Ingersoll,
        LLP*

(m)     Not applicable

(n)     Consent of Independent Auditors*

(o)     Not applicable

(p)     Investment Representation Letter - Filed herewith.

(q)     Not applicable

(r)(1)  Code of Ethics for the Fund - Incorporated by reference
        to Exhibit (p)(1) to Post-Effective Amendment No. 74 of
        the Registration Statement on Form N-1A of Alliance Bond
        Fund, Inc. (File Nos. 2-48227 and 811-2383), filed with
        the Securities and Exchange Commission on October 6,
        2000, which is substantially identical in all material
        respects except as to the party which is the
        Registrant.

   (2)  Code of Ethics for the Alliance Capital Management L.P. -
        Incorporated by reference to Exhibit (p)(2) to Post-
        Effective Amendment No. 31 of the Registration Statement
        on Form N-1A of Alliance Variable Products Series Fund,
        Inc. (File Nos. 33-18647 and 811-5398), filed with the
        Securities and Exchange Commission on April 27, 2001.

___________
*  To be filed by amendment.















                               C-2



<PAGE>

Other Exhibits:

        Powers of Attorney for:  Ruth Block, John D. Carifa,
        David H. Dievler, John H. Dobkin, William H. Foulk, Jr.,
        Dr. James Hester, Clifford L. Michel, and Donald J.
        Robinson - Incorporated by reference to Other Exhibits to
        Pre-Effective Amendment No. 1 of the Registrant's
        Registration Statement on Form N-2 (File Nos. 333-73130
        and 811-10573) filed with the Securities and Exchange
        Commission on December 21, 2001.

ITEM 25.  MARKETING ARRANGEMENTS

   See Underwriting Agreement filed as Exhibit (h)(1).




ITEM 26.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

SEC Registration fees                                  $[______]*
New York Stock Exchange listing fees                   $[______]*
National Association of Securities Dealers, Inc. fees  $[______]*
Printing (other than stock certificates) and related
   delivery expenses                                   $[______]*
Engraving and printing stock certificates              $[______]*
Legal fees and expenses                                $[______]*
Fees and expenses of qualification under
   state securities laws (excluding fees of counsel)   $[______]*
Auditing fees and expenses                             $[______]*
Miscellaneous                                          $[______]*

Total                                                  $[______]*

___________________
*   To be filed by amendment.

ITEM 27.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
          REGISTRANT

                    Not applicable


ITEM 28.     NUMBER OF HOLDERS OF SECURITIES (as of January 23,
             2002)

TITLE OF CLASS                           NUMBER OF RECORD HOLDERS

Common Stock ($0.001 par value per share)          1




                               C-3



<PAGE>

ITEM 29.  INDEMNIFICATION

         It is the Registrant's policy to indemnify its directors
and officers, employees and other agents to the maximum extent
permitted by Section 2-418 of the General Corporation Law of the
State of Maryland and as set forth in Article EIGHTH of
Registrant's Amended Articles of Incorporation filed as Exhibit
(a), Article IX of the Registrant's Bylaws filed as Exhibit (b)
and Section 8 of the Underwriting Agreement filed as Exhibit
(h)(1).  The Adviser's liability for any loss suffered by the
Registrant or its stockholders is set forth in Section 4 of the
Investment Advisory Agreement filed as Exhibit (g) to this
Registration Statement.

         SECTION 2-418 OF THE MARYLAND GENERAL CORPORATION LAW
         READS AS FOLLOWS:

              2-418  INDEMNIFICATION OF DIRECTORS, OFFICERS,
              EMPLOYEES AND AGENTS.--(a)  In this section the
              following words have the meaning indicated.

                   (1)  "Director" means any person who is or was
              a director of a corporation and any person who,
              while a director of a corporation, is or was
              serving at the request of the corporation as a
              director, officer, partner, trustee, employee, or
              agent of another foreign or domestic corporation,
              partnership, joint venture, trust, other
              enterprise, or employee benefit plan.

                   (2)  "Corporation" includes any domestic or
              foreign predecessor entity of a corporation in a
              merger, consolidation, or other transaction in
              which the predecessor's existence ceased upon
              consummation of the transaction.

                   (3)  "Expenses" include attorney's fees.

                   (4)  "Official capacity" means the following:

              (i)  When used with respect to a director, the
              office of director in the corporation; and

              (ii) When used with respect to a person other than
              a director as contemplated in subsection (j), the
              elective or appointive office in the corporation
              held by the officer, or the employment or agency
              relationship undertaken by the employee or agent in
              behalf of the corporation.




                               C-4



<PAGE>

              (iii)  "Official capacity" does not include service
              for any other foreign or domestic corporation or
              any partnership, joint venture, trust, other
              enterprise, or employee benefit plan.

                   (5)  "Party" includes a person who was, is, or
              is threatened to be made a named defendant or
              respondent in a proceeding.

                   (6)  "Proceeding" means any threatened,
              pending or completed action, suit or proceeding,
              whether civil, criminal, administrative, or
              investigative.

                   (b)(1)  A corporation may indemnify any
              director made a party to any proceeding by reason
              of service in that capacity unless it is
              established that:

              (i)  The act or omission of the director was
              material to the matter giving rise to the
              proceeding; and

                   1.   Was committed in bad faith; or

                   2.   Was the result of active and deliberate
              dishonesty; or

              (ii)   The director actually received an improper
         personal benefit in money, property, or services; or

              (iii)  In the case of any criminal proceeding, the
         director had reasonable cause to believe that the act or
         omission was unlawful.

         (2)  (i)  Indemnification may be against judgments,
         penalties, fines, settlements, and reasonable expenses
         actually incurred by the director in connection with the
         proceeding.

              (ii) However, if the proceeding was one by or in
         the right of the corporation, indemnification may not be
         made in respect of any proceeding in which the director
         shall have been adjudged to be liable to the
         corporation.

         (3)  (i)   The termination of any proceeding by
         judgment, order or settlement does not create a
         presumption that the director did not meet the requisite
         standard of conduct set forth in this subsection.



                               C-5



<PAGE>

              (ii)  The termination of any proceeding by
         conviction, or a plea of nolo contendere or its
         equivalent, or an entry of an order of probation prior
         to judgment, creates a rebuttable presumption that the
         director did not meet that standard of conduct.

         (4)  A corporation may not indemnify a director or
         advance expenses under this section for a proceeding
         brought by that director against the corporation,
         except:

              (i)  For a proceeding brought to enforce
         indemnification under this section; or

              (ii) If the charter or bylaws of the corporation, a
         resolution of the board of directors of the corporation,
         or an agreement approved by the board of directors of
         the corporation to which the corporation is a party
         expressly provide otherwise.

              (c)  A director may not be indemnified under
         subsection (b) of this section in respect of any
         proceeding charging improper personal benefit to the
         director, whether or not involving action in the
         director's official capacity, in which the director was
         adjudged to be liable on the basis that personal benefit
         was improperly received.

              (d)  Unless limited by the charter:

         (1)  A director who has been successful, on the merits
         or otherwise, in the defense of any proceeding referred
         to in subsection (b) of this section shall be
         indemnified against reasonable expenses incurred by the
         director in connection with the proceeding.

         (2)  A court of appropriate jurisdiction upon
         application of a director and such notice as the court
         shall require, may order indemnification in the
         following circumstances:

         (i)  If it determines a director is entitled to
         reimbursement under paragraph (1) of this subsection,
         the court shall order indemnification, in which case the
         director shall be entitled to recover the expenses of
         securing such reimbursement; or

         (ii) If it determines that the director is fairly and
         reasonably entitled to indemnification in view of all
         the relevant circumstances, whether or not the director
         has met the standards of conduct set forth in subsection


                               C-6



<PAGE>

         (b) of this section or has been adjudged liable under
         the circumstances described in subsection (c) of this
         section, the court may order such indemnification as the
         court shall deem proper.  However, indemnification with
         respect to any proceeding by or in the right of the
         corporation or in which liability shall have been
         adjudged in the circumstances described in subsection
         (c) shall be limited to expenses.

              (3)  A court of appropriate jurisdiction may be the
         same court in which the proceeding involving the
         director's liability took place.

              (e)(1)  Indemnification under subsection (b) of
         this section may not be made by the corporation unless
         authorized for a specific proceeding after a
         determination has been made that indemnification of the
         director is permissible in the circumstances because the
         director has met the standard of conduct set forth in
         subsection (b) of this section.

              (2)  Such determination shall be made:

         (i)  By the board of directors by a majority vote of a
         quorum consisting of directors not, at the time, parties
         to the proceeding, or, if such a quorum cannot be
         obtained, then by a majority vote of a committee of the
         board consisting solely of two or more directors not, at
         the time, parties to such proceeding and who were duly
         designated to act in the matter by a majority vote of
         the full board in which the designated directors who are
         parties may participate;

         (ii) By special legal counsel selected by the board or a
         committee of the board by vote as set forth in
         subparagraph (i) of this paragraph, or, if the requisite
         quorum of the full board cannot be obtained therefor and
         the committee cannot be established, by a majority vote
         of the full board in which directors who are parties may
         participate; or

         (iii) By the stockholders.

              (3)  Authorization of indemnification and
         determination as to reasonableness of expenses shall be
         made in the same manner as the determination that
         indemnification is permissible.  However, if the
         determination that indemnification is permissible is
         made by special legal counsel, authorization of
         indemnification and determination as to reasonableness
         of expenses shall be made in the manner specified in


                               C-7



<PAGE>

         subparagraph (ii) of paragraph (2) of this subsection
         for selection of such counsel.

              (4)  Shares held by directors who are parties to
         the proceeding may not be voted on the subject matter
         under this subsection.

              (f)(1)  Reasonable expenses incurred by a director
         who is a party to a proceeding may be paid or reimbursed
         by the corporation in advance of the final disposition
         of the proceeding, upon receipt by the corporation of:

         (i)  A written affirmation by the director of the
         director's good faith belief that the standard of
         conduct necessary for indemnification by the corporation
         as authorized in this section has been met; and

         (ii) A written undertaking by or on behalf of the
         director to repay the amount if it shall ultimately be
         determined that the standard of conduct has not been
         met.

              (2)  The undertaking required by subparagraph (ii)
         of paragraph (1) of this subsection shall be an
         unlimited general obligation of the director but need
         not be secured and may be accepted without reference to
         financial ability to make the repayment.

              (3)  Payments under this subsection shall be made
         as provided by the charter, bylaws, or contract or as
         specified in subsection (e) of this section.

              (g)  The indemnification and advancement of
         expenses provided or authorized by this section may not
         be deemed exclusive of any other rights, by
         indemnification or otherwise, to which a director may be
         entitled under the charter, the bylaws, a resolution of
         stockholders or directors, an agreement or otherwise,
         both as to action in an official capacity and as to
         action in another capacity while holding such office.

              (h)  This section does not limit the corporation's
         power to pay or reimburse expenses incurred by a
         director in connection with an appearance as a witness
         in a proceeding at a time when the director has not been
         made a named defendant or respondent in the proceeding.

              (i)  For purposes of this section:

              (1)  The corporation shall be deemed to have
         requested a director to serve an employee benefit plan


                               C-8



<PAGE>

         where the performance of the director's duties to the
         corporation also imposes duties on, or otherwise
         involves services by, the director to the plan or
         participants or beneficiaries of the plan:

              (2)  Excise taxes assessed on a director with
         respect to an employee benefit plan pursuant to
         applicable law shall be deemed fines; and

              (3)  Action taken or omitted by the director with
         respect to an employee benefit plan in the performance
         of the director's duties for a purpose reasonably
         believed by the director to be in the interest of the
         participants and beneficiaries of the plan shall be
         deemed to be for a purpose which is not opposed to the
         best interests of the corporation.

              (j)  Unless limited by the charter:

              (1)  An officer of the corporation shall be
         indemnified as and to the extent provided in subsection
         (d) of this section for a director and shall be
         entitled, to the same extent as a director, to seek
         indemnification pursuant to the provisions of subsection
         (d);

              (2)  A corporation may indemnify and advance
         expenses to an officer, employee, or agent of the
         corporation to the same extent that it may indemnify
         directors under this section; and

              (3)  A corporation, in addition, may indemnify and
         advance expenses to an officer, employee, or agent who
         is not a director to such further extent, consistent
         with law, as may be provided by its charter, bylaws,
         general or specific action of its board of directors or
         contract.

              (k)(1) A corporation may purchase and maintain
         insurance on behalf of any person who is or was a
         director, officer, employee, or agent of the
         corporation, or who, while a director, officer,
         employee, or agent of the corporation, is or was serving
         at the request, of the corporation as a director,
         officer, partner, trustee, employee, or agent of another
         foreign or domestic corporation, partnership, joint
         venture, trust, other enterprise, or employee benefit
         plan against any liability asserted against and incurred
         by such person in any such capacity or arising out of
         such person's position, whether or not the corporation



                               C-9



<PAGE>

         would have the power to indemnify against liability
         under the provisions of this section.

              (2)  A corporation may provide similar protection,
         including a trust fund, letter of credit, or surety
         bond, not inconsistent with this section.

              (3)  The insurance or similar protection may be
         provided by a subsidiary or an affiliate of the
         corporation.

              (1)  Any indemnification of, or advance of expenses
         to, a director in accordance with this section, if
         arising out of a proceeding by or in the right of the
         corporation, shall be reported in writing to the
         stockholders with the notice of the next stockholders'
         meeting or prior to the meeting."

ARTICLE EIGHTH OF THE REGISTRANT'S ARTICLES OF INCORPORATION
READS AS FOLLOWS:

              (1) To the full extent that limitations on the
         liability of directors and officers are permitted by the
         Maryland General Corporation Law, no director or officer
         of the Corporation shall have any liability to the
         Corporation or its stockholders for money damages.  This
         limitation on liability applies to events occurring at
         the time a person serves as a director or officer of the
         Corporation whether or not such person is a director or
         officer at the time of any proceeding in which liability
         is asserted.

              (2) The Corporation shall indemnify and advance
         expenses to its currently acting and its former
         directors to the fullest extent that indemnification of
         directors is permitted by the Maryland General
         Corporation Law.  The Corporation shall indemnify and
         advance expenses to its officers to the same extent as
         its directors and to such further extent as is
         consistent with law.  The Board of Directors may by
         Bylaw, resolution or agreement make further provisions
         for indemnification of directors, officers, employees
         and agents to the fullest extent permitted by the
         Maryland General Corporation Law.

              (3) No provision of this Article EIGHTH shall be
         effective to protect or purport to protect any director
         or officer of the Corporation against any liability to
         the Corporation or its stockholders to which he would
         otherwise be subject by reason of willful misfeasance,



                              C-10



<PAGE>

         bad faith, gross negligence or reckless disregard of the
         duties involved in the conduct to his office.

              (4) References to the Maryland General Corporation
         Law in this Article EIGHTH are to that law as from time
         to time amended.  No amendment to the Charter of the
         Corporation shall affect any right of any person under
         this Article EIGHTH based on any event, omission or
         proceeding prior to the amendment.

ARTICLE IX OF THE REGISTRANT'S BY-LAWS READS AS FOLLOWS:

         Section 1.     Indemnification of Directors and Officers
and Other Persons.  The Corporation shall indemnify its directors
to the fullest extent that indemnification of directors is
permitted by the MGCL.  The Corporation shall indemnify its
current and former officers to the same extent as its directors
and to such further extent as is consistent with law.  The
Corporation shall indemnify its current and former directors and
officers and those persons who, at the request of the
Corporation, serve or have served as a director, officer,
partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise
or employee benefit plan against all expenses, liabilities and
losses (including attorneys' fees, judgments, fines and amounts
paid in settlement) reasonably incurred or suffered by them in
connection with being such a director, officer or other person
serving as described above.  The indemnification and other rights
provided by this Article shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
This Article shall not protect any such person against any
liability to the Corporation or to its security holders to which
such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office
("disabling conduct").

         Section 2.     Advances.  Any current or former director
or officer of the Corporation shall be entitled to advances from
the Corporation for payment of the reasonable expenses incurred
by such current or former director or officer in connection with
the matter as to which he or she may be entitled to
indemnification in the manner and, subject to the conditions
described below, to the fullest extent permissible under the
MGCL.  The person seeking indemnification shall provide to the
Corporation a written affirmation of his or her good faith belief
that the standard of conduct necessary for indemnification by the
Corporation has been met and a written undertaking by the person
seeking indemnification or on behalf of such person to repay any
such advance if it should ultimately be determined that the


                              C-11



<PAGE>

standard of conduct has not been met.  In addition, at least one
of the following additional conditions shall be met:  (a) the
person seeking indemnification shall provide a security in form
and amount acceptable to the Corporation for his undertaking; (b)
the Corporation is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of directors of the
Corporation who are neither "interested persons" as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion,
shall have determined, based on a review of facts readily
available to the Corporation at the time the advance is proposed
to be made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be entitled
to indemnification.

         Section 3.     Procedure.  At the request of any person
claiming indemnification under this Article, the Board of
Directors shall determine, or cause to be determined, in a manner
consistent with the MGCL, whether the standards required by this
Article have been met.  Indemnification shall be made only
following:  (a) a final decision on the merits by a court or
other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct
or (b) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person
to be indemnified was not liable by reason of disabling conduct
by (i) the vote of a majority of a quorum of disinterested non-
party directors or (ii) an independent legal counsel in a written
opinion.

         Section 4.     Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the
Corporation may be indemnified, and reasonable expenses may be
advanced to such employees or agents, as may be provided by
action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940.

         Section 5.     Other Rights.  The Board of Directors may
make further provision consistent with law for indemnification
and advance of expenses to directors, officers, employees and
agents by resolution, agreement or otherwise.  The
indemnification provided by this Article shall not be deemed
exclusive of any other right, with respect to indemnification or
otherwise, to which those seeking indemnification may be entitled
under any insurance or other agreement or resolution of
stockholders or disinterested directors or otherwise.  The rights
provided to any person by this Article shall be enforceable
against the Corporation by such person, who shall be presumed to
have relied upon it in serving or continuing to serve as a
director, officer, employee, or agent as provided above.


                              C-12



<PAGE>

         Section 6.     Amendments.  References in this Article
are to the MGCL and to the Investment Company Act of 1940 as from
time to time amended.  No amendment of these Bylaws shall affect
any right of any person under this Article based on any event,
omission or proceeding prior to the amendment.

 The Underwriting Agreement between the Registrant, Alliance
Capital Management L.P. (the "Manager") and Salomon Smith Barney
Inc. (the "Underwriter") provides that the Registrant and the
Manager will, jointly and severally, agree to indemnify and hold
harmless the Underwriter and each person, if any, who controls
the Underwriter within the meaning of Section 15 of the
Securities Act of 1933 or Section 20 of the Securities Exchange
Act of 1934, from and against any and all losses, claims,
damages, liabilities and expenses, joint or several (including
reasonable costs of investigation) arising out of or based upon
any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus, any
Prepricing Prospectus, any sales material (or any amendment or
supplement to any of the foregoing) or arising out of or based
upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, except
insofar as such losses, claims, damages, liabilities or expenses
arise out of or are based upon any untrue statement or omission
or alleged untrue statement or omission which has been made
therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Underwriter furnished in
writing to the Fund by or on behalf of the Underwriter expressly
for use in connection therewith; provided, however, that the
foregoing indemnity with respect to the Registration Statement,
the Prospectus or any Prepricing Prospectuses (or any amendment
or supplement to any of the foregoing) shall not inure to the
benefit of any Underwriter from whom the person asserting any
loss, claim, damage, liability or expense purchased Shares, if it
is shown that a copy of the Prospectus, as then amended or
supplemented, which would have cured any defect giving rise to
such loss, claim, damage, liability or expense was not sent or
delivered to such person by or on behalf of such Underwriter, if
required by law to be so delivered, at or prior to the
confirmation of the sale of such Shares to such person and such
Prospectus, amendments and supplements had been provided by the
Registrant to the Underwriter in the requisite quantity and on a
timely basis to permit proper delivery.  The foregoing indemnity
agreement shall be in addition to any liability which the
Registrant or the Manager may otherwise have.

    Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing


                              C-13



<PAGE>

provisions, or otherwise, the Registrant has been advised that,
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.  In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.

    In accordance with Release No. IC-11330 (September 2, 1980),
the Registrant will indemnify its directors, officers, investment
manager and principal underwriters only if (1) a final decision
on the merits was issued by the court or other body before whom
the proceeding was brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct") or
(2) a reasonable determination is made, based upon a review of
the facts, that the indemnitee was not liable by reason of
disabling conduct, by (a) the vote of a majority of a quorum of
the directors who are neither "interested persons" of the
Registrant as defined in section 2(a)(19) of the Investment
Company Act of 1940 nor parties to the proceeding
("disinterested, non-party directors"), or (b) an independent
legal counsel in a written opinion.  The Registrant will advance
attorneys fees or other expenses incurred by its directors,
officers, investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or on behalf of
the indemnitee to repay the advance unless it is ultimately
determined that he is entitled to indemnification and, as a
condition to the advance, (1) the indemnitee shall provide a
security for his undertaking, (2) the Registrant shall be insured
against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of disinterested, non-party directors of the
Registrant, or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found entitled to
indemnification.

    The Registrant participates in a joint trustees/directors and
officers liability insurance policy issued by the ICI Mutual
Insurance Company.  Coverage under this policy has been extended


                              C-14



<PAGE>

to directors, trustees and officers of the investment companies
managed by Alliance Capital Management L.P.  Under this policy,
outside trustees and directors are covered up to the limits
specified for any claim against them for acts committed in their
capacities as trustee or director.  A pro rata share of the
premium for this coverage is charged to each investment company
and to the Adviser.

ITEM 30.  BUSINESS AND OTHER CONNECTIONS OF ALLIANCE

    The descriptions of Alliance Capital Management L.P. under
the caption "Management of the Fund-Investment Adviser" in the
Prospectus and in the Statement of Additional Information are
incorporated by reference herein.

    The information as to the directors and executive officers of
Alliance Capital Management Corporation, the general partner of
Alliance, set forth in Alliance Capital Management L.P.'s Form
ADV filed with the Securities and Exchange Commission on April
21, 1988 (File No. 801-32361) and as amended through the date
hereof is incorporated by reference herein.

ITEM 31.  LOCATION OF ACCOUNTS AND RECORDS

 The accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder are maintained as follows: journals,
ledgers, securities records and other original records are
maintained principally at the offices of Alliance Capital
Management L.P., 500 Plaza Drive, Secaucus, New Jersey 07094, at
the offices of State Street Bank and Trust Company, the
Registrant's Custodian, LaFayette Corporate Center, 2 Avenue
Lafayette, Boston, Massachusetts 02111, and at the offices of
EquiServe Trust Company, the Registrant's Transfer Agent,
Dividend-Disbursing Agent and Registrar, 150 Royall Street,
Canton, Massachusetts 02021.  All other records so required to be
maintained are maintained at the offices of Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New York
10105.

ITEM 32.  MANAGEMENT SERVICES

    Not applicable.

ITEM 33.  UNDERTAKINGS

1.    Registrant undertakes to suspend offering of the shares
      covered hereby until it amends its Prospectus contained
      herein if subsequent to the effective date of this
      Registration Statement, its net asset value per share
      declines more than 10 percent from its net asset value per


                              C-15



<PAGE>

      share as of the effective date of this Registration
      Statement or the net asset value increases to an amount
      greater than its net proceeds as stated in the prospectus.

2.    Not applicable.

3.    Not applicable.

4.    Not applicable.

5.    Not applicable.

6.    Registrant undertakes to send by first class mail or other
      means designed to ensure equally prompt delivery, within
      two business days of receipt of a written or oral request,
      any Statement of Additional Information.





































                              C-16



<PAGE>

                           SIGNATURES

      Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York, on
the 25th day of January, 2002.

                   Alliance National Municipal Income Fund, Inc.


                   By /s/ John D. Carifa
                      ------------------------------
                     John D. Carifa
                     Chairman and President

         Pursuant to the requirements of the Securities Act of
1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities and on the date
indicated.

      Signature                        Title               Date
      ---------                        -----               ----

(1)   Principal Executive Officer      Chairman and        January 25, 2002
                                       President

      /s/ John D. Carifa
      --------------------------
      John D. Carifa


(2)  Principal Financial and           Treasurer and       January 25, 2002
      Accounting Officer:              Chief Financial
                                       Officer

      /s/ Mark D. Gersten
     --------------------------
      Mark D. Gersten













                              C-17



<PAGE>

(3)  All of the Directors:             January 25, 2002

      Ruth Block
      John D. Carifa
      David H. Dievler
      John H. Dobkin
      William H. Foulk, Jr.
      Dr. James Hester
      Clifford L. Michel
      Donald J. Robinson


By:   /s/ Edmund P. Bergan, Jr.
      --------------------------
      Edmund P. Bergan, Jr.
      (Attorney-in-Fact)





































                              C-18



<PAGE>

                          EXHIBIT INDEX

EXHIBIT                                SEQUENTIALLY NUMBERED PAGE


(a)(2) Certificate of Correction

(b)    By-Laws

(e)    Dividend Reinvestment Plan

(g)    Form of Investment Advisory Agreement

(h)(1) Form of Underwriting Agreement

   (2) Form of Master Agreement Among Underwriters

   (3) Form of Master Selected Dealer Agreement

(j)    Form of Custodian Agreement

(k)(1) Form of Transfer Agency Agreement

   (2) Form of Shareholder Inquiry Agency Agreement

(p)    Investment Representation Letter



























                              C-19
00250209.AM0

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2A CHARTER
<SEQUENCE>3
<FILENAME>a2_00250209ao5.txt
<TEXT>



<PAGE>


          ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.

                    CERTIFICATE OF CORRECTION


THIS IS TO CERTIFY THAT:

         FIRST:  The title of the document being corrected hereby
is Amended Articles of Incorporation (the "Articles").

         SECOND:  The Articles were filed with the State
Department of Assessments and Taxation of Maryland ("SDAT") on
December 7, 2001.

         THIRD:  The only party to the Articles is Alliance
National Municipal Income Fund, Inc., a Maryland corporation (the
"Corporation").

         FOURTH:  The amendments set forth in the Articles were
approved after the organization meeting of the Corporation.  The
Corporation had no stockholders at the time of the approval of
the amendments set forth in the Articles.  The Articles were
incorrectly filed in the form of Amended Articles of
Incorporation and were incorrectly executed.

         FIFTH:  The Articles as filed with SDAT are attached
hereto as Exhibit A.

         SIXTH:  The corrected document is attached hereto as
Exhibit B.

         The undersigned President acknowledges this Certificate
of Correction to be the corporate act of the Corporation and
further, as to all matters or facts required to be verified under
oath, the undersigned President acknowledges, that to the best of
his knowledge, information and belief, the matters and facts set
forth herein are true in all material respects and that this
statement is made under the penalties for perjury.


                    [SIGNATURE PAGE FOLLOWS]



<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Correction to be signed in its name and on its
behalf by the officers below on this    day of January, 2002.

ATTEST:                      ALLIANCE NATIONAL MUNICIPAL
                             INCOME FUND, INC.


/s/Edmund P. Bergan, Jr.     /s/John D. Carifa
_________________________    By:_________________________
Edmund P. Bergan, Jr.           John D. Carifa
Secretary                       President









































                                2



<PAGE>

                            EXHIBIT A




















































                                3



<PAGE>

          ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.

                AMENDED ARTICLES OF INCORPORATION



         FIRST:    (1)    The name of the incorporator is
Kathleen K. Clarke.

                   (2)    The incorporator's post office address
is 1200 G Street, N.W., Washington, DC 20005.

                   (3)    The incorporator is over eighteen years
of age.

                   (4)    The incorporator does hereby form the
corporation named herein under the general laws of the State of
Maryland.

         SECOND:   The name of the corporation (hereinafter
called the "Corporation") is Alliance National Municipal Income
Fund, Inc.

         THIRD:    The purpose for which the Corporation is
formed is to conduct and carry on the business of an investment
company registered under the Investment Company Act of 1940.  The
Corporation shall have all of the powers granted to corporations
by the Maryland General Corporation Law now or hereafter in
force.

         FOURTH:   The post office address of the principal
office of the Corporation within the State of Maryland is
300 Lombard Street, Baltimore, Maryland 21202, in care of The
Corporation Trust Incorporated.

         The resident agent of the Corporation in the State of
Maryland is The Corporation Trust Incorporated, 300 Lombard
Street, Baltimore, Maryland 21202.

         FIFTH:    The total number of shares of stock which the
Corporation shall have authority to issue is Two Billion
(2,000,000,000), par value $.001 per share, all of which
initially shall be Common Stock.  The aggregate par value of all
authorized shares of stock having par value is Two Million
Dollars ($2,000,000).  If shares of one class of stock are
classified or reclassified into shares of another class of stock
pursuant to Article SEVENTH, the number of authorized shares of
the former class shall be automatically decreased and the number
of shares of the latter class shall be automatically increased,
in each case by the number of shares so classified or
reclassified, so that the aggregate number of shares of stock of


                                4



<PAGE>

all classes that the Corporation has authority to issue shall not
be more than the total number of shares of stock set forth in the
first sentence of this paragraph.  All shares of stock of the
Corporation shall be subject to the charter of the Corporation
(the "Charter") and the Bylaws of the Corporation, including,
without limitation, the following provisions:

                   (1)    The Corporation may issue shares of
stock in fractional denominations to the same extent as its whole
shares, and shares in fractional denominations shall be shares of
stock having proportionately to the respective fractions
represented thereby all the rights of whole shares, including
without limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate upon
liquidation of the Corporation, but excluding the right to
receive a stock certificate representing fractional shares.

                   (2)    No holder of any shares of stock of the
Corporation shall be entitled to any preemptive rights except
those that the Board of Directors may determine from time to
time.

                   (3)    All persons who shall acquire stock or
other securities of the Corporation shall acquire the same
subject to the provisions of the Charter and the Bylaws, each as
from time to time amended.

                   (4) The Board of Directors, without any action
by the stockholders of the Corporation, may amend the  Charter
from time to time to increase or decrease the aggregate number of
shares of stock or the number of shares of stock of any class or
series that the Corporation has authority to issue.

         SIXTH:    (1)    The Corporation initially shall have
one director.  The number of directors of the Corporation may be
changed only by the Board of Directors pursuant to the Bylaws of
the Corporation, but the number of directors shall never be less
than the number prescribed by the Maryland General Corporation
Law.  The term of office of a director in office at the time of
any decrease in the number of directors shall not be affected as
a result thereof.  The name of the initial director of the
Corporation is Edmund P. Bergan, Jr.

                   (2)    Beginning with the first annual meeting
of stockholders held after the initial public offering of the
shares of stock of the Corporation (the "Initial Annual Meeting")
the Board of Directors shall be divided into three classes.
Within the limits specified in Section (1) of this Article SIXTH
and the Bylaws of the Corporation, the number of directors in
each class shall be determined by resolution of the Board of
Directors.  The term of office of each director in the first


                                5



<PAGE>

class shall continue to the date of the annual meeting of
stockholders held one year after the Initial Annual Meeting and
until his successor is elected and qualifies.  The term of office
of each director in the second class shall continue to the date
of the annual meeting of stockholders held two years after the
Initial Annual Meeting and until his successor is elected and
qualifies.  The term of office of each director in the third
class shall continue to the date of the annual meeting of
stockholders held three years after the Initial Annual Meeting
and until his successor is elected and qualifies.  Upon
expiration of the term of office of each class as set forth
above, the number of directors in such class, as determined by
the Board of Directors, shall be elected for a term of three
years to succeed the directors whose terms of office expire.  The
number of directorships shall be apportioned among the classes so
as to maintain the classes as nearly equal in number as possible.

                   (3)  The Corporation elects, at such time as
such election becomes available under Section 3-802(b) of the
Maryland General Corporation Law, that, except as may be provided
by the Board of Directors in setting the terms of any class or
series of preferred stock of the Corporation, any and all
vacancies on the Board of Directors may be filled only by the
affirmative vote of a majority of the remaining directors in
office, even if the remaining directors do not constitute a
quorum, and any director elected to fill a vacancy shall serve
for the remainder of the full term of the directorship in which
such vacancy occurred.

                   (4)    A director may be removed only for
cause by the affirmative vote of seventy-five percent (75%) of
the votes entitled to be cast for the election of such director.

         SEVENTH:  The following provisions are inserted for the
purpose of defining, limiting and regulating the powers of the
Corporation, the Board of Directors and the stockholders.

                   (1)    The business and affairs of the
Corporation shall be managed under the direction of the Board of
Directors which shall have and may exercise all powers of the
Corporation except those powers which are by law, by the Charter
or by the Bylaws conferred upon or reserved to the stockholders.
In furtherance and not in limitation of the powers conferred by
law, the Board of Directors shall have power:

                          (a)   to make, alter and repeal the
         Bylaws of the Corporation;

                          (b)   to issue and sell, from time to
         time, shares of any class of the Corporation's stock in
         such amounts and on such terms and conditions, and for


                                6



<PAGE>

         such amount and kind of consideration, as the Board of
         Directors shall determine;

                          (c)   from time to time to determine
         the net asset value per share of the Corporation's stock
         or to establish methods to be used by the Corporation's
         officers, employees or agents for determining the net
         asset value per share of the Corporation's stock;

                          (d)   from time to time to determine to
         what extent and at what times and places and under what
         conditions and regulations the accounts, books and
         records of the Corporation, or any of them, shall be
         open to the inspection of the stockholders; and no
         stockholder shall have any right to inspect any account
         or book or document of the Corporation, except as
         conferred by the laws of the State of Maryland, unless
         and until authorized to do so by resolution of the Board
         of Directors; and

                          (e)   to classify or to reclassify,
         from time to time, any unissued shares of stock of the
         Corporation, whether now or hereafter authorized, by
         setting, changing or eliminating the preferences,
         conversion or other rights, voting powers, restrictions,
         limitations as to dividends and other distributions,
         qualifications or terms and conditions of or rights to
         require redemption of the stock and any of the terms of
         any class or series of stock set or changed pursuant to
         this paragraph (e) may be made dependent upon facts or
         events ascertainable outside the Charter (including
         determinations by the Board of Directors or other facts
         or events within the control of the Corporation) and may
         vary among holders thereof, provided that the manner in
         which such facts, events or variations shall operate
         upon the terms of such class or series of stock is
         clearly and expressly set forth in the articles
         supplementary relating to such class or series of stock
         filed with the State Department of Assessments and
         Taxation of Maryland.

                   (2)    Except as provided in Article SIXTH,
Sections (3), (4) and (6) of this Article SEVENTH and in Article
NINTH, notwithstanding any provision of the Maryland General
Corporation Law requiring a greater proportion than a majority of
the votes of the Corporation's stock entitled to be cast in order
to take or authorize any action, any such action may be taken or
authorized upon the concurrence of a majority of the aggregate
number of votes entitled to be cast thereon subject to any
applicable requirements of the Investment Company Act of 1940, as
in effect from time to time, or rules, regulations or orders


                                7



<PAGE>

thereunder promulgated by the Securities and Exchange Commission
or any successor thereto.

                   (3)    Notwithstanding any other provisions of
the Charter, the conversion of the Corporation from a closed-end
company to an open-end company and any amendment to the Charter
of the Corporation to effect any such conversion, shall require
the affirmative vote of seventy-five percent (75%) of the
outstanding shares of stock of the Corporation.  Such affirmative
vote shall be in addition to the vote of the holders of the
Common Stock of the Corporation otherwise required by law or any
agreement between the Corporation and any national securities
exchange.

                   (4)    (a)   Notwithstanding any other
provision of the Charter, and subject to the exceptions provided
in Paragraph (d) of this Section (4), the types of transactions
described in Paragraph (c) of this Section (4) shall require the
affirmative vote of seventy-five percent (75%) of the outstanding
shares of Common Stock of the Corporation when a Principal
Shareholder (as defined in Paragraph (b) of this Section (4)) is
a party to the transaction.  Such affirmative vote shall be in
addition to the vote of the holders of the stock of the
Corporation otherwise required by law or any agreement between
the Corporation and any national securities exchange.

                          (b)   The term "Principal Shareholder"
shall mean any corporation, person or other entity which is the
beneficial owner, directly or indirectly, of more than five
percent (5%) of the outstanding shares of stock of the
Corporation and shall include any affiliate or associate, as such
terms are defined in clause (B) below, of a Principal
Shareholder.  For the purposes of this Section (4), in addition
to the shares of stock which a corporation, person or other
entity beneficially owns directly, (i) any corporation, person or
other entity shall be deemed to be the beneficial owner of any
shares of stock of the Corporation (A) which it has the right to
acquire pursuant to any agreement or upon exercise of conversion
rights or warrants, or otherwise (but excluding stock options
granted by the Corporation) or (B) which are beneficially owned,
directly or indirectly (including shares deemed owned through
application of clause (A) above), by any other corporation,
person or entity with which it or its "affiliate" or "associate"
(as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of stock of the Corporation, or which is its
"affiliate" or "associate" as those terms are defined in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect from time to time, and (ii) the
outstanding shares of any class of stock of the Corporation shall
include shares deemed owned through application of clauses (A)


                                8



<PAGE>

and (B) above but shall not include any other shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights or warrants, or otherwise.

                          (c)   This Section (4) shall apply to
the following transactions:

                                (i)   The merger, consolidation
         or statutory share exchange of the Corporation with or
         into any Principal Shareholder.

                                (ii)  The issuance of any
         securities of the Corporation to any Principal
         Shareholder for cash except upon (1) reinvestment of
         dividends pursuant to a dividend reinvestment plan of
         the Corporation or (2) issuance of any securities of the
         Corporation upon the exercise of any stock subscription
         rights distributed by the Corporation or (3) a public
         offering by the Corporation registered under the
         Securities Act of 1933.

                                (iii) The sale, lease or exchange
         of all or any substantial part of the assets of the
         Corporation to any Principal Shareholder (except assets
         having an aggregate fair market value of less than
         $1,000,000, aggregating for the purpose of such
         computation all assets sold, leased or exchanged in any
         series of similar transactions within a twelve-month
         period).

                                (iv)  The sale, lease or exchange
         to the Corporation or any subsidiary thereof, in
         exchange for securities of the Corporation, of any
         assets of any Principal Shareholder (except assets
         having an aggregate fair market value of less than
         $1,000,000, aggregating for the purposes of such
         computation all assets sold, leased or exchanged in any
         series of similar transactions within a twelve-month
         period).

                          (d)   The provisions of this
Section (4) shall not be applicable to (i) any of the
transactions described in Paragraph (c) of this Section if the
Continuing Directors of the Corporation (as defined below) shall
by resolution have approved a memorandum of understanding with
such Principal Shareholder with respect to and substantially
consistent with such transaction, or (ii) any such transaction
with any corporation of which a majority of the outstanding
shares of all classes of stock normally entitled to vote in
elections of directors is owned of record or beneficially by the
Corporation and its subsidiaries.  A "Continuing Director" is a


                                9



<PAGE>

Director who (i) was a Director on the date of the closing of the
initial public offering of the Corporation's Common Stock or (ii)
subsequently became a Director and whose election, or nomination
for election by the Corporation's stockholders, was approved by a
vote of a majority of the Continuing Directors then on the Board
of Directors.

                          (e)   The Board of Directors shall have
the power and duty to determine for the purposes of this
Section 4 on the basis of information known to the Corporation,
whether (i) a corporation, person or entity beneficially owns
more than five percent (5%) of the outstanding shares of any
class of stock of the Corporation, (ii) a corporation, person or
entity is an "affiliate" or "associate" (as defined above) of
another, (iii) the assets being acquired or leased to or by the
Corporation, or any subsidiary thereof, constitute a substantial
part of the assets of the Corporation and have an aggregate fair
market value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in Paragraph (d) hereof is
substantially consistent with the transaction covered thereby.
Any such determination shall be conclusive and binding for all
purposes of this Article.

                   (5)    Any determination made in good faith by
or pursuant to the direction of the Board of Directors, as to the
amount of the assets, debts, obligations, or liabilities of the
Corporation, as to the amount of any reserves or charges set up
and the propriety thereof, as to the time of or purpose for
creating such reserves or charges, as to the use, alteration or
cancellation of any reserves or charges (whether or not any debt,
obligation or liability for which such reserves or charges shall
have been created shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged), as to the
value of or the method of valuing any investment owned or held by
the Corporation, as to the market value or fair value of any
investment or fair value of any other asset of the Corporation,
as to the number of shares of the Corporation outstanding, as to
the estimated expense to the Corporation in connection with
purchases of its shares, as to the ability to liquidate
investments in an orderly fashion, or as to any other matters
relating to the issue, sale, purchase or other acquisition or
disposition of investments or shares of the Corporation, shall be
final and conclusive and shall be binding upon the Corporation
and all holders of its shares, past, present and future, and
shares of the Corporation are issued and sold on the condition
and understanding that any and all such determinations shall be
binding as aforesaid.

                   (6)    The liquidation or dissolution of the
Corporation and any amendments to the Charter to terminate the
Corporation's existence shall require the affirmative vote of


                               10



<PAGE>

seventy-five percent (75%) of the outstanding shares of Common
Stock of the Corporation, provided, however, that if a majority
of the Continuing Directors shall have approved the liquidation
or dissolution of the Corporation, such action shall require the
affirmative vote of a majority of the votes entitled to be cast.

         EIGHTH:   (1)    To the fullest extent that limitations
on the liability of directors and officers are permitted by the
Maryland General Corporation Law, no director or officer of the
Corporation shall have any liability to the Corporation or its
stockholders for money damages.  This limitation on liability
applies to events occurring at the time a person serves as a
director or officer of the Corporation whether or not such person
is a director or officer at the time of any proceeding in which
liability is asserted.

                   (2)    The Corporation shall indemnify and
advance expenses to its currently acting and its former directors
to the fullest extent that indemnification of directors is
permitted by the Maryland General Corporation Law.  The
Corporation shall indemnify and advance expenses to its officers
to the same extent as its directors and to such further extent as
is consistent with law.  The Board of Directors may by Bylaw,
resolution or agreement make further provisions for
indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation
Law.

                   (3)    No provision of this Article EIGHTH
shall be effective to protect or purport to protect any director
or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct to his office.

                   (4)    References to the Maryland General
Corporation Law in this Article EIGHTH are to that law as from
time to time amended.  No amendment to the Charter of the
Corporation shall affect any right of any person under this
Article EIGHTH based on any event, omission or proceeding prior
to the amendment.

         NINTH:    (1)    The Corporation reserves the right to
amend, alter, change or repeal any provision contained in the
Charter in the manner now or hereafter prescribed by the laws of
the State of Maryland, including any amendment which alters the
contract rights, as expressly set forth in the Charter, of any
outstanding stock, and all rights conferred upon stockholders
herein are granted subject to this reservation.



                               11



<PAGE>

                   (2)    Notwithstanding Section (1) of this
Article NINTH or any other provisions of the Charter, no
amendment to the Charter shall amend, alter, change or repeal any
of the provisions of Article THIRD, Article SIXTH, Sections (3),
(4) and (6) of Article SEVENTH and this Article NINTH unless the
amendment effecting such amendment, alteration, change or repeal
shall receive the affirmative vote of seventy-five percent (75%)
of the outstanding shares of Common Stock of the Corporation.
Such affirmative vote shall be in addition to the vote of the
holders of the stock of the Corporation otherwise required by law
or any agreement between the Corporation and any national
securities exchange.



          [Remainder of page intentionally left blank]





































                               12



<PAGE>

         IN WITNESS WHEREOF, the undersigned, being the
incorporator of the Corporation, has adopted and signed these
Amended Articles of Incorporation for the purpose of forming the
corporation described herein pursuant to the Maryland General
Corporation Law and does hereby acknowledge that said adoption
and signing are her act.


                                      /s/Kathleen K. Clarke
                                      _________________________
                                      Kathleen K. Clarke


Dated:  November 29, 2001







































                               13



<PAGE>

                            EXHIBIT B


          ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.

             ARTICLES OF AMENDMENT AND RESTATEMENT

         1.  Alliance National Municipal Income Fund, Inc., a
Maryland corporation (the "Corporation"), desires to amend and
restate its charter as currently in effect and as hereinafter
amended.

         2.  The following provisions are all the provisions of
the charter currently in effect and as hereinafter amended:

         FIRST:    (1)  The name of the incorporator is Kathleen
K. Clarke.

                   (2)  The incorporator's post office address is
1200 G Street, N.W., Washington, DC 20005.

                   (3)  The incorporator is over eighteen years
of age.

                   (4)  The incorporator does hereby form the
corporation named herein under the general laws of the State of
Maryland.

         SECOND:   The name of the corporation (hereinafter
called the "Corporation") is Alliance National Municipal Income
Fund, Inc.

         THIRD:    The purpose for which the Corporation is
formed is to conduct and carry on the business of an investment
company registered under the Investment Company Act of 1940.  The
Corporation shall have all of the powers granted to corporations
by the Maryland General Corporation Law now or hereafter in
force.

         FOURTH:   The post office address of the principal
office of the Corporation within the State of Maryland is 300
Lombard Street, Baltimore, Maryland 21202, in care of The
Corporation Trust Incorporated.

         The resident agent of the Corporation in the State of
Maryland is The Corporation Trust Incorporated, 300 Lombard
Street, Baltimore, Maryland 21202.

         FIFTH:    The total number of shares of stock which the
Corporation shall have authority to issue is Two Billion
(2,000,000,000), par value $.001 per share, all of which


                               14



<PAGE>

initially shall be Common Stock.  The aggregate par value of all
authorized shares of stock having par value is Two Million
Dollars ($2,000,000).  If shares of one class of stock are
classified or reclassified into shares of another class of stock
pursuant to Article SEVENTH, the number of authorized shares of
the former class shall be automatically decreased and the number
of shares of the latter class shall be automatically increased,
in each case by the number of shares so classified or
reclassified, so that the aggregate number of shares of stock of
all classes that the Corporation has authority to issue shall not
be more than the total number of shares of stock set forth in the
first sentence of this paragraph.  All shares of stock of the
Corporation shall be subject to the charter of the Corporation
(the "Charter") and the Bylaws of the Corporation, including,
without limitation, the following provisions:

                   (1)    The Corporation may issue shares of
stock in fractional denominations to the same extent as its whole
shares, and shares in fractional denominations shall be shares of
stock having proportionately to the respective fractions
represented thereby all the rights of whole shares, including
without limitation, the right to vote, the right to receive
dividends and distributions, and the right to participate upon
liquidation of the Corporation, but excluding the right to
receive a stock certificate representing fractional shares.

                   (2)    No holder of any shares of stock of the
Corporation shall be entitled to any preemptive rights except
those that the Board of Directors may determine from time to
time.

                   (3)    All persons who shall acquire stock or
other securities of the Corporation shall acquire the same
subject to the provisions of the Charter and the Bylaws, each as
from time to time amended.

                   (4)    The Board of Directors, without any
action by the stockholders of the Corporation, may amend the
Charter from time to time to increase or decrease the aggregate
number of shares of stock or the number of shares of stock of any
class or series that the Corporation has authority to issue.

         SIXTH:    (1)    The Corporation initially shall have
one director.  The number of directors of the Corporation may be
changed only by the Board of Directors pursuant to the Bylaws of
the Corporation, but the number of directors shall never be less
than the number prescribed by the Maryland General Corporation
Law.  The term of office of a director in office at the time of
any decrease in the number of directors shall not be affected as
a result thereof.  The name of the initial director of the
Corporation is Edmund P. Bergan, Jr.


                               15



<PAGE>

                   (2)    Beginning with the first annual meeting
of stockholders held after the initial public offering of the
shares of stock of the Corporation (the "Initial Annual Meeting")
the Board of Directors shall be divided into three classes.
Within the limits specified in Section (1) of this Article SIXTH
and the Bylaws of the Corporation, the number of directors in
each class shall be determined by resolution of the Board of
Directors.  The term of office of each director in the first
class shall continue to the date of the annual meeting of
stockholders held one year after the Initial Annual Meeting and
until his successor is elected and qualifies.  The term of office
of each director in the second class shall continue to the date
of the annual meeting of stockholders held two years after the
Initial Annual Meeting and until his successor is elected and
qualifies.  The term of office of each director in the third
class shall continue to the date of the annual meeting of
stockholders held three years after the Initial Annual Meeting
and until his successor is elected and qualifies.  Upon
expiration of the term of office of each class as set forth
above, the number of directors in such class, as determined by
the Board of Directors, shall be elected for a term of three
years to succeed the directors whose terms of office expire.  The
number of directorships shall be apportioned among the classes so
as to maintain the classes as nearly equal in number as possible.

                   (3)  The Corporation elects, at such time as
such election becomes available under Section 3-802(b) of the
Maryland General Corporation Law, that, except as may be provided
by the Board of Directors in setting the terms of any class or
series of preferred stock of the Corporation, any and all
vacancies on the Board of Directors may be filled only by the
affirmative vote of a majority of the remaining directors in
office, even if the remaining directors do not constitute a
quorum, and any director elected to fill a vacancy shall serve
for the remainder of the full term of the directorship in which
such vacancy occurred.

                   (4)    A director may be removed only for
cause by the affirmative vote of seventy-five percent (75%) of
the votes entitled to be cast for the election of such director.

         SEVENTH:  The following provisions are inserted for the
purpose of defining, limiting and regulating the powers of the
Corporation, the Board of Directors and the stockholders.

                   (1)    The business and affairs of the
Corporation shall be managed under the direction of the Board of
Directors which shall have and may exercise all powers of the
Corporation except those powers which are by law, by the Charter
or by the Bylaws conferred upon or reserved to the stockholders.



                               16



<PAGE>

In furtherance and not in limitation of the powers conferred by
law, the Board of Directors shall have power:

                          (a)   to make, alter and repeal the
         Bylaws of the Corporation;

                          (b)   to issue and sell, from time to
         time, shares of any class of the Corporation's stock in
         such amounts and on such terms and conditions, and for
         such amount and kind of consideration, as the Board of
         Directors shall determine;

                          (c)   from time to time to determine
         the net asset value per share of the Corporation's stock
         or to establish methods to be used by the Corporation's
         officers, employees or agents for determining the net
         asset value per share of the Corporation's stock;

                          (d)   from time to time to determine to
         what extent and at what times and places and under what
         conditions and regulations the accounts, books and
         records of the Corporation, or any of them, shall be
         open to the inspection of the stockholders; and no
         stockholder shall have any right to inspect any account
         or book or document of the Corporation, except as
         conferred by the laws of the State of Maryland, unless
         and until authorized to do so by resolution of the Board
         of Directors; and

                          (e)   to classify or to reclassify,
         from time to time, any unissued shares of stock of the
         Corporation, whether now or hereafter authorized, by
         setting, changing or eliminating the preferences,
         conversion or other rights, voting powers, restrictions,
         limitations as to dividends and other distributions,
         qualifications or terms and conditions of or rights to
         require redemption of the stock and any of the terms of
         any class or series of stock set or changed pursuant to
         this paragraph (e) may be made dependent upon facts or
         events ascertainable outside the Charter (including
         determinations by the Board of Directors or other facts
         or events within the control of the Corporation) and may
         vary among holders thereof, provided that the manner in
         which such facts, events or variations shall operate
         upon the terms of such class or series of stock is
         clearly and expressly set forth in the articles
         supplementary relating to such class or series of stock
         filed with the State Department of Assessments and
         Taxation of Maryland.




                               17



<PAGE>

                   (2)    Except as provided in Article SIXTH,
Sections (3), (4) and (6) of this Article SEVENTH and in Article
NINTH, notwithstanding any provision of the Maryland General
Corporation Law requiring a greater proportion than a majority of
the votes of the Corporation's stock entitled to be cast in order
to take or authorize any action, any such action may be taken or
authorized upon the concurrence of a majority of the aggregate
number of votes entitled to be cast thereon subject to any
applicable requirements of the Investment Company Act of 1940, as
in effect from time to time, or rules, regulations or orders
thereunder promulgated by the Securities and Exchange Commission
or any successor thereto.

                   (3)    Notwithstanding any other provisions of
the Charter, the conversion of the Corporation from a closed-end
company to an open-end company and any amendment to the Charter
of the Corporation to effect any such conversion, shall require
the affirmative vote of seventy-five percent (75%) of the
outstanding shares of stock of the Corporation.  Such affirmative
vote shall be in addition to the vote of the holders of the
Common Stock of the Corporation otherwise required by law or any
agreement between the Corporation and any national securities
exchange.

                   (4)    (a)   Notwithstanding any other
provision of the Charter, and subject to the exceptions provided
in Paragraph (d) of this Section (4), the types of transactions
described in Paragraph (c) of this Section (4) shall require the
affirmative vote of seventy-five percent (75%) of the outstanding
shares of Common Stock of the Corporation when a Principal
Shareholder (as defined in Paragraph (b) of this Section (4)) is
a party to the transaction.  Such affirmative vote shall be in
addition to the vote of the holders of the stock of the
Corporation otherwise required by law or any agreement between
the Corporation and any national securities exchange.

                          (b)   The term "Principal Shareholder"
shall mean any corporation, person or other entity which is the
beneficial owner, directly or indirectly, of more than five
percent (5%) of the outstanding shares of stock of the
Corporation and shall include any affiliate or associate, as such
terms are defined in clause (B) below, of a Principal
Shareholder.  For the purposes of this Section (4), in addition
to the shares of stock which a corporation, person or other
entity beneficially owns directly, (i) any corporation, person or
other entity shall be deemed to be the beneficial owner of any
shares of stock of the Corporation (A) which it has the right to
acquire pursuant to any agreement or upon exercise of conversion
rights or warrants, or otherwise (but excluding stock options
granted by the Corporation) or (B) which are beneficially owned,
directly or indirectly (including shares deemed owned through


                               18



<PAGE>

application of clause (A) above), by any other corporation,
person or entity with which it or its "affiliate" or "associate"
(as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of stock of the Corporation, or which is its
"affiliate" or "associate" as those terms are defined in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect from time to time, and (ii) the
outstanding shares of any class of stock of the Corporation shall
include shares deemed owned through application of clauses (A)
and (B) above but shall not include any other shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights or warrants, or otherwise.

                          (c)   This Section (4) shall apply to
the following transactions:

                                (i)   The merger, consolidation
         or statutory share exchange of the Corporation with or
         into any Principal Shareholder.

                                (ii)  The issuance of any
         securities of the Corporation to any Principal
         Shareholder for cash except upon (1) reinvestment of
         dividends pursuant to a dividend reinvestment plan of
         the Corporation or (2) issuance of any securities of the
         Corporation upon the exercise of any stock subscription
         rights distributed by the Corporation or (3) a public
         offering by the Corporation registered under the
         Securities Act of 1933.

                                (iii) The sale, lease or exchange
         of all or any substantial part of the assets of the
         Corporation to any Principal Shareholder (except assets
         having an aggregate fair market value of less than
         $1,000,000, aggregating for the purpose of such
         computation all assets sold, leased or exchanged in any
         series of similar transactions within a twelve-month
         period).

                                (iv)  The sale, lease or exchange
         to the Corporation or any subsidiary thereof, in
         exchange for securities of the Corporation, of any
         assets of any Principal Shareholder (except assets
         having an aggregate fair market value of less than
         $1,000,000, aggregating for the purposes of such
         computation all assets sold, leased or exchanged in any
         series of similar transactions within a twelve-month
         period).




                               19



<PAGE>

                          (d)   The provisions of this
Section (4) shall not be applicable to (i) any of the
transactions described in Paragraph (c) of this Section if the
Continuing Directors of the Corporation (as defined below) shall
by resolution have approved a memorandum of understanding with
such Principal Shareholder with respect to and substantially
consistent with such transaction, or (ii) any such transaction
with any corporation of which a majority of the outstanding
shares of all classes of stock normally entitled to vote in
elections of directors is owned of record or beneficially by the
Corporation and its subsidiaries.  A "Continuing Director" is a
Director who (i) was a Director on the date of the closing of the
initial public offering of the Corporation's Common Stock or (ii)
subsequently became a Director and whose election, or nomination
for election by the Corporation's stockholders, was approved by a
vote of a majority of the Continuing Directors then on the Board
of Directors.

                          (e)   The Board of Directors shall have
the power and duty to determine for the purposes of this
Section 4 on the basis of information known to the Corporation,
whether (i) a corporation, person or entity beneficially owns
more than five percent (5%) of the outstanding shares of any
class of stock of the Corporation, (ii) a corporation, person or
entity is an "affiliate" or "associate" (as defined above) of
another, (iii) the assets being acquired or leased to or by the
Corporation, or any subsidiary thereof, constitute a substantial
part of the assets of the Corporation and have an aggregate fair
market value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in Paragraph (d) hereof is
substantially consistent with the transaction covered thereby.
Any such determination shall be conclusive and binding for all
purposes of this Article.

                   (5)    Any determination made in good faith by
or pursuant to the direction of the Board of Directors, as to the
amount of the assets, debts, obligations, or liabilities of the
Corporation, as to the amount of any reserves or charges set up
and the propriety thereof, as to the time of or purpose for
creating such reserves or charges, as to the use, alteration or
cancellation of any reserves or charges (whether or not any debt,
obligation or liability for which such reserves or charges shall
have been created shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged), as to the
value of or the method of valuing any investment owned or held by
the Corporation, as to the market value or fair value of any
investment or fair value of any other asset of the Corporation,
as to the number of shares of the Corporation outstanding, as to
the estimated expense to the Corporation in connection with
purchases of its shares, as to the ability to liquidate
investments in an orderly fashion, or as to any other matters


                               20



<PAGE>

relating to the issue, sale, purchase or other acquisition or
disposition of investments or shares of the Corporation, shall be
final and conclusive and shall be binding upon the Corporation
and all holders of its shares, past, present and future, and
shares of the Corporation are issued and sold on the condition
and understanding that any and all such determinations shall be
binding as aforesaid.

                   (6)    The liquidation or dissolution of the
Corporation and any amendments to the Charter to terminate the
Corporation's existence shall require the affirmative vote of
seventy-five percent (75%) of the outstanding shares of Common
Stock of the Corporation, provided, however, that if a majority
of the Continuing Directors shall have approved the liquidation
or dissolution of the Corporation, such action shall require the
affirmative vote of a majority of the votes entitled to be cast.

         EIGHTH:   (1)    To the fullest extent that limitations
on the liability of directors and officers are permitted by the
Maryland General Corporation Law, no director or officer of the
Corporation shall have any liability to the Corporation or its
stockholders for money damages.  This limitation on liability
applies to events occurring at the time a person serves as a
director or officer of the Corporation whether or not such person
is a director or officer at the time of any proceeding in which
liability is asserted.

                   (2)    The Corporation shall indemnify and
advance expenses to its currently acting and its former directors
to the fullest extent that indemnification of directors is
permitted by the Maryland General Corporation Law.  The
Corporation shall indemnify and advance expenses to its officers
to the same extent as its directors and to such further extent as
is consistent with law.  The Board of Directors may by Bylaw,
resolution or agreement make further provisions for
indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation
Law.

                   (3)    No provision of this Article EIGHTH
shall be effective to protect or purport to protect any director
or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct to his office.

                   (4)    References to the Maryland General
Corporation Law in this Article EIGHTH are to that law as from
time to time amended.  No amendment to the Charter of the
Corporation shall affect any right of any person under this


                               21



<PAGE>

Article EIGHTH based on any event, omission or proceeding prior
to the amendment.

         NINTH:    (1)    The Corporation reserves the right to
amend, alter, change or repeal any provision contained in the
Charter in the manner now or hereafter prescribed by the laws of
the State of Maryland, including any amendment which alters the
contract rights, as expressly set forth in the Charter, of any
outstanding stock, and all rights conferred upon stockholders
herein are granted subject to this reservation.

                   (2)    Notwithstanding Section (1) of this
Article NINTH or any other provisions of the Charter, no
amendment to the Charter shall amend, alter, change or repeal any
of the provisions of Article THIRD, Article SIXTH, Sections (3),
(4) and (6) of Article SEVENTH and this Article NINTH unless the
amendment effecting such amendment, alteration, change or repeal
shall receive the affirmative vote of seventy-five percent (75%)
of the outstanding shares of Common Stock of the Corporation.
Such affirmative vote shall be in addition to the vote of the
holders of the stock of the Corporation otherwise required by law
or any agreement between the Corporation and any national
securities exchange.

         3.  The amendment to and restatement of the charter as
hereinabove set forth has been duly approved pursuant to Section
2-603 (c) of the Maryland General Corporation Law by the Board of
Directors. The Corporation has no stock outstanding.

         4.  The current address of the principal office of the
Corporation is as set forth in Article Fourth of the foregoing
amendment and restatement of the charter.

         5.  The name and address of the Corporation's current
resident agent is as set forth in Article Fourth of the foregoing
amendment and restatement of the charter.

         6.  The number of directors of the Corporation and the
names of those currently in office are as set forth in Article
Sixth of the foregoing amendment and restatement of the charter.

         7.  The number of authorized shares of stock of the
Corporation is not changed by the foregoing amendment and
restatement of the charter.

         The undersigned President acknowledges these Articles of
Amendment and Restatement to be the corporate act of the
Corporation and further, as to all matters or facts required to
be verified under oath, the undersigned President acknowledges,
that to the best of his knowledge, information and belief, the
matters and facts set forth herein are true in all material


                               22



<PAGE>

respects and that this statement is made under the penalties for
perjury.



















































                               23
00250209.AO5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2B BYLAWS
<SEQUENCE>4
<FILENAME>b_00250209aj4.txt
<TEXT>



<PAGE>




                             BYLAWS

                               OF

          ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.

                        ________________

                            ARTICLE I

                             Offices

         Section 1.  Principal Office in Maryland.  The

Corporation shall have a principal office in the City of

Baltimore, or at such other place as the Board of Directors may

designate in the State of Maryland.

         Section 2.  Additional Offices.  The Corporation may

have additional offices, including a principal executive office,

at such places as the Board of Directors may from time to time

determine or as the business of the Corporation may require.

                           ARTICLE II

                    Meetings of Stockholders

         Section 1.  Place of Meeting.  Meetings of stockholders

shall be held at the principal executive office of the

Corporation or at other such place as shall be set by the Board

of Directors and stated in the notice of meeting.

         Section 2.  Annual Meetings.  Annual meetings of

stockholders shall be held on a date and at a time set from time

to time by the Board of Directors not less than ninety nor more

than one hundred twenty days following the end of each fiscal




<PAGE>


year of the Corporation, for the election of directors and the

transaction of any other business within the powers of the

Corporation.

         Section 3.  Special Meetings.  (a)  General.  The

chairman, president or Board of Directors may call a special

meeting of the stockholders.  Subject to subsection (b) of this

Section 3, a special meeting of stockholders shall also be called

by the secretary of the Corporation upon the written request of

the stockholders entitled to cast not less than a majority of all

the votes entitled to be cast at such meeting. Except as provided

in Subsection (b) of this Section 3, any special meeting shall be

held at such place, date and time as may be designated by the

chairman, president and Board of Directors, whoever has called

the meeting.  In setting a date of any special meeting, the

chairman, president or Board of Directors may consider such

factors as he, she or it deems relevant within the good faith

exercise of business judgment, including, without limitation, the

nature of the matters to be considered, the facts and

circumstances surrounding any request for a meeting and any plan

of the Board of Directors to call an annual meeting or a special

meeting.

         (b)  Stockholder Requested Special Meetings.  (1)  Any

stockholder of record seeking to have stockholders request a

special meeting shall, by sending written notice to the secretary

of the Corporation (the "Record Date Request Notice") by




                                2




<PAGE>


certified or registered mail, return receipt requested, request

the Board of Directors to set a record date to determine the

stockholders entitled to request a special meeting (the "Request

Record Date").  The Record Date Request Notice shall set forth

the purpose of the requested special meeting and the matters

proposed to be acted on at such special meeting, shall be signed

by one or more stockholders of record as of the date of signature

(or their duly authorized agents), shall bear the date of

signature of each such stockholder (or duly authorized agent) and

shall set forth all information relating to each such stockholder

that must be disclosed in solicitations of proxies for election

of directors in an election contest (even if an election contest

is not involved), or is otherwise required, in each case pursuant

to Regulation 14A (or any successor provision) under the

Securities Exchange Act of 1934, as amended (the "Exchange Act"),

and Rule 14a-11 (or any successor provision) thereunder.  Upon

receiving the Record Date Request Notice, the Board of Directors

may set a Request Record Date.  The Request Record Date shall not

precede and shall not be more than twenty days after the close of

business on the date on which the resolution setting the Request

Record Date is adopted by the Board of Directors.  If the Board

of Directors, within twenty days after the date on which a valid

Record Date Request Notice is received, fails to adopt a

resolution setting the Request Record Date and make a public

announcement of such Request Record Date, the Request Record Date




                                3




<PAGE>


shall be the close of business on the twentieth day after the

first date on which the Record Date Request Notice is actually

received by the secretary.

              (2) In order for any stockholder to request a

special meeting, one or more written requests for a special

meeting, signed by stockholders of record (or their duly

authorized agents) as of the Request Record Date entitled to cast

not less than a majority (the "Special Meeting Percentage") of

all of the votes entitled to be cast at such meeting (the

"Special Meeting Request") shall be delivered to the secretary.

In addition, the Special Meeting Request shall set forth the

purpose of the meeting and the matters proposed to be acted on at

the meeting (which shall be limited to the matters set forth in

the Record Date Request Notice received by the secretary of the

Corporation), shall be signed by one or more persons who as of

the Request Record Date are stockholders of record (or their duly

authorized agents), shall bear the date of signature of each such

stockholder (or duly authorized agent) signing the Special

Meeting Request, shall set forth the name and address, as they

appear in the Corporation's stock ledger, of each stockholder

signing such request (or on whose behalf the Special Meeting

Request is signed) and the class and number of shares of stock of

the Corporation which are owned of record and beneficially by

each such stockholder, shall be sent to the secretary by

certified or registered mail, return receipt requested, and shall




                                4




<PAGE>


be received by the secretary within sixty days after the Request

Record Date.  Any requesting stockholder may revoke his, her or

its request for a special meeting at any time by written

revocation delivered to the secretary.

              (3) The secretary shall inform the requesting

stockholders of the reasonably estimated cost of preparing and

mailing the notice of the special meeting (including the

Corporation's proxy materials).  The secretary shall not be

required to call a special meeting upon stockholder request and

such meeting shall not be held unless, in addition to the

documents required by paragraph (2) of this Section 3(b), the

secretary receives payment of such reasonably estimated cost

prior to the mailing of any notice of the meeting.

              (4) A special meeting called by the secretary upon

the request of stockholders (a "Stockholder Requested Meeting")

shall be held at such place, date and time as may be designated

by the Board of Directors; provided, however, that the date of

any Stockholder Requested Meeting shall be not more than ninety

days after the record date for such meeting (the "Meeting Record

Date"); and provided further that if the Board of Directors fails

to designate, within ten days after the date that a valid Special

Meeting Request is actually received by the secretary (the

"Delivery Date"), a date and time for a Stockholder Requested

Meeting, then such meeting shall be held at 2:00 p.m. local time

on the ninetieth day after the Meeting Record Date or, if such




                                5




<PAGE>


ninetieth day is not a Business Day (as defined below), on the

first preceding Business Day; and provided further that in the

event that the Board of Directors fails to designate a place for

a Stockholder Requested Meeting within ten days after the

Delivery Date, then such meeting shall be held at the principal

executive offices of the Corporation.  In the case of any

Stockholder Requested Meeting, if the Board of Directors fails to

set a Meeting Record Date that is a date within thirty days after

the Delivery Date, then the close of business on the thirtieth

day after the Delivery Date shall be the Meeting Record Date.

              (5) If at any time as a result of written

revocations of requests for the special meeting, stockholders of

record (or their duly authorized agents) as of the Request Record

Date for the meeting entitled to cast less than the Special

Meeting Percentage shall have delivered and not revoked requests

for the special meeting, the secretary may refrain from mailing

the notice of the meeting or, if the notice of the meeting has

been mailed, the secretary may revoke the notice of the meeting

at any time before ten days prior to the meeting if the secretary

has first sent to all other requesting stockholders written

notice of such revocation and of the intention to revoke the

notice of the meeting.  Any request for a special meeting

received after a revocation by the secretary of a notice of a

meeting shall be considered a request for a new special meeting.






                                6




<PAGE>


              (6) The Corporation may engage regionally or

nationally recognized independent inspectors of elections to act

as the agent of the Corporation for the purpose of promptly

performing a ministerial review of the validity of any purported

Special Meeting Request received by the secretary.  For the

purpose of permitting the inspectors to perform such review, no

such purported request shall be deemed to have been received by

the secretary until the earlier of (i) five Business Days after

actual receipt by the secretary of such purported request and

(ii) such date as the independent inspectors certify to the

Corporation that the valid requests received by the secretary

represent at least a majority of the issued and outstanding

shares of stock that would be entitled to vote at such meeting.

Nothing contained in this paragraph (6) shall in any way be

construed to suggest or imply that the Corporation or any

stockholder shall not be entitled to contest the validity of any

request, whether during or after such five Business Day period,

or to take any other action (including, without limitation, the

commencement, prosecution or defense of any litigation with

respect thereto, and the seeking of injunctive relief in such

litigation).

              (7) For purposes of these Bylaws, "Business Day"

shall mean any day other than a Saturday, a Sunday or a day on

which banking institutions in the State of New York are

authorized or obligated by law or executive order to close.




                                7




<PAGE>


         Section 4.  Notice of Meetings. Not less than ten nor

more than ninety days before each meeting of stockholders, the

secretary shall give to each stockholder entitled to vote at such

meeting and to each stockholder not entitled to vote thereat who

is entitled to notice of the meeting written notice stating the

time and place of the meeting and, in the case of a special

meeting or as otherwise may be required by any statute, the

purpose for which the meeting is called, either by mail, by

presenting it to such stockholder personally, by leaving it at

such stockholder's residence or usual place of business or by any

other means permitted by Maryland law.  If mailed, such notice

shall be deemed to be given when deposited in the United States

mail addressed to the stockholder at the stockholder's address as

it appears on the records of the Corporation, with postage

thereon prepaid.

         Section 5.  Scope of Notice.  Subject to Section 7 of

this Article II of these Bylaws, any business of the Corporation

may be transacted at an annual meeting of the stockholders

without being specifically designated in the notice, except such

business as is required by any statute to be stated in such

notice. Business transacted at any special meeting of

stockholders shall be limited to the purposes stated in the

notice thereof.

         Section 6.  Quorum, Adjournment of Meeting.  At any

meeting of stockholders, the presence in person or by proxy of




                                8




<PAGE>


the holders of a majority of the shares of stock of the

Corporation entitled to vote at such meeting shall constitute a

quorum; but this section shall not affect any requirement under

any statute or the charter of the Corporation (the "Charter") for

the vote necessary for the adoption of any measure.  If, however,

a quorum shall not be present at any meeting of the stockholders,

the chairman of the meeting or the stockholders entitled to vote

at such meeting, present in person or by proxy, shall have the

power to adjourn the meeting from time to time to a date not more

than 120 days after the original record date without notice other

than announcement at the meeting.  At such adjourned meeting at

which a quorum is present, any business may be transacted which

might have been transacted at the meeting as originally notified.

The stockholders present either in person or by proxy at a

meeting which has been duly called and convened may continue to

transact business until adjournment, notwithstanding the

withdrawal of enough stockholders to leave less than a quorum.

Section 7.    Nominations and Proposals by Stockholders.

         (a)  Annual Meetings of Stockholders.  (1) Nominations

of persons for election to the Board of Directors and the

proposal of business to be considered by the stockholders may be

made at an annual meeting of stockholders (i) pursuant to the

Corporation's notice of meeting, (ii) by or at the direction of

the Board of Directors or (iii) by any stockholder of the

Corporation who was a stockholder of record both at the time of




                                9




<PAGE>


giving of notice provided for in this Section 7(a) and at the

time of the annual meeting, who is entitled to vote at the

meeting and who complied with the notice procedures set forth in

this Section 7(a).

              (2) For nominations for election to the Board of

Directors or other business to be properly brought before an

annual meeting by a stockholder pursuant to clause (iii) of

paragraph (a)(1) of this Section 7, the stockholder must have

given timely notice thereof in writing to the secretary of the

Corporation and such other business must otherwise be a proper

matter for action by the stockholders.  To be timely, a

stockholder's notice must be delivered to the secretary at the

principal executive office of the Corporation by no later than

the close of business on the ninetieth day prior to the first

anniversary of the date of mailing of the notice for the

preceding year's annual meeting nor earlier than the close of

business on the 120th day prior to the first anniversary of the

date of mailing of the notice for the preceding year's annual

meeting; provided, however, that in the event that the date of

the mailing of the notice of the annual meeting is advanced by

more than thirty days or delayed by more than sixty days from the

anniversary date of the mailing of the notice of the preceding

year's annual meeting, notice by the stockholder to be timely

must be so delivered not earlier than the close of business on

the 120th day prior to the date of mailing of the notice for the




                               10




<PAGE>


annual meeting and not later than the close of business on the

later of the ninetieth day prior to the annual meeting or the

tenth day following the day on which public announcement of the

date of such meeting is first made by the Corporation.  In no

event shall the public announcement of a postponement of the

mailing of the notice for such annual meeting or adjournment or

postponement of an annual meeting to a later date or time

commence a new time period for the giving of a stockholder's

notice as described above.  Such a stockholder's notice shall set

forth (i) as to each person whom the stockholder proposes to

nominate for election or reelection as a director, (a) the name,

age, business address and residence address of such person, (b)

the class and number of shares of stock of the Corporation that

are beneficially owned by such person, (c) whether such

stockholder believes any nominee will be an "interested person"

of the Corporation (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

Corporation to make such determination, and (d) all other

information relating to such person that is required to be

disclosed in solicitations of proxies for election of directors

in an election contest (even if an election contest is not

involved), or is otherwise required, in each case pursuant to

Regulation 14A (or any successor provision) under the Exchange

Act (including such person's written consent to being named in




                               11




<PAGE>


the proxy statement as a nominee and to serving as a director if

elected); (ii) as to any other business that the stockholder

proposes to bring before the meeting, a description of the

business desired to be brought before the meeting, the reasons

for conducting such business at the meeting and any material

interest in such business of such stockholder (including any

anticipated benefit to the stockholder therefrom) and of each

beneficial owner, if any, on whose behalf the proposal is made;

and (iii) as to the stockholder giving the notice and each

beneficial owner, if any, on whose behalf the nomination or

proposal is made, (x) the name and address of such stockholder,

as they appear on the Corporation's stock ledger and the current

name and address, if different, of such beneficial owner, and (y)

the class and number of shares of each class of stock of the

Corporation which are owned beneficially and of record by such

stockholder and such beneficial owner.

              (3) Notwithstanding anything in subsection (a) of

this Section 7 to the contrary, in the event that the number of

directors to be elected to the Board of Directors is increased

and there is no public announcement by the Corporation naming all

of the nominees for director or specifying the size of the

increased Board of Directors at least 100 days prior to the first

anniversary of the preceding year's annual meeting, a

stockholder's notice required by this Section 7(a) shall also be

considered timely, but only with respect to nominees for any new




                               12




<PAGE>


positions created by such increase, if the notice is delivered to

the secretary at the principal executive offices of the

Corporation not later than the close of business on the tenth day

immediately following the day on which such public announcement

is first made by the Corporation.

         (b)  Special Meetings of Stockholders.  Only such

business shall be conducted at a special meeting of stockholders

as shall have been brought before the meeting pursuant to the

Corporation's notice of meeting.  Nominations of persons for

election to the Board of Directors may be made at a special

meeting of stockholders at which directors are to be elected (i)

pursuant to the Corporation's notice of meeting, (ii) by or at

the direction of the Board of Directors or (iii) provided that

the Board of Directors has determined that directors shall be

elected at such special meeting, by any stockholder of the

Corporation who is a stockholder of record both at the time of

giving of notice provided for in this Section 7(b) and at the

time of the special meeting, who is entitled to vote at the

meeting, and who complied with the notice procedures set forth in

this Section 7(b).  In the event the Corporation calls a special

meeting of stockholders for the purpose of electing one or more

directors to the Board of Directors, any such stockholder may

nominate a person or persons (as the case may be) for election as

a director as specified in the Corporation's notice of meeting,

if the stockholder's notice required by paragraph (a)(2) of this




                               13




<PAGE>


Section 7 shall be delivered to the secretary at the principal

executive offices of the Corporation not earlier than the close

of business on the 120th day prior to such special meeting and

not later than the close of business on the later of the

ninetieth day prior to such special meeting or the tenth day

following the day on which public announcement is first made of

the date of the special meeting and each nominee proposed by the

Board of Directors to be elected at such meeting.  In no event

shall the public announcement of a postponement or adjournment of

a special meeting commence a new time period for the giving of a

stockholder's notice as described above.

         (c)  General.  (1)  Upon written request by the

secretary or the Board of Directors or any committee thereof, any

stockholder proposing a nominee for election as a director or any

proposal for other business at a meeting of stockholders shall

provide, within three business days of delivery of such request

(or such other period as may be specified in such request),

written verification, satisfactory to the secretary or the Board

or any committee thereof, in his, her or its sole discretion, of

the accuracy of any information submitted by the stockholder

pursuant to this Section 7.  If a stockholder fails to provide

such written verification within such period, the secretary or

the Board of Directors or any committee thereof may treat the

information as to which written verification was requested as not






                               14




<PAGE>


having been provided in accordance with the procedures set forth

in this Section 7.

              (2) Only such persons who are nominated in

accordance with the procedures set forth in this Section 7 shall

be eligible to serve as directors, and only such business shall

be conducted at a meeting of stockholders as shall have been

brought before the meeting in accordance with the procedures set

forth in this Section 7.  The chairman of the meeting shall have

the power and duty to determine whether a nomination or any other

business proposed to be brought before the meeting was made or

proposed, as the case may be, in accordance with the procedures

set forth in this Section 7 and, if any proposed nomination or

business is not in compliance with this Section 7, to declare

that such defective nomination or proposal be disregarded.

              (3) For purposes of this Section 7, (a) "the date

of mailing of the notice" shall mean the date of the proxy

statement for the solicitation of proxies for election of

director's and (b) "public announcement" shall mean disclosure

(i) in a press release either transmitted to the principal

securities exchange on which shares of the Corporation's common

stock are traded or reported by a recognized news service or (ii)

in a document publicly filed by the Corporation with the United

States Securities and Exchange Commission pursuant to the

Exchange Act.






                               15




<PAGE>


              (4) Notwithstanding the foregoing provisions of

Section 7, a stockholder shall also comply with all applicable

requirements of state law and of the Exchange Act and the rules

and regulations thereunder with respect to the matters set forth

in this Section 7.  Nothing in this Section 7 shall be deemed to

affect any right of a stockholder to request inclusion of a

proposal in, nor the right of the Corporation to omit a proposal

from, the Corporation's proxy statement pursuant to Rule 14a-8

(or any successor provision) under the Exchange Act.

         Section 8.  Voting.  A plurality of all the votes cast

at a meeting of stockholders duly called and at which a quorum is

present shall be sufficient to elect a director.  Each share may

be voted for as many individuals as there are directors to be

elected and for whose election the share is entitled to be voted.

A majority of the votes cast at a meeting of stockholders duly

called and at which a quorum is present shall be sufficient to

approve any other matter which may properly come before the

meeting, unless more than a majority of the votes cast is

required by express provision in law (including, in particular,

but not limited to, the Investment Company Act of 1940, as from

time to time in effect, or other statutes or rules or orders of

the Securities and Exchange Commission or any successor thereto)

or the Charter.  Unless otherwise provided in the Charter, each

outstanding share, regardless of class, shall be entitled to one






                               16




<PAGE>


vote on each matter submitted to a vote at a meeting of

stockholders.

         Section 9.  Proxies.  A stockholder may cast the votes

entitled to be cast by the shares of stock owned of record by the

stockholder in person or by proxy executed by the stockholder or

by the stockholder's duly authorized agent in any manner

permitted by law.  Such proxy or evidence of authorization of

such proxy shall be filed with the secretary of the Corporation

before or at the meeting, for as long as the polls are open.  No

proxy is valid more than eleven months after its date, unless

otherwise provided in the proxy.

         Section 10. Record Date.  In order that the Corporation

may determine the stockholders entitled to notice of or to vote

at any meeting of stockholders, to express consent to corporate

action in writing without a meeting, or to receive payment of any

dividend or other distribution or allotment of any rights, or to

exercise any rights in respect of any change, conversion or

exchange of stock or for the purpose of any other lawful action,

the Board of Directors may set, in advance, a record date which

shall not be before the close of business on the day the record

date is fixed and shall not be more than ninety days and, in the

case of a meeting of stockholders, not less than ten days before

the date on which the meeting or particular action requiring such

determination of stockholders is to be taken.  In lieu of setting

a record date, the Board of Directors may provide that the stock




                               17




<PAGE>


transfer books shall be closed for a stated period, but not to

exceed, in any case, twenty days.  If the stock transfer books

are closed for the purpose of determining stockholders entitled

to notice of or to vote at a meeting of stockholders, such books

shall be closed for at least ten days immediately before such

meeting.  If no record date is fixed and the stock transfer books

are not closed for the determination of stockholders:  (1) The

record date for the determination of stockholders entitled to

notice of, or to vote at, a meeting of stockholders shall be the

close of business on the day on which notice of the meeting of

stockholders is mailed or the thirtieth day before the meeting,

whichever is the closer date to the meeting; and (2) The record

date for the determination of stockholders entitled to receive

payment of a dividend or an allotment of any rights shall be at

the close of business on the day on which the resolution of the

Board of Directors, declaring the dividend or allotment of

rights, is adopted, provided that the payment or allotment date

shall not be more than sixty days after the date of the adoption

of such resolution.  When a determination of stockholders

entitled to vote at any meeting of stockholders has been made as

provided in this section, such determination shall apply to any

adjournment thereof, except when (i) the determination has been

made through the closing of the transfer books and the stated

period of closing has expired or (ii) the meeting is adjourned to

a date more than 120 days after the record date fixed for the




                               18




<PAGE>


original meeting, in either of which case a new record date shall

be determined as set forth herein.

         Section 11. Inspectors.  The Board of Directors, in

advance of any meeting, may, but need not, appoint one or more

individual inspectors or one or more entities that designate

individuals as inspectors to act at the meeting or any

adjournment thereof.  If an inspector or inspectors are not

appointed, the person presiding at the meeting may, but need not,

appoint one or more inspectors.  In case any person who may be

appointed as an inspector fails to appear or act, the vacancy may

be filled by appointment made by the Board of Directors in

advance of the meeting or at the meeting by the chairman of the

meeting.  Each inspector, if any, before entering upon the

discharge of his or her duties, shall take and sign an oath

faithfully to execute the duties of inspector at such meeting

with strict impartiality and according to the best of his or her

ability.  The inspectors, if any, shall determine the number of

shares outstanding and the voting power of each, the shares

represented at the meeting, the existence of a quorum, the

validity and effect of proxies, and shall receive votes, ballots

or consents, hear and determine all challenges and questions

arising in connection with the right to vote, count and tabulate

all votes, ballots or consents, determine the result, and do such

acts as are proper to conduct the election or vote with fairness

to all stockholders.  Each such report shall be in writing and




                               19




<PAGE>


signed by him or her or by a majority of them if there is more

than one inspector acting at such meeting.  If there is more than

one inspector, the report of a majority shall be the report of

the inspectors.  The report of the inspector or inspectors on the

number of shares represented at the meeting and the results of

the voting shall be prima facie evidence thereof.  On request of

the chairman of the meeting or any stockholder, the inspector or

inspectors, if any, shall make a report in writing of any

challenge, question or matter determined by such inspector or the

inspectors and execute a certificate of any fact found by such

inspector or the inspectors.

         Section 12. Organization, Conduct of Meeting.  Every

meeting of stockholders shall be conducted by an individual

appointed by the Board of Directors to be chairman of the

meeting, or in the absence of such appointment, by the chairman

of the board or, in the case of a vacancy in the office or

absence of the chairman of the board, by one of the following

officers present at the meeting:  the vice chairman of the board,

if there be one, the president, the vice presidents in their

order of rank and seniority, and in the absence of such officers,

a chairman chosen by the stockholders by the vote of a majority

of the votes cast by stockholders present in person or by proxy.

The secretary, or, in the secretary's absence, an assistant

secretary, or in the absence of both the secretary and assistant

secretaries, a person appointed by the Board of Directors or, in




                               20




<PAGE>


the absence of such appointment, a person appointed by the

chairman of the meeting shall act as secretary.  In the event

that the secretary presides at a meeting of the stockholders, an

assistant secretary shall record the minutes of the meeting.  The

order of business and all other matters of procedure at any

meeting of stockholders shall be determined by the chairman of

the meeting.  The chairman of the meeting may prescribe such

rules, regulations and procedures and take such action as, in the

discretion of such chairman, are appropriate for the proper

conduct of the meeting, including, without limitation, (a)

restricting admission to the time set for the commencement of the

meeting; (b) limiting attendance at the meeting to stockholders

of record of the Corporation, their duly authorized proxies or

other such persons as the chairman of the meeting may determine;

(c) limiting participation at the meeting on any matter to

stockholders of record of the Corporation entitled to vote on

such matter; (d) limiting the time allotted to questions or

comments by participants; (e) maintaining order and security at

the meeting; (f) directing the removal of any stockholder or

other person who refuses to comply with meeting procedures, rules

or guidelines as set forth by the chairman of the meeting; and

(g) recessing or adjourning the meeting to a later date and time.

Unless otherwise determined by the chairman of the meeting,

meetings of stockholders shall not be required to be held in

accordance with the rules of parliamentary procedure.




                               21




<PAGE>


         Section 13. Informal Action by Stockholders.  Except to

the extent prohibited by the Investment Company Act of 1940, as

from time to time in effect, or rules or orders of the Securities

and Exchange Commission or any successor thereto, any action

required or permitted to be taken at any meeting of stockholders

may be taken without a meeting if a consent in writing, setting

forth such action, is signed by all the stockholders entitled to

vote on the subject matter thereof and any other stockholders

entitled to notice of a meeting of stockholders (but not to vote

thereat) have waived in writing any rights which they may have to

dissent from such action, and such consent and waiver are filed

with the records of the stockholders meetings.

         Section 14. Voting of Stock by Certain Holders.  Stock

of the Corporation registered in the name of a corporation,

partnership, trust or other entity, if entitled to be voted, may

be voted by the president or a vice president, a general partner

or a trustee thereof, as the case may be, or a proxy appointed by

any of the foregoing individuals, unless some other person who

has been appointed to vote such stock pursuant to a bylaw or a

resolution of the governing body of such corporation or other

entity or agreement of the partners of a partnership presents a

certified copy of such bylaw, resolution or agreement, in which

case such person may vote such stock.  Any fiduciary may vote

stock registered in his, her or its name as such fiduciary,

either in person or by proxy.




                               22




<PAGE>


         Shares of stock of the Corporation directly or

indirectly owned by it shall not be voted at any meeting and

shall not be counted in determining the total number of

outstanding shares entitled to be voted at any given time, unless

they are held by it in a fiduciary capacity, in which case they

may be voted and shall be counted in determining the total number

of outstanding shares at any given time.

         The Board of Directors may adopt by resolution a

procedure by which a stockholder may certify in writing to the

Corporation that any shares of stock registered in the name of

the stockholder are held for the account of a specified person

other than the stockholder.  The resolution shall set forth the

class of stockholders who may make the certification, the purpose

for which the certification may be made, the form of

certification and the information to be contained in it; if the

certification is with respect to a record date or closing of the

stock transfer books, the time after the record date or closing

of the stock transfer books within which the certification must

be received by the Corporation; and any other provisions with

respect to the procedure which the Board of Directors considers

necessary or desirable.  On receipt of such certification, the

person specified in the certification shall be regarded as, for

the purposes set forth in the certification, the stockholder of

record of the specified stock in place of the stockholder who

makes the certification.




                               23




<PAGE>


                           ARTICLE III

                       Board of Directors

         Section 1.  General.  (a)  Number.  The number of

directors constituting the entire Board of Directors may be

increased or decreased from time to time by the vote of the Board

of Directors, provided that the number thereof shall never be

less than the minimum required by the Maryland General

Corporation Law (the "MGCL") nor more than twenty.  The tenure of

office of a director in office at the time of any decrease in the

number of directors shall not be affected as a result thereof.

If the Corporation shall have issued shares of preferred stock,

while any such shares remain outstanding, the number of directors

shall not be less than six.

         (b)  Tenure.  Beginning with the first annual meeting of

stockholders held after the initial public offering of the shares

of stock of the Corporation the Board of Directors shall be

divided into three classes.  Within the limits above specified,

the number of directors in each class shall be determined by

resolution of the Board of Directors or by the stockholders at

the annual meeting thereof.  Each director in the first class

shall serve until the next annual meeting of stockholders and

until his successor is duly elected and qualifies.  Each director

in the second class shall serve until the second succeeding

annual meeting of stockholders and until his successor is duly

elected and qualifies.  Each director in the third class shall




                               24




<PAGE>


serve until the third succeeding annual meeting of stockholders

and until his successor is duly elected and qualifies.  Upon

expiration of the term of office of each class as set forth

above, the number of directors in such class, as determined by

the Board of Directors, shall be elected for a term of three

years to succeed the directors whose terms of office expire.  The

directors shall be elected at the annual meeting of stockholders,

except as provided in Section 2 of this Article, and each

director elected shall serve until his or her successor is duly

elected and qualifies.

         (c)  Resignation.  Any director may resign at any time

by giving written notice of the resignation to the Board of

Directors, the chairman of the board, the president or secretary.

Any resignation shall take place immediately upon its receipt or

at such later time as may be specified in the notice of

resignation.

         Section 2.  Vacancies and Newly-Created Director-ships.

If for any reason any or all of the directors cease to be

directors, such circumstance shall not terminate the Corporation

or affect these Bylaws or the powers of any remaining directors

hereunder.  Pursuant to the Corporation's election in Article

SIXTH, paragraph (3) of the charter, except as may be provided by

the Board of Directors in setting the terms of any class or

series or preferred stock, any vacancy on the Board of Directors

may be filled only by a majority of the remaining directors, even




                               25




<PAGE>


if the directors do not constitute a quorum.  Any director

elected to fill a vacancy shall serve for the remainder of the

full term of the class in which the vacancy occurred and until a

successor is elected and qualifies.

         Section 3.  Powers.  The business and affairs of the

Corporation shall be managed under the direction of the Board of

Directors.  All powers of the Corporation may be exercised by or

under the authority of the Board of Directors except as conferred

on or reserved to the stockholders by law, by the Charter or

these Bylaws.

         Section 4.  Annual Meeting.  The annual meeting of the

Board of Directors shall be held immediately following the

adjournment of the annual meeting of stockholders and at the

place thereof.  No notice of such meeting (other than this Bylaw)

to the directors shall be necessary in order legally to

constitute the meeting, provided a quorum shall be present.  In

the event such meeting is not so held, the meeting may be held at

such time and place as shall be specified in a notice given as

hereinafter provided for special meetings of the Board of

Directors.

         Section 5.  Other Meetings.  The Board of Directors of

the Corporation or any committee thereof may hold meetings, both

regular and special.  Special meetings of the Board of Directors

may be called by the chairman, the president or two or more

directors.  The Board of Directors may provide, by resolution,




                               26




<PAGE>


the time and place for the holding of regular meetings of the

Board of Directors without other notice than such resolution.

Notice of any special meeting of the Board of Directors shall be

delivered personally or by telephone, electronic mail, facsimile

transmission, United States mail or courier to each director at

his or her business or residence address.  Notice by personal

delivery, by telephone, electronic mail, facsimile transmission

shall be given at least 24 hours prior to the meeting. Notice by

United States mail shall be given at least three days prior to

the meeting.  Notice by courier shall be given at least two days

before the meeting. Telephone notice shall be deemed to be given

when the director or his or her agent is personally given such

notice in a telephone call to which the director or the

director's agent is a party. Electronic mail notice shall be

deemed to be given upon transmission of the message to the

electronic mail address given to the Corporation by the director.

Facsimile transmission notice shall be deemed to be given upon

completion of the transmission of the message to the number given

to the Corporation by the director and receipt of a completed

answer-back indicating receipt.  Notice by United States mail

shall be deemed to be given when deposited in the United States

mail properly addressed, with postage thereon prepaid.  Notice by

courier shall be deemed to be given when deposited with or

delivered to a courier properly addressed.  Neither the business

to be transacted at, nor the purpose of, any annual, regular or




                               27




<PAGE>


special meeting of the Board of Directors need be stated in the

notice, unless specifically required by statute or these Bylaws.

         Section 6.  Emergency Meetings.  Emergency meetings of

the Board of Directors may be called at any time by the chairman

of the board after notice delivered personally or by telephone,

electronic mail or facsimile transmission to each director at his

or her business or residence address.  Notice of any emergency

meeting shall be given at least four hours prior to the meeting

and shall be deemed to be given as provided in Section 5 hereof.

         Section 7.  Quorum and Voting.  During such times when

the Board of Directors shall consist of more than one director, a

quorum for the transaction of business at meetings of the Board

of Directors shall consist of a majority of the entire Board of

Directors, but in no event shall a quorum consist of less than

two directors.  If, however, pursuant to the Charter or these

Bylaws, the vote of a majority of a particular group of directors

is required for action, a quorum must also include a majority of

that group.  The action of a majority of the directors present at

a meeting at which a quorum is present shall be the action of the

Board of Directors, unless the concurrence of a greater

proportion is required for such action by statute.  If a quorum

shall not be present at any meeting of the Board of Directors, a

majority of the directors present thereat may adjourn the meeting

from time to time, without notice other than announcement at the

meeting, until a quorum shall be present.  The directors present




                               28




<PAGE>


at a meeting which has been duly called and convened may continue

to transact business until adjournment, not withstanding the

withdrawal of enough directors to leave less than a quorum.

         Section 8.  Committees.  The Board of Directors may

appoint from among its members an executive committee and other

committees of the Board of Directors, each committee to be

composed of one or more directors of the Corporation.  The Board

of Directors may, to the extent provided in the resolution,

delegate to such committees, in the intervals between meetings of

the Board of Directors, any or all of the powers of the Board of

Directors in the management of the business and affairs of the

Corporation, except the power to authorize dividends, to issue

stock, to recommend to stockholders any action requiring

stockholders' approval, to amend the Bylaws or to approve any

merger or share exchange which does not require stockholders'

approval and except as otherwise prohibited by law.  The Board of

Directors may designate a chairman of any committee, and such

chairman or any two members of any committee (if there are at

least two members of the Committee) may set the time and place of

its meeting unless the Board shall otherwise provide.  However, a

meeting of any committee of the Board of Directors may not be

called without the consent of the chairman of the committee.

Such committee or committees shall have the name or names as may

be determined from time to time by resolution adopted by the

Board of Directors.  Notice of Committee meetings shall be given




                               29




<PAGE>


in the same manner as notice for special meetings of the Board of

Directors.  Unless the Board of Directors designates one or more

directors as alternate members of any committee, who may replace

an absent or disqualified member at any meeting of the committee,

the members of any such committee present at any meeting and not

disqualified from voting may, whether or not they constitute a

quorum, appoint another member of the Board of Directors to act

at the meeting in the place of any absent or disqualified member

of such committee.  At meetings of any such committee, a majority

of the members or alternate members of such committee shall

constitute a quorum for the transaction of business and the act

of a majority of the members or alternate members present at any

meeting at which a quorum is present shall be the act of the

committee.  Subject to the provisions hereof, the Board of

Directors shall have the power at any time to change the

membership of any committee, to fill vacancies, to designate

alternate members to replace any absent or disqualified member or

to dissolve any such committee.

         Section 9.  Minutes of Meetings.  The Board of Directors

and any committee thereof shall keep regular minutes of its

proceedings.

         Section 10. Action Without a Meeting.  Any action

required or permitted to be taken at any meeting of the Board of

Directors or of any committee thereof may be taken without a

meeting, if a written consent thereto is signed by each member of




                               30




<PAGE>


the Board of Directors or of such committee, as the case may be,

and such written consent is filed with the minutes of proceedings

of the Board of Directors or committee, provided, however, that

such written consent shall not constitute approval of any matter

which pursuant to the Investment Company Act of 1940 and the

rules thereunder requires the approval of directors by vote cast

in person at a meeting.

         Section 11. Meetings by Conference Telephone.  The

members of the Board of Directors or any committee thereof may

participate in a meeting of the Board of Directors or committee

by means of a conference telephone or similar communications

equipment if all persons participating in the meeting can hear

each other at the same time and such participation shall

constitute presence in person at such meeting, provided, however,

that such participation shall not constitute presence in person

to the extent deemed not to constitute presence in person for the

purposes of those provisions of the Investment Company Act of

1940 and the rules thereunder requiring the approval of directors

by vote cast in person at a meeting.

         Section 12. Fees and Expenses.  The directors may be

paid their expenses of attendance at each meeting of the Board of

Directors and may be paid a fixed sum for attendance at each

meeting of the Board of Directors, a stated salary as director or

such other compensation as the Board of Directors may approve.

No such payment shall preclude any director from serving the




                               31




<PAGE>


Corporation in any other capacity and receiving compensation

therefor.  Members of special or standing committees may be

allowed like reimbursement and compensation for attending

committee meetings.

         Section 13. Loss of Deposits.  No director shall be

liable for any loss which may occur by reason of the failure of

any bank, trust company, savings and loan association, or other

institution with whom moneys or stock have been deposited.

         Section 14. Surety Bonds.  Unless required by law, no

director shall be obligated to give any bond or surety or other

security for the performance of any of his or her duties.

         Section 15. Reliance.  Each director, officer, employee

and agent of the Corporation shall, in the performance of his or

her duties with respect to the Corporation, be fully justified

and protected with regard to any act or failure to act in

reliance in good faith upon the books of account or other records

of the Corporation, upon an opinion of counsel or upon reports

made to the Corporation by any of its officers or employees or by

the adviser, accountants, appraisers or other experts or

consultants selected by the Board of Directors or officers of the

Corporation, regardless of whether such counsel or expert may

also be a director.

         Section 16. Certain Rights of Directors, Officers,

Employees and Agents.  The directors shall have no responsibility

to devote their full time to the affairs of the Corporation.  Any




                               32




<PAGE>


director or officer, employee or agent of the Corporation, in his

or her personal capacity or in a capacity as an affiliate,

employee, or agent of any other person, or otherwise, may have

business interests and engage in business activities similar to

or in addition to or in competition with those of or relating to

the Corporation.

                           ARTICLE IV

                        Waiver of Notice

         Whenever any notice is required to be given pursuant to

applicable law, the Charter or these Bylaws, a waiver thereof in

writing, signed by the person or persons entitled to said notice,

whether before or after the time stated therein, shall be deemed

the equivalent of notice and such waiver shall be filed with the

records of the meeting.  Neither the business to be transacted at

nor the purpose of any meeting need be set forth in the waiver of

notice, unless specifically required by law.  Attendance of a

person at any meeting shall constitute a waiver of notice of such

meeting except when the person attends a meeting for the express

purpose of objecting, at the beginning of the meeting, to the

transaction of any business because the meeting is not lawfully

called or convened.












                               33




<PAGE>


                            ARTICLE V

                            Officers

         Section 1.  General.  The officers of the Corporation

shall be elected by the Board of Directors at its first meeting

after each annual meeting of stockholders and shall be a chairman

of the Board of Directors, a president, a secretary and a

treasurer.  If the election of officers shall not be held at such

meeting, such election shall be held as soon thereafter as may be

convenient.  The Board of Directors may also elect such vice

presidents and additional officers or assistant officers with

such powers and duties as it may deem necessary or advisable.

The chairman of the board may appoint one or more vice

presidents, assistant secretaries and assistant treasurers.  Any

number of offices, except the offices of president and vice

president, may be held concurrently by the same person.  No

officer shall execute, acknowledge or verify any instrument in

more than one capacity if such instrument is required by law to

be executed, acknowledged or verified by two or more officers.

         Section 2.  Other Officers and Agents.  The Board of

Directors may elect such other officers and agents as it desires

who shall hold their offices for such terms and shall exercise

such powers and perform such duties as shall be determined from

time to time by the Board of Directors.

         Section 3.  Tenure, Removal, Resignation and Vacancies

of Officers.  The officers of the Corporation shall hold office




                               34




<PAGE>


at the pleasure of the Board of Directors.  Election of an

officer or agent does not in itself create contract rights

between the Corporation and such officer or agent.  Each elected

officer shall hold his or her office until such officer's

successor is elected and qualifies or until such officer's

successor earlier resignation or removal, in the manner

hereinafter provided, or death.  Any officer may resign at any

time upon written notice to the Board of Directors, the chairman

of the board, the president or the secretary.  Any resignation

shall take effect immediately upon its receipt or at such later

time as may be specified in the notice of resignation.  The

acceptance of a resignation shall not be necessary to make it

effective unless otherwise stated in the resignation.  Such

resignation shall be without prejudice to the rights, if any, of

the Corporation.  Any officer elected by the Board of Directors

or appointed by the chairman of the Board of Directors may be

removed at any time by the Board of Directors when, in its

judgment, the best interests of the Corporation will be served

thereby.  Any vacancy occurring in any office of the Corporation

by death, resignation, removal or otherwise may be filled by the

Board of Directors.

         Section 4.  Chairman of the Board of Directors.  The

chairman of the Board of Directors shall preside at all meetings

of the stockholders and of the Board of Directors. He or she

shall be the chief executive officer, shall have general and




                               35




<PAGE>


active management of the business of the Corporation, shall see

that all orders and resolutions of the Board of Directors are

carried into effect and shall perform other such duties as may be

assigned to him or her by the Board of Directors.  In the absence

or disability of the president, the chairman shall perform the

duties and exercise the powers of the president.  He or she shall

be ex officio a member of all committees designated by the Board

of Directors except as otherwise determined by the Board of

Directors.  He or she may execute bonds, mortgages, contracts and

other instruments, except where required by law or by these

Bylaws to be otherwise signed and executed and except where the

signing and execution thereof shall be expressly delegated by the

Board of Directors to some other officer or agent of the

Corporation.

         Section 5.  President.  The president shall, in the

absence of the chairman or vice chairman, preside at all meetings

of the stockholders or of the Board of Directors.  In the absence

or disability of the chairman or vice chairman, the president

shall perform the duties and exercise the powers of the chairman.

He or she may execute bonds, mortgages, contracts and other

instruments, except where required by law or by these Bylaws to

be otherwise signed and executed and except where the signing and

execution thereof shall be expressly delegated by the Board of

Directors to some other officer or agent of the Corporation.

Additionally, the president shall perform all duties incident to




                               36




<PAGE>


the office of president and such other duties as shall be

assigned to him by the Board of Directors

         Section 6.  Vice Presidents.  The vice presidents shall

act under the direction of the chairman and the president and in

the absence or disability of the chairman and the president shall

perform the duties and exercise the powers of both such offices.

They shall perform such other duties and have such other powers

as the chairman, the president or the Board of Directors may from

time to time assign.  The Board of Directors may designate one or

more executive vice presidents or may otherwise specify the order

of seniority of the vice presidents and, in that event, the

duties and powers of the chairman and the president shall descend

to the vice presidents in the specified order of seniority.

         Section 7.  Secretary.  The secretary shall act under

the direction of the chairman and the president.  Subject to the

direction of the chairman or the president and except as provided

in Section 8 of this Article V, he or she shall (a) attend all

meetings of the Board of Directors and all meetings of

stockholders and record the proceedings in one or more books to

be kept for that purpose; (b) see that all notices are duly given

in accordance with the provisions of these Bylaws or as required

by law; (c) be custodian of the corporate records and of the seal

of the Corporation; and (d) in general perform such other duties

as from time to time may be assigned to him or her by the






                               37




<PAGE>


chairman of the Board of Directors, the president or the Board of

Directors.

         Section 8.  Assistant Secretaries.  The assistant

secretaries in the order of their seniority, unless otherwise

determined by the chairman, the president or the Board of

Directors, shall, in the absence or disability of the secretary,

perform the duties and exercise the powers of the secretary.  If

an assistant secretary is unavailable to perform the duties and

exercise the powers of the secretary at a meeting of the Board of

Directors, the chairman of the Board of Directors or the

president may appoint another person to keep the minutes of the

meeting.  The assistant secretaries shall perform such other

duties and have such other powers as the chairman, the president

or the Board of Directors may from time to time assign.

         Section 9.  Treasurer.  The treasurer shall act under

the direction of the chairman and the president.  Subject to the

direction of the chairman or the president he or she shall have

the custody of the corporate funds and securities and shall keep

full and accurate accounts of receipts and disbursements in books

belonging to the Corporation and shall deposit all moneys and

other valuable effects in the name and to the credit of the

Corporation in such depositories as may be designated by the

Board of Directors.  He or she shall disburse the funds of the

Corporation as may be ordered by the chairman, the president or

the Board of Directors, taking proper vouchers for such




                               38




<PAGE>


disbursements, and shall render to the chairman, the president

and the Board of Directors, at its regular meetings, or when the

Board of Directors so requires, an account of all his or her

transactions as treasurer and of the financial condition of the

Corporation.

         Section 10. Assistant Treasurers.  The assistant

treasurers in the order of their seniority, unless otherwise

determined by the chairman, the president or the Board of

Directors, shall, in the absence or disability of the treasurer,

perform the duties and exercise the powers of the treasurer.

They shall perform such other duties and have such other powers

as the chairman, the president or the Board of Directors may from

time to time assign.

         Section 11. Salaries.  The salaries and other

compensation of the officers, if any, shall be fixed from time to

time by the Board of Directors and no officer shall be prevented

from receiving such salary or other compensation by reason of the

fact that he or she is also a director.

                           ARTICLE VI

                              Stock

         Section 1.  Certificates.  In the event that the

Corporation issues shares of stock represented by certificates,

such certificates shall be signed by the officers of the

Corporation in the manner permitted by the MGCL and shall contain

the statements and information required by the MGCL.  In the




                               39




<PAGE>


event that the Corporation issues shares of stock without

certificates, the Corporation shall provide the holders of such

shares with a written statement of the information required by

the MGCL to be included on stock certificates.

         Section 2.  Fractional Share Interests.  The Corporation

may issue fractions of a share of stock to the same extent as its

whole shares.  Fractional shares of stock shall have

proportionately to the respective fractions represented thereby

all the rights of whole shares, including without limitation the

right to vote, the right to receive dividends and distributions,

and the right to participate upon liquidation of the Corporation,

excluding, however, the right to receive a stock certificate

representing such fractional shares. Notwithstanding any other

provision of the Charter or these Bylaws, the Board of Directors

may issue units consisting of different securities of the

Corporation.  Any security issued in a unit shall have the same

characteristics as any identical securities issued by the

Corporation, except that the Board of Directors may provide that

for a specified period securities of the Corporation issued in

such unit may be transferred on the books of the Corporation only

in such unit.

         Section 3.  Lost, Stolen or Destroyed Certificates.  Any

officer designated by the Board of Directors may direct a new

certificate or certificates to be issued in place of any

certificate or certificates previously issued by the Corporation




                               40




<PAGE>


alleged to have been lost, stolen or destroyed, upon the making

of any affidavit of that fact by the person claiming the

certificate or certificates to be lost, stolen or destroyed.

When authorizing such issue of a new certificate or certificates,

an officer designated by the Board of Directors may, in his or

her discretion and as a condition precedent to the issuance

thereof, require the owner of such lost, stolen or destroyed

certificate or certificates, or the owner's legal representative,

to advertise the same in such manner as he or she shall require

and/or to give the Corporation a bond with sufficient security,

to the Corporation to indemnify it against any loss or claim

which may arise as a result of the issuance of the new security.

         Section 4.  Transfer of Shares.  Upon surrender to the

Corporation or a transfer agent of the Corporation of a

certificate for shares of stock duly endorsed or accompanied by

proper evidence of succession, assignment or authority to

transfer, the Corporation shall record the transaction upon its

books, issue a new certificate to the person entitled thereto

upon request for such certificate, and cancel the old

certificate, if any.  Notwithstanding the foregoing, transfers of

shares of any class of stock will be subject in all respects to

the Charter and all of the terms and conditions contained

therein.

         Section 5.  Registered Owners. The Corporation shall be

entitled to treat the holder of record of any share of stock as




                               41




<PAGE>


the holder in fact thereof and, accordingly, shall not be bound

to recognize any equitable or other claim to or interest in such

share or on the part of any other person, whether or not it shall

have the express or other notice thereof, except as otherwise

provided by the laws of the State of Maryland.  The Corporation

shall maintain at its principal office or at the office of its

transfer agent, an original or duplicate stock ledger containing

the name and address of each stockholder and the number of shares

of each class held by such stockholder.

                           ARTICLE VII

                         Net Asset Value

         The net asset value of a share of Common Stock of the

Corporation as at the time of a particular determination shall be

the quotient obtained by dividing the value at such time of the

net assets of the Corporation (i.e., the value of the assets

belonging to the Corporation less its liabilities exclusive of

capital and surplus) by the total number of shares of Common

Stock outstanding at such time, all determined and computed as

follows:

              (1) The assets of the Corporation shall be deemed

to include (a) all cash on hand, on deposit, or on call, (b) all

bills and notes and accounts receivable, (c) all securities owned

or contracted for by the Corporation, other than shares of its

own Common Stock, (d) all interest accrued on any interest

bearing securities owned by the Corporation and (e) all other




                               42




<PAGE>


property of every kind and nature including prepaid expenses.

Portfolio securities for which market quotations are readily

available shall be valued at market value.  All other investment

assets of the Corporation, including restricted securities, shall

be valued in such manner as the Board of Directors of the

Corporation in good faith shall deem appropriate to reflect such

securities' fair value.

              (2) The liabilities of the Corporation shall

include (a) all bills and notes and accounts payable, (b) all

administrative expenses payable and/or accrued (including

management and advisory fees payable and/or accrued, including in

the case of any contingent feature thereof, an estimate based on

the facts existing at the time), (c) all contractual obligations

for the payment of money or property, including any amounts owing

under contracts for the purchase of securities and the amount of

any unpaid dividend declared upon the Corporation's Common Stock,

(d) all  reserves, if any, authorized or approved by the Board of

Directors for taxes, including reserves for taxes at current

rates based on any unrealized appreciation in the value of the

assets of the Corporation and (e) all other liabilities of the

Corporation of whatsoever kind and nature except liabilities

represented by outstanding capital stock and surplus of the

Corporation.

              (3) For the purposes thereof






                               43




<PAGE>


                  (A)  Changes in the holdings of the

Corporation's portfolio securities shall be accounted for on a

trade date basis.

                  (B)  Expenses, including management and

advisory fees, shall be included to date of calculation.

In addition to the foregoing, the Board of Directors is

empowered, subject to applicable legal requirements, in its

absolute discretion, to establish other methods for determining

the net asset value of each share of Common Stock of the

Corporation.

                          ARTICLE VIII

                          Miscellaneous

         Section 1.  Reserves.  There may be set aside out of any

assets of the Corporation available for dividends or other

distributions such sum or sums as the Board of Directors from

time to time, in its absolute discretion, think proper as a

reserve or reserves to meet contingencies, or for such other

purpose as the Board of Directors shall determine to be in the

best interest of the Corporation, and the Board of Directors may

modify or abolish any such reserve.

         Section 2.  Dividends and Other Distributions.

Dividends and other distributions upon the stock by the

Corporation may, subject to the provisions of the Charter and of

the provisions of applicable law, be authorized by the Board of

Directors at any time.  Dividends and other distributions may be




                               44




<PAGE>


paid in cash, property or stock of the Corporation, subject to

the provisions of the Charter and of applicable law.

         Section 3.  Capital Gains Distributions.  The amount and

number of capital gains distributions paid to the stockholders

during each fiscal year shall be determined by the Board of

Directors.  Each such payment shall be accompanied by a statement

as to the source of such payment, to the extent required by law.

         Section 4.  Checks and Drafts.  All checks, drafts or

demands for the payment of money, notes or other evidence of

indebtedness issued in the name of the Corporation shall be

signed by such officer or officers or such other agent or agents

as the Board of Directors may from time to time designate.

         Section 5.  Fiscal Year.  The fiscal year of the

Corporation shall be fixed by resolution of the Board of

Directors.

         Section 6.  Seal.  The corporate seal shall have

inscribed thereon the name of the Corporation, the year of its

organization and the words "Corporate Seal, Maryland."  The seal

may be used by causing it or a facsimile thereof to be impressed

or affixed or in another manner reproduced.  Whenever the

Corporation is permitted or required to affix its seal to a

document, it shall be sufficient to meet the requirements of any

law, rule or regulation relating to a seal to place the word

"(SEAL)" adjacent to the signature of the person authorized to

execute the document on behalf of the Corporation.




                               45




<PAGE>


         Section 7.  Insurance Against Certain Liabilities.  The

Corporation shall not bear the cost of insurance that protects or

purports to protect directors and officers of the Corporation

against any liabilities to the Corporation or its security

holders to which any such director or officer would otherwise be

subject by reason of willful misfeasance, bad faith, gross

negligence or reckless disregard of the duties involved in the

conduct of his or her office.

         Section 8.  Contracts.  The Board of Directors may

authorize any officer or agent to enter into any contract or to

execute and deliver any instrument in the name of and on behalf

of the Corporation and such authority may be general or confined

to specific instances.  Any agreement, deed, mortgage, lease or

other document shall be valid and binding upon the Corporation

when authorized or ratified by action of the Board of Directors

and executed by an authorized person.

         Section 9.  Deposits.  All funds and assets of the

Corporation not otherwise employed shall be deposited from time

to time to the credit of the Corporation in such banks, trust

companies or other depositories as the Board of Directors may

designate.












                               46




<PAGE>


                           ARTICLE IX

                         Indemnification

         Section 1.  Indemnification of Directors and Officers

and Other Persons.  The Corporation shall indemnify its directors

to the fullest extent that indemnification of directors is

permitted by the MGCL.  The Corporation shall indemnify its

current and former officers to the same extent as its directors

and to such further extent as is consistent with law.  The

Corporation shall indemnify its current and former directors and

officers and those persons who, at the request of the

Corporation, serve or have served as a director, officer,

partner, trustee, employee, agent or fiduciary of another

corporation, partnership, joint venture, trust, other enterprise

or employee benefit plan against all expenses, liabilities and

losses (including attorneys' fees, judgments, fines and amounts

paid in settlement) reasonably incurred or suffered by them in

connection with being such a director, officer or other person

serving as described above.  The indemnification and other rights

provided by this Article shall continue as to a person who has

ceased to be a director or officer and shall inure to the benefit

of the heirs, executors and administrators of such a person.

This Article shall not protect any such person against any

liability to the Corporation or to its security holders to which

such person would otherwise be subject by reason of willful

misfeasance, bad faith, gross negligence or reckless disregard of




                               47




<PAGE>


the duties involved in the conduct of his or her office

("disabling conduct").

         Section 2.  Advances.  Any current or former director or

officer of the Corporation shall be entitled to advances from the

Corporation for payment of the reasonable expenses incurred by

such current or former director or officer in connection with the

matter as to which he or she may be entitled to indemnification

in the manner and, subject to the conditions described below, to

the fullest extent permissible under the MGCL.  The person

seeking indemnification shall provide to the Corporation a

written affirmation of his or her good faith belief that the

standard of conduct necessary for indemnification by the

Corporation has been met and a written undertaking by the person

seeking indemnification or on behalf of such person to repay any

such advance if it should ultimately be determined that the

standard of conduct has not been met.  In addition, at least one

of the following additional conditions shall be met:  (a) the

person seeking indemnification shall provide a security in form

and amount acceptable to the Corporation for his undertaking; (b)

the Corporation is insured against losses arising by reason of

the advance; or (c) a majority of a quorum of directors of the

Corporation who are neither "interested persons" as defined in

Section 2(a)(19) of the Investment Company Act of 1940, as

amended, nor parties to the proceeding ("disinterested non-party

directors"), or independent legal counsel, in a written opinion,




                               48




<PAGE>


shall have determined, based on a review of facts readily

available to the Corporation at the time the advance is proposed

to be made, that there is reason to believe that the person

seeking indemnification will ultimately be found to be entitled

to indemnification.

         Section 3.  Procedure.  At the request of any person

claiming indemnification under this Article, the Board of

Directors shall determine, or cause to be determined, in a manner

consistent with the MGCL, whether the standards required by this

Article have been met.  Indemnification shall be made only

following:  (a) a final decision on the merits by a court or

other body before whom the proceeding was brought that the person

to be indemnified was not liable by reason of disabling conduct

or (b) in the absence of such a decision, a reasonable

determination, based upon a review of the facts, that the person

to be indemnified was not liable by reason of disabling conduct

by (i) the vote of a majority of a quorum of disinterested non-

party directors or (ii) an independent legal counsel in a written

opinion.

         Section 4.  Indemnification of Employees and Agents.

Employees and agents who are not officers or directors of the

Corporation may be indemnified, and reasonable expenses may be

advanced to such employees or agents, as may be provided by

action of the Board of Directors or by contract, subject to any

limitations imposed by the Investment Company Act of 1940.




                               49




<PAGE>


         Section 5.  Other Rights.  The Board of Directors may

make further provision consistent with law for indemnification

and advance of expenses to directors, officers, employees and

agents by resolution, agreement or otherwise.  The

indemnification provided by this Article shall not be deemed

exclusive of any other right, with respect to indemnification or

otherwise, to which those seeking indemnification may be entitled

under any insurance or other agreement or resolution of

stockholders or disinterested directors or otherwise.  The rights

provided to any person by this Article shall be enforceable

against the Corporation by such person, who shall be presumed to

have relied upon it in serving or continuing to serve as a

director, officer, employee, or agent as provided above.

         Section 6.  Amendments.  References in this Article are

to the MGCL and to the Investment Company Act of 1940 as from

time to time amended.  No amendment of these Bylaws shall affect

any right of any person under this Article based on any event,

omission or proceeding prior to the amendment.

                            ARTICLE X

                           Amendments

         The Board of Directors shall have the exclusive power to

make, alter and repeal these Bylaws.










                               50

00250209.AJ4


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2E DIV REIN PL
<SEQUENCE>5
<FILENAME>e_00250209an1.txt
<TEXT>



<PAGE>

ALLIANCE CAPITAL [LOGO]

Dear Shareholder:

In order to provide you with answers to the questions that are
most frequently asked about the Dividend Reinvestment Plan (the
"Plan") established by Alliance National Municipal Income Fund,
Inc. (the "Fund"), we have prepared this brochure to summarize
the details of the Plan.  The Plan provides a convenient way to
acquire additional shares of the Fund's common stock
automatically through the reinvestment of net investment income
and capital gains.

If your shares are held in your own name, you may elect to be a
participant in the Plan.  If your shares are held in the name of
a brokerage firm, bank or other nominee, you should contact such
brokerage firm, bank or nominee to determine whether or how you
may elect to participate in the Plan.  If such service is not
provided by your particular institution, you may have to request
your brokerage firm, bank or other nominee to register your
shares in your own name to enable you to participate in the Plan.

We hope that this brochure will prove helpful in addressing your
questions regarding the Plan.  If you have any questions, please
contact [____________] at the telephone number listed on the
cover of this brochure.

Sincerely,


____________________
John D. Carifa
Chairman of the Board

(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.



<PAGE>

How Often Are Dividends and Capital Gains Distributed?

The Fund will pay dividends of net investment income on its
shares of common stock (the "Shares") on a monthly basis, and
will distribute net capital gains on the Shares, if any, at least
annually.

How Do I Enroll in The Plan?

All shareholders whose Shares are registered in their own names
will have all distributions paid in cash, unless a shareholder
elects to have such distributions reinvested automatically in
additional Shares.

Shareholders whose Shares are held in the name of a broker or
nominee may elect to have distributions reinvested by the broker
or nominee in additional Shares under the Plan, unless the
reinvestment service is not provided by the particular broker or
nominee (the "Nonparticipating Institutions").  You should
contact your brokerage firm, bank or other nominee to determine
whether or how you may elect to participate in the Plan.  If the
service is not available, such distributions will be paid in
cash.  To the extent that you wish to participate in the Plan,
and you hold your Shares through a Nonparticipating Institution,
you should contact such institution to ensure that your account
is properly represented.  It may also be necessary for you to
have your Shares taken out of "street" name and registered in
your own name to guarantee your participation in the Plan.  You
should contact your broker or nominee for information as to its
participation in the reinvestment service.

What Are The Benefits Of the Plan?

The Plan provides you with a convenient way to reinvest your
dividends and capital gains in additional Shares of the Fund,
thereby enabling you to compound your returns from the Fund.

If you elect to become a participant, all distributions will be
automatically reinvested by [____________], as the plan agent
(the "Plan Agent"), in whole or fractional Shares of the Fund, as
the case may be.

Another benefit of the Plan is that, under circumstances in which
the dividends or distributions are reinvested in Shares that are
purchased by the Plan Agent on the open market, brokerage
commissions should be lower than you would pay to buy Shares on
your own because the Plan Agent would purchase Shares in large
blocks.  In cases where dividends or distributions consist of
Shares issued directly by the Fund, no brokerage commissions to
acquire such Shares are paid.



                                2



<PAGE>

You will receive detailed account statements from the Plan Agent,
showing your dividends and capital gains distributions, dates of
reinvestment, number of Shares acquired and purchase price paid
per Share, and also showing the total number of Shares you
previously acquired and still hold through the Plan.

How Do I Have Distributions Automatically Reinvested?

If Shares are registered in your name, you must notify the Plan
Agent that you wish to participate in the Plan.  All such
distributions will be automatically reinvested in additional
Shares.  To notify the Plan Agent, the shareholder MUST:

- -   Complete and sign the attached authorization form; and

- -   Mail the form to the Plan Agent at the address stated on the
    form.

In order to have dividends and capital gains automatically
reinvested in additional Shares, the authorization form must be
received by the Plan Agent at least 10 business days before the
record date for such distributions.

How Does The Dividend Reinvestment Plan Work?

When a dividend or capital gain distribution is declared,
nonparticipants in the Plan will receive cash.  Participants in
the Plan will receive the equivalent in Shares of the Fund valued
as described below:

    (i)  If the Shares are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund
will issue new Shares at the greater of net asset value or 95% of
the then current market price.

    (ii) If the Shares are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the
dividend or distribution in cash and apply it to the purchase of
the Fund's Shares in the open market, on the New York Stock
Exchange or elsewhere, for the participants' accounts.  Such
purchases will be made on or shortly after the payment date for
such dividend or distribution and in no event more than 30 days
after such date except where temporary curtailment or suspension
of purchase is necessary to comply with the Federal securities
laws.  If, before the Plan Agent has completed its purchases, the
market price exceeds the net asset value of a Share of common
stock, the average purchase price per share paid by the Plan
Agent may exceed the net asset value of the Fund's Shares,
resulting in the acquisition of fewer Shares than if the dividend
or distribution had been paid in Shares issued by the Fund.



                                3



<PAGE>

Will The Entire Amount Of My Distribution Be Reinvested?

As a participant in the Plan, the entire amount of your
distribution will be reinvested in Shares.  For any balance that
is not sufficient to purchase a full Share, the Plan Agent will
credit your account with a fractional Share interest computed to
four decimal places.  The fractional Share interest is included
in all subsequent distributions, and you have voting rights on
all full and fractional Shares acquired under the Plan.

Will I Be Issued Share Certificates For Transactions In The Plan?

No.  All Shares will be credited to the shareholder's account.
However, if a stock certificate is desired, it must be requested
in writing for each transaction.  Certificates will be issued
only for full Shares after request.

Are Distributions That Are Reinvested Subject To Income Taxes?

The automatic reinvestment of dividends and distributions will
not relieve participants of any income tax which may be payable
on such dividends or distributions.  If you participate in the
Plan, you will receive a Form 1099 concerning the Federal tax
status of distributions paid during the year.

Is There Any Charge To Participate In The Plan?

You will not pay any charge as a participant in the Plan to have
your dividends and distributions reinvested in additional Shares.
The Plan Agent's fees for handling the reinvestment of dividends
and distributions will be paid by the Fund.  There will be no
brokerage charges for Shares issued directly by the Fund as a
result of dividends or distributions payable either in Shares or
cash.  However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's
open market purchases in connection with the reinvestment of
dividends or distributions paid in cash.

How Do I Withdraw From the Plan or Sell My Shares?

Participants wishing to withdraw from the Plan or sell part or
all of their Shares must notify the Agent in writing not less
than 10 days prior to any dividend record date, as specified in
Paragraph 10 of the Terms and Conditions.

Should you choose to withdraw any Shares from the Plan or
discontinue your participation in the Plan, you will receive a
certificate for the appropriate number of full Shares, along with
a check in payment for any fractional Share interest you may
have.  The payment for the fractional Share interest will be
valued at the market price of the Fund Shares on the date your


                                4



<PAGE>

termination is effective.  In lieu of receiving a certificate,
you may request the Plan Agent to sell part or all of your Shares
at the market price and remit the proceeds to you, net of any
brokerage commissions.  A $3.00 fee is charged by the Plan Agent
upon any cash withdrawal or termination.

WHOM SHOULD I CONTACT FOR ADDITIONAL INFORMATION?

If you hold Shares in your own name, please address all notices,
correspondence, questions or other communications regarding the
Plan to:

                      [NAME OF PLAN AGENT]
        c/o Alliance National Municipal Income Fund, Inc.
                            [ADDRESS]
                         (800) [______]

If your shares are not held in your name, you should contact your
brokerage firm, bank or other nominee for more information.

Experience under the Plan may indicate that changes are
desirable.  Accordingly, the Fund reserves the right to amend or
terminate the Plan as applied to any dividend or distribution
paid subsequent to written notice of the change to the Plan
participant at least 90 days before the date of such dividend or
distribution.  The Plan may also be amended or terminated by the
Plan Agent with the Fund's prior consent on at least 90 days'
written notice to participants.

                        ALLIANCE NATIONAL
                   MUNICIPAL INCOME FUND, INC.
                     TERMS AND CONDITIONS OF
                   DIVIDEND REINVESTMENT PLAN

    1.   Each holder of shares (a "Shareholder") of common stock
in Alliance National Municipal Income Fund, Inc. (the "Fund"),
whose Fund shares are registered in his or her own name may elect
to be a participant ("Participant") in the Dividend Reinvestment
Plan (the "Plan"), unless any such Shareholder specifically
elects to participate in the Plan, the Shareholder will receive
all dividends and capital gains distributions in cash paid by
check mailed directly to the Shareholder.  A Shareholder whose
shares are registered in the name of a broker-dealer or other
nominee (the "Nominee") will be a Participant if such a service
is provided by the Nominee and the Shareholder elects to
participate in the Plan.  [____________] (the "Agent") will act
as agent for Participants and will open an account under the Plan
for each Participant in the same name as such Participant's
common stock is registered on the books and records of the
transfer agent for the common stock.



                                5



<PAGE>

    2.   Whenever the Fund declares a capital gains distribution
or an income dividend payable in shares of common stock or cash,
Participants will receive the equivalent in shares of the Fund
valued as described in paragraph 3 below.

    3.   (i)  If the shares are trading at net asset value or at
a premium above net asset value at the time of valuation, the
Fund will issue new Fund shares at the greater of net asset value
or 95% of the then current market price.

         (ii) If the shares are trading at a discount from net
asset value at the time of valuation, the Agent will receive the
dividend or distribution in cash and apply it to the purchase of
the Fund's Shares in the open market, on the New York Stock
Exchange (the "Exchange") or elsewhere, for the Participants'
accounts.  Such purchases will be made on or shortly after the
payment date for such dividend or distribution and in no event
more than 30 days after such date except where temporary
curtailment or suspension of purchase is necessary to comply with
Federal securities laws.  If, before the Agent has completed its
purchases, the market price exceeds the net asset value of a
share of common stock, the average purchase price per share paid
by the Agent may exceed the net asset value of the Fund's shares,
resulting in the acquisition of fewer shares than if the dividend
or distribution had been in shares issued by the Fund.

    4.   For purposes of the Plan: (i) the market price of the
Fund's common stock on a particular date shall be the last sale
price on the Exchange at the close of the previous trading day
or, if there is no sale on the Exchange on that date, then the
mean between the closing bid and asked quotations for such stock
on the Exchange on such date, and (ii) net asset value per share
of common stock on a particular date shall be as determined by or
on behalf of the Fund.

    5.   The open market purchases provided for above may be made
on any securities exchange where the shares of common stock of
the Fund are traded, in the over-the-counter market or in
negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Agent shall determine.  Monies held
by the Agent uninvested will not bear interest, and it is
understood that, in any event, the Agent shall have no liability
in connection with any inability to purchase shares of common
stock within 30 days after the initial date of such purchase as
herein provided, or with the timing of any purchases effected.
The Agent shall have no responsibility as to the value of the
shares of common stock of the Fund acquired for any Participant's
account.

    6.   The Agent will hold shares of common stock acquired
pursuant to the Plan in the Agent's name or that of its Nominee.


                                6



<PAGE>

The Agent will forward to each Participant any proxy solicitation
material and will vote any shares of common stock so held for
each Participant only in accordance with the proxy returned by
any such Participant to the Fund.  Upon any Participant's written
request, the Agent will cause the Fund to deliver to her or him,
without charge, a certificate or certificates for the full shares
of common stock.  Shares represented by certificates acquired in
this manner will continue to be included in the Participant's
account under the Plan.

    7.   The Agent will confirm to each Participant acquisitions
made for its account as soon as practicable but not later than
60 days after the date thereof.  Although a Participant may from
time to time have an undivided fractional interest (computed to
four decimal places) in a share of common stock of the Fund, no
certificates for a fractional share will be issued.  However,
dividends and distributions on fractional shares of common stock
will be credited to Participants' accounts.

    8.   Any stock dividends or split shares distributed by the
Fund on shares of common stock held by the Agent for any
Participant will be credited to such Participant's account.  In
the event that the Fund makes available to Participants rights to
purchase additional shares of common stock or other securities,
the Agent will sell such rights and apply the proceeds of the
sale to the purchase of additional shares of common stock of the
Fund for the account of Participants.

    9.   The Agent's service fee for handling capital gains
distributions or income dividends will be paid by the Fund.
Participants will be charged a pro rata share of brokerage
commissions on all open market purchases.

    10.  Any Participant may withdraw shares from such
Participant's account or terminate such Participant's account
under the Plan by notifying the Agent in writing.  Such
withdrawal or termination will be effective immediately if notice
is received by the Agent not less than 10 days prior to any
dividend or distribution record date; otherwise such withdrawal
or termination will be effective, with respect to any subsequent
dividend or distribution, on the first trading day after the
dividends paid for such record date have been credited to the
Participant's account.  The Plan may be terminated by the Fund or
the Agent with the Fund's prior consent upon notice in writing
mailed to each Participant at least 90 days prior to any record
date of the payment of any dividend or distribution by the Fund.
Upon any withdrawal or termination, the Agent will cause to be
delivered to each Participant a certificate or certificates for
the appropriate number of full shares and a cash adjustment for
any fractional share (valued at the market value of the shares at
the time of withdrawal or termination); provided, however that


                                7



<PAGE>

any participant may elect by notice to the Agent in writing in
advance of such termination to have the Agent sell part or all of
the shares in question and remit the proceeds to such
Participant, net of any brokerage commissions.  A $3.00 fee will
be charged by the Agent upon any cash withdrawal or termination,
and the Agent is authorized to sell a sufficient number of the
Participant's shares to cover such fee and any brokerage
commission on such sale.

    11.  These terms and conditions may be amended or
supplemented by the Fund or the Agent with the Fund's prior
consent only by mailing to each Participant appropriate written
notice at least 90 days prior to the effective date thereof.  The
amendment or supplement shall be deemed to be accepted by each
Participant unless, with respect to any such Participant, prior
to the effective date thereof, the Agent receives written notice
of the termination of that Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its
place and stead of a successor Agent under these terms and
conditions, with full power and authority to perform all or any
of the acts to be performed by the Agent under these terms and
conditions.  Upon any such appointment of an Agent for the
purpose of receiving dividends and distributions, the Fund will
be authorized to pay to such successor Agent, for Participants'
accounts, all dividends and distributions payable on the shares
of common stock held in each Participant's name or under the Plan
for retention or application by such successor Agent as provided
in these terms and conditions.

    12.  The Agent shall at all times act in good faith and agree
to use its best efforts within reasonable limits to ensure the
accuracy of all services performed under this agreement and to
comply with applicable law, but assumes no responsibility and
shall not be liable for loss or damage due to errors unless such
error is caused by its or its employees' negligence, bad faith or
willful misconduct.

    13.  The Participant shall have no right to draw checks or
drafts against such Participant's Account or to give instructions
to the Agent in respect of any shares or cash held therein except
as expressly provided herein.

    14.  The Participant agrees to notify the Agent promptly in
writing of any change of address.  Notices to the Participant may
be given by the Agent by letter addressed to the Participant as
shown on the records of the Agent.

    15.  This Agreement and the account established hereunder for
the Participant shall be governed by and construed in accordance
with the laws of the State of New York and the Rules and



                                8



<PAGE>

Regulations of the Securities and Exchange Commission, as they
may be changed or amended from time to time.



















































                                9



<PAGE>




              [THIS PAGE INTENTIONALLY LEFT BLANK]

















































                               10



<PAGE>




              [THIS PAGE INTENTIONALLY LEFT BLANK]

















































                               11



<PAGE>

 *AUTHORIZATION FOR PARTICIPATION IN DIVIDEND REINVESTMENT PLAN

/ /   Please automatically reinvest my dividends and capital
      gains in additional shares of the Alliance National
      Municipal Income Fund, Inc.

[DO NOT MAIL, IF YOU WISH TO RECEIVE BOTH YOUR DIVIDEND
AND CAPITAL GAINS DISTRIBUTIONS IN CASH.]

                             PRINT
                             NAME(S)____________________
                             ___________________________
                             DATE_______________________

                             TAX
                             IDENTIFICATION
                             NUMBER_____________________
                             SIGNATURE(S)_______________

                             ___________________________


* NOTIFICATION MUST BE RECEIVED BY THE PLAN AGENT AT LEAST 10
BUSINESS DAYS PRIOR TO THE RECORD DATE FOR A DISTRIBUTION.





























                               12
00250209.AN1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2G ADVSR CONTR
<SEQUENCE>6
<FILENAME>g_00250209an3.txt
<TEXT>



<PAGE>

                 INVESTMENT MANAGEMENT AGREEMENT

          Alliance National Municipal Income Fund, Inc.
                   1345 Avenue Of The Americas
                    New York, New York 10105


                                  [_____________], 2001



Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105

Dear Sirs:

         We, the undersigned Alliance National Municipal Income

Fund, Inc., herewith confirm our agreement with you as follows:

         1.   We are a closed-end, diversified management

investment company registered under the Investment Company Act of

1940 (the "Act").  We propose to engage in the business of

investing and reinvesting our assets in securities ("the

portfolio assets") of the type and in accordance with the

limitations specified in our Charter, By-Laws, Registration

Statement filed with the Securities and Exchange Commission under

the Securities Act of 1933 and the Act, and any representations

made in our prospectus, all in such manner and to such extent as

may from time to time be authorized by our Board of Directors.

We enclose copies of the documents listed above and will from

time to time furnish you with any amendments thereof.

         2.   (a)  We hereby employ you to manage the investment

and reinvestment of the portfolio assets as above specified, and,




<PAGE>

without limiting the generality of the foregoing, to provide

management and other services specified below.

              (b)  You will make decisions with respect to all

purchases and sales of the portfolio assets.  To carry out such

decisions, you are hereby authorized, as our agent and attorney-

in-fact, for our account and at our risk and in our name, to

place orders for the investment and reinvestment of the portfolio

assets.  In all purchases, sales and other transactions in the

portfolio assets you are authorized to exercise full discretion

and act for us in the same manner and with the same force and

effect as we might or could do with respect to such purchases,

sales or other transactions, as well as with respect to all other

things necessary or incidental to the furtherance or conduct of

such purchases, sale or other transactions.

              (c)  You will report to our Board of Directors at

each meeting thereof all changes in the portfolio assets since

the prior report, and will also keep us in touch with important

developments affecting the portfolio assets and on your own

initiative will furnish us from time to time with such

information as you may believe appropriate for this purpose,

whether concerning the individual issuers whose securities are

included in our portfolio, the industries in which they engage,

or the conditions prevailing in the economy generally.  You will

also furnish us with such statistical and analytical information

with respect to the portfolio assets as you may believe




                                2



<PAGE>

appropriate or as we reasonably may request.  In making such

purchases and sales of the portfolio assets, you will bear in

mind the policies set from time to time by our Board of Directors

as well as the limitations imposed by our Articles of

Incorporation and in our Registration Statement under the Act and

the Securities Act of 1933, the limitations in the Act and of the

Internal Revenue Code of 1986 in respect of regulated investment

companies and the investment objectives, policies and practices,

including restrictions, applied to our portfolio.

              (d)  It is understood that you will from time to

time employ or associate with yourselves such persons as you

believe to be particularly fitted to assist you in the execution

of your duties hereunder, the cost of performance of such duties

to be borne and paid by you (i) provide us with the services of

persons competent to perform such administrative and clerical

functions as are necessary to provide effective administration of

our corporation, including maintaining certain books and records,

such as journals, ledger accounts and other records described in

Rule 31a-1 under the Act, initiating all money transfers from us

to our custodians and from our account to appropriate customer

accounts, and reconciling account information and balances among

our custodians and registrar, transfer and dividend disbursing

agent; (ii) oversee the performance of administrative services

rendered to us by others, including our custodians and registrar,

transfer and dividend disbursing agent; (iii) provide us with




                                3



<PAGE>

adequate office space and facilities; (iv) prepare financial

information for the periodic updating of our registration

statements and for our proxy statements; (v) prepare our tax

returns, reports to our shareholders, and periodic reports to the

Securities and Exchange Commission; (vi) calculate the net asset

value of our shares of common stock; and (vii) perform such other

administrative services for us as may be reasonably requested by

us.  It is also understood that you will from time to time employ

or associate with yourselves such persons as you believe to be

particularly fitted to assist you in the execution of your duties

hereunder, the cost of performance of such duties to be borne and

paid by you.  During the continuance of this agreement at our

request you will provide us persons satisfactory to our Board of

Directors to serve as our officers.  You or your affiliates will

also provide persons, who may be our officers, to render such

clerical, accounting and other services to us as we may from time

to time request of you.  Such personnel may be employees of you

or your affiliates.  We will pay to you or your affiliates the

cost of such personnel for rendering the services to us, provided

that all time devoted to the investment or reinvestment of the

portfolio assets shall be for your account.  Nothing contained

herein shall be construed to restrict our right to hire our own

employees or to contract for services to be performed by third

parties.  Furthermore, you or your affiliates shall furnish us

without charge with such management supervision and assistance




                                4



<PAGE>

and such office facilities as you may believe appropriate or as

we may reasonably request subject to the requirements of any

regulatory authority to which you may be subject.

         3.   We hereby confirm that, subject to the foregoing,

we shall be responsible and hereby assume the obligation for

payment of all our other expenses, including: (a) payment of the

fee payable to you under paragraph 5 hereof; (b) brokerage and

commission expenses; (c) Federal, state, local and foreign taxes,

including issue and transfer taxes, incurred by or levied on us;

(d) interest charges on borrowings; (e) our organizational and

offering expenses, whether or not advanced by you; (f) the cost

of personnel providing services to us, as provided in paragraph

2(d) above; (g) fees and expenses of registering our shares under

the appropriate federal securities laws and of qualifying our

shares under applicable state securities laws; (h) fees and

expenses of listing and maintaining the listing of our shares on

any national securities exchange; (i) costs of maintaining our

existence as a Maryland corporation and our authority to do

business in New York; (j) expenses of printing and distributing

our prospectus and reports to shareholders; (k) costs of proxy

solicitation; (l) charges and expenses of our custodians and

registrar, transfer and dividend disbursing agent;

(m) compensation of our Directors who are not your affiliated

persons; (n) legal and auditing expenses; (o) the cost of stock

certificates representing shares of our common stock;




                                5



<PAGE>

(p) clerical, accounting and other office costs and costs of

stationery and supplies.

         4.   We shall expect of you, and you will give us the

benefit of, your best judgment and efforts in rendering these

services to us, and we agree as an inducement to your undertaking

these services that you shall not be liable hereunder for any

mistake of judgment or in any event whatsoever, except for lack

of good faith, provided that nothing herein shall be deemed to

protect, or purport to protect, you against any liability to us

or to our security holders to which you would otherwise be

subject by reason of willful misfeasance, bad faith or gross

negligence in the performance of your duties hereunder, or by

reason of your reckless disregard of your obligations and duties

hereunder.

         5.   In consideration of the foregoing we will pay you a

monthly fee at an annualized rate of [_____]% of our average

daily net assets.  Your compensation for the period from the date

hereof through the last day of the month of the effective date

hereof will be prorated based on the proportion that such period

bears to the full month.  In the event of any termination of this

Agreement, your compensation will be calculated on the basis of a

period ending on the last day on which this Agreement is in

effect, subject to proration based on the number of days elapsed

in the current period as a percentage of the total number of days

in such period.




                                6



<PAGE>

         6.   This agreement shall become effective on the date

hereof and shall continue for an initial term ending two years

from the date hereof and may continue in effect thereafter

provided that such continuance is specifically approved at least

annually by our Board of Directors or by majority vote of the

holders of our outstanding voting securities (as defined in the

Act), and in either case, by a majority of our Board of Directors

who are not interested persons, as defined in the Act, of any

party to this agreement (other than as Directors of our

corporation), provided further, however, that if the continuation

of this agreement is not approved, you may continue to render the

services described herein in the manner and to the extent

permitted by the Act and the rules and regulations thereunder.

Upon the effectiveness of this agreement, it shall supersede all

previous agreements between us covering the subject matter

hereof.  This agreement may be terminated at any time, without

the payment of any penalty, by vote of a majority of our

outstanding voting securities (as so defined), or by a vote of

our Board of Directors on 60 days written notice to you, or by

you on 60 days written notice to us.

         7.   This agreement may not be assigned by you and this

agreement shall terminate automatically in the event of any such

assignment by you.  The term "assignment" as used in this

paragraph shall have the meanings ascribed thereto by the Act and

any regulations or interpretations of the Commission thereunder.




                                7



<PAGE>

         8.   (a) Except to the extent necessary to perform your

obligations hereunder, nothing herein shall be deemed to limit or

restrict your right, or the right of any of your employees, or

any of the officers or directors of Alliance Capital Management

Corporation, your general partner, who may also be a Director,

officer or employee of ours, or persons otherwise affiliated with

us (within the meaning of the Act) to engage in any other

business or to devote time and attention to the management or

other aspects of any other business, whether of a similar or

dissimilar nature, or to render service of any kind to any other

trust, corporation, firm, individual or association.

              (b) You will notify us of any change in the general

partner of your partnership within a reasonable time after such

change.

         9.   If you cease to act as our investment adviser, or,

in any event, if you so request in writing, we agree to take all

necessary action to change our name to a name not including the

term Alliance.  You may from time to time make available without

charge to us for our use such marks or symbols owned by you,

including marks or symbols containing the term Alliance or any

variation thereof, as you may consider appropriate.  Any such

marks or symbols so made available will remain your property and

you shall have the right, upon notice in writing, to require us

to cease the use of such mark or symbol at any time.






                                8



<PAGE>

         10.  This Agreement shall be construed in accordance

with the laws of the State of New York, provided, however, that

nothing herein shall be construed as being inconsistent with the

Act.

         If the foregoing is in accordance with your

understanding, will you kindly so indicate by signing and

returning to us the enclosed copy hereof.

                                  Very truly yours,

                                  ALLIANCE NATIONAL MUNICIPAL
                                  INCOME FUND, INC.

                                  By __________________________
                                     Name:
                                     Title:


Agreed to and accepted
as of the date first set forth above.


ALLIANCE CAPITAL MANAGEMENT L.P.

By ALLIANCE CAPITAL MANAGEMENT
     CORPORATION,
      its General Partner


   By_______________________________
     Name:
     Title:















                                9
00250209.AN3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2H DISTR CONTR
<SEQUENCE>7
<FILENAME>h1_00250209ao1.txt
<TEXT>



<PAGE>


                        __________ Shares


  ALLIANCE [CALIFORNIA] [NEW YORK] MUNICIPAL INCOME FUND, INC.

                          Common Stock

                     UNDERWRITING AGREEMENT

                                                 January __, 2002


Salomon Smith Barney Inc.
A.G. Edwards & Sons, Inc.
Prudential Securities Incorporated
UBS Warburg LLC
Crowell, Weedon & Co.
Wedbush Morgan Securities, Inc.
Wells FargoVan Kasper, LLC

As Representatives of the Several Underwriters

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

         The undersigned, Alliance [California] [New York]
Municipal Income Fund, Inc., a Maryland corporation (the "Fund"),
and Alliance Capital Management L.P., a Delaware limited
partnership (the "Manager"), address you as Underwriters and as
the representatives (the "Representatives") of each of the other
persons, firms and corporations, if any, listed in Schedule I
hereto (herein collectively called "Underwriters").  The Fund
proposes to issue and sell an aggregate of ___________ shares
(the "Firm Shares") of its common stock, $.001 par value per
share (the "Common Shares"), to the several Underwriters.  The
Fund also proposes to sell to the Underwriters, upon the terms
and conditions set forth in Section 2 hereof, up to an additional
___________ Common Shares (the "Additional Shares").  The Firm
Shares and Additional Shares are hereinafter collectively
referred to as the "Shares".

         The Fund and the Manager wish to confirm as follows
their agreements with you and the other several Underwriters on
whose behalf you are acting in connection with the several
purchases of the Shares by the Underwriters.




<PAGE>

         The Fund is entering into an investment management
agreement with the Manager dated January 24, 2002, a custody
agreement with State Street Bank & Trust Company dated January
24, 2002 and a shareholder transfer agency agreement with
Equiserve Trust Company, N.A. dated January 24, 2002, and such
agreements are herein referred to as the "Management Agreement",
the "Custodian Agreement" and the "Transfer Agency Agreement",
respectively.  Collectively, the Management Agreement, the
Custodian Agreement and the Transfer Agency Agreement are herein
referred to as the "Fund Agreements".  This Underwriting
Agreement is herein referred to as the "Agreement".

         1.   Registration Statement and Prospectus.  The Fund
has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions
of the Securities Act of 1933, as amended (the "1933 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Rules and Regulations") and the 1940 Act (the
"1940 Act Rules and Regulations" and together with the 1933 Act
Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2 (File No. 333-73134) under the
1933 Act and the 1940 Act and may pursuant to the Rules and
Regulations prepare and file an additional registration statement
relating to a portion of the Shares pursuant to Rule 462(b) of
the 1933 Act Rules and Regulations (collectively, the
"registration statement"), including a prospectus (including any
statement of additional information) relating to the Shares and a
notification of registration of the Fund as an investment company
under the 1940 Act on Form N-8A (the "1940 Act Notification").
The term "Registration Statement" as used in this Agreement means
the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective under the
1933 Act or, if the registration statement became effective under
the 1933 Act prior to the execution of this Agreement, as amended
or supplemented, prior to the execution of this Agreement and
includes any information deemed to be included by Rule 430A under
the 1933 Act Rules and Regulations.  If it is contemplated, at
the time this Agreement is executed, that a post-effective
amendment to the registration statement will be filed under the
1933 Act and must be declared effective before the offering of
the Shares may commence, the term "Registration Statement" as
used in this Agreement means the registration statement as
amended by said post-effective amendment.  The term "Prospectus"
as used in this Agreement means the prospectus (including the
statement of additional information) in the form included in the
Registration Statement or, if the prospectus (including the
statement of additional information) included in the Registration
Statement omits information in reliance on Rule 430A and such
information is included in a prospectus (including the statement
of additional information) filed with the Commission pursuant to


                                2



<PAGE>

Rule 497(h) under the 1933 Act Rules and Regulations, the term
"Prospectus" as used in this Agreement means the prospectus
(including the statement of additional information) in the form
included in the Registration Statement as supplemented by the
addition of the information contained in the prospectus
(including the statement of additional information) filed with
the Commission pursuant to Rule 497(h).  The term "Prepricing
Prospectus" as used in this Agreement means the prospectus
(including the statement of additional information) subject to
completion in the form included in the registration statement at
the time of the initial filing of the registration statement with
the Commission and as such prospectus (including the statement of
additional information) shall have been amended from time to time
prior to the date of the Prospectus, together with any other
prospectus (including any other statement of additional
information) relating to the Fund other than the Prospectus.

         The Fund has furnished the Representatives with copies
of such registration statement, each amendment to such
registration statement filed with the Commission and each
Prepricing Prospectus.

         2.   Agreements to Sell and Purchase.  The Fund hereby
agrees, subject to all the terms and conditions set forth herein,
to issue and to sell to each Underwriter and, upon the basis of
the representations, warranties and agreements of the Fund and
the Manager herein contained and subject to all of the other
terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund at a
purchase price per share of $14.325 per Share (the "purchase
price per share"), the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto (or such number
of Firm Shares increased as set forth in Section 10 hereof).

         The Fund also agrees, subject to all the terms and
conditions set forth herein, to issue and to sell to the
Underwriters and, upon the basis of the representations,
warranties and agreements of the Fund and the Manager herein
contained and subject to all the terms and conditions set forth
herein, the Underwriters shall have the right to purchase from
the Fund, at the purchase price per share, pursuant to an option
(the "over-allotment option") which may be exercised at any time
and from time to time prior to 9:00 P.M., New York City time, on
the 45th day after the date of the Prospectus (or if such 45th
day shall be a Saturday or a Sunday or a holiday, on the next
business day thereafter when the New York Stock Exchange (the
"NYSE") is open for trading) up to an aggregate of ____________
Additional Shares. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with
the offering of the Firm Shares.  Upon any exercise of the
over-allotment option, upon the basis of the representations,


                                3



<PAGE>

warranties and agreements of the Fund and the Manager herein
contained and subject to all of the other terms and conditions
set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Fund the number of Additional
Shares (subject to such adjustments as you may determine to avoid
fractional shares) which bears the same proportion to the number
of Additional Shares to be purchased by the Underwriters as the
number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I (or such number of Firm Shares
increased as set forth in Section 10 hereof) bears to the
aggregate number of Firm Shares.

         3.   Terms of Public Offering.  The Fund and the Manager
have been advised by you that the Underwriters propose to make a
public offering of their respective portions of the Firm Shares
as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially
to offer the Firm Shares upon the terms set forth in the
Prospectus.

         4.   Delivery of Shares and Payments Therefor.

              (a)  Delivery to the Underwriters of and payment to
         the Fund for the Firm Shares and payment of all amounts
         due to the Underwriters under Section 12 hereof shall be
         made at the office of Salomon Smith Barney Inc., 388
         Greenwich Street, New York, New York 10013 or through
         the facilities of the Depository Trust Company or
         another mutually agreeable facility, at 9:00 A.M., New
         York City time, on _________ __, 2002 (the "Closing
         Date"). The place of closing for the Firm Shares and the
         Closing Date may be varied by agreement between you and
         the Fund.

              (b)  Delivery to the Underwriters of and payment to
         the Fund for any Additional Shares to be purchased by
         the Underwriters and payment of all amounts due to the
         Underwriters under Section 12 hereof shall be made at
         the aforementioned office of Salomon Smith Barney Inc.
         at such time and on such date (an "Option Closing
         Date"), which may be the same as the Closing Date, but
         shall in no event be earlier than the Closing Date nor
         earlier than two nor later than three business days
         after the giving of the notice hereinafter referred to,
         as shall be specified in a written notice from you on
         behalf of the Underwriters to the Fund of the
         Underwriters' determination to purchase a number,
         specified in said notice, of Additional Shares. The
         place of closing for any Additional Shares and the
         Option Closing Date for such Additional Shares may be
         varied by agreement between you and the Fund.


                                4



<PAGE>

              (c)  Certificates for the Firm Shares and for any
         Additional Shares shall be registered in such names and
         in such denominations as you shall request prior to 1:00
         P.M., New York City time, (i) in respect of the Firm
         Shares, on the second business day preceding the Closing
         Date and (ii) in respect of Additional Shares, on the
         day of the giving of the written notice in respect of
         such Additional Shares. Such certificates will be made
         available to you in New York City for inspection and
         packaging not later than 9:00 A.M., New York City time,
         on the business day next preceding the Closing Date or
         any Option Closing Date, as the case may be.  The
         certificates evidencing the Firm Shares and any
         Additional Shares to be purchased hereunder shall be
         delivered to you on the Closing Date or the Option
         Closing Date, as the case may be, against payment of the
         purchase price therefor in same-day funds to the order
         of the Fund.


         5.   Agreements of the Fund and the Manager.  The Fund
and the Manager, jointly and severally, agree with the several
Underwriters as follows:

              (a)  If, at the time this Agreement is executed and
         delivered, it is necessary for the Registration
         Statement or a post-effective amendment thereto to be
         declared effective under the 1933 Act before the
         offering of the Firm Shares may commence, the Fund will
         use its reasonable best efforts to cause the
         Registration Statement or such post-effective amendment
         to become effective under the 1933 Act as soon as
         possible. If the Registration Statement has become
         effective and the Prospectus contained therein omits
         certain information at the time of effectiveness
         pursuant to Rule 430A of the 1933 Act Rules and
         Regulations, the Fund will file a prospectus including
         such information pursuant to Rule 497(h) of the 1933 Act
         Rules and Regulations, as promptly as practicable, but
         no later than the second business day following the
         earlier of the date of the determination of the offering
         price of the Shares or the date the Prospectus is first
         used after the effective date of the Registration
         Statement. If the Registration Statement has become
         effective and the Prospectus contained therein does not
         so omit such information, the Fund will file a
         Prospectus or a certification pursuant to Rule 497 (c)
         or (j), as applicable, of the 1933 Act Rules and
         Regulations as promptly as practicable, but no later
         than the fifth business day following the date of the
         later of the effective date of the Registration


                                5



<PAGE>

         Statement or the commencement of the public offering of
         the Shares after the effective date of the Registration
         Statement. The Fund will advise you promptly and, if
         requested by you, will confirm such advice in writing
         (i) when the Registration Statement or such
         post-effective amendment has become effective and (ii)
         when the Prospectus has been timely filed pursuant to
         Rule 497(c) or Rule 497(h) of the 1933 Act Rules and
         Regulations or the certification permitted pursuant to
         Rule 497(j) of the 1933 Act Rules and Regulations has
         been timely filed, whichever is applicable.

              (b)  The Fund will advise you promptly and, if
         requested by you, will confirm such advice in writing:
         (i) of any request made by the Commission for amendment
         of or a supplement to the Registration Statement, any
         Prepricing Prospectus or the Prospectus (or any
         amendment or supplement to any of the foregoing) or for
         additional information, (ii) of the issuance by the
         Commission, the National Association of Securities
         Dealers, Inc. (the "NASD"), any state securities
         commission, any national securities exchange, any
         arbitrator, any court or any other governmental,
         regulatory, self-regulatory or administrative agency or
         any official suspending the effectiveness of the
         Registration Statement, prohibiting or suspending the
         use of the Prospectus, any Prepricing Prospectus or any
         sales material (as hereinafter defined), of any notice
         pursuant to Section 8(e) of the 1940 Act, of the
         suspension of qualification of the Shares for offering
         or sale in any jurisdiction, or the initiation or
         contemplated initiation of any proceeding for any such
         purposes, (iii) of receipt by the Fund, the Manager or
         any affiliate of the Fund or any representative or
         attorney of the Fund or the Manager of any other
         material communication from the Commission, the NASD,
         any state securities commission, any national securities
         exchange, any arbitrator, any court or any other
         governmental, regulatory, self-regulatory or
         administrative agency or any official relating to the
         Fund (if such communication relating to the Fund is
         received by such person within three years after the
         date of this Agreement), the Registration Statement, the
         1940 Act Notification, the Prospectus, any Prepricing
         Prospectus, any sales material (as hereinafter defined)
         (or any amendment or supplement to any of the
         foregoing), this Agreement or any of the Fund Agreements
         and (iv) within the period of time referred to in
         paragraph (f) below, of any material adverse change in
         the condition (financial or other), business, prospects,
         properties, net assets or results of operations of the


                                6



<PAGE>

         Fund or the Manager or of the happening of any event
         which makes any statement of a material fact made in the
         Registration Statement, the Prospectus, any Prepricing
         Prospectus or any sales material (as herein defined) (or
         any amendment or supplement to any of the foregoing)
         untrue or which requires the making of any additions to
         or changes in the Registration Statement, the
         Prospectus, any Prepricing Prospectus or any sales
         materials (as herein defined) (or any amendment or
         supplement to any of the foregoing) in order to state a
         material fact required by the 1933 Act, the 1940 Act or
         the Rules and Regulations to be stated therein or
         necessary in order to make the statements therein (in
         the case of a prospectus, in light of the circumstances
         under which they were made) not misleading or of the
         necessity to amend or supplement the Registration
         Statement, the Prospectus, any Prepricing Prospectus or
         any sales material (as herein defined) (or any amendment
         or supplement to any of the foregoing) to comply with
         the 1933 Act, the 1940 Act, the Rules and Regulations or
         any other law or order of any court or regulatory body.
         If at any time the Commission, the NASD, any state
         securities commission, any national securities exchange,
         any arbitrator, any court or any other governmental,
         regulatory, self-regulatory or administrative agency or
         any official shall issue any order suspending the
         effectiveness of the Registration Statement, prohibiting
         or suspending the use of the Prospectus, any Prepricing
         Prospectus or any sales material (as hereinafter
         defined) (or any amendment or supplement to any of the
         foregoing) or suspending the qualification of the Shares
         for offering or sale in any jurisdiction, the Fund will
         use its reasonable best efforts to obtain the withdrawal
         of such order at the earliest possible time.

              (c)  The Fund will furnish to you, without charge,
         three signed copies of the registration statement and
         the 1940 Act Notification as originally filed with the
         Commission and of each amendment thereto, including
         financial statements and all exhibits thereto (except
         any post-effective amendment required by Rule 8b-16 of
         the 1940 Act Rules and Regulations which is filed with
         the Commission after the later of (x) one year from the
         date of this Agreement and (y) the date on which the
         distribution of the Shares is completed) and will also
         furnish to you, without charge, such number of conformed
         copies of the registration statement as originally filed
         and of each amendment thereto (except any post-effective
         amendment required by Rule 8b-16 of the 1940 Act Rules
         and Regulations which is filed with the Commission after
         the later of (x) one year from the date of this


                                7



<PAGE>

         Agreement and (y) the date on which the distribution of
         the Shares is completed), with or without exhibits, as
         you may reasonably request.

              (d)  The Fund will not (i) file any amendment to
         the Registration Statement or make any amendment or
         supplement to the Prospectus, any Prepricing Prospectus
         or any sales material (as hereinafter defined) (or any
         amendment or supplement to any of the foregoing) of
         which you shall not previously have been advised or to
         which you shall reasonably object within a reasonable
         time after being so advised or (ii) so long as, in the
         opinion of counsel for the Underwriters, a Prospectus is
         required to be delivered in connection with sales by any
         Underwriter or dealer, file any information, documents
         or reports pursuant to the Securities Exchange Act of
         1934, as amended (the "1934 Act"), without delivering a
         copy of such information, documents or reports to you,
         as Representatives of the Underwriters, prior to or
         concurrently with such filing.

              (e)  Prior to the execution and delivery of this
         Agreement, the Fund has delivered to you, without
         charge, in such quantities as you have reasonably
         requested, copies of each form of any Prepricing
         Prospectus. The Fund consents to the use, in accordance
         with the provisions of the 1933 Act and with the
         securities or Blue Sky laws of the jurisdictions in
         which the Shares are offered by the several Underwriters
         and by dealers, prior to the date of the Prospectus, of
         each Prepricing Prospectus so furnished by the Fund.

              (f)  As soon after the execution and delivery of
         this Agreement as possible and thereafter from time to
         time, for such period as in the opinion of counsel for
         the Underwriters a prospectus is required by the 1933
         Act to be delivered in connection with sales of Shares
         by any Underwriter or dealer, the Fund will
         expeditiously deliver to each Underwriter and each
         dealer, without charge, as many copies of the Prospectus
         (and of any amendment or supplement thereto) as you may
         reasonably request. The Fund consents to the use of the
         Prospectus (and of any amendments or supplements
         thereto) in accordance with the provisions of the 1933
         Act and with the securities or Blue Sky laws of the
         jurisdictions in which the Shares are offered by the
         several Underwriters and by all dealers to whom Shares
         may be sold, both in connection with the offering or
         sale of the Shares and for such period of time
         thereafter as the Prospectus is required by law to be
         delivered in connection with sales of Shares by any


                                8



<PAGE>

         Underwriter or dealer.  If during such period of time
         any event shall occur that in the judgment of the Fund
         or in the opinion of counsel for the Underwriters is
         required to be set forth in the Prospectus (as then
         amended or supplemented) or should be set forth therein
         in order to make the statements therein, in light of the
         circumstances under which they were made, not misleading
         or if it is necessary to supplement or amend the
         Prospectus to comply with the 1933 Act, the 1940 Act,
         the Rules and Regulations or any other law, rule or
         regulation, the Fund will forthwith prepare and, subject
         to the provisions of paragraph (d) above, file with the
         Commission an appropriate amendment or supplement
         thereto and will expeditiously furnish to the
         Underwriters and dealers, without charge, such number of
         copies thereof as they shall reasonably request.  In the
         event that the Prospectus is to be amended or
         supplemented, the Fund, if requested by you, will
         promptly issue a press release announcing or disclosing
         the matters to be covered by the proposed amendment or
         supplement.

              (g)  The Fund will cooperate with you and with
         counsel for the Underwriters in connection with the
         registration or qualification of the Shares for offering
         and sale by the several Underwriters and by dealers
         under the securities or Blue Sky laws of such
         jurisdictions as you may designate and will file such
         consents to service of process or other documents
         necessary or appropriate in order to effect such
         registration or qualification; provided that in no event
         shall the Fund be obligated to qualify to do business in
         any jurisdiction where it is not now so qualified or to
         take any action which would subject it to service of
         process in suits, other than those arising out of the
         offering or sale of the Shares, in any jurisdiction
         where it is not now so subject.

              (h)  The Fund will make generally available to its
         security holders an earnings statement, which need not
         be audited, covering a twelve-month period commencing
         after the effective date of the Registration Statement
         and ending not later than 15 months thereafter, as soon
         as practicable after the end of such period, which
         earnings statement shall satisfy the provisions of
         Section 11(a) of the 1933 Act and Rule 158 of the 1933
         Act Rules and Regulations.

              (i)  The Fund will comply with the undertaking set
         forth in paragraph 6 of Item 33 of Part C of the
         Registration Statement.


                                9



<PAGE>

              (j)  During the period of five years hereafter, the
         Fund will furnish to you (i) as soon as available, a
         copy of each report of the Fund mailed to shareholders
         or filed with the Commission and (ii) from time to time
         such other information concerning the Fund as you may
         reasonably request.

              (k)  If this Agreement shall terminate or shall be
         terminated after execution pursuant to any provisions
         hereof (other than pursuant to the second paragraph of
         Section 10 hereof or by notice given by you terminating
         this Agreement pursuant to Section 10 or Section 11
         hereof) or if this Agreement shall be terminated by the
         Underwriters because of any failure or refusal on the
         part of the Fund or the Manager to comply with the terms
         or fulfill any of the conditions of this Agreement, the
         Fund and the Manager, jointly and severally, agree to
         reimburse the Representatives for all out-of-pocket
         expenses (including fees and expenses of counsel for the
         Underwriters) incurred by you in connection herewith,
         but the Fund and the Manager shall in no event be liable
         for any internal cost of the Underwriters or any loss of
         anticipated profits or speculative, consequential or
         similar damages for such termination.

              (l)  The Fund will direct the investment of the net
         proceeds of the offering of the Shares in such a manner
         as to comply with the investment objectives, policies
         and restrictions of the Fund as described in the
         Prospectus.

              (m)  The Fund will file the requisite copies of the
         Prospectus with the Commission in a timely fashion
         pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act
         Rules and Regulations, whichever is applicable or, if
         applicable, will file in a timely fashion the
         certification permitted by Rule 497(j) of the 1933 Act
         Rules and Regulations and will advise you of the time
         and manner of such filing.

              (n)  Except as provided in this Agreement or
         pursuant to any dividend reinvestment plan of the Fund
         in effect on the date hereof, the Fund will not sell,
         contract to sell or otherwise dispose of, any Common
         Shares or any securities convertible into or exercisable
         or exchangeable for Common Shares or grant any options
         or warrants to purchase Common Shares, for a period of
         180 days after the date of the Prospectus, without the
         prior written consent of Salomon Smith Barney Inc.




                               10



<PAGE>

              (o)  Except as stated in this Agreement and in the
         Prospectus, neither the Fund nor the Manager has taken,
         nor will it take, directly or indirectly, any action
         designed to or that might reasonably be expected to
         cause or result in stabilization or manipulation of the
         price of the Common Shares.

              (p)  The Fund will use its reasonable best efforts
         to have the Common Shares listed, subject to notice of
         issuance, on the NYSE concurrently with the
         effectiveness of the Registration Statement and to
         comply with the rules and regulations of such exchange.


         6.   Representations and Warranties of the Fund and the
Manager.  The Fund and the Manager, jointly and severally,
represent and warrant to each Underwriter that:

              (a)  Each Prepricing Prospectus included as part of
         the registration statement as originally filed or as
         part of any amendment or supplement thereto complied
         when so filed in all material respects with the
         provisions of the 1933 Act, the 1940 Act and the Rules
         and Regulations.

              (b)  The Registration Statement, in the form in
         which it became or becomes effective and also in such
         form as it may be when any post-effective amendment
         thereto shall become effective and the Prospectus and
         any amendment or supplement thereto when filed with the
         Commission under Rule 497 of the 1933 Act Rules and
         Regulations and the 1940 Act Notification when
         originally filed with the Commission and any amendment
         or supplement thereto when filed with the Commission
         complied or will comply in all material respects with
         the provisions of the 1933 Act, the 1940 Act and the
         Rules and Regulations and did not or will not at any
         such times contain an untrue statement of a material
         fact or omit to state a material fact required to be
         stated therein or necessary to make the statements
         therein (in the case of a prospectus, in light of the
         circumstances under which they were made) not
         misleading; except that this representation and warranty
         does not apply to statements in or omissions from the
         Registration Statement or the Prospectus (or any
         amendment or supplement thereto) made in reliance upon
         and in conformity with information relating to any
         Underwriter furnished to the Fund by or on behalf of any
         Underwriter through you expressly for use therein.




                               11



<PAGE>

              (c)  All the outstanding Common Shares of the Fund
         have been duly authorized and validly issued, are fully
         paid and, except as described in the Registration
         Statement, nonassessable and are free of any preemptive
         or similar rights; the Shares have been duly authorized
         and, when issued and delivered to the Underwriters
         against payment therefor in accordance with the terms
         hereof, will be validly issued, fully paid and, except
         as described in the Registration Statement,
         nonassessable and free of any preemptive or similar
         rights and the capital stock of the Fund conforms to the
         description thereof in the Registration Statement and
         the Prospectus (and any amendment or supplement to
         either of them).

              (d)  The Fund has been duly incorporated and is
         validly existing as a corporation in good standing under
         the laws of the State of Maryland, with full corporate
         power and authority to own, lease and operate its
         properties and to conduct its business as described in
         the Registration Statement and the Prospectus (and any
         amendment or supplement to either of them) and is duly
         registered and qualified to conduct business and is in
         good standing in each jurisdiction or place where the
         nature of its properties or the conduct of its business
         requires such registration or qualification, except
         where the failure so to register or to qualify does not
         have a material, adverse effect on the condition
         (financial or other), business, properties, net assets
         or results of operations of the Fund. The Fund has no
         subsidiaries.

              (e)  There are no legal or governmental proceedings
         pending or, to the knowledge of the Fund, threatened,
         against the Fund or to which the Fund or any of its
         properties is subject, that are required to be described
         in the Registration Statement or the Prospectus (or any
         amendment or supplement to either of them) but are not
         described as required and there are no agreements,
         contracts, indentures, leases or other instruments that
         are required to be described in the Registration
         Statement or the Prospectus (or any amendment or
         supplement to either of them) or to be filed as an
         exhibit to the Registration Statement that are not
         described or filed as required by the 1933 Act, the 1940
         Act or the Rules and Regulations.

              (f)  The Fund is not in violation of its Articles
         of Incorporation or By-Laws or in material violation of
         any law, ordinance, administrative or governmental rule
         or regulation applicable to the Fund or of any decree of


                               12



<PAGE>

         the Commission, the NASD, any state securities
         commission, any national securities exchange, any
         arbitrator, any court or any other governmental,
         regulatory, self-regulatory or administrative agency or
         any official having jurisdiction over the Fund or in
         breach or default in the performance of any obligation,
         agreement or condition contained in any material bond,
         debenture, note or any other evidence of indebtedness or
         in any agreement, indenture, lease or other instrument
         to which the Fund is a party or by which it or any of
         its properties may be bound.

              (g)  Neither the issuance and sale of the Shares,
         the execution, delivery or performance of this Agreement
         nor any of the Fund Agreements by the Fund, nor the
         consummation by the Fund of the transactions
         contemplated hereby or thereby (A) requires any consent,
         approval, authorization or other order of or
         registration or filing with the Commission, the NASD,
         any national securities exchange, any arbitrator, any
         court or any other governmental, regulatory,
         self-regulatory or administrative agency or any official
         (except compliance with the securities or Blue Sky laws
         of various jurisdictions which have been or will be
         effected in accordance with this Agreement and except
         for compliance with the filing requirements of the NASD
         Division of Corporate Finance) or conflicts or will
         conflict with or constitutes or will constitute a breach
         of the Articles of Incorporation or By-Laws of the Fund
         or (B) conflicts or will conflict with or constitutes or
         will constitute a breach of or a default under, any
         material agreement, indenture, lease or other instrument
         to which the Fund is a party or by which it or any of
         its properties may be bound or violates or will violate
         any material statute, law, regulation or filing or
         judgment, injunction, order or decree applicable to the
         Fund or any of its properties or will result in the
         creation or imposition of any material lien, charge or
         encumbrance upon any property or assets of the Fund
         pursuant to the terms of any agreement or instrument to
         which it is a party or by which it may be bound or to
         which any of the property or assets of the Fund is
         subject.

              (h)  Since the date as of which information is
         given in the Registration Statement and the Prospectus
         (and any amendment or supplement to either of them),
         except as otherwise stated therein, (A) there has been
         no material, adverse change in the condition (financial
         or other), business, properties, net assets or results
         of operations of the Fund or business prospects (other


                               13



<PAGE>

         than as a result of a change in the financial markets
         generally) of the Fund, whether or not arising in the
         ordinary course of business, (B) there have been no
         transactions entered into by the Fund which are material
         to the Fund other than those in the ordinary course of
         its business as described in the Prospectus (and any
         amendment or supplement thereto) and (C) there has been
         no dividend or distribution of any kind declared, paid
         or made by the Fund on any class of its common stock.

              (i)  The accountants, Ernst & Young LLP, who have
         audited or shall audit the Statement of Assets and
         Liabilities included in the Registration Statement and
         the Prospectus (and any amendment or supplement to
         either of them), are an independent public accounting
         firm as required by the 1933 Act, the 1940 Act and the
         Rules and Regulations.

              (j)  The financial statements, together with
         related schedules and notes, included in the
         Registration Statement or the Prospectus (or any
         amendment or supplement to either of them) present
         fairly the financial position of the Fund on the basis
         stated in the Registration Statement at the respective
         dates or for the respective periods to which they apply;
         such statements and related schedules and notes have
         been prepared in accordance with generally accepted
         accounting principles consistently applied throughout
         the periods involved except as disclosed therein; and
         the other financial and statistical information and data
         included in the Registration Statement or the Prospectus
         (or any amendment or supplement thereto) are accurately
         derived from such financial statements and the books and
         records of the Fund.

              (k)  The Fund, subject to the Registration
         Statement having been declared effective and the filing
         of the Prospectus under Rule 497 under the Rules and
         Regulations, has taken all required action under the
         1933 Act, the 1940 Act and the Rules and Regulations to
         make the public offering and consummate the sale of the
         Shares as contemplated by this Agreement.

              (l)  The execution and delivery of and the
         performance by the Fund of its obligations under this
         Agreement and the Fund Agreements have been duly and
         validly authorized by the Fund and this Agreement and
         the Fund Agreements have been duly executed and
         delivered by the Fund and constitute the valid and
         legally binding agreements of the Fund, enforceable
         against the Fund in accordance with their terms, except


                               14



<PAGE>

         as rights to indemnity and contribution hereunder may be
         limited by federal or state securities laws and subject
         to the qualification that the enforceability of the
         Fund's obligations hereunder and thereunder may be
         limited by bankruptcy, insolvency, reorganization,
         moratorium and other laws relating to or affecting
         creditors' rights generally and by general equitable
         principles.

              (m)  Except as disclosed in the Registration
         Statement and the Prospectus (and any amendment or
         supplement to either of them), subsequent to the
         respective dates as of which such information is given
         in the Registration Statement and the Prospectus (and
         any amendment or supplement to either of them), the Fund
         has not incurred any liability or obligation, direct or
         contingent, or entered into any transaction, not in the
         ordinary course of business, that is material to the
         Fund and there has not been any change in the capital
         stock or material increase in the short-term debt or
         long-term debt of the Fund or any material, adverse
         change or any development involving or which should
         reasonably be expected to involve a prospective
         material, adverse change in the condition (financial or
         other), business, properties, net assets or results of
         operations of the Fund.

              (n)  The Fund has not distributed and, prior to the
         later to occur of (i) the Closing Date and (ii)
         completion of the distribution of the Shares, will not
         distribute to the public any offering material in
         connection with the offering and sale of the Shares
         other than the Registration Statement, the Prepricing
         Prospectus included in Pre-Effective Amendment No. 1 to
         the Registration Statement, the Prospectus and the
         advertisements/sales literature filed with the NASD on
         December 5, 2001.

              (o)  The Fund has such licenses, permits, and
         authorizations of governmental or regulatory authorities
         ("permits") as are necessary to own its property and to
         conduct its business in the manner described in the
         Prospectus (and any amendment or supplement thereto);
         the Fund has fulfilled and performed all its material
         obligations with respect to such permits and no event
         has occurred which allows or, after notice or lapse of
         time, would allow, revocation or termination thereof or
         results in any other material impairment of the rights
         of the Fund under any such permit, subject in each case
         to such qualification as may be set forth in the
         Prospectus (and any amendment or supplement thereto);


                               15



<PAGE>

         and, except as described in the Prospectus (and any
         amendment or supplement thereto), none of such permits
         contains any restriction that is materially burdensome
         to the Fund.

              (p)  The Fund maintains and will maintain a system
         of internal accounting controls sufficient to provide
         reasonable assurances that (i) transactions are executed
         in accordance with management's general or specific
         authorization and with the investment policies and
         restrictions of the Fund and the applicable requirements
         of the 1940 Act, the 1940 Act Rules and Regulations and
         the Internal Revenue Code of 1986, as amended (the
         "Code"); (ii) transactions are recorded as necessary to
         permit preparation of financial statements in conformity
         with generally accepted accounting principles, to
         calculate net asset value, to maintain accountability
         for assets and to maintain material compliance with the
         books and records requirements under the 1940 Act and
         the 1940 Act Rules and Regulations; (iii) access to
         assets is permitted only in accordance with management's
         general or specific authorization; and (iv) the recorded
         account for assets is compared with existing assets at
         reasonable intervals and appropriate action is taken
         with respect to any differences.

              (q)  The conduct by the Fund of its business (as
         described in the Prospectus) does not require it to be
         the owner, possessor or licensee of any patents, patent
         licenses, trademarks, service marks or trade names which
         it does not own, possess or license.

              (r)  Except as stated in this Agreement and in the
         Prospectus (and any amendment or supplement thereto),
         the Fund has not taken and will not take, directly or
         indirectly, any action designed to or which should
         reasonably be expected to cause or result in or which
         will constitute stabilization or manipulation of the
         price of the Common Shares in violation of federal
         securities laws and the Fund is not aware of any such
         action taken or to be taken by any affiliates of the
         Fund.

              (s)  The Fund is duly registered under the 1940 Act
         as a closed-end, non-diversified management investment
         company and the 1940 Act Notification has been duly
         filed with the Commission and, at the time of filing
         thereof and at the time of filing any amendment or
         supplement thereto, conformed in all material respects
         with all applicable provisions of the 1940 Act and the
         Rules and Regulations.  The Fund has not received any


                               16



<PAGE>

         notice from the Commission pursuant to Section 8(e) of
         the 1940 Act with respect to the 1940 Act Notification
         or the Registration Statement (or any amendment or
         supplement to either of them).

              (t)  All advertising, sales literature or other
         promotional material (including "prospectus wrappers"
         and "broker kits"), whether in printed or electronic
         form, authorized in writing by or prepared by the Fund
         or the Manager for use in connection with the offering
         and sale of the Shares (collectively, "sales material")
         complied and comply in all material respects with the
         applicable requirements of the 1933 Act, the 1933 Act
         Rules and Regulations and the rules and interpretations
         of the NASD and if required to be filed with the NASD
         under the NASD's conduct rules were so filed. No sales
         material, when read together with the Prospectus,
         contained or contains an untrue statement of a material
         fact or omitted or omits to state a material fact
         required to be stated therein or necessary to make the
         statements therein, in light of the circumstances under
         which they were made, not misleading.

              (u)  This Agreement and each of the Fund Agreements
         complies in all material respects with all applicable
         provisions of the 1940 Act, the 1940 Act Rules and
         Regulations, the Investment Advisers Act of 1940, as
         amended (the "Advisers Act") and the rules and
         regulations adopted by the Commission under the Advisers
         Act (the "Advisers Act Rules and Regulations").

              (v)  No holder of any security of the Fund has any
         right to require registration of Common Shares or any
         other security of the Fund because of the filing of the
         registration statement or consummation of the
         transactions contemplated by this Agreement.

              (w)  The Shares have been duly approved for listing
         upon notice of issuance on the NYSE and the Fund's
         registration statement on Form 8-A, under the 1934 Act,
         has become effective.

              (x)  The Fund intends to direct the investment of
         the proceeds of the offering of the Shares in such a
         manner as to comply with the requirements of Subchapter
         M of the Code.

         7.   Representations and Warranties of the Manager.  The
Manager represents and warrants to each Underwriter as follows:




                               17



<PAGE>

              (a)  The Manager has been duly formed and is
         validly existing and in good standing under the laws of
         Delaware, with power and authority (partnership and
         other) to own its properties and conduct its business as
         described in the Prospectus, and has been duly qualified
         as a foreign partnership for the transaction of business
         and is in good standing under the laws of each other
         jurisdiction in which it owns or leases properties, or
         conducts any business, so as to require such
         qualification, other than where the failure to be so
         qualified or in good standing would not have a material
         adverse effect on the Manager and its subsidiaries taken
         as a whole.

              (b)  The Manager is duly registered as an
         investment adviser under the Advisers Act and is not
         prohibited by any provision of the Advisers Act or the
         1940 Act, or the rules and regulations under such Acts,
         from acting as an investment adviser for the Company as
         contemplated in the Prospectus and the Management
         Agreement.  There does not exist to the knowledge of the
         Manager any proceeding, which might materially adversely
         affect the registration of the Manager with the
         Commission.

              (c)  Each of this Agreement, the Management
         Agreement and any other Fund Agreement to which the
         Manager is a party has been duly authorized, executed
         and delivered by the Manager and complies with all
         applicable provisions of the Advisers Act, the 1940 Act,
         and the rules and regulations under such Acts.

              (d)  Neither the execution, delivery or performance
         by the Manager of its obligations under this Agreement,
         the Management Agreement or any other Fund Agreement to
         which the Manager is a party nor the consummation of the
         transactions contemplated therein or in the Registration
         Statement or Prospectus nor the fulfillment of the terms
         thereof will conflict with or result in a breach of any
         of the terms or provisions of, or constitute a default
         under, any indenture, mortgage, deed of trust, loan
         agreement or other agreement or instrument to which the
         Manager is a party or by which the Manager is bound or
         to which any of the property or assets of the Manager is
         subject, nor will any such action result in any
         violation of the provisions of the organizational
         documents of the Manager or any applicable law or
         statute or any order, rule or regulation of any court or
         governmental agency or body having jurisdiction over the
         Manager or any of its properties.



                               18



<PAGE>

              (e)  Other than as set forth in (i) Part II, Item 1
         of the Quarterly Report on Form 10-Q filed by the
         Manager with the Commission with respect to the
         quarterly periods ended March 31, 2001, June 30, 2001
         and September 30, 2001 pursuant to Section 13 or 15(d)
         of the 1934 Act and (ii) the Current Report on Form 8-K
         filed by the Manager with the Commission on December 13,
         2001 and January 10, 2002 pursuant to Section 13 or
         15(d) of the 1934 Act, there are no legal or
         governmental investigations, actions, suits or
         proceedings pending or, to the knowledge of the Manager,
         threatened against or affecting the Manager or any of
         its subsidiaries or any of their respective properties
         or to which the Manager or any of its subsidiaries is or
         may be a party or to which any property of the Manager
         or any of its subsidiaries is or may be the subject
         which, if determined adversely to the Manager or any of
         its subsidiaries, would individually or in the aggregate
         have, or reasonably be expected to have, a material
         adverse effect on the Manager's ability to perform its
         obligations under the Management Agreement and, to the
         Manager's knowledge, no such proceedings are threatened
         or contemplated by governmental authorities or
         threatened by others.

              (f)  No consent, approval, authorization, order,
         license, registration or qualification of, or any filing
         with, any court or governmental agency or body, whether
         foreign or domestic, is required for the consummation by
         the Manager of the transactions contemplated by this
         Agreement.

              (g)  The Manager owns or possesses all material
         governmental licenses, permits, consents, orders,
         approvals or other authorizations, whether foreign or
         domestic, to enable the Manager to perform its
         obligations under the Management Agreement.

              (h)  The information regarding the Manager in the
         Registration Statement and the Prospectus complies in
         all material respects with the requirements of Form N-2
         and, as of the date of the Prospectus, such information
         regarding the Manager did not contain any untrue
         statement of a material fact or omit to state any
         material fact required to be stated therein or necessary
         in order to make the statements therein, in light of the
         circumstances under which they were made, not
         misleading.

              (i)  Except as stated in this Agreement and in the
         Prospectus (and in any amendment or supplement thereto),


                               19



<PAGE>

         the Manager has not taken and will not take, directly or
         indirectly, any action designed to or which should
         reasonably be expected to cause or result in or which
         will constitute, stabilization or manipulation of the
         price of the Common Shares in violation of federal
         securities laws and the Manager is not aware of any such
         action taken or to be taken by any affiliates of the
         Manager.

              (j)  In the event that the Fund or the Manager
         makes available any promotional materials intended for
         use only by qualified broker-dealers and registered
         representatives thereof by means of an Internet web site
         or similar electronic means, the Manager will install
         and maintain pre-qualification and password-protection
         or similar procedures which are reasonably designed to
         effectively prohibit access to such promotional
         materials by persons other than qualified broker-dealers
         and registered representatives thereof.

         8.   Indemnification and Contribution.

              (a)  The Fund and the Manager, jointly and
         severally, agree to indemnify and hold harmless each of
         you and each other Underwriter and each person, if any,
         who controls any Underwriter within the meaning of
         Section 15 of the 1933 Act or Section 20 of the 1934
         Act, from and against any and all losses, claims,
         damages, liabilities and expenses, joint or several
         (including reasonable costs of investigation) arising
         out of or based upon any untrue statement or alleged
         untrue statement of a material fact contained in the
         Registration Statement, the Prospectus, any Prepricing
         Prospectus, any sales material (or any amendment or
         supplement to any of the foregoing) or arising out of or
         based upon any omission or alleged omission to state
         therein a material fact required to be stated therein or
         necessary to make the statements therein (in the case of
         a prospectus, in light of the circumstances under which
         they were made) not misleading, except insofar as such
         losses, claims, damages, liabilities or expenses arise
         out of or are based upon any untrue statement or
         omission or alleged untrue statement or omission which
         has been made therein or omitted therefrom in reliance
         upon and in conformity with the information relating to
         such Underwriters furnished in writing to the Fund by or
         on behalf of any Underwriter through you expressly for
         use in connection therewith; provided, however, that the
         foregoing indemnity with respect to the Registration
         Statement, the Prospectus or any Prepricing Prospectuses
         (or any amendment or supplement to any of the foregoing)


                               20



<PAGE>

         shall not inure to the benefit of any Underwriter from
         whom the person asserting any loss, claim, damage,
         liability or expense purchased Shares, if it is shown
         that a copy of the Prospectus, as then amended or
         supplemented, which would have cured any defect giving
         rise to such loss, claim, damage, liability or expense
         was not sent or delivered to such person by or on behalf
         of such Underwriter, if required by law to be so
         delivered, at or prior to the confirmation of the sale
         of such Shares to such person and such Prospectus,
         amendments and supplements had been provided by the Fund
         to the Underwriters in the requisite quantity and on a
         timely basis to permit proper delivery.  The foregoing
         indemnity agreement shall be in addition to any
         liability which the Fund or the Manager may otherwise
         have.

              (b)  If any action, suit or proceeding shall be
         brought against any Underwriter or any person
         controlling any Underwriter in respect of which
         indemnity may be sought against the Fund or the Manager,
         such Underwriter or such controlling person shall
         promptly notify the Fund or the Manager and the Fund or
         the Manager shall assume the defense thereof, including
         the employment of counsel and the payment of all fees
         and expenses. Such Underwriter or any such controlling
         person shall have the right to employ separate counsel
         in any such action, suit or proceeding and to
         participate in the defense thereof, but the fees and
         expenses of such counsel shall be at the expense of such
         Underwriter or controlling person unless (i) the Fund or
         the Manager have agreed in writing to pay such fees and
         expenses, (ii) the Fund and the Manager have failed
         within a reasonable time to assume the defense and
         employ counsel or (iii) the named parties to any such
         action, suit or proceeding (including any impleaded
         parties) include both such Underwriter or such
         controlling person and the Fund or the Manager and such
         Underwriter or such controlling person shall have been
         advised by its counsel that representation of such
         indemnified party and the Fund or the Manager by the
         same counsel would be inappropriate under applicable
         standards of professional conduct (whether or not such
         representation by the same counsel has been proposed)
         due to actual or potential differing interests between
         them (in which case the Fund and the Manager shall not
         have the right to assume the defense of such action,
         suit or proceeding on behalf of such Underwriter or such
         controlling person).  It is understood, however, that
         the Fund and the Manager shall, in connection with any
         one such action, suit or proceeding or separate but


                               21



<PAGE>

         substantially similar or related actions, suits or
         proceedings in the same jurisdiction arising out of the
         same general allegations or circumstances be liable for
         the reasonable fees and expenses of only one separate
         firm of attorneys (in addition to any local counsel if
         there is any action, suit or proceeding in more than one
         jurisdiction) at any time for all such Underwriters and
         controlling persons not having actual or potential
         differing interests with you or among themselves, which
         firm shall be designated in writing by Salomon Smith
         Barney Inc. and that, subject to the requirements of
         1940 Act Release No. 11330, all such fees and expenses
         shall be reimbursed promptly as they are incurred.  The
         Fund and the Manager shall not be liable for any
         settlement of any such action, suit or proceeding
         effected without the written consent of the Fund or the
         Manager, but if settled with such written consent or if
         there be a final judgment for the plaintiff in any such
         action, suit or proceeding, the Fund and the Manager
         agree to indemnify and hold harmless any Underwriter, to
         the extent provided in the preceding paragraph, and any
         such controlling person from and against any loss,
         liability, damage or expense by reason by such
         settlement or judgment.

              (c)  Each Underwriter agrees, severally and not
         jointly, to indemnify and hold harmless the Fund and the
         Manager, their trustees, directors, any officers of the
         Fund who sign the Registration Statement and any person
         who controls the Fund or the Manager within the meaning
         of Section 15 of the 1933 Act or Section 20 of the 1934
         Act, to the same extent as the foregoing indemnity from
         the Fund and the Manager to each Underwriter, but only
         with respect to information relating to such Underwriter
         furnished in writing by or on behalf of such Underwriter
         through you expressly for use in the Registration
         Statement or the Prospectus (or any amendment or
         supplement to either of them).  If any action, suit or
         proceeding shall be brought against the Fund or the
         Manager, any of their trustees, directors, any such
         officer or any such controlling person, based on the
         Registration Statement or the Prospectus (or any
         amendment or supplement to either of them) and in
         respect of which indemnity may be sought against any
         Underwriter pursuant to this paragraph (c), such
         Underwriter shall have the rights and duties given to
         the Fund by paragraph (b) above (except that if the Fund
         or the Manager shall have assumed the defense thereof
         such Underwriter shall not be required to do so, but may
         employ separate counsel therein and participate in the
         defense thereof, but the fees and expenses of such


                               22



<PAGE>

         counsel shall be at such Underwriter's expense) and the
         Fund and the Manager, their trustees, directors, any
         such officer and any such controlling person shall have
         the rights and duties given to the Underwriters by
         paragraph (b) above.  The foregoing indemnity agreement
         shall be in addition to any liability which the
         Underwriters may otherwise have.

              (d)  If the indemnification provided for in this
         Section 8 is unavailable to an indemnified party under
         paragraphs (a) or (c) hereof in respect of any losses,
         claims, damages, liabilities or expenses referred to
         therein, then an indemnifying party, in lieu of
         indemnifying such indemnified party, shall contribute to
         the amount paid or payable by such indemnified party as
         a result of such losses, claims, damages, liabilities or
         expenses (i) in such proportion as is appropriate to
         reflect the relative benefits received by the Fund and
         the Manager on the one hand (treated jointly for this
         purpose as one person) and the Underwriters on the other
         hand from the offering of the Shares or (ii) if the
         allocation provided by clause (i) above is not permitted
         by applicable law, in such proportion as is appropriate
         to reflect not only the relative benefits referred to in
         clause (i) above but also the relative fault of the Fund
         and the Manager on the one hand (treated jointly for
         this purpose as one person) and of the Underwriters on
         the other hand in connection with the statements or
         omissions which resulted in such losses, claims,
         damages, liabilities or expenses, as well as any other
         relevant equitable considerations.  The relative
         benefits received by the Fund and the Manager on the one
         hand (treated jointly for this purpose as one person)
         and the Underwriters on the other hand shall be deemed
         to be in the same proportion as the total net proceeds
         from the offering (before deducting expenses) received
         by the Fund as set forth in the table on the cover page
         of the Prospectus bear to the total payments received by
         the Underwriters with respect to the Firm Shares as set
         forth in the table on the cover page of the Prospectus.
         The relative fault of the Fund and the Manager on the
         one hand (treated jointly for this purpose as one
         person) and of the Underwriters on the other hand shall
         be determined by reference to, among other things,
         whether the untrue or alleged untrue statement of a
         material fact or the omission or alleged omission to
         state a material fact relates to information supplied by
         the Fund and the Manager on the one hand (treated
         jointly for this purpose as one person) or by the
         Underwriters on the other hand and the parties' relative



                               23



<PAGE>

         intent, knowledge, access to information and opportunity
         to correct or prevent such statement or omission.

              (e)  The Fund, the Manager and the Underwriters
         agree that it would not be just and equitable if
         contribution pursuant to this Section 8 were determined
         by pro rata allocation (even if the Underwriters were
         treated as one entity for such purpose) or by any other
         method of allocation that does not take account of the
         equitable considerations referred to in paragraph (d)
         above. The amount paid or payable by an indemnified
         party as a result of the losses, claims, damages,
         liabilities and expenses referred to in paragraph (d)
         above shall be deemed to include, subject to the
         limitations set forth above, any legal or other expenses
         reasonably incurred by such indemnified party in
         connection with defending any such action, suit or
         proceeding. Notwithstanding the provisions of this
         Section 8, no Underwriter shall be required to
         contribute any amount in excess of the amount by which
         the total price of the Shares underwritten by it and
         distributed to the public exceeds the amount of any
         damages which such Underwriter has otherwise been
         required to pay by reason of such untrue or alleged
         untrue statement or omission or alleged omission. No
         person guilty of fraudulent misrepresentation (within
         the meaning of Section 11(f) of the 1933 Act) shall be
         entitled to contribution from any person who was not
         guilty of such fraudulent misrepresentation. The
         Underwriters' obligations to contribute pursuant to this
         Section 8 are several in proportion to the respective
         number of Firm Shares set forth opposite their names in
         Schedule I (or such numbers of Firm Shares increased as
         set forth in Section 10 hereof) and not joint.

              (f)  No indemnifying party shall, without the prior
         written consent of the indemnified party, effect any
         settlement of any pending or threatened action, suit or
         proceeding in respect of which any indemnified party is
         or could have been a party and indemnity could have been
         sought hereunder by such indemnified party, unless such
         settlement includes an unconditional release of such
         indemnified party from all liability from claimants on
         claims that are the subject matter of such action, suit
         or proceeding.

              (g)  Any losses, claims, damages, liabilities or
         expenses for which an indemnified party is entitled to
         indemnification or contribution under this Section 8
         shall be paid by the indemnifying party to the
         indemnified party as such losses, claims, damages,


                               24



<PAGE>

         liabilities or expenses are incurred. The indemnity and
         contribution agreements contained in this Section 8 and
         the representations and warranties of the Fund and the
         Manager set forth in this Agreement shall remain
         operative and in full force and effect, regardless of
         (i) any investigation made by or on behalf of any
         Underwriter or any person controlling any Underwriter,
         the Fund, the Manager or their trustees, directors or
         officers or any person controlling the Fund or the
         Manager, (ii) acceptance of any Shares and payment
         therefor hereunder and (iii) any termination of this
         Agreement. A successor to any Underwriter or to the
         Fund, the Manager or their trustees, directors or
         officers or any person controlling any Underwriter, the
         Fund or the Manager shall be entitled to the benefits of
         the indemnity, contribution and reimbursement agreements
         contained in this Section 8.

         9.   Conditions of Underwriters' Obligations.  The
several obligations of the Underwriters to purchase any Shares
hereunder are subject to, in the good faith judgment of the
Underwriters, the accuracy of and compliance with the
representations, warranties and agreements of and by the Fund and
the Manager contained herein on and as of the date hereof, the
date on which the Registration Statement becomes or became
effective, the date of the Prospectus (and of any amendment or
supplement thereto), the Closing Date and, with respect to any
Additional Shares, any Option Closing Date; to the accuracy and
completeness of all statements made by the Fund, the Manager or
any of their officers in any certificate delivered to the
Representatives or their counsel pursuant to this Agreement and
to the following conditions:

              (a)  If, at the time this Agreement is executed and
         delivered, it is necessary for the Registration
         Statement or a post-effective amendment thereto to be
         declared effective before the offering of the Shares may
         commence, the Registration Statement or such
         post-effective amendment shall have become effective not
         later than 5:30 p.m., New York City time, on the date
         hereof or at such later date and time as shall be
         consented to in writing by you and all filings, if any,
         required by Rules 497 and 430A under the 1933 Act Rules
         and Regulations shall have been timely made; no order
         suspending the effectiveness of the Registration
         Statement shall have been issued and no proceeding for
         that purpose shall have been instituted or, to the
         knowledge of the Fund, the Manager or any Underwriter,
         threatened by the Commission and any request of the
         Commission for additional information (to be included in
         the Registration Statement or the Prospectus or


                               25



<PAGE>

         otherwise) shall have been complied with to your
         satisfaction.

              (b)  You shall have received on the Closing Date an
         opinion of Seward & Kissel LLP, counsel for the Fund,
         dated the Closing Date and addressed to you, as
         Representatives of the several Underwriters, to the
         effect that:

                   (i)  The Fund has been duly incorporated and
              is validly existing as a corporation in good
              standing under the laws of the State of Maryland
              with full corporate power and authority to own,
              lease and operate its properties and to conduct its
              business as described in the Registration Statement
              and the Prospectus (and any amendment or supplement
              thereto through the date of the opinion) and is
              duly registered and qualified to conduct its
              business and is in good standing in each
              jurisdiction where the nature of its properties or
              the conduct of its business requires such
              registration or qualification, except where the
              failure so to register or to qualify does not have
              a material, adverse effect on the condition
              (financial or other), business, properties, net
              assets or results of operations of the Fund;

                  (ii)  The authorized and outstanding capital
              stock of the Fund is as set forth in the
              Registration Statement and Prospectus (or any
              amendment or supplement thereto through the date of
              the opinion); and the description of the authorized
              capital stock of the Fund contained in the
              Prospectus (or any amendment or supplement thereto
              through the date of the opinion) under the caption
              "Description of Shares" conforms in all material
              respects as to legal matters to the terms thereof
              contained in the Fund's Articles of Incorporation;

                 (iii)  All the shares of capital stock of the
              Fund outstanding prior to the issuance of the
              Shares have been duly authorized and validly issued
              and are fully paid and nonassessable;

                  (iv)  The Shares have been duly authorized and,
              when issued and delivered to the Underwriters
              against payment therefor in accordance with the
              terms hereof, will be validly issued, fully paid
              and nonassessable and not subject to any preemptive
              rights that entitle or will entitle any person to



                               26



<PAGE>

              acquire any Shares upon the issuance thereof by the
              Fund;

                   (v)  The form of certificates for the Shares
              is in due and proper form and complies with the
              requirements of all applicable laws and the NYSE;

                  (vi)  The Fund has the power and authority to
              enter into this Agreement and the Fund Agreements
              and to issue, sell and deliver the Shares to the
              Underwriters as provided herein and this Agreement
              and each of the Fund Agreements have been duly
              authorized, executed and delivered by the Fund and
              assuming due authorization, execution and delivery
              by the other parties thereto, constitute the valid,
              legal and binding agreements of the Fund,
              enforceable against the Fund in accordance with
              their terms, except as enforcement of rights to
              indemnity hereunder may be limited by Federal or
              state securities laws or principles of public
              policy and subject to the qualification that the
              enforceability of the Fund's obligations hereunder
              and thereunder may be limited by bankruptcy,
              insolvency, reorganization, moratorium and other
              laws relating to or affecting creditors' rights
              generally and by general equitable principles,
              whether enforcement is considered in a proceeding
              in equity or at law;

                 (vii)  The Manager has corporate power and
              authority to enter into this Agreement and the
              Management Agreement and each of this Agreement and
              the Management Agreement has been duly authorized,
              executed and delivered by the Manager and each of
              this Agreement and the Management Agreement is a
              valid, legal and binding agreement of the Manager,
              enforceable against the Manager in accordance with
              its terms, except as enforcement of rights to
              indemnity and contribution hereunder may be limited
              by Federal or state securities laws or principles
              of public policy and subject to the qualification
              that the enforceability of the Manager's
              obligations hereunder and thereunder may be limited
              by bankruptcy, insolvency, reorganization,
              moratorium and other laws relating to or affecting
              creditors' rights generally and by general
              equitable principles, whether enforcement is
              considered in a proceeding in equity or at law;

                (viii)  The Fund Agreements comply in all
              material respects with all applicable provisions of


                               27



<PAGE>

              the 1933 Act, the 1940 Act, the Advisers Act, the
              Rules and Regulations and the Advisers Act Rules
              and Regulations;

                  (ix)  The Fund is not in violation of its
              Articles of Incorporation or By-Laws or to the best
              knowledge of such counsel after reasonable inquiry,
              is not in default in the performance of any
              material obligation, agreement or condition
              contained in any bond, debenture, note or other
              evidence of indebtedness, except as may be
              disclosed in the Prospectus (and any amendment or
              supplement thereto);

                   (x)  No consent, approval, authorization or
              order of or registration or filing with the
              Commission, the NASD, any state securities
              commission, any national securities exchange, any
              arbitrator, any court or any other governmental
              body, agency or regulatory, self-regulatory or
              administrative agency or any official is required
              on the part of the Fund (except as have been
              obtained under the 1933 Act and the 1934 Act or
              such as may be required under state securities or
              Blue Sky laws governing the purchase and
              distribution of the Shares) for the valid issuance
              and sale of the Shares to the Underwriters as
              contemplated by this Agreement, performance of the
              Fund Agreements or this Agreement by the Fund, the
              consummation by the Fund of the transactions
              contemplated thereby or hereby or the adoption of
              the Fund's Dividend Reinvestment Plan;

                  (xi)  Neither the offer, sale or delivery of
              the Shares, the execution, delivery or performance
              of this Agreement or the Fund Agreements,
              compliance by the Fund with the provisions hereof
              or thereof, consummation by the Fund of the
              transactions contemplated hereby or thereby nor the
              adoption of the Fund's Dividend Reinvestment Plan
              violates the Articles of Incorporation or By-Laws
              of the Fund or any material agreement, indenture,
              lease or other instrument to which the Fund is a
              party or by which it or any of its properties is
              bound that is an exhibit to the Registration
              Statement or that is known to such counsel after
              reasonable inquiry or, to the best of such
              counsel's knowledge after reasonable inquiry, will
              result in the creation or imposition of any
              material lien, charge or encumbrance upon any
              property or assets of the Fund, nor, to the best of


                               28



<PAGE>

              such counsel's knowledge after reasonable inquiry,
              will any such action result in any violation of any
              existing material law, regulation, ruling (assuming
              compliance with all applicable state securities and
              Blue Sky laws), judgment, injunction, order or
              decree applicable to the Fund or any of its
              properties;

                 (xii)  The Registration Statement and all
              post-effective amendments, if any, have become
              effective under the 1933 Act and, to the best
              knowledge of such counsel after reasonable inquiry,
              no order suspending the effectiveness of the
              Registration Statement has been issued and no
              proceedings for that purpose are pending before or
              contemplated by the Commission; and any filing of
              the Prospectus and any amendments or supplements
              thereto required pursuant to Rule 497 of the 1933
              Act Rules and Regulations prior to the date of such
              opinion have been made in accordance with Rule 497;

                (xiii)  The Fund is duly registered with the
              Commission under the 1940 Act as a closed-end, non-
              diversified management investment company and all
              action has been taken by the Fund as required by
              the 1933 Act and the 1940 Act and the Rules and
              Regulations in connection with the issuance and
              sale of the Shares to make the public offering and
              consummate the sale of the Shares as contemplated
              by this Agreement;

                 (xiv)  The statements made in the Registration
              Statement and the Prospectus (and any amendment or
              supplement to either of them through the date of
              the opinion) under the caption "Tax Matters" have
              been reviewed by such counsel and to the extent
              they describe or summarize tax laws, doctrines or
              practices of the United States, present a fair and
              accurate description or summary thereof as of the
              date of the opinion;

                  (xv)  The statements in the Registration
              Statement and Prospectus (and any amendment or
              supplement to either of them through the date of
              the opinion), insofar as they are descriptions of
              contracts, agreements or other legal documents or
              refer to statements of law or legal conclusions,
              are accurate and present fairly the information
              required to be shown;




                               29



<PAGE>

                 (xvi)  The Registration Statement and the
              Prospectus (and any amendment or supplement to
              either of them through the date of the opinion)
              comply as to form in all material respects with the
              requirements of the 1933 Act, the 1940 Act and the
              Rules and Regulations (except that no opinion need
              be expressed as to the financial statements and the
              notes thereto and the schedules and other financial
              and statistical data included therein as to which
              such counsel need not express any opinion);

                (xvii)  To the best knowledge of such counsel
              after reasonable inquiry, (A) other than as
              described or contemplated in the Prospectus (or any
              amendment or supplement thereto through the date of
              the opinion), there are no actions, suits or other
              legal or governmental proceedings pending or
              expressly threatened against the Fund and (B) there
              are no material agreements, contracts, indentures,
              leases or other instruments that are required to be
              described in the Registration Statement or the
              Prospectus (or any amendment or supplement to
              either of them through the date of the opinion) or
              to be filed as an exhibit to the Registration
              Statement that are not described or filed as
              required, as the case may be;

               (xviii)  To the best knowledge of such counsel
              after reasonable inquiry, the Fund is not in
              violation of any law, ordinance, administrative or
              governmental rule or regulation applicable to the
              Fund or of any decree of the Commission, the NASD,
              any state securities commission, any national
              securities exchange, any arbitrator, any court or
              any other governmental, regulatory, self-regulatory
              or administrative agency or any official having
              jurisdiction over the Fund; and

                 (xix)  The Shares are duly authorized for
              listing, subject to official notice of issuance, on
              the NYSE and the Fund's registration statement on
              Form 8-A under the 1934 Act is effective.

              Such counsel shall also state that although counsel
         has not undertaken, except as otherwise indicated in
         their opinion, to determine independently and does not
         assume any responsibility for, the accuracy or
         completeness of the statements in the Registration
         Statement, such counsel has participated in the
         preparation of the Registration Statement and the
         Prospectus, including review and discussion of the


                               30



<PAGE>

         contents thereof, and nothing has come to the attention
         of such counsel that has caused it to believe that the
         Registration Statement, at the time the Registration
         Statement became effective or the Prospectus, as of its
         date and as of the Closing Date or the Option Closing
         Date, as the case may be, contained an untrue statement
         of a material fact or omitted to state a material fact
         required to be stated therein or necessary to make the
         statements therein (in the case of a prospectus, in
         light of the circumstances under which they were made)
         not misleading or that any amendment or supplement to
         the Prospectus, as of the Closing Date or the Option
         Closing Date, contained an untrue statement of a
         material fact or omitted to state a material fact
         necessary in order to make the statements therein, in
         light of the circumstances under which they were made,
         not misleading (it being understood that such counsel
         need express no view with respect to the financial
         statements and the notes thereto and the schedules and
         other financial and statistical data included in the
         Registration Statement or the Prospectus).

              In rendering such opinion, such counsel may limit
         such opinion to matters involving the application of the
         laws of the State of New York, the State of Maryland,
         the State of Delaware and the United States. To the
         extent they deem proper and to the extent specified in
         such opinion, such counsel may rely, as to matters
         involving the application of laws of the State of
         Maryland, upon the opinion of Ballard Spahr Andrews &
         Ingersoll LLP and, [as to matters involving the
         application of laws of the State of [California], upon
         the opinion of ___________________ or, in either case,
         other counsel of good standing whom they believe to be
         reliable and who are satisfactory to the
         Representatives; provided that (X) such reliance is
         expressly authorized by the opinion so relied upon and a
         copy of each such opinion is delivered to the
         Representatives and is, in form and substance,
         satisfactory to them and their counsel and (Y) Seward &
         Kissel LLP states in their opinion that they believe
         that they and the Underwriters are justified in relying
         thereon.]

              (c)  You shall have received on the Closing Date an
         opinion of David R. Brewer, Jr., Senior Vice President
         and General Counsel of Alliance Capital Management
         Corporation, the general partner of the Manager, dated
         the Closing Date and addressed to you, as
         Representatives of the several Underwriters, to the
         effect that:


                               31



<PAGE>

                   (i)  The Manager has been duly formed and is
              validly existing and in good standing under the
              laws of Delaware, with power and authority
              (partnership and other) to own its properties and
              conduct its business as described in the
              Prospectus;

                  (ii)  The Manager has been duly qualified as a
              foreign partnership for the transaction of business
              and is in good standing under the laws of each
              other jurisdiction in which it owns or leases
              properties, or conducts any business, so as to
              require such qualification, other than where the
              failure to be so qualified or in good standing
              would not have a material adverse effect on the
              Manager and its subsidiaries taken as a whole;

                 (iii)  The Manager is duly registered as an
              investment adviser under the Advisers Act and is
              not prohibited by the Advisers Act, the 1940 Act,
              or the rules and regulations under such Acts, from
              acting as an investment adviser for the Company as
              contemplated in the Prospectus and the Management
              Agreement;

                  (iv)  Neither the performance by the Manager of
              its obligations under this Agreement nor the
              consummation of the transactions contemplated
              therein or in the Registration Statement nor the
              fulfillment of the terms thereof is, or with the
              giving of notice or lapse of time or both would be,
              in violation of or constitute a default under, the
              limited partnership agreement of the Manager or any
              agreement known to such counsel to which the
              Manager is a party or by which it or any of its
              properties is bound, except for violations and
              defaults which individually and in the aggregate
              are not material to the Manager and its
              subsidiaries taken as a whole; or, to the knowledge
              of such counsel, the terms and provisions of any
              applicable order, law, rule or regulation of any
              court or governmental agency or body under the laws
              of Delaware, federal law or the laws of any other
              jurisdiction in the United States having
              jurisdiction over the Manager or any of its
              properties;

                   (v)  Other than as set forth in (i) Part II,
              Item 1 of the Quarterly Report on Form 10-Q filed
              by the Manager with the Commission with respect to
              the quarterly periods ended March 31, 2001,


                               32



<PAGE>

              June 30, 2001 and September 30, 2001 pursuant to
              Section 13 or 15(d) of the 1934 Act and (ii) the
              Current Report on Form 8-K filed by the Manager
              with the Commission on December 13, 2001 and
              January 10, 2002 pursuant to Section 13 or 15(d) of
              the 1934 Act, to the knowledge of such counsel,
              there is no pending or threatened action, suit or
              proceeding to which the Manager is a party before
              or by any court or governmental agency, authority
              or body or any arbitrator, whether foreign or
              domestic, which reasonably might result in a
              material adverse effect on the          Manager's
              ability to perform its obligations under the
              Management Agreement.

              In rendering such opinion, such counsel may limit
         such opinion to matters involving the application of the
         laws of the State of New York, the State of Delaware and
         the United States.

              (d)  (i)  You shall have received on the Closing
         Date an opinion of _________, special [California] [New
         York] counsel to the Fund, dated the Closing Date and
         addressed to you, as Representatives of the several
         Underwriters, to the effect that:

                        The statements contained in the
              Prospectus under the headings "Prospectus Summary -
              Special Risk Considerations - Concentration Risk",
              "Risks - Concentration Risk" and "Tax Matters -
              [California] [New York] Tax Matters" and in
              Appendix C to the statement of additional
              information under the heading "Factors Pertaining
              to [California] [New York]", to the extent that
              such statements constitute matters of law or legal
              conclusions, provide a fair and accurate summary of
              such law or conclusions. Such statements are based
              on current law and special counsel's understanding
              of the Fund's proposed operations, as disclosed in
              the Prospectus.

              Such counsel shall also state that although special
         counsel does not pass upon or assume any responsibility
         for the accuracy, completeness or fairness of the
         statements contained in the Registration Statement or
         the Prospectus (other than to the extent set forth
         above), and has not made any independent check or
         verification thereof, no facts have come to the
         attention of such special counsel which would lead it to
         believe that the material contained in the Registration
         Statement, at the time it became effective, and the


                               33



<PAGE>

         Prospectus, as of its date and as of the Closing Date or
         the Option Closing Date, as the case may be, under the
         headings "Prospectus Summary - Special Risk
         Considerations - Concentration Risk",  "Risks -
         Concentration Risk" and "Tax Matters - [California] [New
         York] Tax Matters" and in Appendix C to the statement of
         additional information under the heading "Factors
         Pertaining to [California] [New York]", contained any
         untrue statement of a material fact or omitted to state
         a material fact required to be stated therein or
         necessary to make the statements therein (in the case of
         a prospectus, in light of the circumstances under which
         they were made) not misleading or that any statement
         contained in any amendment or supplement to the
         Prospectus under such headings, as of the Closing Date
         or the Option Closing Date, as the case may be,
         contained any untrue statement of a material fact or
         omitted or omits to state a material fact necessary in
         order to make the statements therein, in light of the
         circumstances under which they were made, not
         misleading.

         In rendering such opinion, such special counsel may rely
         as to matters of fact, to the extent such special
         counsel deems proper, on certificates of responsible
         officers of the Fund and of the Manager, and of public
         officials.

                 [(ii)  You shall have received on the Closing
         Date a letter, substantially in the form heretofore
         approved by you, from __________, special counsel to the
         Fund, dated the Closing Date and addressed to you, as
         Representatives of the several Underwriters, with
         respect to the taxable equivalent yield tables under the
         heading "Performance Related and Comparative
         Information" in the statement of additional
         information.]

              (e)  That you shall have received on the Closing
         Date, an opinion, dated the Closing Date, of Simpson
         Thacher & Bartlett, counsel for the Underwriters, dated
         the Closing Date and addressed to you, as
         Representatives of the several Underwriters, with
         respect to such matters as the Underwriters may require
         and the Fund, the Manager and their respective counsels
         shall have furnished to such counsel such documents as
         they may request for the purpose of enabling them to
         pass upon such matters.

              (f)  That you shall have received letters addressed
         to you, as Representatives of the several Underwriters,


                               34



<PAGE>

         and dated the date hereof and the Closing Date from
         Ernst & Young LLP, independent certified public
         accountants, substantially in the forms heretofore
         approved by you.

              (g)  (i)  No order suspending the effectiveness of
         the Registration Statement or prohibiting or suspending
         the use of the Prospectus (or any amendment or
         supplement thereto) or any Prepricing Prospectus or any
         sales material shall have been issued and no proceedings
         for such purpose or for the purpose of commencing an
         enforcement action against the Fund, the Manager or,
         with respect to the transactions contemplated by the
         Prospectus (or any amendment or supplement thereto) and
         this Agreement, any Underwriter, may be pending before
         or, to the knowledge of the Fund, the Manager or any
         Underwriter or in the reasonable view of counsel to the
         Underwriters, shall be threatened or contemplated by the
         Commission at or prior to the Closing Date and that any
         request for additional information on the part of the
         Commission (to be included in the Registration
         Statement, the Prospectus or otherwise) be complied with
         to the satisfaction of the Representatives, (ii)  there
         shall not have been any change in the capital stock of
         the Fund nor any material increase in debt of the Fund
         from that set forth in the Prospectus (and any amendment
         or supplement thereto) and the Fund shall not have
         sustained any material liabilities or obligations,
         direct or contingent, other than those reflected in the
         Prospectus (and any amendment or supplement thereto);
         (iii)  since the date of the Prospectus there shall not
         have been any material, adverse change in the condition
         (financial or other), business, prospects, properties,
         net assets or results of operations of the Fund or the
         Manager; (iv)  the Fund and the Manager must not have
         sustained any material loss or interference with its
         business from any court or from legislative or other
         governmental action, order or decree or from any other
         occurrence not described in the Registration Statement
         and the Prospectus (and any amendment or supplement to
         either of them); and (v)  all of the representations and
         warranties of the Fund and the Manager contained in this
         Agreement shall be true and correct on and as of the
         date hereof and as of the Closing Date as if made on and
         as of the Closing Date.

              (h)  Subsequent to the effective date of this
         Agreement, there shall not have occurred (i) any change
         or any development involving a prospective change in or
         affecting the condition (financial or other), business,
         prospects, properties, net assets or results of


                               35



<PAGE>

         operations of the Fund or the Manager not contemplated
         by the Prospectus (and any amendment or supplement
         thereto), which in your opinion, as Representatives of
         the several Underwriters, would materially, adversely
         affect the market for the Shares or (ii)any event or
         development relating to or involving the Fund, the
         Manager or any officer or trustee or director of the
         Fund or the Manager which makes any statement of a
         material fact made in the Prospectus (or any amendment
         or supplement thereto) untrue or which, in the opinion
         of the Fund and its counsel or the Underwriters and
         their counsel, requires the making of any addition to or
         change in the Prospectus (or any amendment or supplement
         thereto) in order to state a material fact required by
         the 1933 Act, the 1940 Act, the Rules and Regulations or
         any other law to be stated therein or necessary in order
         to make the statements therein (in the case of a
         prospectus, in light of the circumstances under which
         they were made) not misleading, if amending or
         supplementing the Prospectus (or any amendment or
         supplement thereto) to reflect such event or development
         would, in your opinion, as Representatives of the
         several Underwriters, materially, adversely affect the
         market for the Shares.

              (i)  That neither the Fund nor the Manager shall
         have failed at or prior to the Closing Date to have
         performed or complied with any of the agreements herein
         contained and required to be performed or complied with
         by them at or prior to the Closing Date.

              (j)  That you shall have received on the Closing
         Date a certificate, dated such date, of the president or
         any vice president and of the controller or treasurer of
         each of the Fund and the Manager certifying that
         (i)  the signers have carefully examined the
         Registration Statement, the Prospectus (and any
         amendments or supplements to either of them) and this
         Agreement, (ii)  the representations and warranties of
         the Fund (with respect to the certificates from such
         Fund officers) and the representations of the Manager
         (with respect to the certificates from such officers of
         the Manager) in this Agreement are true and correct on
         and as of the date of the certificate as if made on such
         date, (iii)  since the date of the Prospectus (and any
         amendment or supplement thereto) there has not been any
         material, adverse change in the condition (financial or
         other), business, prospects (other than as a result of a
         change in the financial markets generally), properties,
         net assets or results of operations of the Fund (with
         respect to the certificates from such Fund officers) or


                               36



<PAGE>

         the Manager (with respect to the certificates from such
         officers of the Manager), (iv)  to the knowledge of such
         officers after reasonable investigation, no order
         suspending the effectiveness of the Registration
         Statement or prohibiting the sale of any of the Shares
         or having a material, adverse effect on the Fund (with
         respect to the certificates from such Fund officers) or
         the Manager (with respect to the certificates from such
         officers of the Manager) has been issued and no
         proceedings for any such purpose are pending before or
         threatened by the Commission or any court or other
         regulatory body, the NASD, any state securities
         commission, any national securities exchange, any
         arbitrator, any court or any other governmental,
         regulatory, self-regulatory or administrative agency or
         any official, (v)  each of the Fund (with respect to
         certificates from such Fund officers) and the Manager
         (with respect to certificates from such officers of the
         Manager) has performed and complied with all agreements
         that this Agreement require it to perform by such
         Closing Date, (vi)  neither the Fund (with respect to
         the certificate from such officers of the Fund) nor the
         Manager (with respect to the certificate from such
         officers of the Manager) has sustained any material loss
         or interference with its business from any court or from
         legislative or other governmental action, order or
         decree or from any other occurrence not described in the
         Registration Statement and the Prospectus and any
         amendment or supplement to either of them and
         (vii)  with respect to the certificate from such
         officers of the Fund, there has not been any change in
         the capital stock of the Fund nor any material increase
         in the debt of the Fund from that set forth in the
         Prospectus (and any amendment or supplement thereto) and
         the Fund has not sustained any material liabilities or
         obligations, direct or contingent, other than those
         reflected in the Prospectus (and any amendment or
         supplement thereto).

              (k)  That the Fund and the Manager shall have
         furnished to you such further certificates, documents
         and opinions of counsel as you shall reasonably request
         (including certificates of officers of the Fund and the
         Manager).

              All such opinions, certificates, letters and other
         documents will be in compliance with the provisions
         hereof only if they are satisfactory in form and
         substance to you and your counsel acting in good faith.




                               37



<PAGE>

              Any certificate or document signed by any officer
         of the Fund or the Manager and delivered to you, as
         Representatives of the Underwriters or to Underwriters'
         counsel, shall be deemed a representation and warranty
         by the Fund or the Manager to each Underwriter as to the
         statements made therein.

              The several obligations of the Underwriters to
         purchase Additional Shares hereunder are subject to (i)
         the accuracy of and compliance with the representations
         and warranties of the Fund and the Manager contained
         herein on and as of the Option Closing Date as though
         made on any Option Closing Date, (ii) satisfaction on
         and as of any Option Closing Date of the conditions set
         forth in this Section 9 except that, if any Option
         Closing Date is other than the Closing Date, the
         certificates, opinions and letters referred to in
         paragraphs (b), (c), (d), (e), (f), (j), (k) and this
         paragraph shall be dated the Option Closing Date in
         question and the opinions and letters called for by
         paragraphs (b), (c), (d) and (e) shall be revised to
         reflect the sale of Additional Shares and (iii) the
         absence of circumstances on or prior to the Option
         Closing Date which would permit termination of this
         Agreement pursuant to Section 11 hereof if they existed
         on or prior to the Closing Date.

         10.  Effective Date of Agreement.  This Agreement shall
become effective: (i) upon the execution and delivery hereof by
the parties hereto; or (ii) if, at the time this Agreement is
executed and delivered, it is necessary for the Registration
Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when
notification of the effectiveness of the Registration Statement
or such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become
effective, it may be terminated by the Fund by notifying you or
by you, as Representatives of the several Underwriters, by
notifying the Fund.

         If any one or more of the Underwriters shall fail or
refuse to purchase Firm Shares which it or they have agreed to
purchase hereunder and the aggregate number of Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate
number of the Firm Shares, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the aggregate
number of Firm Shares set forth opposite its name in Schedule I
hereto bears to the aggregate number of Firm Shares set forth
opposite the names of all non-defaulting Underwriters or in such
other proportion as you may specify in accordance with Section 20


                               38



<PAGE>

of the Salomon Smith Barney Master Agreement Among Underwriters,
to purchase Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any
Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate
number of Firm Shares and arrangements satisfactory to you and
the Fund for the purchase of such Firm Shares by one or more
non-defaulting Underwriters or other party or parties approved by
you and the Fund are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of
any non-defaulting Underwriter or the Fund. In any such case
which does not result in termination of this Agreement, either
you or the Fund shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that
the required changes, if any, in the Registration Statement and
the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect to any such
default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule I
hereto who, with your approval and the approval of the Fund,
purchases Firm Shares which a defaulting Underwriter agreed, but
failed or refused, to purchase.

          Any notice under this Section 10 may be made by
telegram, telecopy or telephone but shall be subsequently
confirmed by letter.

         11.  Termination of Agreement.  This Agreement shall be
subject to termination in your absolute discretion, without
liability on the part of any Underwriter to the Fund or the
Manager by notice to the Fund or the Manager if prior to the
Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the
case may be, (i) trading in the Shares or securities generally on
the NYSE, American Stock Exchange, Nasdaq National Market or the
Nasdaq Stock Market shall have been suspended or materially
limited, (ii) additional material governmental restrictions not
in force on the date of this Agreement have been imposed upon
trading in securities generally or a general moratorium on
commercial banking activities in New York shall have been
declared by either Federal or state authorities or (iii) any
outbreak or material escalation of hostilities or other
international or domestic calamity, crisis or change in
political, financial or economic conditions, occurs, the effect
of which is such as to make it, in your judgment, impracticable
or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page
of the Prospectus or to enforce contracts for the resale of the


                               39



<PAGE>

Shares by the Underwriters. Notice of such termination may be
given to the Fund or the Manager by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

         12.  Expenses.  The Fund agrees to pay the following
costs and expenses and all other costs and expenses incident to
the performance by the Fund of its obligations hereunder: (a) the
preparation, printing or reproduction, filing (including, without
limitation, the filing fees prescribed by the 1933 Act, the 1940
Act and the Rules and Regulations) and distribution of the
Registration Statement (including exhibits thereto), the
Prospectus, each Prepricing Prospectus and the 1940 Act
Notification and all amendments or supplements to any of them,
(b) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, the
Prospectus, each Prepricing Prospectus, any sales material and
all amendments or supplements to any of them as may be reasonably
requested for use in connection with the offering and sale of the
Shares, (c) the preparation, printing, authentication, issuance
and delivery of certificates for the Shares, including any stamp
taxes and transfer agent and registrar fees payable in connection
with the original issuance and sale of such Shares, (d) the
registrations or qualifications of the Shares for offer and sale
under the securities or Blue Sky laws of the several states as
provided in Section 5(g) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction and
delivery of the preliminary and supplemental Blue Sky Memoranda
and such registration and qualification), (e) the fees and
expenses of the Fund's independent accountants, counsel for the
Fund and of the transfer agent, (f) the expenses of delivery to
the Underwriters and dealers (including postage, air freight and
the cost of counting and packaging) of copies of the Prospectus,
the Prepricing Prospectus, any sales material and all amendments
or supplements to the Prospectus as may be requested for use in
connection with the offering and sale of the Shares, (g) the
printing (or reproduction) and delivery of this Agreement, any
dealer agreements, the preliminary and supplemental Blue Sky
Memoranda and all other company-authorized agreements or other
documents printed (or reproduced) and delivered in connection
with the offering of the Shares, (h) the filing fees and the fees
and expenses of counsel for the Underwriters in connection with
any filings required to be made with the NASD and incurred with
respect to the review of the offering of the Shares by the NASD,
(i) the registration of the Shares under the 1934 Act and the
listing of the Shares on the NYSE, and (j) an amount equal to (A)
$20,000 plus (B) $.0025 per Share for each Share in excess of
2,000,000 sold pursuant to this Agreement, payable no later than
45 days from the date of this Agreement to the Underwriters in
partial reimbursement of their expenses (but not including


                               40



<PAGE>

reimbursement for the cost of one tombstone advertisement in a
newspaper that is one-quarter of a newspaper page or less in
size) in connection with the offering.

         Notwithstanding the foregoing, in the event that the
sale of the Firm Shares is not consummated pursuant to Section 2
hereof, the Manager will pay the costs and expenses of the Fund
set forth above in this Section 12 (a) through (i), and
reimbursements of Underwriter expenses in connection with the
offering shall be made in accordance with Section 5(k) hereof.

         13.  Information Furnished by the Underwriters.  The
names of the underwriters and numbers of Shares listed opposite
such names in the first paragraph under the caption
"Underwriting" in the Prospectus, as well as, under the same
caption, the third paragraph, the first sentence of the tenth
paragraph, the eleventh paragraph and the fourteenth paragraph
constitute the only information relating to any Underwriter
furnished to the Fund in writing by or on behalf of the
Underwriters through you as such information is referred to
herein, expressly for use in the Prospectus.

         14.  Miscellaneous.  Except as otherwise provided in
Sections 5, 10 and 11 hereof, notice given pursuant to any
provision of this Agreement shall be in writing and shall be
delivered (a) if to the Fund, Attn: Edmund P. Bergan, Jr., c/o
Alliance Capital Management L.P., 1345 Avenue of the Americas,
New York, New York 10105, or if to the Manager, Attn:  David R.
Brewer, Jr., 1345 Avenue of the Americas, New York, New York
10105, or (b) if to you, as Representatives of the Underwriters,
at the office of Salomon Smith Barney Inc. at 388 Greenwich
Street, New York, New York 10013, Attention:  Manager, Investment
Banking Division.

         This Agreement has been and is made solely for the
benefit of the several Underwriters, the Fund, the Manager, their
trustees, directors and officers and the other controlling
persons referred to in Section 8 hereof and their respective
successors and assigns to the extent provided herein and no other
person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" or the term "successors
and assigns" as used in this Agreement shall include a purchaser
from any Underwriter of any of the Shares in his status as such
purchaser.

         15.  Applicable Law; Counterparts.  This Agreement shall
be governed by and construed in accordance with the laws of the
State of New York.

         This Agreement may be signed in various counterparts
which together constitute one and the same instrument.  If signed


                               41



<PAGE>

in counterparts, this Agreement shall not become effective unless
at least one counterpart hereof shall have been executed and
delivered on behalf of each party hereto.


















































                               42



<PAGE>

         Please confirm that the foregoing correctly sets forth
the agreement among the Fund and the Manager and the several
Underwriters.


                             Very truly yours,

                             ALLIANCE [CALIFORNIA] [NEW YORK]
                             MUNICIPAL INCOME FUND, INC.


                             By: ___________________________
                                  Name:
                                  Title:


                             ALLIANCE CAPITAL MANAGEMENT L.P.

                             By: ALLIANCE CAPITAL MANAGEMENT
                                  CORPORATION, its general
                                  partner


                             By: ____________________________
                                  Name:
                                  Title:



























                               43



<PAGE>

Confirmed as of the date
first above written on
behalf of themselves and
the other several Underwriters
named in Schedule I hereto.

By:                          SALOMON SMITH BARNEY INC.
                             A.G. EDWARDS & SONS, INC.
                             PRUDENTIAL SECURITIES INCORPORATED
                             UBS WARBURG LLC
                             CROWELL, WEEDON & CO.
                             WEDBUSH MORGAN SECURITIES, INC.
                             WELLS FARGO VAN KASPER, LLC


AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS

By: SALOMON SMITH BARNEY INC.


    By: _____________________
        Title:  Director































                               44



<PAGE>

                           SCHEDULE I


Name of Underwriters                   Number of Common Shares

Salomon Smith Barney Inc.





     Total









































                               45
00250209.A01

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2H DISTR CONTR
<SEQUENCE>8
<FILENAME>h2_00250209an7.txt
<TEXT>



<PAGE>


               MASTER AGREEMENT AMONG UNDERWRITERS

                    Registered SEC Offerings
            (including Multiple Syndicate Offerings),
           Standby Underwritings and Exempt Offerings
         (other than Offerings of Municipal Securities)


                                                     July 1, 1999


Ladies and Gentlemen:

         From time to time Salomon Smith Barney Inc. ("Salomon
Smith Barney") may invite you (and others) to participate on the
terms set forth herein as an underwriter or an initial purchaser,
or in a similar capacity, in connection with certain offerings of
securities that are managed solely by us or with one or more
other co-managers.  If we invite you to participate in a specific
offering and sale (an "Offering") to which this Master Agreement
Among Underwriters (the "Salomon Smith Barney Master AAU") shall
apply, we will send the information set forth below in Section
1.1 to you by one or more wires, telexes, facsimile or electronic
data transmissions or other written communications (each a "Wire"
and collectively, an "AAU").  Each Wire will indicate that it is
a Wire pursuant to the Salomon Smith Barney Master AAU.  The Wire
inviting you to participate in an Offering is referred to herein
as the "Invitation Wire".  You and we hereby agree that by the
terms hereof the provisions of this Salomon Smith Barney Master
AAU automatically shall be incorporated by reference in each AAU,
except that any such AAU may also exclude or revise any provision
of this Salomon Smith Barney Master AAU or may contain such
additional provisions as may be specified in such AAU.

                           I.  GENERAL

         1.1.  Terms of AAU; Certain Definitions; Construction.
Each AAU shall relate to an Offering and shall identify (i) the
securities to be offered in the Offering (the "Securities"),
their principal terms, the issuer or issuers (each an "Issuer")
and any guarantor (each a "Guarantor") thereof and, if different
from the Issuer, the seller or sellers (each a "Seller") of the
Securities, (ii) the underwriting agreement, purchase agreement,
standby underwriting agreement, distribution agreement or similar
agreement (as identified in such AAU and as amended or
supplemented, including a terms agreement or pricing agreement
pursuant to any of the foregoing, collectively, the "Underwriting
Agreement") providing for the purchase, on a several and not
joint basis, of the Securities by the several underwriters,
initial purchasers or others acting in a similar capacity on



<PAGE>

whose behalf the Manager (as defined below) executes the
Underwriting Agreement (including the Manager and the Co-Managers
(as defined below), the "Underwriters"), (iii) if applicable,
that the Underwriting Agreement includes an option (an "Over-
allotment Option") to purchase Additional Securities (as defined
below) to cover over-allotments, if any, (iv) if applicable, that
the Offering is part of an offering that includes concurrent
offerings by two or more syndicates (an "International
Offering"), each of which will offer and sell Securities subject
to such restrictions as shall be specified in any Intersyndicate
Agreement (as defined below) referred to in such AAU, (v) the
price at which the Securities are to be purchased by the several
Underwriters from any Issuer or Seller thereof (the "Purchase
Price"), (vi) the offering terms, including, if applicable, the
price or prices at which the Securities initially will be offered
by the Underwriters (the "Offering Price"), any selling
concession to dealers (the "Selling Concession"), reallowance
(the "Reallowance"), management fee, global coordinators' fee,
praecipium or other similar fees, discounts or commissions
(collectively, the "Fees and Commissions") with respect to the
Securities, (vii) the proposed pricing date ("Pricing Date") and
settlement date (the "Settlement Date"), (viii) any contractual
restrictions on the offer and sale of the Securities pursuant to
the Underwriting Agreement, Intersyndicate Agreement or
otherwise, (ix) any co-managers for such Offering (the "Co-
Managers"), (x) your proposed participation in the Offering, (xi)
if applicable, the trustee, fiscal agent or similar agent (the
"Trustee") for the indenture, trust agreement, fiscal agency
agreement or similar agreement (the "Indenture") under which such
Securities will be issued and (xii) any other principal terms of
the Offering.

         The term "Manager" means Salomon Smith Barney.  The term
"Underwriters" includes the Manager and the Co-Managers.  The
term "Firm Securities" means the number or amount of Securities
that the several Underwriters are initially committed to purchase
under the Underwriting Agreement (which may be expressed as a
percentage of an aggregate number or amount of Securities to be
purchased by the Underwriters as in the case of a standby
Underwriting Agreement).  The term "Additional Securities" means
the Securities, if any, that the several Underwriters have an
option to purchase under the Underwriting Agreement to cover
over-allotments, if any.  The number, amount or percentage of
Firm Securities set forth opposite each Underwriter's name in the
Underwriting Agreement plus any additional Firm Securities that
such Underwriter has become obligated to purchase under the
Underwriting Agreement or Article XI hereof is hereinafter
referred to as the "Original Purchase Obligation" of such
Underwriter and the ratio which such Original Purchase Obligation
bears to the total of all Firm Securities set forth in the
Underwriting Agreement (or, in the case of a standby Underwriting


                                2



<PAGE>

Agreement, to 100%) is hereinafter referred to as the
"Underwriting Percentage" of such Underwriter.

         References herein to statutory sections, rules,
regulations, forms and interpretive materials shall be deemed to
include any successor provisions.

         1.2.  Acceptance of AAU.  You shall have accepted an AAU
for an Offering if we receive your acceptance, prior to the time
specified in the Invitation Wire for such Offering, by wire,
telex, facsimile or electronic data transmission or other written
communication (any such manner of communication being deemed "In
Writing") (or orally, if promptly confirmed In Writing) in the
manner specified in the Invitation Wire, of our invitation to
participate in the Offering.  If we receive your timely
acceptance of the invitation to participate, such AAU shall
constitute a valid and binding contract between us.  Your
acceptance of the Invitation Wire shall also constitute
acceptance by you of the terms of subsequent Wires to you
relating to the Offering unless we receive In Writing, within the
time and in the manner specified in such subsequent Wire, a
notice from you to the effect that you do not accept the terms of
such subsequent Wire, in which case you shall be deemed to have
elected not to participate in the Offering.

         1.3.  Underwriters' Questionnaire.  Your acceptance of
the Invitation Wire shall confirm that you have no exceptions to
the Underwriters' Questionnaire attached as Exhibit A hereto (or
to any other questions addressed to you in any Wires relating to
the Offering previously sent to you), other than exceptions noted
by you In Writing in connection with the Offering and received
from you by us before the time specified in the Invitation Wire
or any subsequent Wire.

                     II.  OFFERING MATERIALS

         2.1.  Registered Offerings.  In the case of an Offering
that will be registered in whole or in part (a "Registered
Offering") under the United States Securities Act of 1933, as
amended (the "1933 Act"), you understand that the Issuer has
filed with the Securities and Exchange Commission (the
"Commission") a registration statement including a prospectus
relating to the Securities.  The term "Registration Statement"
means such registration statement as amended or deemed to be
amended to the effective date of the Underwriting Agreement and,
in the event that the Issuer files an abbreviated registration
statement to register additional Securities pursuant to Rule
462(b) under the 1933 Act, such abbreviated registration
statement.  The term "Prospectus" means the prospectus, together
with the final prospectus supplement, if any, relating to the
Offering first used to confirm sales of Securities and, in the


                                3



<PAGE>

case of a Registered Offering that is an International Offering,
the term "Prospectus" shall mean, collectively, each prospectus
or offering circular, together with each final prospectus
supplement or final offering circular supplement, if any,
relating to the Offering, in the respective forms first used or
made available for use to confirm sales of Securities.  The term
"Preliminary Prospectus" means any preliminary prospectus
relating to the Offering or any preliminary prospectus supplement
together with a prospectus relating to the Offering and, in the
case of a Registered Offering that is an International Offering,
the term "Preliminary Prospectus" shall mean, collectively, each
preliminary prospectus or preliminary offering circular relating
to the Offering or each preliminary prospectus supplement or
preliminary offering circular supplement, together with a
prospectus or offering circular, respectively, relating to the
Offering.  As used herein the terms "Registration Statement",
"Prospectus" and "Preliminary Prospectus" shall include in each
case the material, if any, incorporated by reference therein.
The Manager will furnish to you, or make arrangements for you to
obtain, copies of each Prospectus and Preliminary Prospectus (but
excluding for this purpose, unless otherwise required pursuant to
regulations under the 1933 Act, documents incorporated therein by
reference) as soon as practicable after sufficient quantities
thereof have been made available by the Issuer.

         2.2.  Unregistered Offerings.  In the case of an
Offering other than a Registered Offering, you understand that no
registration statement has been filed with the Commission.  The
term "Offering Circular" means an offering circular or
memorandum, if any, or any other written materials authorized by
the Issuer to be used in connection with an Offering that is not
a Registered Offering.  The term "Preliminary Offering Circular"
means any preliminary offering circular or memorandum, if any, or
any other written preliminary materials authorized by the Issuer
to be used in connection with such an Offering.  As used herein,
the terms "Offering Circular" and "Preliminary Offering Circular"
shall include the material, if any, incorporated by reference
therein.  We will either, as soon as practicable after the later
of the date of the Invitation Wire or the date made available to
us by the Issuer, furnish to you (or make available for your
review in our office) a copy of any Preliminary Offering Circular
or any proof or draft of the Offering Circular.  In any event, in
any Offering involving an Offering Circular, the Manager will
furnish to you, or make arrangements for you to obtain, as soon
as practicable after sufficient quantities thereof are made
available by the Issuer, copies of the final Offering Circular,
as amended or supplemented, if applicable (but excluding for this
purpose documents incorporated therein by reference).





                                4



<PAGE>

                    III.  MANAGER'S AUTHORITY

         3.1.  Authority of Manager to Determine Form of
Documents, Terms of Offering, Etc.  You authorize the Manager to
act as lead manager of the Offering of the Securities by the
Underwriters (the "Underwriters' Securities") or by the Issuer or
Seller pursuant to delayed delivery contracts (the "Contract
Securities"), if any, contemplated by the Underwriting Agreement.
You authorize the Manager, on your behalf, (a) to determine the
form of the Underwriting Agreement, (b) to execute and deliver
the Underwriting Agreement to the Issuer, Guarantor or Seller,
(c) to determine the form of any agreement or agreements between
or among the syndicates participating in the International
Offering of which the Offering is a part (each an "Intersyndicate
Agreement"), and (d) to execute and deliver any such
Intersyndicate Agreement.  You authorize the Manager (i) to
exercise any Over-allotment Option for the purchase any of or all
the Additional Securities for the accounts of the several
Underwriters pursuant to the Underwriting Agreement, (ii) to
agree, on your behalf and on behalf of the Co-Managers, to any
addition to, change in or waiver of any provision of, or the
termination of, the Underwriting Agreement or any Intersyndicate
Agreement (other than an increase in the Purchase Price or in
your Original Purchase Obligation to purchase Securities, in
either case from that contemplated by the applicable AAU), (iii)
to add or remove prospective Underwriters to or from the
syndicate, (iv) to exercise, in the Manager's discretion, all the
authority vested in the Manager in the Underwriting Agreement and
(v) except as described below in this Section 3.1, to take any
other action as may seem advisable to the Manager in respect of
the Offering (including, without limitation, actions and
communications with the Commission, the National Association of
Securities Dealers, Inc. (the "NASD"), state blue sky or
securities commissions, stock exchanges and other regulatory
bodies or organizations).  If, in accordance with the terms of
the applicable AAU, the Offering of the Securities is at varying
prices based on prevailing market prices or prices related to
prevailing market prices or at negotiated prices, you authorize
the Manager to determine, on your behalf in the Manager's
discretion, any Offering Price and the Fees and Commissions
applicable to the Offering from time to time.  You authorize the
Manager on your behalf to arrange for any currency transactions
(including forward and hedging currency transactions) as the
Manager deems necessary to facilitate settlement of the purchase
of the Securities, but you do not authorize the Manager on your
behalf to engage in any other forward or hedging transactions in
connection with the Offering unless such transactions are
specified in an applicable AAU or are otherwise consented to by
you. You further authorize the Manager, subject to the provisions
of Section 1.2 hereof, (i) to vary the offering terms of the
Securities in effect at any time, including, if applicable, the


                                5



<PAGE>

Offering Price and Fees and Commissions set forth in the
applicable AAU, (ii) to determine, on your behalf, the Purchase
Price and (iii) to increase or decrease the number, amount or
percentage of Securities being offered.  Notwithstanding the
foregoing provisions of this Section 3.1, the Manager shall
notify the Underwriters, prior to the signing of the Underwriting
Agreement, of any provision in the Underwriting Agreement that
could result in an increase in the amount or percentage of Firm
Securities set forth opposite each Underwriter's name in the
Underwriting Agreement by more than 25% (or such other percentage
as shall have been specified in the applicable Invitation Wire or
otherwise consented to by you) as a result of the failure or
refusal of another Underwriter or Underwriters to perform its or
their obligations thereunder.

         3.2.  Offering Date.  The Offering is to be made as soon
after the Underwriting Agreement is entered into by the Issuer,
Guarantor or Seller and the Manager as in the Manager's judgment
is advisable, on the terms and conditions set forth in the
Prospectus or the Offering Circular, as the case may be, and the
applicable AAU.  You agree not to sell any Securities prior to
the time the Manager releases such Securities for sale to
purchasers.  The date on which such Securities are released for
sale is referred to herein as the "Offering Date".

         3.3.  Advertising; Supplemental Offering Material. Any
public advertisement of the Offering shall be made by the Manager
on behalf of the Underwriters on such date as the Manager shall
determine.  You agree not to advertise the Offering prior to the
date of the Manager's advertisement thereof without the Manager's
consent.  If the offering is made in whole or in part in reliance
on Rule 144A (or upon another exemption from registration), you
agree not to engage in any general solicitation and to abide by
any other restrictions in the AAU or the Underwriting Agreement
in connection therewith relating to any advertising or publicity.
Any advertisement you may make of the Offering after such date
will be your own responsibility and at your own expense and risk.
In addition to your agreement to comply with restrictions on the
Offering pursuant to Sections 10.10 and 10.11 hereof, you also
agree that you will not, in connection with the offer and sale of
the Securities in the Offering, without the consent of the
Manager, give to any prospective purchaser of the Securities or
other person not in your employ any written information
concerning the Offering, the Issuer, the Guarantor or the Seller,
other than information contained in any Preliminary Prospectus,
Prospectus, Preliminary Offering Circular or Offering Circular or
in any computational materials ("Computational Materials") or
other offering materials prepared by or with the consent of the
Manager for use by the Underwriters in connection with the
Offering and, in the case of a Registered Offering, filed with
the Commission or the NASD, as applicable (the "Supplemental


                                6



<PAGE>

Offering Materials").  You further agree to cease distribution of
any Computational Materials on the Offering Date.

         3.4.  Institutional and Retail Sales.  You authorize the
Manager to sell to institutions or retail purchasers such
Securities purchased by you pursuant to the Underwriting
Agreement as the Manager shall determine.  The Selling Concession
on any such sales shall be credited to the accounts of the
Underwriters as the Manager shall determine.

         3.5.  Sales to Dealers.  You authorize the Manager to
sell to Dealers (as defined below) such Securities purchased by
you pursuant to the Underwriting Agreement as the Manager shall
determine.  A "Dealer" shall be a person who is (a) a broker or
dealer (as defined in the By-Laws of the NASD) actually engaged
in the investment banking or securities business and (i) a member
in good standing of the NASD or (ii) a foreign bank, broker,
dealer or other institution not eligible for membership in the
NASD that, in the case of either clause (a)(i) or (a)(ii), makes
the representations and agreements applicable to such
institutions contained in Section 10.6 hereof or (b) in the case
of Offerings of Securities that are exempt securities under
Section 3(a)(12) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and such other Securities as from time
to time may be sold by a "bank" (as defined in Section 3(a)(6) of
the 1934 Act (a "Bank")), a Bank that is not a member of the NASD
and that makes the representations and agreements applicable to
such institutions contained in Section 10.6 hereof.  If the price
for any such sales by the Manager to Dealers exceeds an amount
equal to the Offering Price less the Selling Concession set forth
in the applicable AAU, the amount of such excess, if any, shall
be credited to the accounts of the Underwriters as the Manager
shall determine.

         3.6.  Direct Sales.  The Manager will advise you
promptly, on the date of the Offering, as to the Securities
purchased by you pursuant to the Underwriting Agreement that you
shall retain for direct sale.  At any time prior to the
termination of the applicable AAU, any such Securities that are
held by the Manager for sale but not sold, may, on your request
and at the Manager's discretion, be released to you for direct
sale, and Securities so released to you shall no longer be deemed
held for sale by the Manager.  You may allow, and Dealers may
reallow, a discount on sales to Dealers in an amount not in
excess of the Reallowance set forth in the applicable AAU.  You
may not purchase Securities from, or sell Securities to, any
other Underwriter or Dealer at any discount or concession other
than the Reallowance, except with the consent of the Manager.

         3.7.  Release of Unsold Securities.  From time to time
prior to the termination of the applicable AAU, on the request of


                                7



<PAGE>

the Manager, you shall advise the Manager of the amount of
Securities remaining unsold which were retained by or released to
you for direct sale and of the amount of Securities and Other
Securities (as defined below) purchased for your account
remaining unsold which were delivered to you pursuant to Article
V hereof or pursuant to any Intersyndicate Agreement, and, on the
request of the Manager, you shall release to the Manager any such
Securities and Other Securities remaining unsold (i) for sale by
the Manager to institutions, Dealers or retail purchasers, (ii)
for sale by the Issuer or Seller pursuant to delayed delivery
contracts or (iii) if, in the Manager's opinion, such Securities
or Other Securities are needed to make delivery against sales
made pursuant to Article V hereof or any Intersyndicate
Agreement.

         3.8.  International Offerings.  In the case of an
International Offering, you authorize the Manager (i) to make
representations on your behalf as set forth in any Intersyndicate
Agreement or Underwriting Agreement and (ii) to purchase or sell
for your account pursuant to the Intersyndicate Agreement (a)
Securities, (b) any other securities of the same class and
series, or any securities into which the Securities may be
converted or for which the Securities may be exchanged or
exercised and (c) any other securities designated in the
applicable AAU or applicable Intersyndicate Agreement (the
securities referred to in clauses (b) and (c) above being
referred to collectively as the "Other Securities").

                 IV.  DELAYED DELIVERY CONTRACTS

         4.1.  Arrangements for Sales.  You agree that
arrangements for sales of Contract Securities will be made only
through the Manager acting either directly or through Dealers
(including Underwriters acting as Dealers), and you authorize the
Manager to act on your behalf in making such arrangements.  The
aggregate amount of Securities to be purchased by the several
Underwriters shall be reduced by the respective amounts of
Contract Securities attributed to such Underwriters as
hereinafter provided.  Subject to the provisions of Section 4.2,
the aggregate amount of Contract Securities shall be attributed
to the Underwriters as nearly as practicable in their respective
Underwriting Percentages, except that, as determined by the
Manager in its discretion, (i) Contract Securities directed and
allocated by a purchaser to specific Underwriters shall be
attributed to such Underwriters and (ii) Contract Securities for
which arrangements have been made for sale through Dealers shall
be attributed to each Underwriter approximately in the proportion
that Securities of such Underwriter held by the Manager for sales
to Dealers bear to all Securities so held.  The fee with respect
to Contract Securities payable to the Manager for the accounts of
the Underwriters pursuant to the Underwriting Agreement shall be


                                8



<PAGE>

credited to the accounts of the respective Underwriters in
proportion to the Contract Securities attributed to such
Underwriters pursuant to the provisions of this Section 4.1,
less, in the case of each Underwriter, the concession to Dealers
on Contract Securities sold through Dealers and attributed to
such Underwriter.

         4.2.  Excess Sales.  If the amount of Contract
Securities attributable to an Underwriter pursuant to Section 4.1
would exceed such Underwriter's Original Purchase Obligation
reduced by the amount of Underwriters' Securities sold by or on
behalf of such Underwriter, such excess shall not be attributed
to such Underwriter, and such Underwriter shall be regarded as
having acted only as a Dealer with respect to, and shall receive
only the concession to Dealers on, such excess.

              V.  PURCHASE AND SALE OF SECURITIES;
                  FACILITATION OF DISTRIBUTION

         5.1.  Purchase and Sale of Securities; Facilitation of
Distribution.  In order to facilitate the distribution and sale
of the Securities, you authorize the Manager to buy and sell
Securities and any Other Securities, in addition to Securities
sold pursuant to Article III hereof, in the open market or
otherwise (including, without limitation, pursuant to any
Intersyndicate Agreement), for long or short account, on such
terms as it shall deem advisable, and to over-allot in arranging
sales.  Such purchases and sales and over-allotments shall be
made for the accounts of the several Underwriters as nearly as
practicable in their respective Underwriting Percentages or, in
the case of an International Offering, such purchases and sales
shall be for such accounts as set forth in the applicable
Intersyndicate Agreement.  Any securities which may have been
purchased by the Manager for stabilizing purposes in connection
with the Offering prior to the execution of the applicable AAU
shall be treated as having been purchased pursuant to this
Section 5.1 for the accounts of the several Underwriters or, in
the case of an International Offering, for such accounts as are
set forth in the applicable Intersyndicate Agreement.  Your net
commitment pursuant to the foregoing authorization shall not
exceed at the close of business on any day an amount equal to 20%
of your Underwriting Percentage of the aggregate initial Offering
Price of the Firm Securities, it being understood that, in
calculating such net commitment, the initial Offering Price shall
be used with respect to the Securities so purchased or sold and,
in the case of all Other Securities, shall be the purchase price
thereof.  Your net commitment for short account (i.e., "naked
short") shall be calculated by assuming that all Securities that
may be purchased upon exercise of any over-allotment option then
exercisable are acquired (whether or not actually acquired) and,
in the case of an International Offering, after giving effect to


                                9



<PAGE>

the purchase of any Securities or Other Securities that the
Manager has agreed to purchase for your account pursuant to any
applicable Intersyndicate Agreement.  On demand you shall take up
and pay for any Securities or Other Securities so purchased for
your account and any Securities released to you pursuant to
Section 3.7 hereof and you shall deliver to the Manager against
payment any Securities or Other Securities so sold or over-
allotted for your account or released to you.  The Manager agrees
to notify you if it engages in any stabilization transaction
requiring reports to be filed pursuant to Rule 17a-2 under the
1934 Act and to notify you of the date of termination of
stabilization.  You agree not to stabilize or engage in any
syndicate covering transaction (as defined in Rule 100 of
Regulation M under the 1934 Act ("Regulation M")) in connection
with the Offering without the prior consent of the Manager. You
further agree to provide to Salomon Smith Barney any reports
required of you pursuant to Rule 17a-2 not later than the date
specified therein and you authorize Salomon Smith Barney to file
on your behalf with the Commission any reports required by such
Rule.

         If the limitations of Rule 101 of Regulation M ("Rule
101") do not apply to you with respect to the Securities, Other
Securities or other reference securities (as defined in Rule 100
of Regulation M) because they satisfy the exception for actively-
traded securities in subsection (c)(1) of Rule 101 or the
exception for Rule 144A securities in subsection (b)(10) of Rule
101, you agree that promptly upon notice from the Manager (or, if
later, at the time stated in the notice) you will comply with
Rule 101 as though such exception were not available but the
other provisions of Rule 101 (as interpreted by the Commission
and after giving effect to any applicable exemptions) did apply.
If the securities in question are NASDAQ securities (as defined
in Rule 100 of Regulation M) you may engage in passive market
making in accordance with Rule 103 of Regulation M (except that
the daily net purchase volume limitation will not apply and the
maximum displayed bid size shall be 5,000 shares excluding
transactions effected in the SOES system) unless the notice from
the Manager also states that passive market making is not
permitted.

         5.2.  Penalty With Respect to Securities Repurchased by
the Manager.  If pursuant to the provisions of Section 5.1 and
prior to the termination of the Manager's authority to cover any
short position incurred under the applicable AAU or such other
date as the Manager shall specify in a Wire, either (A) the
Manager purchases or contracts to purchase for the account of any
Underwriter in the open market or otherwise any Securities which
were retained by, or released to, you for direct sale or any
Securities sold pursuant to Section 3.4 for which you received a
portion of the Selling Concession set forth in the applicable


                               10



<PAGE>

AAU, or any Securities which may have been issued on transfer or
in exchange for such Securities, and which Securities were
therefore not effectively placed for investment or (B) if the
Manager has advised you by Wire that trading in the Securities
will be reported to the Manager pursuant to the "Initial Public
Offering Tracking System" of The Depository Trust Company ("DTC")
and the Manager determines, based on notices from DTC, that your
customers sold an amount of Securities during any day that
exceeds the amount previously notified to you by Wire, then you
authorize the Manager either to charge your account with an
amount equal to such portion of the Selling Concession set forth
in the applicable AAU received by you with respect to such
Securities or, in the case of clause (B), such Securities as
exceed the amount specified in such Wire or to require you to
repurchase such Securities or, in the case of clause (B), such
Securities as exceed the amount specified in such Wire, at a
price equal to the total cost of such purchase, including
transfer taxes, accrued interest, dividends and commissions, if
any.

         5.3.  Compliance with Regulation M.  You represent that,
at all times since you were invited to participate in the
Offering, you have complied with the provisions of Regulation M
applicable to such Offering, in each case as interpreted by the
Commission and after giving effect to any applicable exemptions.
If you have been notified in a Wire that the Underwriters may
conduct passive market making in compliance with Rule 103 of
Regulation M in connection with the Offering, you represent that,
at all times since your receipt of such Wire, you have complied
with the provisions of such Rule applicable to such Offering, as
interpreted by the Commission and after giving effect to any
applicable exemptions.

         5.4.  Standby Underwritings.  You authorize the Manager
in its discretion, at any time on, or from time to time prior to,
the expiration of the conversion right of  convertible securities
identified in the applicable AAU in the case of securities called
for redemption, or the expiration of rights to acquire securities
in the case of rights offerings, for which, in either case,
standby underwriting arrangements have been made:  (i) to
purchase convertible securities or rights to acquire Securities
for your account, in the open market or otherwise, on such terms
as the Manager determines and to convert convertible securities
or exercise rights so purchased; and (ii) to offer and sell the
underlying common stock or depositary shares for your account, in
the open market or otherwise, for long or short account (for
purposes of such commitment, such common stock or depositary
shares being considered the equivalent of convertible securities
or rights), on such terms consistent with the terms of the
Offering set forth in the Prospectus or Offering Circular as the
Manager determines.  On demand you shall take up and pay for any


                               11



<PAGE>

securities so purchased for your account or you shall deliver to
the Manager against payment any securities so sold, as the case
may be.  During such period you may offer and sell the underlying
common stock or depositary shares, but only at prices set by the
Manager from time to time, and any such sales shall be subject to
the Manager's right to sell to you the underlying common stock or
depositary shares as above provided and to the Manager's right to
reserve your Securities purchased, received or to be received
upon conversion.  You agree not to bid for, purchase, attempt to
induce others to purchase, or sell, directly or indirectly, any
convertible securities or rights or underlying common stock or
depositary shares, provided, however, that no Underwriter shall
be prohibited from (a) selling underlying common stock owned
beneficially by such Underwriter on the day the convertible
securities were first called for redemption, (b) converting
convertible securities owned beneficially by such Underwriter on
such date or selling underlying common stock issued upon
conversion of convertible securities so owned, (c) exercising
rights owned beneficially by such Underwriter on the record date
for a rights offering or selling the underlying common stock or
depositary shares issued upon exercise of rights so owned or (d)
purchasing or selling convertible securities or rights or
underlying common stock or depositary shares as a broker pursuant
to unsolicited orders.

                   VI.  PAYMENT AND SETTLEMENT

         6.1.  Payment and Settlement.  You shall deliver to the
Manager on the date and at the place and time specified in the
applicable AAU (or on such later date and at such place and time
as may be specified by the Manager in a subsequent Wire) the
funds specified in the applicable AAU, payable to the order of
Salomon Smith Barney Inc., for (i) an amount equal to the
Offering Price plus (if not included in the Offering Price)
accrued interest, amortization of original issue discount or
dividends, if any, specified in the Prospectus or Offering
Circular, less the applicable Selling Concession in respect of
the Firm Securities to be purchased by you, (ii) an amount equal
to the Offering Price plus (if not included in the Offering
Price) accrued interest, amortization of original issue discount
or dividends, if any, specified in the Prospectus or Offering
Circular, less the applicable Selling Concession in respect of
such of the Firm Securities to be purchased by you as shall have
been retained by or released to you for direct sale as
contemplated by Section 3.6 hereof or (iii) the amount set forth
or indicated in the applicable AAU, as the Manager shall advise.
You shall make similar payment as the Manager may direct for
Additional Securities, if any, to be purchased by you on the date
specified by the Manager for such payment.  The Manager will make
payment to the Issuer or Seller against delivery to the Manager
for your account of the Securities to be purchased by you, and


                               12



<PAGE>

the Manager will deliver to you the Securities paid for by you
which shall have been retained by or released to you for direct
sale.  If the Manager determines that transactions in the
Securities are to be settled through the facilities of DTC or
other clearinghouse facility, payment for and delivery of
Securities purchased by you shall be made through such
facilities, if you are a member, or, if you are not a member,
settlement shall be made through your ordinary correspondent who
is a member.

                         VII.  EXPENSES

         7.1.  Management Fee.  You authorize the Manager to
charge your account as compensation for the Manager's and Co-
Managers' services in connection with the Offering, including the
purchase from the Issuer or Seller of the Securities, as the case
may be, and the management of the Offering, the amount, if any,
set forth as the management fee, global coordinators fee,
praecipium or other similar fee in the applicable AAU.  Such
amount shall be divided among the Manager and any Co-Managers
named in the applicable AAU as they may determine.

         7.2.  General Expenses.  You authorize the Manager to
charge your account with your Underwriting Percentage of all
expenses of a general nature incurred by the Manager and Co-
Managers under the applicable AAU in connection with the
Offering, including the negotiation and preparation thereof, or
in connection with the purchase, carrying, marketing and sale of
any securities under the applicable AAU and any Intersyndicate
Agreement, including, without limitation, legal fees and
expenses, transfer taxes, costs associated with approval of the
Offering by the NASD and the costs of currency transactions
(including forward and hedging currency transactions) entered
into to facilitate settlement of the purchase of Securities
permitted under Section 3.1 hereof.

            VIII.  MANAGEMENT OF SECURITIES AND FUNDS

         8.1.  Advances; Loans; Pledges.  You authorize the
Manager to advance the Manager's own funds for your account,
charging current interest rates, or to arrange loans for your
account for the purpose of carrying out the provisions of the
applicable AAU and any Intersyndicate Agreement and in connection
therewith, to hold or pledge as security therefor all or any
securities which the Manager may be holding for your account
under the applicable AAU and any Intersyndicate Agreement, to
execute and deliver any notes or other instruments evidencing
such advances or loans and to give all instructions to the
lenders with respect to any such loans and the proceeds thereof.
The obligations of the Underwriters under loans arranged on their
behalf shall be several in proportion to their respective


                               13



<PAGE>

Original Purchase Obligations and not joint.  Any lender is
authorized to accept the Manager's instructions as to the
disposition of the proceeds of any such loans.  In the event of
any such advance or loan, repayment thereof shall, in the
discretion of the Manager, be effected prior to making any
remittance or delivery pursuant to Section 8.2, 8.3 or 9.2
hereof.

         8.2.  Return of Amount Paid for Securities.  Out of
payment received by the Manager for Securities sold for your
account which have been paid for by you, the Manager will remit
to you promptly an amount equal to the price paid by you for such
Securities.

         8.3.  Delivery and Redelivery of Securities for Carrying
Purposes.  The Manager may deliver to you from time to time prior
to the termination of the applicable AAU pursuant to Section 9.1
hereof against payment, for carrying purposes only, any
Securities or Other Securities purchased by you under the
applicable AAU or any Intersyndicate Agreement which the Manager
is holding for sale for your account but which are not sold and
paid for.  You shall redeliver to the Manager against payment any
Securities or Other Securities delivered to you for carrying
purposes at such times as the Manager may demand.

                IX.  TERMINATION; INDEMNIFICATION

         9.1.  Termination.  Each AAU shall terminate at the
close of business on the later of the date on which the
Underwriters pay the Issuer or Seller for the Securities and 45
full days after the applicable Offering Date, unless sooner
terminated by the Manager.  The Manager may in its discretion by
notice to you prior to the termination of such AAU alter any of
the terms or conditions of the Offering to the extent permitted
by Articles III or IV hereof, or terminate or suspend the
effectiveness of Article V hereof, or any part thereof.  No
termination or suspension pursuant to this paragraph shall affect
the Manager's authority under Section 3.1 hereof to take actions
in respect of the Offering or under Article V hereof to cover any
short position incurred under such AAU or in connection with
covering any such short position to require you to repurchase
Securities as specified in Section 5.2 hereof.

         9.2.  Delivery or Sale of Securities; Settlement of
Accounts.  Upon termination of each AAU or prior thereto at the
Manager's discretion, the Manager shall deliver to you any
Securities paid for by you pursuant to Section 6.1 hereof and
held by the Manager for sale pursuant to Section 3.4 or 3.5
hereof but not sold and paid for and any Securities or Other
Securities that are held by the Manager for your account pursuant
to the provisions of Article V hereof or any Intersyndicate


                               14



<PAGE>

Agreement.  Notwithstanding the foregoing, at the termination of
such AAU, if the aggregate initial Offering Price of any such
Securities and the aggregate purchase price of any Other
Securities so held and not sold and paid for does not exceed an
amount equal to 20% of the aggregate initial Offering Price of
the Securities, the Manager may, in its discretion, sell such
Securities and Other Securities for the accounts of the several
Underwriters, at such prices, on such terms, at such times and in
such manner as it may determine.  Within the period specified by
applicable NASD Rules or, if no period is so specified, as soon
as practicable after termination of such AAU, your account shall
be settled and paid.  The Manager may reserve from distribution
such amount as the Manager deems advisable to cover possible
additional expenses.  The determination by the Manager of the
amount so to be paid to or by you shall be final and conclusive.
Any of your funds in the Manager's hands may be held with the
Manager's general funds without accountability for interest

         Notwithstanding any provision of this Master AAU other
than Section 10.12, upon termination of each AAU or prior thereto
at the Manager's discretion, the Manager (i) may allocate to the
accounts of the Underwriters the expenses described in Section
7.2 hereof and any losses incurred upon the sale of Securities or
Other Securities pursuant to the applicable AAU or any
Intersyndicate Agreement (including any losses incurred upon the
sale of securities referred to in Section 5.4(ii) hereof), (ii)
may deliver to the Underwriters any unsold Securities or Other
Securities purchased pursuant to Section 5.1 hereof or any
Intersyndicate Agreement and (iii) may deliver to the
Underwriters any unsold Securities purchased pursuant to the
applicable Underwriting Agreement, in each case in the Manager's
discretion.  The Manager shall have full discretion to allocate
expenses and Securities to the accounts of any Underwriter as the
Manager decides, except that (a) no Underwriter (other than the
Manager or a Co-Manager) shall bear more than its share of such
expenses, losses or Securities (such share shall not exceed such
Underwriter's Underwriting Percentage and shall be determined pro
rata among all such Underwriters based on their Underwriting
Percentages), (b) no such Underwriter shall receive Securities
that, together with any Securities purchased by such Underwriter
pursuant to Section 6.1 (but excluding any Securities that such
Underwriter is required to repurchase pursuant to Section 5.2)
exceed such Underwriter's Original Purchase Obligation and (c) no
Co-Manager shall bear more than its share, as among the Manager
and the other Co-Managers, of such expenses, losses or Securities
(such share to be determined pro rata among the Manager and all
Co-Managers based on (1) their relative Underwriting Percentages
as a percentage of the total combined Underwriting Percentages of
the Manager and all Co-Managers, or (2) if the Manager so
determines, their relative Offering Economics (as hereinafter
defined) as a percentage of the combined Offering Economics of


                               15



<PAGE>

the Manager and all Co-Managers together.  The Manager's or a Co-
Manager's "Offering Economics" equals the sum of its Management
Fee Share, its Underwriting Fee Share and its Selling Concession
Share (each as hereinafter defined).  The Manager's or a Co-
Manager's "Management Fee Share" is the dollar amount of its
share, as agreed among the Manager and any Co-Managers, of the
amount payable by all Underwriters to some or all of the Manager
and any Co-Manager as a global coordinators' fee, praecipium,
management fee or other fee.  The Manager's or a Co-Manager's
"Underwriting Fee Share" is the dollar amount of its Underwriting
Percentage of the aggregate initial Offering Price of the Firm
Securities less the Purchase Price thereof, less the Selling
Concession thereon.  The Manager's or a Co-Manager's "Selling
Concession Share" is the dollar amount of any Selling Concession
credited to it on sales from the institutional pot or on sales
made for the account of any other Underwriter.  If any Securities
or Other Securities returned to you pursuant to clause (ii) or
(iii) above were not paid for by you pursuant to Section 6.1
hereof, you shall pay to the Manager an amount per security equal
to the amount set forth in Section 6.1(i), in the case of
Securities returned to you pursuant to clause (iii) above, or the
purchase price of such securities, in the case of Securities or
Other Securities returned to you pursuant to clause (ii) above.

         9.3.  Post-Settlement Expenses.  Notwithstanding any
settlement on the termination of the applicable AAU, you agree to
pay any transfer taxes which may be assessed and paid after such
settlement on account of any sales or transfers under such AAU or
any Intersyndicate Agreement for your account and your
Underwriting Percentage of (i) all expenses incurred by the
Manager in investigating, preparing to defend or defending
against any action, claim or proceeding which is asserted or
instituted by any party (including any governmental or regulatory
body) relating to (a) the Registration Statement, any Preliminary
Prospectus or Prospectus (or any amendment or supplement
thereto), any Preliminary Offering Circular or Offering Circular
(or any amendment or supplement thereto) or Supplemental Offering
Materials, (b) the violation of any applicable restrictions on
the offer, sale, resale or purchase of Securities or Other
Securities imposed by United States Federal or state laws or
foreign laws and the rules and regulations of any regulatory body
promulgated thereunder or pursuant to the terms of such AAU, the
Underwriting Agreement or any Intersyndicate Agreement or (c) any
claim that the Underwriters constitute a partnership, an
association or an unincorporated business or other separate
entity and (ii) any liability, including attorneys' fees,
incurred by the Manager in respect of any such action, claim or
proceeding, whether such liability shall be the result of a
judgment or arbitrator's determination or as a result of any
settlement agreed to by the Manager, other than any such expense
or liability as to which the Manager actually receives indemnity


                               16



<PAGE>

pursuant to Section 9.4, contribution pursuant to Section 9.5,
indemnity or contribution pursuant to the Underwriting Agreement
or damages from an Underwriter for breach of its representations,
warranties, agreements, or covenants contained in the applicable
AAU.  None of the foregoing provisions of this Section 9.3 shall
relieve any defaulting or breaching Underwriter from liability
for its defaults or breach.

         9.4.  Indemnification.  You agree to indemnify and hold
harmless each other Underwriter and each person, if any, who
controls any such Underwriter within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, to the
extent and upon the terms which you agree to indemnify and hold
harmless any of the Issuer, the Guarantor, the Seller, any person
controlling the Issuer, the Guarantor, the Seller, its directors
and, in the case of a Registered Offering, its officers who
signed the Registration Statement and, in the case of an Offering
other than a Registered Offering, its officers, in each case as
set forth in the Underwriting Agreement.  You further agree to
indemnify and hold harmless any investment banking firm
identified in a Wire as the qualified independent underwriter as
defined in Rule 2720 of the NASD's Conduct Rules ("QIU") for an
Offering and each person, if any, who controls such QIU within
the meaning of either Section 15 of the 1933 Act or Section 20 of
the 1934 Act, from and against any and all losses, claims,
damages and liabilities related to, arising out of or in
connection with such investment banking firm's activities as QIU
for the Offering.  You agree with the other Underwriters to
reimburse such QIU for all expenses, including fees and expenses
of counsel as they are incurred, in connection with
investigating, preparing for, or defending any action, claim or
proceeding related to, arising out of, or in connection with such
QIU's activities as a QIU for the Offering.  Each Underwriter
shall be responsible for its Underwriting Percentage of any
amount due to such QIU on account of the foregoing indemnity.
You agree that such QIU shall have no additional liability to any
Underwriter or otherwise as a result of its serving as QIU in
connection with the Offering.  You further agree that to the
extent the indemnification provided to a QIU under this Section
9.4 is unavailable to such QIU or insufficient in respect of any
losses, claims, damages or liabilities (and expenses relating
thereto), whether as a matter of law or public policy or as a
result of the default of any Underwriter in performing its
obligations under this Section 9.4, you and each other
Underwriter shall contribute to the amount paid or payable by
such QIU as a result of such losses, claims, damages or
liabilities (and expenses relating thereto) in proportion to your
Underwriting Percentage.

         9.5.  Contribution.  Notwithstanding any settlement on
the termination of the applicable AAU, you agree to pay upon


                               17



<PAGE>

request of the Manager, as contribution, your Underwriting
Percentage of any losses, claims, damages or liabilities, joint
or several, paid or incurred by any Underwriter to any person
other than an Underwriter, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary
Prospectus or Prospectus (or any amendment or supplement
thereto), any Preliminary Offering Circular or Offering Circular
(or any amendment or supplement thereto) or Supplemental Offering
Materials or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading (other than an untrue
statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information
furnished to the Company in writing by the Underwriter on whose
behalf the request for contribution is being made expressly for
use therein) and your Underwriting Percentage of any legal or
other expenses reasonably incurred by the Underwriter (with the
approval of the Manager) on whose behalf the request for
contribution is being made in connection with investigating or
defending any such loss, claim, damage or liability or any action
in respect thereof; provided that no request shall be made on
behalf of any Underwriter guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) from any
Underwriter who was not guilty of such fraudulent
misrepresentation.  None of the foregoing provisions of this
Section 9.5 shall relieve any defaulting or breaching Underwriter
from liability for its defaults or breach.

         9.6.  Separate Counsel.  If any claim is asserted or
action or proceeding commenced pursuant to which the indemnity
provided in Section 9.4 may apply, the Manager may take such
action in connection therewith as it deems necessary or
desirable, including retention of counsel for the Underwriters,
and in its discretion separate counsel for any particular
Underwriter or group of Underwriters, and the fees and
disbursements of any counsel so retained shall be allocated among
the several Underwriters as determined by the Manager.  Any
Underwriter may elect to retain at its own expense its own
counsel and, on advice of such counsel but only with the consent
of the Manager, may settle or consent to the settlement of any
such claim, action or proceeding.  The Manager may settle or
consent to the settlement of any such claim, action or
proceeding. Whenever the Manager receives notice of the assertion
of any claim, action or proceeding to which the provisions of
Section 9.4 would apply, it will give prompt notice thereof to
each Underwriter, and whenever you receive notice of the
assertion of any claim or commencement of any action or
proceeding to which the provisions of Section 9.4 would apply,
you will give prompt notice thereof to the Manager.  The Manager
also will furnish each Underwriter with periodic reports, at such


                               18



<PAGE>

times as it deems appropriate, as to the status of such claim,
action or proceeding, and the action taken by it in connection
therewith.

         9.7.  Survival of Agreements.  Regardless of any
termination of an AAU, your agreements contained in Article V and
Sections 3.1, 9.3, 9.4, 9.5, 9.6 and 11.2 shall remain operative
and in full force and effect regardless of (i) any termination of
the Underwriting Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any
Underwriter or by or on behalf of the Issuer, the Guarantor, the
Seller, its directors or officers or any person controlling the
Issuer, the Guarantor or the Seller and (iii) acceptance of any
payment for any Securities.

        X.  REPRESENTATIONS AND COVENANTS OF UNDERWRITERS

         10.1.  Knowledge of Offering.  You understand that it is
your responsibility to examine the Registration Statement, the
Prospectus or the Offering Circular, as the case may be, relating
to the Offering, any amendment or supplement thereto, any
Preliminary Prospectus or Preliminary Offering Circular and the
material, if any, incorporated by reference therein and any
Supplemental Offering Materials and you will familiarize yourself
with the terms of the Securities, any applicable Indenture and
the other terms of the Offering thereof which are to be reflected
in the Prospectus or the Offering Circular, as the case may be,
and the applicable AAU and Underwriting Agreement.  The Manager
is authorized, with the advice of counsel for the Underwriters,
to approve on your behalf any amendments or supplements to the
Registration Statement and the Prospectus or the Offering
Circular, as the case may be.

         10.2.  Distribution of Materials.  You will keep an
accurate record of the names and addresses of all persons to whom
you give copies of the Registration Statement, the Prospectus,
any Preliminary Prospectus (or any amendment or supplement
thereto) or any Offering Circular or any Preliminary Offering
Circular and, when furnished with any subsequent amendment to the
Registration Statement, any subsequent Prospectus, any subsequent
Offering Circular or any memorandum outlining changes in the
Registration Statement or any Prospectus or Offering Circular,
you will, upon request of the Manager, promptly forward copies
thereof to such persons.

         10.3.  Accuracy of Underwriters' Information.  You
confirm that the information that you have given or are deemed to
have given in response to the Underwriters' Questionnaire
attached as Exhibit A hereto (and to any other questions
addressed to you in the Invitation Wire or other Wires), which
information has been furnished to the Issuer for use in the


                               19



<PAGE>

Registration Statement and the Prospectus or the Offering
Circular, as the case may be, or has otherwise been relied upon
in connection with the Offering, is complete and accurate.  You
shall notify the Manager immediately of any development before
the termination of the applicable AAU which makes untrue or
incomplete any information that you have given or are deemed to
have given in response to the Underwriters' Questionnaire (or
such other questions).

         10.4.  Name; Address.  Unless you have promptly notified
the Manager in writing otherwise, your name as it should appear
in the Prospectus or the Offering Circular and any advertisement,
if different, and your address are as set forth on the signature
pages hereof.

         10.5.  Capital Requirements.  You represent that your
commitment to purchase the Securities will not result in a
violation of the financial responsibility requirements of Rule
15c3-1 under the 1934 Act or of any similar provision of any
applicable rules of any securities exchange to which you are
subject or, if you are a financial institution subject to
regulation by the Board of Governors of the United States Federal
Reserve System, the United States Comptroller of the Currency or
the United States Federal Deposit Insurance Corporation, will not
place you in violation of any applicable capital requirements or
restrictions of such regulator or any other regulator to which
you are subject.

         10.6.  Compliance with NASD Requirements.  You represent
that you are a member in good standing of the NASD, a Bank that
is not a member of the NASD or a foreign bank or dealer not
eligible for membership in the NASD.  In making sales of
Securities, if you are such a member, you agree to comply with
all applicable interpretive material ("IM") and rules of the
NASD, including, without limitation, IM-2110-1 (the NASD's
interpretation with respect to free-riding and withholding) and
Rule 2740 of the NASD's Conduct Rules, or, if you are such a
foreign bank or dealer, you agree to comply, as applicable, with
IM-2110-1 and Rules 2730, 2740 and 2750 of the NASD's Conduct
Rules as though you were such a member and Rule 2420 of the
NASD's Conduct Rules as it applies to a nonmember broker or
dealer in a foreign country.  If you are a Bank, you agree, to
the extent required by applicable law or the Conduct Rules of the
NASD, that you will not, in connection with the public offering
of any Securities that do not constitute "exempted securities"
within the meaning of Section 3(a)(12) of the 1934 Act or such
other Securities as from time to time may be sold by a Bank,
purchase any Securities at a discount from the Offering Price
from any Underwriter or dealer or otherwise accept any Fees and
Commissions from any Underwriter or Dealer, and you agree to



                               20



<PAGE>

comply, as applicable, with Rule 2420 of the NASD's Conduct Rules
as though you were a member.

         10.7.  Further State Notice.  The Manager will file a
Further State Notice with the Department of State of New York, if
required.

         10.8.  Compliance with Rule 15c2-8.  In the case of a
Registered Offering and any other Offering to which the
provisions of Rule 15c2-8 under the 1934 Act are made applicable
pursuant to the AAU or otherwise, you agree to comply with such
Rule in connection with the Offering.  In the case of an Offering
other than a Registered Offering, you agree to comply with
applicable Federal and state laws and the applicable rules and
regulations of any regulatory body promulgated thereunder
governing the use and distribution of offering circulars by
underwriters.

         10.9.  Discretionary Accounts.  In the case of a
Registered Offering of Securities issued by an Issuer that was
not, immediately prior to the filing of the Registration
Statement, subject to the requirements of Section 13(d) or 15(d)
of the 1934 Act, you agree that you will not make sales to any
account over which you exercise discretionary authority in
connection with such sale except as otherwise permitted by the
applicable AAU for such Offering.

         10.10.  Offering Restrictions.  If you are a foreign
bank or dealer and you are not registered as a broker-dealer
under Section 15 of the 1934 Act, you agree that while you are
acting as an Underwriter in respect of the Securities and in any
event during the term of the applicable AAU, you will not
directly or indirectly effect in, or with persons who are
nationals or residents of, the United States, its territories or
possessions any transactions (except for the purchases provided
for in the Underwriting Agreement and transactions contemplated
by Articles III and V hereof) in Securities or any Other
Securities.

         It is understood that, except as specified in the
applicable AAU, no action has been taken by the Manager, the
Issuer, the Guarantor or the Seller to permit you to offer
Securities in any jurisdiction other than the United States, in
the case of a Registered Offering, where action would be required
for such purpose.

         10.11.  Representations, Warranties and Agreements.  You
agree to make to each other Underwriter participating in an
Offering the same representations, warranties and agreements, if
any, made by the Underwriters to the Issuer, the Guarantor or the
Seller in the applicable Underwriting Agreement or any


                               21



<PAGE>

Intersyndicate Agreement and you authorize the Manager to make
such representations, warranties and agreements to the Issuer,
the Guarantor or the Seller on your behalf.

         10.12.  Limitation on the Authority of the Manager to
Purchase and Sell Securities for the Account of Certain
Underwriters.  Notwithstanding any provision of this AAU
authorizing the Manager to purchase or sell any Securities or
Other Securities (including arranging for the sale of Contract
Securities) or over-allot in arranging sales of Securities for
the accounts of the several Underwriters, the Manager may not, in
connection with the Offering of any Securities, make any such
purchases, sales and/or over-allotments for the account of any
Underwriter that, not later than its acceptance of the Invitation
Wire relating to such Offering, has advised the Manager that, due
to its status as, or relationship to, a bank or bank holding
company such purchases, sales and/or over-allotments are
prohibited by applicable law. If any Underwriter so advises the
Manager, the Manager may allocate any such purchases, sales and
over-allotments (and the related expenses) which otherwise would
have been allocated to your account based on your respective
Underwriting Percentage to your account based on the ratio of
your Original Purchase Obligation to the Original Purchase
Obligations of all Underwriters other than the advising
Underwriter or Underwriters or in such other manner as the
Manager shall determine.

                  XI.  DEFAULTING UNDERWRITERS

         11.1.  Effect of Termination.  If the Underwriting
Agreement is terminated as permitted by the terms thereof, your
obligations hereunder with respect to the Offering of the
Securities shall immediately terminate except (i) as set forth in
Section 9.7, (ii) that you shall remain liable for your
Underwriting Percentage (or such other percentage as may be
specified pursuant to Section 9.2) of all expenses and for any
purchases or sales which may have been made for your account
pursuant to the provisions of Article V hereof or any
Intersyndicate Agreement and (iii) that such termination shall
not affect any obligations of any defaulting or breaching
Underwriter.

         11.2.  Sharing of Liability.  If any Underwriter shall
default in its obligations (i) pursuant to Section 5.1, 5.2 or
5.4, (ii) to pay amounts charged to its account pursuant to
Section 7.1, 7.2 or 8.1 or (iii) pursuant to Section 9.2, 9.3,
9.4, 9.5, 9.6 or 11.1, you will assume your proportionate share
(determined on the basis of the respective Underwriting
Percentages of the non-defaulting Underwriters) of such
obligations, but no such assumption shall relieve any defaulting



                               22



<PAGE>

Underwriter from liability to the non-defaulting Underwriters,
the Issuer, the Guarantor or the Seller for its default.

         11.3.  Arrangements for Purchases.  The Manager is
authorized to arrange for the purchase by others (including the
Manager or any other Underwriter) of any Securities not purchased
by any defaulting Underwriter in accordance with the terms of the
applicable Underwriting Agreement or, if the applicable
Underwriting Agreement does not provide arrangements for
defaulting Underwriters, in the discretion of the Manager.  If
such arrangements are made, the respective amounts of Securities
to be purchased by the remaining Underwriters and such other
person or persons, if any, shall be taken as the basis for all
rights and obligations hereunder, but this shall not relieve any
defaulting Underwriter from liability for its default.

                       XII.  MISCELLANEOUS

         12.1.  Obligations Several.  Nothing contained in this
Salomon Smith Barney Master AAU or any AAU constitutes you
partners with the Manager or with the other Underwriters and the
obligations of you and each of the other Underwriters are several
and not joint.  Each Underwriter elects to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A, of the United
States Internal Revenue Code of 1986, as amended.  Each
Underwriter authorizes the Manager, on behalf of such
Underwriter, to execute such evidence of such election as may be
required by the United States Internal Revenue Service.

         12.2.  Liability of Manager.  The Manager shall be under
no liability to you for any act or omission except for
obligations expressly assumed by the Manager in the applicable
AAU.

         12.3.  Termination of Master Agreement Among
Underwriters.  This Salomon Smith Barney Master AAU may be
terminated by either party hereto upon five business days'
written notice to the other party; provided that with respect to
any Offering for which an AAU was sent prior to such notice, this
Salomon Smith Barney Master AAU as it applies to such Offering
shall remain in full force and effect and shall terminate with
respect to such Offering in accordance with Section 9.1 hereof.

         12.4.  Governing Law.  This Salomon Smith Barney Master
AAU and each AAU shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York.

         12.5.  Amendments.  This Salomon Smith Barney Master AAU
may be amended from time to time by consent of the parties
hereto.  Your consent shall be deemed to have been given to an


                               23



<PAGE>

amendment to this Salomon Smith Barney Master AAU, and such
amendment shall be effective, five business days following
written notice to you of such amendment if you do not notify
Salomon Smith Barney in writing prior to the close of business on
such fifth business day that you do not consent to such
amendment.  Upon effectiveness, the provisions of this Salomon
Smith Barney Master AAU as so amended shall apply to each AAU
thereafter entered into except as otherwise specifically provided
in any such AAU.

         12.6.  Notices.  Any notice to any Underwriter shall be
deemed to have been duly given if mailed, sent by wire, telex,
facsimile or electronic transmission or other written
communication or delivered in person to such Underwriter at the
address which shall have been provided to Salomon Smith Barney as
provided in Section 10.4 hereof.  Any such notice shall take
effect upon receipt thereof.

         Please confirm your acceptance of this Salomon Smith
Barney Master AAU by signing and returning to us the enclosed
duplicate copy hereof.


                                       Very truly yours,

                                       Salomon Smith Barney Inc.


                                  By:  _________________________
                                       Name:
                                       Title:


CONFIRMED:  ______________________1999

- --------------------------------------
         (Name of Underwriter)


By: ----------------------------------
Name:
Title:

    (If person signing is not an officer or a partner,
     please attach instrument of authorization)

Address: -----------------------------

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

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


                               24



<PAGE>

Telephone:  --------------------------

Fax:        --------------------------


















































                               25



<PAGE>

                                                        EXHIBIT A
                                                     June 1, 1999



                    SALOMON SMITH BARNEY INC.
                   UNDERWRITERS' QUESTIONNAIRE


         In connection with each Offering covered by the Salomon
Smith Barney Inc. Master Agreement Among Underwriters dated June
1, 1999, we confirm that except as set forth in a timely reply by
us to the Invitation Wire:

         (1)  Neither we nor any of our directors, officers or
partners have a material relationship (as "material" is defined
in Regulation C under the 1933 Act) with the Issuer, the
Guarantor or any Seller.

         (2)  (If the offer and sale of the Securities are to be
registered under the 1933 Act pursuant to a Registration
Statement on Form S-1 of Form F-1:)  Neither we nor any "group"
(as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of which
we are a member is the beneficial owner (determined in accordance
with Rule 13d-3 under the Exchange Act) of more than 5% of any
class of voting securities of the Issuer or the Guarantor, nor do
we have any knowledge that more than 5% of any class of voting
securities of the Issuer or the Guarantor is held or to be held
subject to any voting trust or other similar agreement.

         (3)  Other than as may be stated in the Salomon Smith
Barney Master Agreement Among Underwriters dated June 1, 1999,
the applicable AAU, the Intersyndicate Agreement or dealer
agreement, if any, the Prospectus, the Registration Statement or
the Offering Circular, we do not know and have no reason to
believe that there is an intention to over-allot or that the
price of any security may be stabilized to facilitate the
offering of the Securities.

         (4)  Except as described in the Prospectus or Offering
Circular, as the case may, be and the Invitation Wire, we do not
know of any discounts or commissions to be allowed or paid to
dealers, including all cash, securities, contracts or other
consideration to be received by any dealer in connection with the
sale of the securities.

         (5)  We have not prepared any report or memorandum for
external use in connection with the Offering.  (If there are any
exceptions, (i) furnish four (4) copies of each report and
memorandum to Salomon Smith Barney Inc., 388 Greenwich Street,


                               26



<PAGE>

New York, N.Y.  10013, Attention:  Investment Banking
Department/Transaction Structuring Group, (ii) identify each
class of person who received such material and the number of
copies distributed to each such class, and (iii) indicate when
such distribution commenced and ceased.)

         (6)  (If the offer and sale of the Securities are to be
registered under the 1933 Act pursuant to a Registration
Statement on Form S-1 or Form F-1:) We have not within the past
twelve months prepared or had prepared for us any engineering,
management or similar report or memorandum relating to broad
aspects of the business, operations or products of the Issuer or
the Guarantor.  (The immediately preceding sentence does not
apply to reports solely comprised of recommendations to buy, sell
or hold the Issuer's or the Guarantor's securities, unless such
recommendations have changed within the past six months or to
information already contained in documents filed with the
Commission.  If there are any exceptions, (i) furnish four (4)
copies of each report and memorandum to Salomon Smith Barney Inc.
388 Greenwich Street, New York, N.Y.  10013, Attention:
Investment Banking Department/Transaction Structuring Group, (ii)
identify each class of persons who received such material and the
number of copies distributed to each such class, and (iii)
indicate when such distribution commenced and ceased.)

         (7)  We are not an "affiliate" of the Issuer or the
Guarantor for purposes of Rule 2720 of the National Association
of Securities Dealers, Inc.'s ("NASD") Conduct Rules.  We
understand that under Rule 2720 (except as provided in Rule
2720(b)(1)(C) thereof) two entities are "affiliates" of each
other if one entity controls, is controlled by, or is under
common control with, the second entity and that "control" is
presumed to exist if one entity (or, in the case of an NASD
member, the entity and all "persons associated with" it (as
defined in the NASD By-Laws)) beneficially owns 10% or more of
the second entity's outstanding voting securities or, if the
second entity is a partnership, if the first entity has a
partnership interest in 10% or more of the second entity's
distributable profits or losses.

         (8)  (If the Securities are not investment grade debt
securities or preferred stock, or equity securities for which
there exists a "bona fide independent market" (as defined in Rule
2720(b)(3) of the NASD's Conduct Rules) or otherwise exempted
under Rule 2720(b)(7)(D) of the NASD's Conduct Rules:)  We do not
have a "conflict of interest" with the Issuer or the Guarantor
under Rule 2720 of the NASD's Conduct Rules.  In that regard, we
specifically confirm that we, our "parent" (as defined in Rule
2720), affiliates and "persons associated with" us (as defined in
the NASD By-Laws), in the aggregate do not  (i) beneficially own
10% or more of the Issuer's or the Guarantor's "common equity",


                               27



<PAGE>

"preferred equity", or "subordinated debt" (as each such term is
defined in Rule 2720), or (ii) in the case of an Issuer or
Guarantor which is a partnership, beneficially own a general,
limited or special partnership interest in 10% or more of the
Issuer's or Guarantor's distributable profits or losses.

         (9)  (If filing with the NASD is required:) Neither we
nor any of our directors, officers, partners or "persons
associated with" us (as defined in the NASD By-Laws) nor, to our
knowledge, any "related person" (defined by the NASD to include
counsel, financial consultants and advisors, finders, members of
the selling or distribution group, any NASD member participating
in the offering and any other persons associated with or related
to and members of the immediate family of any of the foregoing)
or any other broker-dealer, (a) within the last 12 months have
purchased in private transactions, or intend before, at or within
six months after the commencement of the public offering of the
Securities to purchase in private transactions, any securities of
the Issuer, the Guarantor or any Issuer Related Party (as
hereinafter defined), (b) within the last 12 months had any
dealings with the Issuer, the Guarantor, any Seller or any
subsidiary or controlling person thereof (other than relating to
the proposed Underwriting Agreement) as to which documents or
information are required to be filed with the NASD pursuant to
its Corporate Financing Rule, or (c) during the 12 months
immediately preceding the filing of the Registration Statement
(or, if there is none, the Offering Circular), have entered into
any arrangement which provided or provides for the receipt of any
item of value (including, but not limited to, cash payments and
expense reimbursements) and/or the transfer of any warrants,
options or other securities from the Issuer, the Guarantor or any
Issuer Related Party to us or any related person.

         (10) (If filing with the NASD is required:) There is no
association or affiliation between us and (i) any officer or
director of the Issuer, the Guarantor or any Issuer Related
Party, or (ii) any securityholder of five percent or more (or, in
the case of an initial public offering of equity securities, any
securityholder) of any class of securities of the Issuer, the
Guarantor or an Issuer Related Party; it being understood that
for purposes of paragraph (9) above and this paragraph (10), the
term "Issuer Related Party" includes any Seller, any affiliate of
the Issuer the Guarantor or a Seller and the officers or general
partners, directors, employees and securityholders thereof.  (If
there are any exceptions, state the identity of the person with
whom the association or affiliation exists and, if relevant, the
number of equity securities or the face value of debt securities
owned by such person, the date such securities were acquired and
the price paid for such securities).




                               28



<PAGE>

         (11) (If the Securities are not issued by a real estate
investment trust:)  No portion of the net offering proceeds from
the sale of the Securities will be paid to us or any of our
affiliates or "persons associated with" us (as defined in the
NASD By-Laws) or members of the immediate family of any such
person.

         (12) (If the Securities are debt securities and their
offer and sale is to be registered under the 1933 Act:)  We are
not an affiliate (as defined in Rule 0-2 under the Trust
Indenture Act of 1939) of the Trustee for the Securities or of
its parent, if any.  Neither the Trustee nor its parent, if any,
nor any of their directors or executive officers is a "director,
officer, partner, employee, appointee or representative" of ours
(as those terms are defined in the Trust Indenture Act of 1939 or
in the relevant instructions to Form T-1).  We and our directors,
partners, and executive officers, taken as a group, did not on
the date specified in the Invitation Wire, and do not, own
beneficially 1% or more of the shares of any class of voting
securities of the Trustee or of its parent, if any.  If we are a
corporation, we do not have outstanding and have not assumed or
guaranteed any securities issued otherwise than in our present
corporate name.

         (13) (If the Issuer is a public utility:) We are not a
"holding company" or a "subsidiary company" or an "affiliate" of
a "holding company" or of a "public-utility company", each as
defined in the Public Utility Holding Company Act of 1935.

         (14) If we are, or we are affiliated with, a U.S. or
non-U.S. bank, we hereby represent that our participation in the
offering of the Securities on the terms contemplated in the
applicable AAU and the proposed Underwriting Agreement does not
contravene any U.S. or state banking law restricting the exercise
of securities powers in the United States.

         Capitalized terms used but not defined herein shall have
the respective meanings given to them in the applicable AAU.















                               29
00250209.AN7

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2H DISTR CONTR
<SEQUENCE>9
<FILENAME>h3_00250209an6.txt
<TEXT>



<PAGE>


                MASTER SELECTED DEALER AGREEMENT


                                                     July 1, 1999



Ladies and Gentlemen:

         In connection with registered public offerings of
securities for which we are acting as manager or co-manager of an
underwriting syndicate or unregistered offerings of securities
for which we are acting as manager or co-manager of the initial
purchasers, you may be offered the right as a selected dealer to
purchase as principal a portion of such securities.  This will
confirm our mutual agreement as to the general terms and
conditions applicable to your participation in any such selected
dealer group.

         1.   Applicability of this Agreement.  The terms and
conditions of this Agreement shall be applicable to any offering
of securities ("Securities"), whether pursuant to a registration
statement filed under the Securities Act of 1933, as amended (the
"Securities Act"), or exempt from registration thereunder,  in
respect of which Salomon Smith Barney Inc. (acting for its own
account or for the account of any underwriting or similar group
or syndicate) is responsible for managing or otherwise
implementing the sale of the Securities to selected dealers
("Selected Dealers") and has expressly informed you that such
terms and conditions shall be applicable.  Any such offering of
Securities to you as a Selected Dealer is hereinafter called an
"Offering".  In the case of any Offering where we are acting for
the account of any underwriting or similar group or syndicate
("Underwriters"), the terms and conditions of this Agreement
shall be for the benefit of, and binding upon, such Underwriters,
including, in the case of any Offering where we are acting with
others as representatives of Underwriters, such other
representatives.

         2.   Conditions of Offering; Acceptance and Purchases.
Any Offering will be subject to delivery of the Securities and
their acceptance by us and any other Underwriters, may be subject
to the approval of all legal matters by counsel and the
satisfaction of other conditions, and may be made on the basis of
reservation of Securities or an allotment against subscription.
We will advise you by telecopy, telex or other form of written
communication ("Written Communication", which term, in the case
of any Offering described in Section 3(a) or 3(b) hereof, may
include a prospectus or offering circular) of the particular
method and supplementary terms and conditions (including, without



<PAGE>

limitation, the information as to prices and the offering date
referred to in Section 3(c) hereof) of any Offering in which you
are invited to participate.  To the extent such supplementary
terms and conditions are inconsistent with any provision herein,
such terms and conditions shall supersede any such provision.
Unless otherwise indicated in any such Written Communication,
acceptances and other communications by you with respect to an
Offering should be sent to the appropriate Syndicate Department
of Salomon Smith Barney Inc.  We may close the subscription books
at any time in our sole discretion without notice, and we reserve
the right to reject any acceptance in whole or in part.

         Unless notified otherwise by us, Securities purchased by
you shall be paid for on such date as we shall determine, on one
day's prior notice to you, by wire transfer payable in
immediately available funds to the order of Salomon Smith Barney
Inc., in an amount equal to the Public Offering Price (as
hereinafter defined) or, if we shall so advise you, at such
Public Offering Price less the Concession (as hereinafter
defined).  If Securities are purchased and paid for at such
Public Offering Price, such Concession will be paid after the
termination of the provisions of Section 3(c) hereof with respect
to such Securities.  Unless notified otherwise by us, payment for
and delivery of Securities purchased by you shall be made through
the facilities of The Depository Trust Company, if you are a
member, unless you have otherwise notified us prior to the date
specified in a Written Communication to you from us or, if you
are not a member, settlement may be made through a correspondent
who is a member pursuant to instructions which you will send to
us prior to such specified date.

         3.   Representations, Warranties and Agreements.

         (a)  Registered Offerings.  In the case of any Offering
of Securities which are registered under the Securities Act
("Registered Offering"), we will make available to you as soon as
practicable after sufficient copies are made available to us by
the issuer of the Securities such number of copies of each
preliminary prospectus and of the final prospectus relating
thereto as you may reasonably request for the purposes
contemplated by the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the applicable
rules and regulations of the Securities and Exchange Commission
thereunder.

         You represent and warrant that you are familiar with
Rule 15c2-8 under the Exchange Act relating to the distribution
of preliminary and final prospectuses and agree that you will
comply therewith.  You agree to make a record of your
distribution of each preliminary prospectus and when furnished
with copies of any revised preliminary prospectus, you will


                                2



<PAGE>

promptly forward copies thereof to each person to whom you have
theretofore distributed a preliminary prospectus.

         You agree that in purchasing Securities in a Registered
Offering you will rely upon no statement whatsoever, written or
oral, other than the statements in the final prospectus delivered
to you by us.  You will not be authorized by the issuer or other
seller of Securities offered pursuant to a prospectus or by any
Underwriters to give any information or to make any
representation not contained in the prospectus in connection with
the sale of such Securities.

         (b)  Offerings Pursuant to Offering Circular.  In the
case of any Offering of Securities, other than a Registered
Offering, which is made pursuant to an offering circular or other
document comparable to a prospectus in a Registered Offering, we
will make available to you as soon as practicable after
sufficient copies are made available to us by the issuer of the
Securities such number of copies of each preliminary offering
circular and of the final offering circular relating thereto as
you may reasonably request.  You agree that you will comply with
applicable Federal, state and other laws, and the applicable
rules and regulations of any regulatory body promulgated
thereunder, governing the use and distribution of offering
circulars by brokers or dealers.

         You agree that in purchasing Securities pursuant to an
offering circular you will rely upon no statements whatsoever,
written or oral, other than the statements in the final offering
circular delivered to you by us.  You will not be authorized by
the issuer or other seller of Securities offered pursuant to an
offering circular or by any Underwriters to give any information
or to make any representation not contained in the offering
circular in connection with the sale of such Securities.

         (c)  Offer and Sale to the Public.   The Offering of
Securities is made subject to the conditions referred to the
prospectus or offering circular relating to the Offering and to
the terms and conditions set forth in this Agreement.  With
respect to any Offering of Securities, we will inform you by a
Written Communication of the public offering price, the selling
concession, the reallowance (if any) to dealers and the time when
you may commence selling Securities to the public.  After such
public offering has commenced, we may change the public offering
price, the selling concession and the reallowance to dealers.
The offering price, selling concession and reallowance (if any)
to dealers at any time in effect with respect to an Offering are
hereinafter referred to, respectively, as the "Public Offering
Price", the "Concession" and the "Reallowance".  With respect to
each Offering of Securities, until the provisions of this Section
3(c) shall be terminated pursuant to Section 4 hereof, you agree


                                3



<PAGE>

to offer Securities to the public only at the Public Offering
Price, except that if a Reallowance is in effect, a Reallowance
from the Public Offering Price not in excess of such Reallowance
may be allowed as consideration for services rendered in
distribution to dealers who are actually engaged in the
investment banking or securities business who are either members
in good standing of the NASD who agree to abide by the applicable
rules of the NASD (see Section 3(e) below) or foreign banks,
dealers or institutions not eligible for membership in the NASD
who represent to you that they will promptly reoffer such
Securities at the Public Offering Price and will abide by the
conditions with respect to foreign banks, dealers and
institutions set forth in Section 3(e) hereof.

         (d)  Over-allotment; Stabilization; Unsold Allotments.
We may, with respect to any Offering, be authorized to over-allot
in arranging sales to Selected Dealers, to purchase and sell
Securities for long or short account and to stabilize or maintain
the market price of the Securities.  You agree that upon our
request at any time and from time to time prior to the
termination of the provisions of Section 3(c) hereof with respect
to any Offering, you will report to us the amount of Securities
purchased by you pursuant to such Offering which then remain
unsold by you and will, upon our request at any such time, sell
to us for our account or the account of one or more Underwriters
such amount of such unsold Securities as we may designate at the
Public Offering Price less an amount to be determined by us not
in excess of the Concession.  If, prior to the later of (a) the
termination of the provisions of Section 3(c) hereof with respect
to any Offering, or (b) the covering by us of any short position
created by us in connection with such Offering for our account or
the account of one or more Underwriters, we purchase or contract
to purchase for our account or the account of one or more
Underwriters in the open market or otherwise any Securities
purchased by you under this Agreement as part of such Offering,
you agree to pay us on demand for the account of the Underwriters
an amount equal to the Concession with respect to such Securities
(unless you shall have purchased such Securities pursuant to
Section 2 hereof at the Public Offering Price and you have not
received or been credited with any Concession,  in which case we
shall not be obligated to pay such Concession to you pursuant to
Section 2) plus transfer taxes and broker's commissions or
dealer's mark-up, if any, paid in connection with such purchase
or contract to purchase.

         (e)  NASD.  You represent and warrant that you are
actually engaged in the investment banking or securities business
and either are a member in good standing of the NASD or, if you
are not such a member, you are a foreign bank, dealer or
institution not eligible for membership in the NASD which agrees
to make no sales within the United State, its territories or its


                                4



<PAGE>

possessions or to persons who are citizens thereof or residents
therein, and in making other sales to comply with the NASD's
interpretation with respect to free-riding and withholding.  You
further represent, by your participation in an Offering, that you
have provided to us all documents and other information required
to be filed with respect to you, any related person or any person
associated with you or any such related person pursuant to the
supplementary requirements of the NASD's interpretation with
respect to review of corporate financing as such requirements
relate to such Offering.

         You agree that, in connection with any purchase or sale
of the Securities wherein a selling concession, discount or other
allowance is received or granted, you will (a) if you are a
member of the NASD, comply with all applicable interpretive
material ("IM") and Conduct Rules of the NASD, including, without
limitation, IM 2110-1 (relating to Free-Riding and Withholding)
and Conduct Rule 2740 (relating to Selling Concessions, Discounts
and Other Allowances) or (b) if you are a foreign bank or dealer
or institution not eligible for such membership, comply with  IM
2110-1 and with Conduct Rules 2730 (relating to Securities Taken
in Trade), 2740 (relating to Selling Concessions) and 2750
(relating to Transactions With Related Persons) as though you
were such a member and Conduct Rule 2420 (relating to Dealing
with Non-Members) as it applies to a non-member broker or dealer
in a foreign country.

         You further agree that, in connection with any purchase
of securities from us that is not otherwise covered by the terms
of this Agreement (whether we are acting as manager, as member of
an underwriting syndicate or a selling group or otherwise), if a
selling concession, discount or other allowance is granted to
you, clauses (a) and (b) of the preceding paragraph will be
applicable.

         (f)  Relationship among Underwriters and Selected
Dealers.  We may buy Securities from or sell Securities to any
Underwriter or Selected Dealer and, with our consent, the
Underwriters (if any) and the Selected Dealers may purchase
Securities from and sell Securities to each other at the Public
Offering Price less all or any part of the Concession.  We shall
have full authority to take such action as we deem advisable in
all matters pertaining to any Offering under this Agreement.  You
are not authorized to act as agent for us, any Underwriter or the
issuer or other seller of any Securities in offering Securities
to the public or otherwise.  Neither we nor any Underwriter shall
be under any obligation to you except for obligations assumed
hereby or in any Written Communication from us in connection with
any Offering.  Nothing contained herein or in any Written
Communication from us shall constitute the Selected Dealers an
association or partners with us or any Underwriter or with one


                                5



<PAGE>

another. If the Selected Dealers, among themselves or with the
Underwriters, should be deemed to constitute a partnership for
Federal income tax purposes, then you elect to be excluded from
the application of Subchapter K, Chapter 1, Subtitle A of the
Internal Revenue Code of 1986 and agree not to take any position
inconsistent with that election. You authorize us, in our
discretion, to execute and file on your behalf such evidence of
that election as may be required by the Internal Revenue Service.
In connection with any Offering you shall be liable for your
proportionate amount of any tax, claim, demand or liability that
may be asserted against you alone or against one or more Selected
Dealers participating in such Offering, or against us or the
Underwriters, based upon the claim that the Selected Dealers, or
any of them constitute an association, an unincorporated business
or other entity, including, in each case, your proportionate
amount of any expense incurred in defending against any such tax,
claim, demand or liability.

         (g)  Blue Sky Laws.  Upon application to us, we shall
inform you as to any advice we have received from counsel
concerning the jurisdictions in which Securities have been
qualified for sale or are exempt under the securities or blue sky
laws of such jurisdictions, but we do not assume any obligation
or responsibility as to your right to sell Securities in any such
jurisdiction.

         (h)  Compliance with Law.  You agree that in selling
Securities pursuant to any Offering (which agreement shall also
be for the benefit of the issuer or other seller of such
Securities), you will comply with all applicable laws, rules and
regulations, including the applicable provisions of the
Securities Act and the Exchange Act, the applicable rules and
regulations of the Securities and Exchange Commission thereunder,
the applicable rules and regulations of the NASD, the applicable
rules and regulations of any securities exchange or other
regulatory authority having jurisdiction over the Offering and
the applicable laws, rules and regulations specified in Section
3(b) hereof.  Without limiting the foregoing, (a) you agree that,
at all times since you were invited to participate in an Offering
of Securities, you have complied with the provisions of
Regulation M applicable to such Offering, in each case after
giving effect to any applicable exemptions and (b) you represent
that your incurrence of obligations hereunder in connection with
any Offering of Securities will not result in the violation by
you of Rule 15c3-1 under the Exchange Act, if such requirements
are applicable to you.

         4.   Termination; Supplements and Amendments.  This
Agreement shall continue in full force and effect until
terminated by a written instrument executed by each of the
parties hereto.  This Agreement may be supplemented or amended by


                                6



<PAGE>

us by written notice thereof to you, and any such supplement or
amendment to this Agreement shall be effective with respect to
any Offering to which this Agreement applies after the date of
such supplement or amendment.  Each reference to "this Agreement"
herein shall, as appropriate, be to this Agreement as so amended
and supplemented.  The terms and conditions set forth in Section
3(c) hereof with regard to any Offering will terminate at the
close of business on the 30th day after the commencement of the
public offering of the Securities to which such Offering relates,
but in our discretion may be extended by us for a further period
not exceeding 30 days and in our discretion, whether or not
extended, may be terminated at any earlier time.

         5.   Successors and Assigns.  This Agreement shall be
binding on, and inure to the benefit of, the parties hereto and
other persons specified in Section 1 hereof, and the respective
successors and assigns of each of them.

         6.   Governing Law.  This Agreement and the terms and
conditions set forth herein with respect to any Offering together
with such supplementary terms and conditions with respect to such
Offering as may be contained in any Written Communication from us
to you in connection therewith shall be governed by, and
construed in accordance with, the laws of the State of New York
applicable to contracts made and to be performed within the State
of New York.

         Please confirm by signing and returning to us the
enclosed copy of this Agreement that your subscription to or your
acceptance of any reservation of any Securities pursuant to an
Offering shall constitute (i) acceptance of and agreement to the
terms and conditions of this Agreement (as supplemented and
amended pursuant to Section 4 hereof; together with and subject
to any supplementary terms and conditions contained in any
Written Communication from us in connection with such Offering,
all of which shall constitute a binding agreement between you and
us, individually or as representative of any Underwriters, (ii)
confirmation that your representations and warranties set forth
in Section 3 hereof are true and correct at that time, (iii)
confirmation that your agreements set forth in Sections 2 and 3
hereof have been and will be fully performed by you to the extent
and at the times required thereby and (iv) in the case of any
Offering described in Section 3(a) or 3(b) hereof, acknowledgment
that you have requested and received from us sufficient copies of
the final prospectus or offering circular, as the case may be,
with respect to such Offering in order to comply with your
undertakings in Section 3(a) or 3(b) hereof.

                                       Very truly yours,

                                       Salomon Smith Barney Inc.


                                7



<PAGE>

                                       By: ---------------------
                                           Name:
                                           Title:

CONFIRMED:  ----------------- 1999

- ----------------------------------
         (Name of Dealer)

By:-------------------------------
   Name:
   Title:

Address: -------------------------

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

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

Telephone: -----------------------

Fax:       -----------------------































                                8
00250209.AN6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2J CUST CONTR
<SEQUENCE>10
<FILENAME>j_00250209ao2.txt
<TEXT>



<PAGE>

                       Custodian Agreement

         This Agreement between Alliance National Municipal Fund,
Inc. a corporation organized and existing under the laws of
Maryland (the "Fund"), and State Street Bank and Trust Company, a
Massachusetts trust company (the "Custodian").

         Witnesseth  that in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto agree as follows:

1.       Employment of Custodian and Property to be Held by It

The Fund hereby employs the Custodian as the custodian of its
assets, including securities which the Fund desires to be held in
places within the United States ("domestic securities") and
securities it desires to be held outside the United States
("foreign securities").  The Fund agrees to deliver to the
Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions
received by it from time to time, and the cash consideration
received by it for such new or treasury shares of beneficial
interest of the Fund ("Shares") as may be issued or sold from
time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not
delivered to the Custodian.

Upon receipt of "Proper Instructions" (as such term is defined in
Section 6 hereof), the Custodian shall from time to time employ
one or more sub-custodians located in the United States, but only
in accordance with an applicable vote by the Board of Directors
of the Fund (the "Board"), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so
employed than any such subcustodian has to the Custodian.  The
Custodian may employ as sub-custodian for the Fund's foreign
securities the foreign banking institutions and foreign
securities depositories designated in Schedules A and B hereto,
but only in accordance with the applicable provisions of Sections
3 and 4.

2.       Duties of the Custodian with Respect to Property of the
         Fund Held By the Custodian in the United States

         2.1  Holding Securities.  The Custodian shall hold and
physically segregate for the account of the Fund all non-cash
property, to be held by it in the United States, including all
domestic securities owned by the Fund other than (a) securities
which are maintained pursuant to Section 2.9 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury and certain



<PAGE>

federal agencies (each, a "U.S. Securities System") and (b)
commercial paper of an issuer for which the Custodian acts as
issuing and paying agent ("Direct Paper") which is deposited
and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.10.

         2.2  Delivery of Securities.  The Custodian shall
release and deliver domestic securities owned by the Fund held by
the Custodian or in a U.S. Securities System account of the
Custodian or in the Custodian's Direct Paper book-entry system
account (the "Direct Paper System Account") only upon receipt of
Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following
cases:

         1)   Upon sale of such securities for the account of the
              Fund and receipt of payment therefor;

         2)   Upon the receipt of payment in connection with any
              repurchase agreement related to such securities
              entered into by the Fund;

         3)   In the case of a sale effected through a U.S.
              Securities System, in accordance with the
              provisions of Section 2.9 hereof;

         4)   To the depository agent in connection with tender
              or other similar offers for securities of the Fund;

         5)   To the issuer thereof or its agent when such
              securities are called, redeemed, retired or
              otherwise become payable; provided that, in any
              such case, the cash or other consideration is to be
              delivered to the Custodian;

         6)   To the issuer thereof, or its agent, for transfer
              into the name of the Fund or into the name of any
              nominee or nominees of the Custodian or into the
              name or nominee name of any agent appointed
              pursuant to Section 2.8 or into the name or nominee
              name of any sub-custodian appointed pursuant to
              Article 1; or for exchange for a different number
              of bonds, certificates or other evidence
              representing the same aggregate face amount or
              number of units; provided that, in any such case,
              the new securities are to be delivered to the
              Custodian;

         7)   Upon the sale of such securities for the account of
              the Fund, to the broker or its clearing agent,
              against a receipt, for examination in accordance


                                2



<PAGE>

              with "street delivery" custom; provided that in any
              such case, the Custodian shall have no
              responsibility or liability for any loss arising
              from the delivery of such securities prior to
              receiving payment for such securities except as may
              arise from the Custodian's own negligence or
              willful misconduct;

         8)   For exchange or conversion pursuant to any plan of
              merger, consolidation, recapitalization,
              reorganization or readjustment of the securities of
              the issuer of such securities, or pursuant to
              provisions for conversion contained in such
              securities, or pursuant to any deposit agreement;
              provided that, in any such case, the new securities
              and cash, if any, are to be delivered to the
              Custodian;

         9)   In the case of warrants, rights or similar
              securities, the surrender thereof in the exercise
              of such warrants, rights or similar securities or
              the surrender of interim receipts or temporary
              securities for definitive securities; provided
              that, in any such case, the new securities and
              cash, if any, are to be delivered to the Custodian;

         10)  For delivery in connection with any loans of
              securities made by the Fund, but only against
              receipt of adequate collateral as agreed upon from
              time to time by the Custodian and the Fund, which
              may be in the form of cash or obligations issued by
              the United States government, its agencies or
              instrumentalities, except that in connection with
              any loans for which collateral is to be credited to
              the Custodian's account in the book-entry system
              authorized by the U.S. Department of the Treasury,
              the Custodian will not be held liable or
              responsible for the delivery of securities owned by
              the Fund prior to the receipt of such collateral;

         11)  For delivery as security in connection with any
              borrowings by the Fund requiring a pledge of assets
              by the Fund, but only against receipt of amounts
              borrowed;

         12)  For delivery in accordance with the provisions of
              any agreement among the Fund, the Custodian and a
              broker-dealer registered under the Securities
              Exchange Act of 1934 (the "Exchange Act") and a
              member of The National Association of Securities
              Dealers, Inc. ("NASD"), relating to compliance with


                                3



<PAGE>

              the rules of The Options Clearing Corporation and
              of any registered national securities exchange, or
              of any similar organization or organizations,
              regarding escrow or other arrangements in
              connection with transactions by the Fund;

         13)  For delivery in accordance with the provisions of
              any agreement among the Fund, the Custodian, and a
              Futures Commission Merchant registered under the
              Commodity Exchange Act, relating to compliance with
              the rules of the Commodity Futures Trading
              Commission ("CFTC") and/or any Contract Market, or
              any similar organization or organizations,
              regarding account deposits in connection with
              transactions by the Fund;

         14)  Upon receipt of instructions from the transfer
              agent (the "Transfer Agent") for the Fund, for
              delivery to such Transfer Agent or to the holders
              of shares in connection with distributions in kind,
              as may be described from time to time in the Fund's
              currently effective prospectus and statement of
              additional information (the "Prospectus"), in
              satisfaction of requests by holders of Shares for
              repurchase or redemption; and

         15)  For any other proper corporate purpose, but only
              upon receipt of Proper Instructions, specifying the
              securities of the Fund to be delivered, setting
              forth the purpose for which such delivery is to be
              made, declaring such purpose to be a proper
              corporate purpose and naming the person or persons
              to whom delivery of such securities shall be made.

         2.3  Registration of Securities.  Domestic securities
held by the Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of any nominee
of the Fund or of any nominee of the Custodian which nominee
shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment advisor as the Fund, or in the name or nominee name of
any agent appointed pursuant to Section 2.8 or in the name or
nominee name of any sub-custodian appointed pursuant to Article
1.  All securities accepted by the Custodian on behalf of the
Fund under the terms of this Agreement shall be in "street name"
or other good delivery form.  If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian
shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including,


                                4



<PAGE>

without limitation, pendency of calls, maturities, tender or
exchange offers.

         2.4  Bank Accounts.  The Custodian shall open and
maintain a separate bank account or accounts in the United States
in the name of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and
shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended (the "1940 Act").
Monies held by the Custodian for the Fund may be deposited by it
to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in
its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act
as a custodian under the 1940 Act and that each such bank or
trust company and the monies to be deposited with each such bank
or trust company shall be approved by vote of a majority of the
Board.  Such monies shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.

         2.5  Availability of Federal Funds.  Upon mutual
agreement between the Fund and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions, make federal
funds available to the Fund as of specified times agreed upon
from time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares which are deposited into
the Fund's account.

         2.6  Collection of Income.  Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely basis all
income and other payments with respect to registered domestic
securities held hereunder to which the Fund shall be entitled
either by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other payments
with respect to bearer domestic securities if, on the date of
payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected,
to the Fund's custodian account.  Without limiting the generality
of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation
as and when they become due and shall collect interest when due
on securities held hereunder.  Income due the Fund on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund.  The Custodian will have no duty
or responsibility in connection therewith, other than to provide
the Fund with such information or data as may be necessary to



                                5



<PAGE>

assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Fund is properly entitled.

         2.7  Payment of Fund Monies.  Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall pay out monies of
the Fund in the following cases only:

         1)   Upon the purchase of domestic securities, options,
              futures contracts or options on futures contracts
              for the account of the Fund but only (a) against
              the delivery of such securities or evidence of
              title to such options, futures contracts or options
              on futures contracts to the Custodian (or any bank,
              banking firm or trust company doing business in the
              United States or abroad which is qualified under
              the 1940 Act to act as a custodian and has been
              designated by the Custodian as its agent for this
              purpose) registered in the name of the Fund or in
              the name of a nominee of the Custodian referred to
              in Section 2.3 hereof or in proper form for
              transfer; (b) in the case of a purchase effected
              through a U.S. Securities System, in accordance
              with the conditions set forth in Section 2.9
              hereof; (c) in the case of a purchase involving the
              Direct Paper System, in accordance with the
              conditions set forth in Section 2.10; (d) in the
              case of repurchase agreements entered into between
              the Fund and the Custodian, or another bank, or a
              broker-dealer which is a member of NASD, (i)
              against delivery of the securities either in
              certificate form or through an entry crediting the
              Custodian's account at the Federal Reserve Bank
              with such securities or (ii) against delivery of
              the receipt evidencing purchase by the Fund of
              securities owned by the Custodian along with
              written evidence of the agreement by the Custodian
              to repurchase such securities from the Fund; or (e)
              for transfer to a time deposit account of the Fund
              in any bank, whether domestic or foreign; such
              transfer may be effected prior to receipt of a
              confirmation from a broker and/or the applicable
              bank pursuant to Proper Instructions from the Fund
              as defined in Article 6;

         2)   In connection with conversion, exchange or
              surrender of securities owned by the Fund as set
              forth in Section 2.2 hereof;

         3)   For the redemption or repurchase of Shares issued
              as set forth in Article 5 hereof;


                                6



<PAGE>

         4)   For the payment of any expense or liability
              incurred by the Fund, including but not limited to
              the following payments for the account of the Fund:
              interest, taxes, management, accounting, transfer
              agent and legal fees, and operating expenses of the
              Fund whether or not such expenses are to be in
              whole or part capitalized or treated as deferred
              expenses;

         5)   For the payment of any dividends on Shares declared
              pursuant to the governing documents of the Fund;

         6)   For payment of the amount of dividends received in
              respect of securities sold short; and

         7)   For any other proper purpose, but only upon receipt
              of Proper Instructions specifying the amount of
              such payment, setting forth the purpose for which
              such payment is to be made, declaring such purpose
              to be a proper purpose, and naming the person or
              persons to whom such payment is to be made.

         2.8  Appointment of Agents.  The Custodian may at any
time or times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself qualified
under the 1940 Act to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may
from time to time direct; provided, however, that the appointment
of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.

         2.9  Deposit of Securities in U.S. Securities Systems.
The Custodian may deposit and/or maintain domestic securities
owned by the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and Securities
and Exchange Commission rules and regulations, if any, and
subject to the following provisions:

         1)   The Custodian may keep domestic securities of the
              Fund in a U.S. Securities System provided that such
              securities are represented in an account
              ("Account") of the Custodian in the U.S. Securities
              System which shall not include any assets of the
              Custodian other than assets held as a fiduciary,
              custodian or otherwise for customers;



                                7



<PAGE>

         2)   The records of the Custodian with respect to
              domestic securities of the Fund which are
              maintained in a U.S. Securities System shall
              identify by book-entry those securities belonging
              to the Fund;

         3)   The Custodian shall pay for domestic securities
              purchased for the account of the Fund upon (i)
              receipt of advice from the U.S. Securities System
              that such securities have been transferred to the
              Account, and (ii) the making of an entry on the
              records of the Custodian to reflect such payment
              and transfer for the account of the Fund.  The
              Custodian shall transfer domestic securities sold
              for the account of the Fund upon (i) receipt of
              advice from the U.S. Securities System that payment
              for such securities has been transferred to the
              Account, and (ii) the making of an entry on the
              records of the Custodian to reflect such transfer
              and payment for the account of the Fund.  Copies of
              all advices from the U.S. Securities System of
              transfers of domestic securities for the account of
              the Fund shall identify the Fund, be maintained for
              the Fund by the Custodian and be provided to the
              Fund at its request.  Upon request, the Custodian
              shall furnish the Fund confirmation of each
              transfer to or from the account of the Fund in the
              form of a written advice or notice and shall
              furnish to the Fund copies of daily transaction
              sheets reflecting each day's transactions in the
              U.S. Securities System for the account of the Fund;

         4)   The Custodian shall provide the Fund with any
              report obtained by the Custodian on the U.S.
              Securities System's accounting system, internal
              accounting control and procedures for safeguarding
              securities deposited in the U.S. Securities System;
              and

         5)   Anything to the contrary in this Agreement
              notwithstanding, the Custodian shall be liable to
              the Fund for any loss or damage to the Fund
              resulting from use of the U.S. Securities System by
              reason of any negligence, misfeasance or misconduct
              of the Custodian or any of its agents or of any of
              its or their employees or from failure of the
              Custodian or any such agent to enforce effectively
              such rights as it may have against the U.S.
              Securities System; at the election of the Fund, it
              shall be entitled to be subrogated to the rights of
              the Custodian with respect to any claim against the


                                8



<PAGE>

              U.S. Securities System or any other person which
              the Custodian may have as a consequence of any such
              loss or damage if and to the extent that the Fund
              has not been made whole for any such loss or
              damage.

         2.10 Fund Assets Held in the Custodian's Direct Paper
System.  The Custodian may deposit and/or maintain securities
owned by the Fund in the Direct Paper System of the Custodian
subject to the following provisions:

         1)   No transaction relating to securities in the Direct
              Paper System will be effected in the absence of
              Proper Instructions;

         2)   The Custodian may keep securities of the Fund in
              the Direct Paper System only if such securities are
              represented in an account ("Account") of the
              Custodian in the Direct Paper System which shall
              not include any assets of the Custodian other than
              assets held as a fiduciary, custodian or otherwise
              for customers;

         3)   The records of the Custodian with respect to
              securities of the Fund which are maintained in the
              Direct Paper System shall identify by book-entry
              those securities belonging to the Fund;

         4)   The Custodian shall pay for securities purchased
              for the account of the Fund upon the making of an
              entry on the records of the Custodian to reflect
              such payment and transfer of securities to the
              account of the Fund.  The Custodian shall transfer
              securities sold for the account of the Fund upon
              the making of an entry on the records of the
              Custodian to reflect such transfer and receipt of
              payment for the account of the Fund;

         5)   The Custodian shall furnish the Fund confirmation
              of each transfer to or from the account of the
              Fund, in the form of a written advice or notice, of
              Direct Paper on the next business day following
              such transfer and shall furnish to the Fund copies
              of daily transaction sheets reflecting each day's
              transaction in the U.S. Securities System for the
              account of the Fund; and

         6)   The Custodian shall provide the Fund with any
              report on its system of internal accounting control
              as the Fund may reasonably request from time to
              time.


                                9



<PAGE>

         2.11 Segregated Account.  The Custodian shall upon
receipt of Proper Instructions establish and maintain a
segregated account or accounts for and on behalf of the Fund,
into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the
Custodian pursuant to Section 2.9 hereof, (i) in accordance with
the provisions of any agreement among the Fund, the Custodian and
a broker-dealer registered under the Exchange Act and a member of
the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodities Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii)
for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the U.S.
Securities and Exchange Commission (the "SEC"), or interpretative
opinion of the staff of the SEC, relating to the maintenance of
segregated accounts by registered investment companies, and (iv)
for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of Proper Instructions setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.

         2.12 Ownership Certificates for Tax Purposes.  The
Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to domestic
securities of the Fund held by it and in connection with
transfers of such securities.

         2.13 Proxies.  The Custodian shall, with respect to the
domestic securities held hereunder, cause to be promptly executed
by the registered holder of such securities, if the securities
are registered otherwise than in the name of the Fund or a
nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Fund such proxies, all proxy soliciting materials
and all notices relating to such securities.

         2.14 Communications Relating to Fund Securities.
Subject to the provisions of Section 2.3, the Custodian shall
transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund


                               10



<PAGE>

and the maturity of futures contracts purchased or sold by the
Fund) received by the Custodian from issuers of the domestic
securities being held for the Fund.  With respect to tender or
exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from
issuers of the domestic securities whose tender or exchange is
sought and from the party (or its agents) making the tender or
exchange offer.  If the Fund desires to take action with respect
to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take
such action.

3.       Provisions Relating to Rules 17f-5 and 17f-7

         3.1  Definitions.  As used throughout this Agreement,
the capitalized terms set forth below shall have the indicated
meanings:

"Country Risk" means all factors reasonably related to the
systemic risk of holding Foreign Assets in a particular country
including, but not limited to, such country's political
environment, economic and financial infrastructure (including any
Eligible Securities Depository operating in the country),
prevailing or developing custody and settlement practices, and
laws and regulations applicable to the safekeeping and recovery
of Foreign Assets held in custody in that country.

"Eligible Foreign Custodian" has the meaning set forth in section
(a)(1) of Rule 17f-5, including a majority-owned or indirect
subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank
holding company meeting the requirements of an Eligible Foreign
Custodian  (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the
"SEC")), or a foreign branch of a Bank (as defined in Section
2(a)(5) of the 1940 Act) meeting the requirements of a custodian
under Section 17(f) of the 1940 Act; the term does not include
any Eligible Securities Depository.

"Eligible Securities Depository" has the meaning set forth in
section (b)(1) of Rule 17f-7.

 "Foreign Assets" means any of the Fund's investments (including
foreign currencies) for which the primary market is outside the
United States and such cash and cash equivalents as are
reasonably necessary to effect the Fund's transactions in such
investments.

"Foreign Custody Manager" has the meaning set forth in section
(a)(3) of Rule 17f-5.



                               11



<PAGE>

         3.2  The Custodian as Foreign Custody Manager.

         3.2.1 Delegation to the Custodian as Foreign Custody
Manager.  The Fund, by resolution adopted by the Board, hereby
delegates to the Custodian, in accordance with Section (b) of
Rule 17f-5, the responsibilities set forth in this Section 3.2
with respect to Foreign Assets held outside the United States,
and the Custodian hereby accepts such delegation as Foreign
Custody Manager of the Fund.

         3.2.2 Countries covered.  The Foreign Custody Manager
shall be responsible for performing the delegated
responsibilities defined below only with respect to the countries
and custody arrangements for each such country listed on Schedule
A to this Agreement, which list of countries may be amended from
time to time by the Fund with the agreement of the Foreign
Custody Manager.  The Foreign Custody Manager shall list on
Schedule A the Eligible Foreign Custodians selected by the
Foreign Custody Manager to maintain the Fund's assets, which list
of Eligible Foreign Custodians may be amended from time to time
in the sole discretion of the Foreign Custody Manager.  The
Foreign Custody Manager will provide amended versions of Schedule
A in accordance with Section 3.2.5 hereof.

Upon the receipt by the Foreign Custody Manager of Proper
Instructions to open an account or to place or maintain Foreign
Assets in a country listed on Schedule A, and the fulfillment by
the Fund, of the applicable account opening requirements for such
country, the Foreign Custody Manager shall be deemed to have been
delegated by the Board responsibility as Foreign Custody Manager
with respect to that country and to have accepted such
delegation.  Execution of this Amendment by the Fund shall be
deemed to be a Proper Instruction to open an account, or to place
or maintain Foreign Assets, in each country listed on Schedule A
in which the Custodian has previously placed or currently
maintains Foreign Assets pursuant to the terms of the Agreement.
Following the receipt of Proper Instructions directing the
Foreign Custody Manager to close the account of the Fund with the
Eligible Foreign Custodian selected by the Foreign Custody
Manager in a designated country, the delegation by the Board to
the Custodian as Foreign Custody Manager for that country shall
be deemed to have been withdrawn and the Custodian shall
immediately cease to be the Foreign Custody Manager of the Fund
with respect to that country.

The Foreign Custody Manager may withdraw its acceptance of
delegated responsibilities with respect to a designated country
upon written notice to the Fund.  Sixty (60) days (or such longer
period to which the parties agree in writing) after receipt of
any such notice by the Fund, the Custodian shall have no further
responsibility in its capacity as Foreign Custody Manager to the


                               12



<PAGE>

Fund with respect to the country as to which the Custodian's
acceptance of delegation is withdrawn.

         3.2.3. Scope of Delegated Responsibilities:

         (a)  Selection of Eligible Foreign Custodians.  Subject
to the provisions of this Section 3.2, the Foreign Custody
Manager may place and maintain the Foreign Assets in the care of
the Eligible Foreign Custodian selected by the Foreign Custody
Manager in each country listed on Schedule A, as amended from
time to time.  In performing its delegated responsibilities as
Foreign Custody Manager to place or maintain Foreign Assets with
an Eligible Foreign Custodian, the Foreign Custody Manager shall
determine that the Foreign Assets will be subject to reasonable
care, based on the standards applicable to custodians in the
country in which the Foreign Assets will be held by that Eligible
Foreign Custodian, after considering all factors relevant to the
safekeeping of such assets, including, without limitation the
factors specified in Rule 17f-5(c)(1).

         (b)  Contracts With Eligible Foreign Custodians.  The
Foreign Custody Manager shall determine that the contract
governing the foreign custody arrangements with each Eligible
Foreign Custodian selected by the Foreign Custody Manager will
satisfy the requirements of Rule 17f-5(c)(2).

         (c)  Monitoring.  In each case in which the Foreign
Custody Manager maintains Foreign Assets with an Eligible Foreign
Custodian selected by the Foreign Custody Manager, the Foreign
Custody Manager shall establish a system to monitor in accordance
with Rule 17f-5(c)(3), (i) the appropriateness of maintaining the
Foreign Assets with such Eligible Foreign Custodian and (ii) the
contract governing the custody arrangements established by the
Foreign Custody Manager with the Eligible Foreign Custodian.  In
the event the Foreign Custody Manager determines that the custody
arrangements with an Eligible Foreign Custodian it has selected
are no longer appropriate, the Foreign Custody Manager shall
notify the Board in accordance with Section 3.2.5 hereunder.  In
such event where the Foreign Custody Manager has selected an
alternative Eligible Foreign Custodian in accordance with Section
3.2.3(a) herein, the Foreign Custody Manager will arrange the
transfer of the affected Foreign Assets to such Eligible Foreign
Custodian as soon as reasonably practicable.

         3.2.4  Guidelines for the Exercise of Delegated
Authority.  For purposes of this Article 3, the Foreign Custody
Manager shall have no responsibility for such Country Risk as is
incurred by placing and maintaining the Foreign Assets in each
country for which the Custodian is serving as Foreign Custody
Manager of the Fund.



                               13



<PAGE>

         3.2.5  Reporting Requirements.  The Foreign Custody
Manager shall report the withdrawal of the Foreign Assets from an
Eligible Foreign Custodian and the placement of such Foreign
Assets with another Eligible Foreign Custodian by providing to
the Board and upon Proper Instructions to the Fund's investment
adviser an amended Schedule A at the end of the calendar quarter
in which an amendment to such Schedule has occurred.  The Foreign
Custody Manager shall make written reports notifying the Board
and upon Proper Instructions the Fund's investment adviser of any
other material change in the foreign custody arrangements of the
Fund described in this Section 3.2 after the occurrence of the
material change.

         3.2.6  Standard of Care as Foreign Custody Manager of
the Fund.  In performing the responsibilities delegated to it,
the Foreign Custody Manager agrees to exercise reasonable care,
prudence and diligence such as a person having responsibility for
the safekeeping of assets of management investment companies
registered under the 1940 Act would exercise.

         3.2.7  Representations with Respect to Rule 17f-5.  The
Foreign Custody Manager represents to the Fund that it is a U.S.
Bank as defined in section (a)(7) of Rule 17f-5.  The Fund
represents to the Custodian that the Board has determined that it
is reasonable for the Board to rely on the Custodian to perform
the responsibilities delegated pursuant to this Contract to the
Custodian as the Foreign Custody Manager of the Fund.

         3.2.8  Effective Date and Termination of the Custodian
as Foreign Custody Manager.  The Board's delegation to the
Custodian as Foreign Custody Manager of the Fund shall be
effective as of the date hereof and shall remain in effect until
terminated at any time, without penalty, by written notice from
the terminating party to the non-terminating party.  Termination
will become effective sixty (60) days after receipt by the non-
terminating party of such notice.  The provisions of Section
3.2.2 hereof shall govern the delegation to and termination of
the Custodian as Foreign Custody Manager of the Fund with respect
to designated countries.

         3.3  Eligible Securities Depositories.

         3.3.1  Analysis and Monitoring.  The Custodian shall (a)
provide the Fund (or its duly-authorized investment manager or
investment adviser) with a list of Eligible Securities
Depositories on Schedule B hereto, as amended from time to time
by the Custodian and with an analysis of the custody risks
associated with maintaining assets with the Eligible Securities
Depositories set forth on Schedule B hereto in accordance with
section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on
a continuing basis, and promptly notify the Fund (or its duly-


                               14



<PAGE>

authorized investment manager or investment adviser) of any
material change in such risks, in accordance with section
(a)(1)(i)(B) of Rule 17f-7.  The risk analysis provided by the
Custodian may include consideration of the following, as deemed
appropriate and relevant by the Custodian:  a depository's
expertise and market reputation, the quality of its services, its
financial strength (including the level of settlement guarantee
funds, collateral requirements, lines of credit, or insurance as
compared with participants' daily settlement obligations), any
insurance or indemnification arrangements, the extent and quality
of regulation and independent examination of the depository, its
standing in published ratings, its internal controls and other
procedures for safeguarding investments, and any related legal
protections.

         3.3.2  Standard of Care.  The Custodian agrees to
exercise reasonable care, prudence and diligence in performing
the duties set forth in Section 3.3.1.

4.       Duties of the Custodian with Respect to Fund Property
         Held Outside the United States.

         4.1  Definitions.  As used throughout this Agreement,
the capitalized terms set forth below shall have the indicated
meanings:

"Foreign Securities System" means an Eligible Securities
Depository listed on Schedule B hereto.

"Foreign Sub-Custodian" means a foreign banking institution
serving as an Eligible Foreign Custodian.

         4.2. Holding Securities.  The Custodian shall identify
on its books as belonging to the Fund the foreign securities held
by each Foreign Sub-Custodian or Foreign Securities System.  The
Custodian may hold foreign securities for all of its customers,
including the Fund, with any Foreign Sub-Custodian in an account
that is identified as belonging to the Custodian for the benefit
of its customers, provided however, that (i) the records of the
Custodian with respect to foreign securities of the Fund which
are maintained in such account shall identify those securities as
belonging to the Fund and (ii), to the extent permitted and
customary in the market in which the account is maintained, the
Custodian shall require that securities so held by the Foreign
Sub-Custodian be held separately from any assets of such Foreign
Sub-Custodian or of other customers of such Foreign Sub-
Custodian.

         4.3. Foreign Securities Systems.  Foreign securities
shall be maintained in a Foreign Securities System in a
designated country through arrangements implemented by the


                               15



<PAGE>

Custodian or a Foreign Sub-Custodian, as applicable, in such
country.

         4.4. Transactions in Foreign Custody Account.

         4.4.1.  Delivery of Foreign Assets.  The Custodian or a
Foreign Sub-Custodian shall release and deliver foreign
securities of the Fund held by the Custodian or such Foreign Sub-
Custodian, or in a Foreign Securities System account, only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in
the following cases:

         (i)    upon the sale of such foreign securities for the
                Fund in accordance with commercially reasonable
                market practice in the country where such foreign
                securities are held or traded, including, without
                limitation: (A) delivery against expectation of
                receiving later payment; or (B) in the case of a
                sale effected through a Foreign Securities
                System, in accordance with the rules governing
                the operation of the Foreign Securities System;

         (ii)   in connection with any repurchase agreement
                related to foreign securities;

         (iii)  to the depository agent in connection with tender
                or other similar offers for foreign securities of
                the Fund;

         (iv)   to the issuer thereof or its agent when such
                foreign securities are called, redeemed, retired
                or otherwise become payable;

         (v)    to the issuer thereof, or its agent, for transfer
                into the name of the Custodian (or the name of
                the respective Foreign Sub-Custodian or of any
                nominee of the Custodian or such Foreign Sub-
                Custodian) or for exchange for a different number
                of bonds, certificates or other evidence
                representing the same aggregate face amount or
                number of units;

         (vi)   to brokers, clearing banks or other clearing
                agents for examination or trade execution in
                accordance with market custom; provided that in
                any such case the Foreign Sub-Custodian shall
                have no responsibility or liability for any loss
                arising from the delivery of such securities
                prior to receiving payment for such securities



                               16



<PAGE>

                except as may arise from the Foreign Sub-
                Custodian's own negligence or willful misconduct;

         (vii)  for exchange or conversion pursuant to any plan
                of merger, consolidation, recapitalization,
                reorganization or readjustment of the securities
                of the issuer of such securities, or pursuant to
                provisions for conversion contained in such
                securities, or pursuant to any deposit agreement;

         (viii) in the case of warrants, rights or similar
                foreign securities, the surrender thereof in the
                exercise of such warrants, rights or similar
                securities or the surrender of interim receipts
                or temporary securities for definitive
                securities;

         (ix)   for delivery as security in connection with any
                borrowing by the Fund requiring a pledge of
                assets by the Fund;

         (x)    in connection with trading in options and futures
                contracts, including delivery as original margin
                and variation margin;

         (xi)   in connection with the lending of foreign
                securities; and

         (xii)  for any other purpose, but only upon receipt of
                Proper Instructions specifying the foreign
                securities to be delivered and naming the person
                or persons to whom delivery of such securities
                shall be made.

         4.4.2.  Payment of Fund Monies.  Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall pay out, or
direct the respective Foreign Sub-Custodian or the respective
Foreign Securities System to pay out, monies of the Fund in the
following cases only:

         (i)    upon the purchase of foreign securities for the
                Fund, unless otherwise directed by Proper
                Instructions, by (A) delivering money to the
                seller thereof or to a dealer therefor (or an
                agent for such seller or dealer) against
                expectation of receiving later delivery of such
                foreign securities; or (B) in the case of a
                purchase effected through a Foreign Securities
                System, in accordance with the rules governing
                the operation of such Foreign Securities System;


                               17



<PAGE>

         (ii)   in connection with the conversion, exchange or
                surrender of foreign securities of the Fund;

         (iii)  for the payment of any expense or liability of
                the Fund, including but not limited to the
                following payments:  interest, taxes, investment
                advisory fees, transfer agency fees, fees under
                this Agreement, legal fees, accounting fees, and
                other operating expenses;

         (iv)   for the purchase or sale of foreign exchange or
                foreign exchange contracts for the Fund,
                including transactions executed with or through
                the Custodian or its Foreign Sub-Custodians;

         (v)    in connection with trading in options and futures
                contracts, including delivery as original margin
                and variation margin;

         (vi)   for payment of part or all of the dividends
                received in respect of securities sold short;

         (vii)  in connection with the borrowing or lending of
                foreign securities; and

         (viii) for any other purpose, but only upon receipt of
                Proper Instructions specifying the amount of such
                payment setting forth the purpose of such
                payment, declaring such purpose to be a proper
                corporate purpose, and naming the person or
                persons to whom such payment is to be made.

         4.4.3.  Market Conditions.  Notwithstanding any
provision of this Agreement to the contrary, settlement and
payment for Foreign Assets received for the account of the Fund
and delivery of Foreign Assets maintained for the account of the
Fund may be effected in accordance with the customary established
securities trading or processing practices and procedures in the
country or market in which the transaction occurs that have been
generally accepted by Institutional Clients, including, without
limitation, delivering Foreign Assets to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer)
with the expectation of receiving later payment for such Foreign
Assets from such purchaser or dealer.  For purposes of this
Agreement, the term "Institutional Clients" means U.S. registered
investment companies or major U.S. commercial banks, insurance
companies, pension funds or substantially similar institutions
which as part of their ordinary business operations purchase or
sell securities and make use of global custody services.




                               18



<PAGE>

The Custodian shall provide to the Board the information with
respect to custody and settlement practices in countries in which
the Custodian employs a Foreign Sub-Custodian described on
Schedule C hereto at the time or times set forth on such
Schedule. The Custodian may revise Schedule C from time to time,
provided that no such revision shall result in the Board being
provided with substantively less information than had been
previously provided hereunder.

         4.5. Registration of Foreign Securities.  The foreign
securities maintained in the custody of a Foreign Sub-Custodian
(other than bearer securities) shall be registered in the name of
the Fund or in the name of the Custodian or in the name of any
Foreign Sub-Custodian or in the name of any nominee of the
foregoing, and the Fund on agrees to hold any such nominee
harmless from any liability as a holder of record of such foreign
securities except to the extent the Fund incurs loss or damage
due to the failure of such nominee to meet its standard of care
set forth in the relevant contract.  The Custodian or a Foreign
Sub-Custodian shall not be obligated to accept securities on
behalf of the Fund under the terms of this Agreement unless the
form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.

         4.6  Bank Accounts.  The Custodian shall identify on its
books as belonging to the Fund cash (including cash denominated
in foreign currencies) deposited with the Custodian.  Where the
Custodian is unable to maintain, or market practice does not
facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts shall be opened and
maintained outside the United States on behalf of the Fund with a
Foreign Sub-Custodian.  All accounts referred to in this Section
shall be subject only to draft or order by the Custodian (or, if
applicable, such Foreign Sub-Custodian) acting pursuant to the
terms of this Agreement to hold cash received by or from or for
the account of the Fund.  Cash maintained on the books of the
Custodian (including its branches, subsidiaries and affiliates),
regardless of currency denomination, is maintained in bank
accounts established under, and subject to the laws of, The
Commonwealth of Massachusetts.

         4.7. Collection of income.  The Custodian shall use
reasonable commercial efforts to collect all income and other
payments with respect to the Foreign Assets held hereunder to
which the Fund shall be entitled and shall credit such income, as
collected, to the Fund.  In the event that extraordinary measures
are required to collect such income, the Fund and the Custodian
shall consult as to such measures and as to the compensation and
expenses of the Custodian relating to such measures.




                               19



<PAGE>

         4.8  Shareholder Rights.  With respect to the foreign
securities held pursuant to this Article 4, the Custodian will
use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder rights, subject always to the laws,
regulations and practical constraints that may exist in the
country where such securities are issued.  The Fund acknowledges
that local conditions, including lack of regulation, onerous
procedural obligations, lack of notice and other factors may have
the effect of severely limiting the ability of the Fund to
exercise shareholder rights.

         4.9. Communications Relating to Foreign Securities.  The
Custodian shall transmit promptly to the Fund written information
with respect to materials received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of the Fund (including, without
limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith).
With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund written information with respect to
materials so received by the Custodian from issuers of the
foreign securities whose tender or exchange is sought or from the
party (or its agents) making the tender or exchange offer.
Subject to the standard of care to which the Custodian is held
hereunder, the Custodian shall not be liable for any untimely
exercise of any tender, exchange or other right or power in
connection with foreign securities or other property of the Fund
at any time held by it unless (i) the Custodian or the respective
Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or
power, and both (i) and (ii) occur at least three business days
prior to the date on which the Custodian is to take action to
exercise such right or power.

         4.10.  Liability of Foreign Sub-Custodians.  Each
agreement pursuant to which the Custodian employs a Foreign Sub-
Custodian shall, to the extent possible, require the Foreign Sub-
Custodian to exercise reasonable care in the performance of its
duties, and to indemnify, and hold harmless, the Custodian from
and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Foreign Sub-Custodian's
performance of such obligations.  At the Fund's election, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claims against a Foreign Sub-Custodian as a
consequence of any such loss, damage, cost, expense, liability or
claim if and to the extent that the Fund has not been made whole
for any such loss, damage, cost, expense, liability or claim.

         4.11  Tax Law.   Except to the extent that imposition of
any tax liability arises from the Custodian's failure to perform


                               20



<PAGE>

in accordance with the terms of this section 4.11, the Custodian
shall have no responsibility or liability for any obligations now
or hereafter imposed on the Fund, or the Custodian as custodian
of the Fund, by the tax law of the United States or of any state
or political subdivision thereof.  It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on
the Fund or the Custodian as custodian of the Fund, by the tax
law of countries other than the United States, including
responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental
reporting.  The sole responsibility of the Custodian with regard
to such tax law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund under the
tax law of countries for which the Fund has provided such
information.

         4.12.  Liability of Custodian.  Except as may arise from
the Custodian's own negligence or willful misconduct, or the
negligence or willful misconduct of a Sub-Custodian, the
Custodian shall be without liability to the Fund for any loss,
liability, claim or expense resulting from or caused by anything
which is part of Country Risk.

The Custodian shall be liable for the acts or omissions of a
Foreign Sub-Custodian to the same extent as set forth with
respect to sub-custodians generally in the Agreement and,
regardless of whether assets are maintained in the custody of a
Foreign Sub-Custodian or a Foreign Securities System, the
Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism
or any loss where the sub-custodian has otherwise exercised
reasonable care.  Notwithstanding the foregoing provisions of
this paragraph 4.12, (i) in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation,
except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil
strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused
by political risk) due to Acts of God, nuclear incident or other
losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care; and (ii) the
delegation by State Street Bank and Trust Company to its
affiliate, State Street Trust Company Canada, of sub-custody
duties in Canada shall not relieve State Street Bank and Trust
Company of any responsibility for any loss due to the delegation
to State Street Trust Company Canada, except (a) such loss as may
result from political risk (e.g., exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil


                               21



<PAGE>

strife or armed hostilities) and (b) other losses (excluding
losses resulting from a bankruptcy or insolvency of State Street
Trust Company Canada not caused by political risk) under
circumstances where State Street Bank and Trust Company and State
Street Trust Company Canada have exercised reasonable care
(including, without limitation, Acts of God, nuclear incident and
the like).

         5.   Payments for Repurchases or Redemptions and Sales
of Shares

From such funds as may be available for the purpose, but subject
to the limitations of the Articles of Incorporation and By Laws
and any applicable votes of the Board of the Fund pursuant
thereto, the Custodian shall, upon receipt of instructions from
the Transfer Agent, make funds available for payment to holders
of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares.  In connection with the
redemption or repurchase of Shares of the Fun, the Custodian is
authorized upon receipt of instructions from the Transfer Agent
to wire funds to or through a commercial bank designated by the
redeeming shareholders.  In connection with the redemption or
repurchase of Shares, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been
furnished by the Fund to the holder of Shares, when presented to
the Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund and
the Custodian.

The Custodian shall receive from the distributor for the Fund's
Shares or from the Transfer Agent and deposit into the Fund's
account such payments as are received for Shares thereof issued
or sold from time to time by the Fund.  The Custodian will
provide timely notification to the Fund and the Transfer Agent of
any receipt by it of payments for Shares of the Fund.

6.       Proper Instructions

Proper Instructions as used herein means a writing signed or
initialed by one or more person or persons as the Board shall
have from time to time authorized.  Each such writing shall set
forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such
action is requested.  Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved.  The Fund shall cause all
oral instructions to be confirmed in writing.  Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the
instructions are consistent with the security procedures agreed


                               22



<PAGE>

to by the Fund and the Custodian including, but not limited to,
the security procedures selected by the Fund on the Funds
Transfer Addendum to this Agreement.  For purposes of this
Section, Proper Instructions shall include instructions received
by the Custodian pursuant to any three-party agreement which
requires a segregated asset account in accordance with Section
2.11.

7.       Actions Permitted without Express Authority

The Custodian may in its discretion, without express authority
from the Fund:

         1)   make payments to itself or others for minor
              expenses of handling securities or other similar
              items relating to its duties under this Agreement,
              provided that all such payments shall be accounted
              for to the Fund;

         2)   surrender securities in temporary form for
              securities in definitive form;

         3)   endorse for collection, in the name of the Fund,
              checks, drafts and other negotiable instruments;
              and

         4)   in general, attend to all non-discretionary details
              in connection with the sale, exchange,
              substitution, purchase, transfer and other dealings
              with the securities and property of the Fund except
              as otherwise directed by the Board.

8.       Evidence of Authority

The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly
executed by or on behalf of the Fund.  The Custodian may receive
and accept a certified copy of a vote of the Board of Directors
of the Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors of the
Fund pursuant to the Articles of Incorporation and By Laws as
described in such vote, and such vote may be considered as in
full force and effect until receipt by the Custodian of written
notice to the contrary.







                               23



<PAGE>

9.       Duties of Custodian with Respect to the Books of Account
         and Calculation of Net Asset Value and Net Income

The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board to
keep the books of account of the Fund and/or compute the net
asset value per Share of the outstanding Shares of the Fund or,
if directed in writing to do so by the Fund, shall itself keep
such books of account and/or compute such net asset value per
share.  If so directed, the Custodian shall also calculate daily
the net income of the Fund as described in the currently
effective prospectus and shall advise the Fund and the Transfer
Agent daily of the total amounts of such net income and, if
instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such
net income among its various components.  The calculations of the
net asset value per share and the daily income of the Fund shall
be made at the time or times described from time to time in the
currently effective Prospectus.

10.      Records

The Custodian shall create and maintain all records relating to
its activities and obligations under this Agreement in such
manner as will meet the obligations of the Fund under the 1940
Act, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder.  All such records shall be the
property of the Fund and shall at all times during the regular
business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and
employees and agents of the Securities Exchange Commission.  The
Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by the Fund and held by the
Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and
the Custodian, include certificate numbers in such tabulations.

11.      Opinion of Fund's Independent Accountant

The Custodian shall take all reasonable action, as the Fund may
from time to time request, to obtain from year to year favorable
opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other annual reports to
the Securities Exchange Commission and with respect to any other
requirements of such Commission.







                               24



<PAGE>

12.      Compensation of Custodian

The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon from time
to time between the Fund and the Custodian.

13.      Responsibility of Custodian

So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Agreement and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options
agreement.  The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement,
but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith
without negligence.  It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.

Except as may arise from the Custodian's own negligence or
willful misconduct or the negligence or willful misconduct of a
sub-custodian or agent, the Custodian shall be without liability
to the Fund for any loss, liability, claim or expense resulting
from or caused by; (i) events or circumstances beyond the
reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or
expropriation, imposition of currency controls or restrictions,
the interruption, suspension or restriction or trading on or the
closure of any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or
communications disruptions, acts of war or terrorism, riots,
revolutions, work stoppages, natural disasters or other similar
events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions
have been in accordance with this Agreement; (iii) the insolvency
of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or
other commercially prevalent payment or clearing system to
deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with
securities sold; (v) any delay or failure of any company,
corporation, or other body in charge of registering or
transferring securities in the name of the Custodian, the Fund,


                               25



<PAGE>

the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus,
dividends and rights and other accretions or benefits; (vi)
delays or inability to perform its duties due to any disorder in
market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or
future law or regulation or order of the United States of
America, or any state thereof, or any other country, or political
subdivision thereof or of any court of competent jurisdiction.

The Custodian shall be liable for the acts or omissions of a
Foreign Sub-Custodian to the same extent as set forth with
respect to sub-custodians generally in this Agreement.

If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund being liable
for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.

If the Fund requires the Custodian, its affiliates, subsidiaries
or agents, to advance cash or securities for any purpose
(including but not limited to securities settlements, foreign
exchange contracts and assumed settlement) or in the event that
the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as
may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at
any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available
cash and to dispose of the Fund's assets to the extent necessary
to obtain reimbursement.

In no event shall the Custodian be liable for indirect, special
or consequential damages.

14.      Effective Period, Termination and Amendment

This Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the
other party, such termination to take effect not sooner than
thirty (30) days after the date of such delivery or mailing;


                               26



<PAGE>

provided, however, that the Fund shall not amend or terminate
this Agreement in contravention of any applicable federal or
state regulations, or any provision of the Articles of
Incorporation and By Laws, and further provided, that the Fund
may at any time by action of its Board (i) substitute another
bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate
this Agreement in the event of the appointment of a conservator
or receiver for the Custodian by the Comptroller of the Currency
or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.

Upon termination of the Agreement, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.

15.      Successor Custodian

If a successor custodian for the Fund shall be appointed by the
Board, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed
and in the form for transfer, all securities of the Fund then
held by it hereunder and shall transfer to an account of the
successor custodian all of the securities of the Fund held in a
Securities System.

If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote
of the Board, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with
such vote.

In the event that no written order designating a successor
custodian or certified copy of a vote of the Board shall have
been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital,
surplus, and undivided  profits, as shown by its last published
report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian hereunder and all
instruments held by the Custodian relative thereto and all other
property held by it under this Agreement on behalf of the Fund,
and to transfer to an account of such successor custodian all of
the Fund's securities held in any Securities System.  Thereafter,
such bank or trust company shall be the successor of the
Custodian under this Agreement.




                               27



<PAGE>

In the event that securities, funds and other properties remain
in the possession of the Custodian after the date of termination
hereof owing to failure of the Fund to procure the certified copy
of the vote referred to or of the Board to appoint a successor
custodian, the Custodian shall be entitled to fair compensation
for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the
provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and
effect.

16.      Interpretive and Additional Provisions

In connection with the operation of this Agreement, the Custodian
and the Fund may from time to time agree on such provisions
interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the
general tenor of this Agreement.  Any such interpretive or
additional provisions shall be in a  writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Fund's Articles of Incorporation and By Laws.  No interpretive or
additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.

17.      Massachusetts Law to Apply

This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth
of Massachusetts.

18.      Prior Agreements

This Agreement supersedes and terminates, as of the date hereof,
all prior agreements between the Fund and the Custodian relating
to the custody of the Fund's assets.

19.      Reproduction of Documents

This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or
other similar process.  The parties hereto all/each agree that
any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding,
whether or not the original is in existence and whether or not
such reproduction was made by a party in the regular course of
business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in
evidence.


                               28



<PAGE>

20.      Remote Access Services Addendum

The Custodian and the Fund agree to be bound by the terms of the
Remote Access Services Addendum attached hereto.

21.      Shareholder Communications Election

Securities Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to  respond to
requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held
by the bank unless the beneficial owner has expressly objected to
disclosure of this information.  In order to comply with the
rule, the Custodian needs the Fund to indicate whether it
authorizes the Custodian to provide the Fund's name, address, and
share position to requesting companies whose securities the Fund
owns.  If the Fund tells the Custodian "no", the Custodian will
not provide this information to requesting companies.  If the
Fund tells the Custodian "yes" or does not check either "yes" or
"no" below, the Custodian is required by the rule to treat the
Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established
by the Fund.  For the Fund's protection, the Rule prohibits the
requesting company from using the Fund's name and address for any
purpose other than corporate communications.  Please indicate
below whether the Fund consents or objects by checking one of the
alternatives below.

         YES [ ]    The Custodian is authorized to release the
                    Fund's name, address, and share positions.

         NO  [X]    The Custodian is not authorized to release
                    the Fund's name, address, and share
                    positions.

          [Remainder of page intentionally left blank.]

















                               29



<PAGE>

         IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its  name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of January 15, 2002.

Alliance National Municipal
  Fund, Inc.                       Fund signature attested to By:


By:_________________________       By:___________________________

Name:_______________________       Name:_________________________

Title:______________________       Title: *[secretary/ass't secretary]
                                          ----------------------------


State Street Bank and Trust
  Company                          Signature attested to By:


By:_________________________       By:___________________________

Name: Joseph L. Hooley             Name: Raelene S. LaPlante
     ----------------------             -------------------------

Title: Executive Vice President    Title: V.P. and Senior Counsel
       ------------------------           ----------------------------

























                               30



<PAGE>

     REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT

         ADDENDUM to that certain Custodian Agreement dated as of
January 15, 2002 (the "Custodian Agreement") between Alliance
National Municipal Fund, Inc. (the "Customer") and State Street
Bank and Trust Company.

         State Street Bank and Trust Company, its subsidiaries
and affiliates (collectively, "State Street") has developed and
utilized proprietary accounting and other systems in conjunction
with the custodian services which State Street provides to the
Customer.  In this regard, State Street maintains certain
information in databases under its control and ownership which it
makes available to its customers (the "Remote Access Services").

The Services

State Street agrees to provide the Customer, and its designated
investment advisors, consultants or other third parties
authorized by State Street who agree to abide by the terms of
this Addendum ("Authorized Designees") with access to In~SightSM
as described in Exhibit A or such other systems as may be offered
from time to time (the "System") on a remote basis.

Security Procedures

The Customer agrees to comply, and to cause its Authorized
Designees to comply, with remote access operating standards and
procedures and with user identification or other password control
requirements and other security procedures as may be issued from
time to time by State Street for use of the System and access to
the Remote Access Services.  The Customer agrees to advise State
Street immediately in the event that it learns or has reason to
believe that any person to whom it has given access to the System
or the Remote Access Services has violated or intends to violate
the terms of this Addendum and the Customer will cooperate with
State Street in seeking injunctive or other equitable relief.
The Customer agrees to discontinue use of the System and Remote
Access Services, if requested, for any security reasons cited by
State Street.

Fees

Fees and charges for the use of the System and the Remote Access
Services and related payment terms shall be as set forth in the
custody fee schedule in effect from time to time between the
parties (the "Fee Schedule").  The Customer shall be responsible
for any tariffs, duties or taxes imposed or levied by any
government or governmental agency by reason of the transactions
contemplated by this Addendum, including, without limitation,
federal, state and local taxes, use, value added and personal


                               31



<PAGE>

property taxes (other than income, franchise or similar taxes
which may be imposed or assessed against State Street).  Any
claimed exemption from such tariffs, duties or taxes shall be
supported by proper documentary evidence delivered to State
Street.

Proprietary Information/Injunctive Relief

The System and Remote Access Services described herein and the
databases, computer programs, screen formats, report formats,
interactive design techniques, formulae, processes, systems,
software, know-how, algorithms, programs, training aids, printed
materials, methods, books, records, files, documentation and
other information made available to the Customer by State Street
as part of the Remote Access Services and through the use of the
System and all copyrights, patents, trade secrets and other
proprietary rights of State Street related thereto are the
exclusive, valuable and confidential property of State Street and
its relevant licensors (the "Proprietary Information").  The
Customer agrees on behalf of itself and its Authorized Designees
to keep the Proprietary Information confidential and to limit
access to its employees and Authorized Designees (under a similar
duty of confidentiality) who require access to the System for the
purposes intended.  The foregoing shall not apply to Proprietary
Information in the public domain or required by law to be made
public.

The Customer agrees to use the Remote Access Services only in
connection with the proper purposes of this Addendum.  The
Customer will not, and will cause its employees and Authorized
Designees not to, (i) permit any third party to use the System or
the Remote Access Services, (ii) sell, rent, license or otherwise
use the System or the Remote Access Services in the operation of
a service bureau or for any purpose other than as expressly
authorized under this Addendum, (iii) use the System or the
Remote Access Services for any fund, trust or other investment
vehicle without the prior written consent of State Street, or
(iv) allow or cause any information transmitted from State
Street's databases, including data from third party sources,
available through use of the System or the Remote Access
Services, to be redistributed or retransmitted for other than use
for or on behalf of the Customer, as State Street's customer.

The Customer agrees that neither it nor its Authorized Designees
will modify the System in any way, enhance or otherwise create
derivative works based upon the System, nor will the Customer or
its Authorized Designees reverse engineer, decompile or otherwise
attempt to secure the source code for all or any part of the
System.




                               32



<PAGE>

The Customer acknowledges that the disclosure of any Proprietary
Information, or of any information which at law or equity ought
to remain confidential, will immediately give rise to continuing
irreparable injury to State Street inadequately compensable in
damages at law and that State Street shall be entitled to obtain
immediate injunctive relief against the breach or threatened
breach of any of the foregoing undertakings, in addition to any
other legal remedies which may be available.

Limited Warranties

State Street represents and warrants that it is the owner of and
has the right to grant access to the System and to provide the
Remote Access Services contemplated herein.  Because of the
nature of computer information technology and the necessity of
relying upon third party sources, and data and pricing
information obtained from third parties, the System and Remote
Access Services are provided "AS IS", and the Customer and its
Authorized Designees shall be solely responsible for the
investment decisions, regulatory reports and statements produced
using the Remote Access Services.  State Street and its relevant
licensors will not be liable to the Customer or its Authorized
Designees for any direct or indirect, special, incidental,
punitive or consequential damages arising out of or in any way
connected with the System or the Remote Access Services, nor
shall either party be responsible for delays or nonperformance
under this Addendum arising out of any cause or event beyond such
party's control.

State Street will take reasonable steps to ensure that its
products (and those of its third-party suppliers) reflect the
available state of the art technology to offer products that are
Year 2000 compliant, including, but not limited to, century
recognition of dates, calculations that correctly compute same
century and multi century formulas and date values, and interface
values that reflect the date issues arising between now and the
next one-hundred years, and if any changes are required, State
Street will make the changes to its products at no cost to you
and in a commercially reasonable time frame and will require
third-party suppliers to do likewise.  The Customer will do
likewise for its systems.

EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET FOR
ITSELF AND ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED
HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A
PARTICULAR PURPOSE.





                               33



<PAGE>

Infringement

State Street will defend or, at our option, settle any claim or
action brought against the Customer to the extent that it is
based upon an assertion that access to the System or use of the
Remote Access Services by the Customer under this Addendum
constitutes direct infringement of any United States patent or
copyright or misappropriation of a trade secret, provided that
the Customer notifies State Street promptly in writing of any
such claim or proceeding and cooperates with State Street in the
defense of such claim or proceeding.  Should the System or the
Remote Access Services or any part thereof become, or in State
Street's opinion be likely to become, the subject of a claim of
infringement or the like under the patent or copyright or trade
secret laws of the United States, State Street shall have the
right, at State Street's sole option, to (i) procure for the
Customer the right to continue using the System or the Remote
Access Services, (ii) replace or modify the System or the Remote
Access Services so that the System or the Remote Access Services
becomes noninfringing, or (iii) terminate this Addendum without
further obligation.

Termination

Either party to the Custodian Agreement may terminate this
Addendum (i) for any reason by giving the other party at least
one-hundred and eighty (180) days' prior written notice in the
case of notice of termination by State Street to the Customer or
thirty (30) days' notice in the case of notice from the Customer
to State Street of termination, or (ii) immediately for failure
of the other party to comply with any material term and condition
of the Addendum by giving the other party written notice of
termination.  This Addendum shall in any event terminate within
ninety (90) days after the termination of the Custodian
Agreement.  In the event of termination, the Customer will return
to State Street all copies of documentation and other
confidential information in its possession or in the possession
of its Authorized Designees.  The foregoing provisions with
respect to confidentiality and infringement will survive
termination for a period of three (3) years.

Miscellaneous

This Addendum and the exhibit hereto constitutes the entire
understanding of the parties to the Custodian Agreement with
respect to access to the System and the Remote Access Services.
This Addendum cannot be modified or altered except in a writing
duly executed by each of State Street and the Customer and shall
be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts.



                               34



<PAGE>

By its execution of the Custodian Agreement, the Customer, for
itself and its Authorized Designees, accepts the terms of this
Addendum


















































                               35



<PAGE>

                            EXHIBIT A
                               to
     REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT


                          IN~SIGHT`sm'
                   System Product Description

In~Sight`sm' provides information delivery and on-line access to
State Street.  In~Sight`sm' allows users a single point of entry
into the many views of data created by the diverse systems and
applications.  Reports and data from systems such as Investment
Policy Monitor`sm', Multicurrency Horizon`sm', Securities
Lending, Performance & Analytics can be accessed through
In~Sight`sm'.  This Internet-enabled application is designed to
run from a Web browser and perform across low-speed data line or
corporate high-speed backbones. In~Sight`sm' also offers users a
flexible toolset, including an ad-hoc query function, a custom
graphics package, a report designer, and a scheduling capability.
Data and reports offered through In~Sight`sm' will continue to
increase in direct proportion with the customer roll out, as it
is viewed as the information delivery system will grow with State
Street's customers.






























                               36



<PAGE>

                     FUNDS TRANSFER ADDENDUM

OPERATING GUIDELINES

1.       OBLIGATION OF THE SENDER: State Street is authorized to
promptly debit Client's account(s) upon the receipt of a payment
order in compliance with the selected Security Procedure chosen
for funds transfer and in the amount of money that State Street
has been instructed to transfer.  State Street shall execute
payment orders in compliance with the Security Procedure and with
the Client's instructions on the execution date provided that
such payment order is received by the customary deadline for
processing such a request, unless the payment order specifies a
later time.  All payment orders and communications received after
this time will be deemed to have been received on the next
business day.

2.       SECURITY PROCEDURE: The Client acknowledges that the
Security Procedure it has designated on the Selection Form was
selected by the Client from Security Procedures offered by State
Street.  The Client agrees that the Security Procedures are
reasonable and adequate for its wire transfer transactions and
agrees to be bound by any payment orders, amendments and
cancellations, whether or not authorized, issued in its name and
accepted by State Street after being confirmed by any of the
selected Security Procedures.  The Client also agrees to be bound
by any other valid and authorized payment order accepted by State
Street.  The Client shall restrict access to confidential
information relating to the Security Procedure to authorized
persons as communicated in writing to State Street.  The Client
must notify State Street immediately if it has reason to believe
unauthorized persons may have obtained access to such information
or of any change in the Client's authorized personnel.  State
Street shall verify the authenticity of all instructions
according to the Security Procedure.

3.       ACCOUNT NUMBERS: State Street shall process all payment
orders on the basis of the account number contained in the
payment order.  In the event of a discrepancy between any name
indicated on the payment order and the account number, the
account number shall take precedence and govern. Financial
institutions that receive payment orders initiated by State
Street at the instruction of the Client may also process payment
orders on the basis of account numbers, regardless of any name
included in the payment order.  State Street will also rely on
any financial institution identification numbers included in any
payment order, regardless of any financial institution name
included in the payment order.

4.       REJECTION: State Street reserves the right to decline to
process or delay the processing of a payment order which (a) is


                               37



<PAGE>

in excess of the collected balance in the account to be charged
at the time of State Street's receipt of such payment order; (b)
if initiating such payment order would cause State Street, in
State Street's sole judgment, to exceed any volume, aggregate
dollar, network, time, credit or similar limits upon wire
transfers which are applicable to State Street; or (c) if State
Street, in good faith, is unable to satisfy itself that the
transaction has been properly authorized.

5.       CANCELLATION OR AMENDMENT: State Street shall use
reasonable efforts to act on all authorized requests to cancel or
amend payment orders received in compliance with the Security
Procedure provided that such requests are received in a timely
manner affording State Street reasonable opportunity to act.
However, State Street assumes no liability if the request for
amendment or cancellation cannot be satisfied.

6.       ERRORS: State Street shall assume no responsibility for
failure to detect any erroneous payment order provided that State
Street complies with the payment order instructions as received
and State Street complies with the Security Procedure.  The
Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of
errors in payment orders.

7.       INTEREST AND LIABILITY LIMITS: State Street shall assume
no responsibility for lost interest with respect to the
refundable amount of any unauthorized payment order, unless State
Street is notified of the unauthorized payment order within
thirty (30) days of notification by State Street of the
acceptance of such payment order.  In no event shall State Street
be liable for special, indirect or consequential damages, even if
advised of the possibility of such damages and even for failure
to execute a payment order.

8.       AUTOMATED CLEARING HOUSE ("ACH") CREDIT
ENTRIES/PROVISIONAL PAYMENTS: When a Client initiates or receives
ACH credit and debit entries pursuant to these Guidelines and the
rules of the National Automated Clearing House Association and
the New England Clearing House Association, State Street will act
as an Originating Depository Financial Institution and/or
Receiving Depository Institution, as the case may be, with
respect to such entries.  Credits given by State Street with
respect to an ACH credit entry are provisional until State Street
receives final settlement for such entry from the Federal Reserve
Bank.  If State Street does not receive such final settlement,
the Client agrees that State Street shall receive a refund of the
amount credited to the Client in connection with such entry, and
the party making payment to the Client via such entry shall not
be deemed to have paid the amount of the entry.



                               38



<PAGE>

9.       CONFIRMATION STATEMENTS: Confirmation of State Street's
execution of payment orders shall ordinarily be provided within
24 hours. Notice may be delivered through State Street's
proprietary information systems, such as, but not limited to
Horizon and GlobalQuest`r' account statements, advices, or by
facsimile or callback. The Client must report any objections to
the execution of a payment order within 30 days.

10.      LIABILITY ON FOREIGN ACCOUNTS:  State Street shall not
be required to repay any deposit made at a non-U.S. branch of
State Street, or any deposit made with State Street and
denominated in a non-U.S. dollar currency, if repayment of such
deposit or the use of assets denominated in the non-U.S. dollar
currency is prevented, prohibited or otherwise blocked due to:
(a) an act of war, insurrection or civil strife; (b)  any action
by a non-U.S. government or instrumentality or authority
asserting governmental, military or police power of any kind,
whether such authority be recognized as a defacto or a dejure
government, or by any entity, political or revolutionary movement
or otherwise that usurps, supervenes or otherwise materially
impairs the normal operation of civil authority; or(c)  the
closure of a non-U.S. branch of State Street in order to prevent,
in the reasonable judgment of State Street, harm to the employees
or property of State Street.  The obligation to repay any such
deposit shall not be transferred to and may not be enforced
against any other branch of State Street.

The foregoing provisions constitute the disclosure required by
Massachusetts General Laws, Chapter 167D, Section 36.

While State Street is not obligated to repay any deposit made at
a non-U.S. branch or any deposit denominated in a non-U.S.
currency during the period in which its repayment has been
prevented, prohibited or otherwise blocked, State Street will
repay such deposit when and if all circumstances preventing,
prohibiting or otherwise blocking repayment cease to exist.

11.      MISCELLANEOUS:  State Street and the Client agree to
cooperate to attempt to recover any funds erroneously paid to the
wrong party or parties, regardless of any fault of State Street
or the Client, but the party responsible for the erroneous
payment shall bear all costs and expenses incurred in trying to
effect such recovery.  These Guidelines may not be amended except
by a written agreement signed by the parties.









                               39



<PAGE>

Security Procedure(s) Selection Form

Please select one or more of the funds transfer security
procedures indicated below.

[  ]SWIFT
SWIFT (Society for Worldwide Interbank Financial
Telecommunication) is a cooperative society owned and operated by
member financial institutions that provides telecommunication
services for its membership. Participation is limited to
securities brokers and dealers, clearing and depository
institutions, recognized exchanges for securities, and investment
management institutions. SWIFT provides a number of security
features through encryption and authentication to protect against
unauthorized access, loss or wrong delivery of messages,
transmission errors, loss of confidentiality and fraudulent
changes to messages.  SWIFT is considered to be one of the most
secure and efficient networks for the delivery of funds transfer
instructions.
Selection of this security procedure would be most appropriate
for existing SWIFT members.

[  ]Standing Instructions
Standing Instructions may be used where funds are transferred to
a broker on the Client's established list of brokers with  which
it engages in foreign exchange transactions. Only the date, the
currency and the currency amount are variable. In order to
establish this procedure, State Street will send to the Client a
list of the brokers that State Street has determined are used by
the Client.  The Client will confirm the list in writing, and
State Street will verify the written confirmation by telephone.
Standing Instructions will be subject to a mutually agreed upon
limit. If the payment order exceeds the established limit, the
Standing Instruction will be confirmed by telephone prior to
execution.

[  ]Remote Batch Transmission
Wire transfer instructions are delivered via Computer-to-Computer
(CPU-CPU) data communications between the Client and State
Street. Security procedures include encryption and or the use of
a test key by those individuals authorized as Automated Batch
Verifiers.
Clients selecting this option should have an existing facility
for completing CPU-CPU transmissions. This delivery mechanism is
typically used for high-volume business.

[  ]Global Horizon Interchange`sm' Funds Transfer Service
Global Horizon Interchange Funds Transfer Service (FTS) is a
State Street proprietary microcomputer-based wire initiation
system. FTS enables Clients to electronically transmit



                               40



<PAGE>

authenticated Fedwire, CHIPS or internal book transfer
instructions to State Street.
This delivery mechanism is most appropriate for Clients with a
low-to-medium number of transactions (5-75 per day), allowing
Clients to enter, batch, and review wire transfer instructions on
their PC prior to release to State Street.

[  ]Telephone Confirmation (Callback)
Telephone confirmation will be used to verify all non-repetitive
funds transfer instructions received via untested facsimile or
phone.  This procedure requires Clients to designate individuals
as authorized initiators and authorized verifiers.  State Street
will verify that the instruction contains the signature of an
authorized person and prior to execution, will contact someone
other than the originator at the Client's location to
authenticate the instruction.
Selection of this alternative is appropriate for Clients who do
not have the capability to use other security procedures.

[  ]Repetitive Wires
For situations where funds are transferred periodically (minimum
of one instruction per calendar quarter) from an existing
authorized account to the same payee (destination bank and
account number) and only the date and currency amount are
variable, a repetitive wire may be implemented.  Repetitive wires
will be subject to a mutually agreed upon limit.  If the payment
order exceeds the established limit, the instruction will be
confirmed by telephone prior to execution.  Telephone
confirmation is used to establish this process. Repetitive wire
instructions must be reconfirmed annually.
This alternative is recommended whenever funds are frequently
transferred between the same two accounts.

[  ]Transfers Initiated by Facsimile
The Client faxes wire transfer instructions directly to State
Street Mutual Fund Services.  Standard security procedure
requires the use of a random number test key for all transfers.
Every six months the Client receives test key logs from State
Street.  The test key contains alpha-numeric characters, which
the Client puts on each document faxed to State Street.  This
procedure ensures all wire instructions received via fax are
authorized by the Client.
We provide this option for Clients who wish to batch wire
instructions and transmit these as a group to State Street Mutual
Fund Services once or several times a day.

[  ]Automated Clearing House (ACH)
State Street receives an automated transmission or a magnetic
tape from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network.  The
transactions contained on each transmission or tape must be


                               41



<PAGE>

authenticated by the Client. Clients using ACH must select one or
more of the following delivery options:

[  ]Global Horizon Interchange Automated Clearing House Service
Transactions are created on a microcomputer, assembled into
batches and delivered to State Street via fully authenticated
electronic transmissions in standard NACHA formats.

[  ]Transmission from Client PC to State Street Mainframe with
Telephone Callback

[  ]Transmission from Client Mainframe to State Street Mainframe
with Telephone Callback

[  ]Transmission from DST Systems to State Street Mainframe with
Encryption

[  ]Magnetic Tape Delivered to State Street with Telephone
Callback


State Street is hereby instructed to accept funds transfer
instructions only via the delivery methods and security
procedures indicated. The selected delivery methods and security
procedure(s) will be effective ______________________ for payment
orders initiated by our organization.

Key Contact Information

Whom shall we contact to implement your selection(s)?

CLIENT OPERATIONS CONTACT              ALTERNATE CONTACT

_____________________________       __________________________
        Name                               Name

_____________________________       __________________________
        Address                            Address

_____________________________       __________________________
        City/State/Zip Code                City/State/Zip Code

_____________________________       __________________________
        Telephone Number                   Telephone Number

_____________________________       __________________________
        Facsimile Number                   Facsimile Number

_____________________________
        SWIFT Number



                               42



<PAGE>

_____________________________
        Telex Number



















































                               43



<PAGE>

INSTRUCTION(S)

TELEPHONE CONFIRMATION

Fund    Alliance National Municipal Fund, Inc.
        _______________________________________

Investment Adviser  ___________________________________

Authorized Initiators
        Please Type or Print

Please provide a listing of Fund officers or other individuals
who are currently authorized to INITIATE wire transfer
instructions to State Street:

NAME                      TITLE (Specify whether           SPECIMEN SIGNATURE
                          position is with Fund
                          or Investment Adviser)

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________


Authorized Verifiers
   Please Type or Print

Please provide a listing of Fund officers or other individuals who will be
CALLED BACK to verify the initiation of repetitive wires of $10 million or
more and all non-repetitive wire instructions:

NAME                      CALLBACK PHONE NUMBER            DOLLAR LIMITATION
                                                           (IF ANY)

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________

_____________________     __________________________       ___________________



                               44



<PAGE>

                                                           SCHEDULE A
                          STATE STREET
                     GLOBAL CUSTODY NETWORK
                         SUBCUSTODIANS


Country                 Subcustodian


Argentina               Citibank, N.A.

Australia               Westpac Banking Corporation

Austria                 Erste Bank der Osterreichischen
                        Sparkassen AG

Bahrain                 HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Bangladesh              Standard Chartered Bank

Belgium                 Fortis Bank nv-sa

Benin                   via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Bermuda                 The Bank of Bermuda Limited

Bolivia                 Citibank, N. A.

Botswana                Barclays Bank of Botswana Limited

Brazil                  Citibank, N.A.

Bulgaria                ING Bank N.V.

Burkina Faso            via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Canada                  State Street Trust Company Canada

Chile                   BankBoston, N.A.

People's Republic       Hongkong and Shanghai Banking Corporation
  of China              Limited, Shanghai and Shenzhen branches

Colombia                Cititrust Colombia S.A. Sociedad
                        Fiduciaria

Costa Rica              Banco BCT S.A.


                               45



<PAGE>

Croatia                 Privredna Banka Zagreb d.d

Cyprus                  The Cyprus Popular Bank Ltd.

Czech Republic          Ceskoslovenska Obchodni Banka, A.S.

Denmark                 Danske Bank A/S

Ecuador                 Citibank, N.A.

Egypt                   HSBC Bank Egypt S.A.E.
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Estonia                 Hansabank

Finland                 Nordea Bank Finland Plc.

France                  BNP Paribas Securities Services, S.A.

Germany                 Dresdner Bank AG

Ghana                   Barclays Bank of Ghana Limited

Greece                  National Bank of Greece S.A.

Guinea-Bissau           via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Hong Kong               Standard Chartered Bank

Hungary                 HVB Bank Hungary Rt.

Iceland                 Icebank Ltd.

India                   Deutsche Bank AG

                        Hongkong and Shanghai Banking Corporation
                        Limited

Indonesia               Standard Chartered Bank

Ireland                 Bank of Ireland

Israel                  Bank Hapoalim B.M.

Italy                   BNP Paribas Securities Services, S.A.

Ivory Coast             Societe Generale de Banques en Cote
                        d'Ivoire



                               46



<PAGE>

Jamaica                 Scotiabank Jamaica Trust and Merchant
                        Bank Ltd.

Japan                   The Fuji Bank, Limited

                        Sumitomo Mitsui Banking Corporation

Jordan                  HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Kazakhstan              HSBC Bank Kazakhstan
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Kenya                   Barclays Bank of Kenya Limited

Republic of Korea       Hongkong and Shanghai Banking Corporation
                        Limited

Latvia                  A/s Hansabanka

Lebanon                 HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Lithuania               Vilniaus Bankas AB

Malaysia                Standard Chartered Bank Malaysia Berhad

Mali                    via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Mauritius               Hongkong and Shanghai Banking Corporation
                        Limited

Mexico                  Banco Nacional de Mexico S.A.

Morocco                 Banque Commerciale du Maroc

Namibia                 Standard Bank Namibia Limited

Netherlands             Fortis Bank (Nederland) N.V.

New Zealand             Westpac Banking Corporation

Niger                   via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Nigeria                 Stanbic Merchant Bank Nigeria Limited



                               47



<PAGE>

Norway                  Nordea Bank Norge ASA

Oman                    HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Pakistan                Deutsche Bank AG

Palestine               HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Panama                  BankBoston, N.A.

Peru                    Citibank, N.A.

Philippines             Standard Chartered Bank

Poland                  Bank Handlowy w Warszawie S.A.

Portugal                Banco Comercial Portugues

Qatar                   HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

Romania                 ING Bank N.V.

Russia                  Credit Suisse First Boston AO - Moscow
                        (as delegate of Credit Suisse First
                        Boston - Zurich)

Senegal                 via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Singapore               The Development Bank of Singapore Limited

Slovak Republic         Ceskoslovenska Obchodni Banka, A.S.

Slovenia                Bank Austria Creditanstalt d.d. -
                        Ljubljana

South Africa            Standard Bank of South Africa Limited

Spain                   Banco Santander Central Hispano S.A.

Sri Lanka               Hongkong and Shanghai Banking Corporation
                        Limited

Swaziland               Standard Bank Swaziland Limited



                               48



<PAGE>

Sweden                  Skandinaviska Enskilda Banken

Switzerland             UBS AG

Taiwan - R.O.C.         Central Trust of China

Thailand                Standard Chartered Bank

Togo                    via Societe Generale de Banques en Cote
                        d'Ivoire, Abidjan, Ivory Coast

Trinidad & Tobago       Republic Bank Limited

Tunisia                 Banque Internationale Arabe de Tunisie

Turkey                  Citibank, N.A.

Ukraine                 ING Bank Ukraine

United Arab Emirates    HSBC Bank Middle East
                        (as delegate of the Hongkong and Shanghai
                        Banking Corporation Limited)

United Kingdom          State Street Bank and Trust Company,
                        London Branch

Uruguay                 BankBoston, N.A.

Venezuela               Citibank, N.A.

Vietnam                 The Hongkong and Shanghai
                        Banking Corporation Limited

Zambia                  Barclays Bank of Zambia Limited

Zimbabwe                Barclays Bank of Zimbabwe Limited

















                               49



<PAGE>

                                                       SCHEDULE B

                          STATE STREET
                         GLOBAL CUSTODY
                             NETWORK
            DEPOSITORIES OPERATING IN NETWORK MARKETS

Country                 Depositories


Argentina               Caja de Valores S.A.

Australia               Austraclear Limited

                        Reserve Bank Information and Transfer
                        System

Austria                 Oesterreichische Kontrollbank AG
                        (Wertpapiersammelbank Division)

Belgium                 Caisse Interprofessionnelle de Depots et
                        de Virements de Titres, S.A.

                        Banque Nationale de Belgique

Benin                   Depositaire Central  Banque de Reglement

Brazil                  Companhia Brasileira de Liquidacao e
                        Custodia

                        Sistema Especial de Liquidacao e de
                        Custodia (SELIC)

                        Central de Custodia e de Liquidacao
                        Financeira de Titulos Privados (CETIP)

Bulgaria                Central Depository AD

                        Bulgarian National Bank

Burkina Faso            Depositaire Central  Banque de Reglement

Canada                  Canadian Depository for Securities
                        Limited

Chile                   Deposito Central de Valores S.A.

Peoples Republic        China Securities Depository and Clearing
  of China              Corporation Limited Shanghai Branch




                               50



<PAGE>

                        China Securities Depository and Clearing
                        Corporation Limited Shenzhen Branch

Colombia                Deposito Centralizado de Valores

Costa Rica              Central de Valores S.A.

Croatia                 Ministry of Finance

                        National Bank of Croatia

                        Sredinja Depozitarna Agencija d.d.

Czech Republic          Stredisko cennch papiru  Ceska republika

                        Czech National Bank

Denmark                 Verdipapircentralen (Danish Securities
                        Center)

Egypt                   Misr for Clearing, Settlement, and
                        Depository S.A.E.

Estonia                 Eesti Vaartpaberite Keskdepositoorium

Finland                 Finnish Central Securities Depository

France                  Euroclear France

Germany                 Clearstream Banking AG, Frankfurt

Greece                  Bank of Greece,
                        System for Monitoring Transactions in
                        Securities in Book-Entry Form

                        Apothetirion Titlon AE - Central
                        Securities Depository

Guinea-Bissau           Depositaire Central  Banque de Reglement

Hong Kong               Hong Kong Securities Clearing Company
                        Limited

                        Central Moneymarkets Unit

Hungary                 Kozponti Elszamolohaz es Ertektar
                        (Budapest) Rt. (KELER)

Iceland                 Iceland Securities Depository Limited

India                   National Securities Depository Limited


                               51



<PAGE>

                        Central Depository Services India Limited

                        Reserve Bank of India

Indonesia               Bank Indonesia

                        PT Kustodian Sentral Efek Indonesia

Israel                  Tel Aviv Stock Exchange Clearing House
                        Ltd. (TASE Clearinghouse)

Italy                   Monte Titoli S.p.A.

Ivory Coast             Depositaire Central  Banque de Reglement

Jamaica                 Jamaica Central Securities Depository

Japan                   Japan Securities Depository Center
                        (JASDEC)

                        Bank of Japan

Kazakhstan              Central Depository of Securities

Kenya                   Central Bank of Kenya

Republic of Korea       Korea Securities Depository

Latvia                  Latvian Central Depository

Lebanon                 Custodian and Clearing Center of
                        Financial Instruments for Lebanon and the
                        Middle East (Midclear) S.A.L.

                        Banque du Liban

Lithuania               Central Securities Depository of
                        Lithuania

Malaysia                Malaysian Central Depository Sdn. Bhd.

                        Bank Negara Malaysia

Mali                    Depositaire Central  Banque de Reglement

Mauritius               Central Depository and Settlement Co.
                        Ltd.

                        Bank of Mauritius

Mexico                  S.D. Indeval, S.A. de C.V.


                               52



<PAGE>

Morocco                 Maroclear

Netherlands             Nederlands Centraal Instituut voor
                        Giraal Effectenverkeer B.V. (NECIGEF)

New Zealand             New Zealand Central Securities Depository
                        Limited

Niger                   Depositaire Central  Banque de Reglement

Nigeria                 Central Securities Clearing System
                        Limited

Norway                  Verdipapirsentralen (Norwegian Central
                        Securities Depository)

Oman                    Muscat Depository & Securities
                        Registration Company, SAOC

Pakistan                Central Depository Company of Pakistan
                        Limited

                        State Bank of Pakistan

Palestine               Clearing Depository and Settlement, a
                        department of the Palestine Stock
                        Exchange

Peru                    Caja de Valores y Liquidaciones,
                        Institucion de
                        Compensacion y Liquidacion de Valores S.A

Philippines             Philippine Central Depository, Inc.

                        Registry of Scripless Securities (ROSS)
                        of the Bureau of Treasury

Poland                  National Depository of Securities
                        (Krajowy Depozyt Papierow Wartosciowych
                        SA)

                        Central Treasury Bills Registrar

Portugal                INTERBOLSA  Sociedade Gestora de Sistemas
                        de Liquidacao e de
                        Sistemas Centralizados de Valores
                        Mobiliarios, S.A.

Qatar                   Central Clearing and Registration (CCR),
                        a department of the Doha Securities
                        Market


                               53



<PAGE>

Romania                 National Securities Clearing, Settlement
                        and Depository Company

                        Bucharest Stock Exchange Registry
                        Division

                        National Bank of Romania

Russia                  Vneshtorgbank, Bank for Foreign Trade of
                        the Russian Federation

Senegal                 Depositaire Central  Banque de Reglement

Singapore               Central Depository (Pte) Limited

                        Monetary Authority of Singapore

Slovak Republic         Stredisko cennch papierov SR, a.s.

                        National Bank of Slovakia

Slovenia                KDD-Centralna klirinsko depotna druzba
                        d.d.

South Africa            Central Depository Limited

                        Share Transactions Totally Electronic
                        (STRATE) Ltd.

Spain                   Servicio de Compensacion y Liquidacion de
                        Valores, S.A.

                        Banco de Espana, Central de Anotaciones
                        en Cuenta

Sri Lanka               Central Depository System (Pvt) Limited

Sweden                  Vardepapperscentralen  VPC AB
                        (Swedish Central Securities Depository)

Switzerland             SegaIntersettle AG (SIS)

Taiwan - R.O.C.         Taiwan Securities Central Depository Co.,
                        Ltd.

Thailand                Thailand Securities Depository Company
                        Limited

Togo                    Depositaire Central  Banque de Reglement




                               54



<PAGE>

Tunisia                 Societe Tunisienne Interprofessionelle
                        pour la Compensation et de Depots des
                        Valeurs Mobilieres

Turkey                  Takas ve Saklama Bankasi A.S. (TAKASBANK)

                        Central Bank of Turkey

Ukraine                 National Bank of Ukraine

                        Mizhregionalny Fondovy Souz

United Arab Emirates    Clearing and Depository System, a
                        department of theDubai Financial Market

Venezuela               Banco Central de Venezuela

Zambia                  LuSE Central Shares Depository Limited

                        Bank of Zambia


TRANSNATIONAL

Euroclear

Clearstream Banking AG


























                               55



<PAGE>

                           SCHEDULE C

                       MARKET INFORMATION

Publication/Type of Information     Brief Description
(scheduled frequency)

The Guide to Custody in
World Markets
(hardcopy annually and
regular website updates)           An overview of settlement and
                                   safekeeping procedures,
                                   custody practices and foreign
                                   investor considerations for
                                   the markets in which State
                                   Street offers custodial
                                   services.

Global Custody Network
Review (annually)                  Information relating to
                                   Foreign Sub-Custodians in
                                   State Street's  Global Custody
                                   Network.  The Review stands as
                                   an integral part of the
                                   materials that State Street
                                   provides to its U.S. mutual
                                   fund clients to assist them in
                                   complying with SEC Rule 17f-5.
                                   The Review also gives insight
                                   into State Street's market
                                   expansion and Foreign Sub-
                                   Custodian selection processes,
                                   as well as the procedures and
                                   controls used to monitor the
                                   financial condition and
                                   performance of our Foreign
                                   Sub-Custodian banks.

Securities Depository
Review (annually)                  Custody risk analyses of the
                                   Foreign Securities
                                   Depositories presently
                                   operating in Network markets.
                                   This publication is an
                                   integral part of the materials
                                   that State Street provides to
                                   its U.S. mutual fund clients
                                   to meet informational
                                   obligations created by SEC
                                   Rule 17f-7.



                               56



<PAGE>

Global Legal Survey
(annually)                         With respect to each market in
                                   which State Street offers
                                   custodial services, opinions
                                   relating to whether local law
                                   restricts (i) access of a
                                   fund's independent public
                                   accountants to books and
                                   records of a Foreign Sub-
                                   Custodian or Foreign
                                   Securities System, (ii) a
                                   fund's ability to recover in
                                   the event of bankruptcy or
                                   insolvency of a Foreign Sub-
                                   Custodian or Foreign
                                   Securities System, (iii) a
                                   fund's ability to recover in
                                   the event of a loss by a
                                   Foreign Sub-Custodian or
                                   Foreign Securities System, and
                                   (iv) the ability of a foreign
                                   investor to convert cash and
                                   cash equivalents to U.S.
                                   dollars.

Subcustodian Agreements            Copies of the contracts that
(annually)                         State Street has entered into
                                   with each Foreign Sub-
                                   Custodian that maintains U.S.
                                   mutual fund assets in the
                                   markets in which State Street
                                   offers custodial services.

Global Market Bulletin
(daily or as necessary)            Information on changing
                                   settlement and custody
                                   conditions in markets where
                                   State Street offers custodial
                                   services.  Includes changes in
                                   market and tax regulations,
                                   depository developments,
                                   dematerialization information,
                                   as well as other market
                                   changes that may impact State
                                   Street's clients.

Foreign Custody Advisories         For those markets where State
(as necessary)                     Street offers custodial
                                   services that exhibit special
                                   risks or infrastructures
                                   impacting custody, State


                               57



<PAGE>

                                   Street issues market
                                   advisories to highlight those
                                   unique market factors which
                                   might impact our ability to
                                   offer recognized custody
                                   service levels.

Material Change Notices
(presently on a quarterly
basis or as otherwise
necessary)                         Informational letters and
                                   accompanying materials
                                   confirming State Street's
                                   foreign custody arrangements,
                                   including a summary of
                                   material changes with Foreign
                                   Sub-Custodians that have
                                   occurred during the previous
                                   quarter. The notices also
                                   identify any material changes
                                   in the custodial risks
                                   associated with maintaining
                                   assets with Foreign Securities
                                   Depositories.





























                               58
00250209.AO2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K OTH CONTRCT
<SEQUENCE>11
<FILENAME>k1_00250209al0.txt
<TEXT>



<PAGE>




              Transfer Agency and Service Agreement

                             Between
          Alliance National Municipal Income Fund, Inc.

                               and
                  EquiServe Trust Company, N.A.

                               and

                  EquiServe Limited Partnership




<PAGE>

                        Table of Contents

Section 1.      Certain Definitions...........................4

Section 2.      Appointment of Agent..........................6

Section 3.      Standard Services.............................7

Section 4.      Dividend Disbursing Services..................8

Section 5.      Shareholder Internet Account Access
                Services......................................9

Section 6.      Optional Services and Standards...............10

Section 7.      Customer Responsibilites For Employee
                Plan Services.................................12

Section 8.      Fee and Expenses..............................14

Section 9.      Representations and Warranties of
                Transfer Agent................................15

Section 10.     Representations and Warranties of Customer....16

Section 11.     Indemnification/Limitation of
                Liability.....................................17

Section 12.     Damages.......................................19

Section 13.     Responsibilites of the Transfer Agent.........19

Section 14.     Covenants of the Customer and
                Transfer Agent................................20

Section 15.     Data Access and Propreitary Information.......21

Section 16.     Confidentiality...............................23

Section 17.     Term and Terminiation.........................23

Section 18.     Assignment....................................24

Section 19.     Unaffiliated Third Parties....................25

Section 20.     Miscellaneous.................................25

Section 20.1.   Notice........................................25

Section 20.2.   Successors....................................25



                                2



<PAGE>

Section 20.3.   Amendments....................................26

Section 20.4.   Severability..................................26

Section 20.5.   Governing Law.................................26

Section 20.6.   Force Majeure.................................26

Section 20.7.   Descriptive Headings..........................26

Section 20.8.   Third Party Beneficiaries.....................26

Section 20.9.   Survival......................................26

Section 20.10.  Priorities....................................27

Section 20.11.  Merger of Agreement...........................27

Section 20.12   Counterparts..................................27


































                                3



<PAGE>

    AGREEMENT made as of the ___________day of _____________,
2001, by and between Alliance National Municipal Income Fund,
Inc. a corporation, having its principal office and place of
business at ________________ (the "Customer"), and EquiServe
Limited Partnership, a Delaware limited partnership, and its
fully owned subsidiary EquiServe Trust Company, N.A., a federally
charted trust company doing business at  150 Royall Street,
Canton, Massachusetts 02021] (collectively, the "Transfer Agent"
or individually "ELP" and the "Trust Company", respectively).

    WHEREAS, the Customer desires to appoint the Transfer Agent
as sole transfer agent, registrar, administrator of dividend
reinvestment plans, option plans, and direct stock purchase plans
and ELP as dividend disbursing agent and processor of all
payments received or made by Customer under this Agreement.

    NOW THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:

1.  Certain Definitions.

(a)      "Account" or "Accounts" shall mean the account of each
Shareholder which account shall hold any full or fractional
shares of stock held by such Shareholder and/or outstanding funds
or tax reporting to be done.

(b)      "Account Agreement" shall have the meaning set forth in
Section 7.10.

(c)      "Additional Services" shall mean any and all services
which are not Services as set forth in the Fee and Service
Schedule, but performed by Transfer Agent upon request of
Customer.

(d)      "Agreement" shall mean this agreement and any and all
exhibits or schedules attached hereto and any and all amendments
or modifications, which may from time to time be executed.

(e)      "Annual Period" shall mean each twelve (12) month period
commencing on the Effective Date and, thereafter, on each
anniversary of the Effective Date.

(f)      "Closed Account" shall mean an account with a zero share
balance, no outstanding funds or no reportable tax information.

(g)      "Customer ID(s)" shall have the meaning set forth in
Section 15.3.

(h)      "Data Access Service" shall have the meaning set forth
in Section 15.1.



                                4



<PAGE>

(i)      "Dividend Reinvestment Plan" and "Direct Stock Purchase
Plan" shall mean the services as set forth in Section 4 and in
the Fee and Service Schedule.

(j)      "Effective Date" shall mean the date first stated above.

(k)      "Employee Stock Purchase Plan" and "Employee Stock
Option Plan" shall mean the services as set forth in Section 6.

(l)      "Enrollment Materials" shall mean the Plan brochure,
enrollment card and other materials prepared by Transfer Agent
for distribution to Participants.

"Fee and Service Schedule" shall mean the fees and services set
forth in the "Fee and Service Schedule" attached hereto.

(n)      "Grant File" shall have the meaning set forth in Section
7.4.

(o)      "Optional Services" shall mean all services described in
Section 5.

(p)      "Participant" or "Participants" shall mean employees of
Customer who have been granted Options in the Option Plan and
Customer's employees who complete and return a signed enrollment
form, which is accepted by Transfer Agent for the Employee Stock
Purchase Plan, or Shareholders enrolled in a Dividend
Reinvestment Plan or Direct Stock Purchase Plan.

(q)      "Password(s)" shall have the meaning set forth in
Section 15.3.

(r)      "Payroll File" shall mean the file from Customer
delivered to Transfer Agent from time to time setting forth the
amount of funds to be delivered on behalf of each Participant in
the Employee Stock Purchase Plan and any additional information
Transfer Agent may reasonably request.

(s)      "Plan" or "Plans" shall mean the Customer's Employee
Stock Purchase Plan and Customer's Employee Stock Option Plan.

(t)      "Proprietary Information" shall have the meaning set
forth in Section 15.4.

(u)      "Security Procedures" shall have the meaning set forth
in Section 5.1.

(v)      "Services" shall mean any and all services as further
described herein and in the "Fee and Service Schedule" or other
schedules attached hereto.



                                5



<PAGE>

(w)      "SESO" shall mean the Simultaneous Exercise and Sale of
Options services performed by Transfer Agent on behalf of
Participants.

(x)      "Share" shall mean Customer's common stock, par value
____ per share and Customer's preferred stock, par value ______
per share authorized by the Customer's Articles of Incorporation,
and other classes of Customer's stock to be designated by the
Customer in writing and for which the Transfer Agent agrees to
service under this Agreement.

(y)      "Shareholder" shall mean the holder of record of Shares.

(z)      "Shareholder Data" shall have the meaning set forth in
Section 15.2.

(aa)     "Shareholder Internet Services" shall have the meaning
set forth in Section 5.1.

2.  Appointment of Agent.

         2.1    Appointments. The Customer hereby appoints the
Transfer Agent to act as sole transfer agent and registrar for
all Shares in accordance with the terms and conditions hereof and
as administrator of Plans and appoints ELP as dividend disbursing
agent and processor of all payments received or made by or on
behalf of the Customer under this Agreement, and the Transfer
Agent and ELP accept the appointments.  Customer shall provide
Transfer Agent with certified copies of resolutions dated the
date hereof appointing the Trust Company as Transfer Agent.

         2.2    Documents.  In connection with the appointing of
Transfer Agent as the transfer agent and registrar for the
Customer, the Customer will provide or has previously provided
each of the following documents to the Transfer Agent:

                (a)   Copies of Registration Statements and
                      amendments thereto, filed with the
                      Securities and Exchange Commission for
                      initial public offerings;

                (b)   Specimens of all forms of outstanding stock
                      certificates, in forms approved by the
                      Board of Directors of the Customer, with a
                      certificate of the Secretary of the
                      Customer as to such approval;

                (c)   Specimens of the Signatures of the officers
                      of the Customer authorized to sign stock
                      certificates and individuals authorized to
                      sign written instructions and requests; and


                                6



<PAGE>

                (d)   An opinion of counsel for the Customer
                      addressed to both the Trust Company and ELP
                      with respect to:

                      (i)    The Customer's organization and
                             existence under the laws of its
                             state of organization;

                     (ii)    The status of all Shares of the
                             Customer covered by the appointment
                             under the Securities Act of 1933, as
                             amended,  and any other applicable
                             federal or state statute; and

                    (iii)    That all issued Shares are, and all
                             unissued Shares will be, when
                             issued, validly issued, fully paid
                             and non-assessable.

         2.3    Records.  Transfer Agent may adopt as part of its
records all lists of holders, records of Customer's stock, books,
documents and records which have been employed by any former
agent of Customer for the maintenance of the ledgers for such
shares, provided such ledger is certified by an officer of
Customer or the prior transfer agent to be true, authentic and
complete.

         2.4    Shares.  Customer shall, if applicable, inform
Transfer Agent as to (i) the existence or termination of any
restrictions on the transfer of Shares and in the application to
or removal from any certificate of stock of any legend
restricting the transfer of such Shares or the substitution for
such certificate of a certificate without such legend, (ii) any
authorized but unissued Shares reserved for specific purposes,
(iii) any outstanding Shares which are exchangeable for Shares
and the basis for exchange, (iv) reserved Shares subject to
option and the details of such reservation and (v) special
instructions regarding dividends and information of foreign
holders.

         2.5    Customer's Agent.  Transfer Agent represents that
it is engaged in an independent business and will perform its
obligations under this Agreement as an agent of Customer.

         2.6    Certificates.  Customer shall deliver to Transfer
Agent an appropriate supply of stock certificates, which
certificates shall provide a signature panel for use by an
officer of or authorized signor for Transfer Agent to sign as
transfer agent and registrar, and which shall state that such
certificates are only valid after being countersigned and
registered.


                                7



<PAGE>

3.  Standard Services.

         3.1    Transfer Agent Services.  The Transfer Agent will
perform the following services:

         In accordance with the procedures established from time
to time by agreement between the Customer and the Transfer Agent,
the Transfer Agent shall:

                (a)   issue and record the appropriate number of
                      Shares as authorized and hold such Shares
                      in the appropriate Shareholder account;

                (b)   effect transfers of Shares by the
                      registered owners thereof upon receipt of
                      appropriate documentation;

                (c)   act as agent for Shareholders pursuant to
                      the Dividend Reinvestment Plan, and other
                      investment programs as amended from time to
                      time in accordance with the terms of the
                      agreements relating thereto to which the
                      Transfer Agent is or will be a party; and

                (d)   issue replacement certificates for those
                      certificates alleged to have been lost,
                      stolen or destroyed upon receipt by the
                      Transfer Agent of an open penalty surety
                      bond satisfactory to it and holding it and
                      the Customer harmless, absent notice to the
                      Customer and the Transfer Agent that such
                      certificates have been acquired by a bona
                      fide purchaser.  The Transfer Agent, at its
                      option, may issue replacement certificates
                      in place of mutilated stock certificates
                      upon presentation thereof without such
                      indemnity.  Further, the Transfer Agent may
                      at its sole option accept indemnification
                      from a Customer to issue replacement
                      certificates for those certificates alleged
                      to have been lost, stolen or destroyed in
                      lieu of an open penalty bond.

         3.2     ELP Services.  In accordance with procedures
established from time to time by agreement between the Customer
and ELP, ELP shall:

                (a)   prepare and transmit payments for dividends
                      and distributions declared by the Customer,
                      provided good funds for said dividends or
                      distributions are received by ELP prior to


                                8



<PAGE>

                      the scheduled payable date for said
                      dividends or distributions;

                (b)   issue replacement checks and place stop
                      orders on original checks based on
                      shareholder's representation that a check
                      was not received or was lost.  Such stop
                      orders and replacements will be deemed to
                      have been made at the request of Customer,
                      and Customer shall be responsible for all
                      losses or claims resulting from such
                      replacement; and

                (c)   Receive all payments made to the Customer
                      or the Transfer Agent under the Dividend
                      Reinvestment Plan, Direct Stock Purchase
                      Plan, and Plans and make all payments
                      required to be made under such plans,
                      including all payments required to be made
                      to the Customer.

         3.3    Customary Services.  The Transfer Agent shall
perform all the customary services of a transfer agent, agent of
dividend reinvestment plan, cash purchase plan and other
investment programs as described in Section 3.1 consistent with
those requirements in effect as of the date of this Agreement.
ELP shall perform all the customary services of a dividend
disbursing agent and a processor of payments as described in
Section 3.2 consistently with those requirements in effect as of
the date of this Agreement.  The detailed services and
definition, frequency, limitations and associated costs (if any)
of the Services to be performed by the Transfer Agent are set out
in the attached Fee and Service Schedule.

         3.4    Compliance with Laws.  The Customer agrees that
each of the Trust Company and ELP is obligated to and the Trust
Company and ELP agree to comply with all applicable federal,
state and local laws and regulations, codes, order and government
rules in the performance of its duties under this Agreement.

         3.5    Unclaimed Property and Lost Shareholders.  The
Transfer Agent shall report unclaimed property to each state in
compliance with state law and Section 17Ad-17 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), for lost
Shareholders. If the Customer is not in compliance with
applicable state laws, there will be no charge for the first two
years for this service, other than a charge of $3.00 per due
diligence notice mailed; provided that after the first two years,
the Transfer Agent will charge Customer its then standard fee
plus any out-of-pocket expenses.



                                9



<PAGE>

         3.6    Compliance with Office of Foreign Asset Control
("OFAC") Regulations.  The Transfer Agent shall ensure compliance
with OFAC laws.

4.  Dividend Disbursing Services.

         4.1    Declaration of Dividends.  Upon receipt of a
written notice from the President, any Vice President, Assistant
Secretary, Treasurer or Assistant Treasurer of Customer declaring
the payment of a dividend, ELP shall disburse such dividend
payments provided that in advance of such payment, Customer
furnishes ELP with sufficient funds.  The payment of such funds
to ELP for the purpose of being available for the payment of
dividend checks from time to time is not intended by Customer to
confer any rights in such funds on Customer's Shareholders
whether in trust or in contract or otherwise.

         4.2    Stop Payments.  Customer hereby authorizes ELP to
stop payment of checks issued in payment of dividends, but not
presented for payment, when the payees thereof allege either that
they have not received the checks or that such checks have been
mislaid, lost, stolen, destroyed or, through no fault of theirs,
are otherwise beyond their control and cannot be produced by them
for presentation and collection, and ELP shall issue and deliver
duplicate checks in replacement thereof, and Customer shall
indemnify Transfer Agent against any loss or damage resulting
from reissuance of the checks.

         4.3    Tax Withholding.  ELP is hereby authorized to
deduct from all dividends declared by Customer and disbursed by
ELP, as dividend disbursing agent, the tax required to be
withheld pursuant to Sections 1441, 1442 and 3406 of the Internal
Revenue Code of 1986, as amended, or by any Federal or State
statutes subsequently enacted, and to make the necessary return
and payment of such tax in connection therewith.

5.  Shareholder Internet Account Access Services.

         5.1    Shareholder Internet Services.  The Transfer
Agent shall provide internet access to Customer's shareholders
through Transfer Agent's web site, equiserve.com ("Shareholder
Internet Services"), pursuant to its established procedures
("Security Procedures"), to allow shareholders to view their
account information and perform certain on-line transaction
request capabilities.  The Shareholder Internet Services shall be
provided at no additional charge at this time, other than the
transaction fees currently being charged for the different
transactions as described on the Fee and Service Schedule.  The
Transfer Agent reserves the right to charge a fee for this
service at any time in the future.



                               10



<PAGE>

         5.2    Scope of Transfer Agent Shareholder Internet
Services Obligations.  Transfer Agent shall at all times use
reasonable care in performing Shareholder Internet Services under
this Agreement.  In the absence of breach of its duties under
this Agreement, Transfer Agent shall not be liable for any action
taken, suffered, or omitted by it or for any error made by it in
the performance of its services under this Agreement. With
respect to any claims for losses, damages, costs or expenses
which may arise directly or indirectly from Security Procedures
which Transfer Agent has implemented or omitted, Transfer Agent
shall be presumed to have used reasonable care if it has
followed, in all material respects, its Security Procedures then
in effect. Transfer Agent may, but shall not be required to,
modify such Security Procedures from time to time to the extent
it believes, in good faith, that such modifications will enhance
the security of Shareholder Internet Services.  All data and
information transmissions accessed via Shareholder Internet
Services are for informational purposes only, and are not
intended to satisfy regulatory requirements or comply with any
laws, rules, requirements or standards of any federal, state or
local governmental authority, agency or industry regulatory body,
including the securities industry, which compliance is the sole
responsibility of Customer.

         5.3    No Other Warranties.

EXCEPT AS OTHERWISE EXPRESSLY STATED IN SECTION 5.2 OF THIS
AGREEMENT, THE SHAREHOLDER INTERNET SERVICES ARE PROVIDED "AS-
IS," ON AN "AS AVAILABLE" BASIS, AND TRANSFER AGENT HEREBY
SPECIFICALLY DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, REGARDING SUCH SERVICES PROVIDED BY TRANSFER
AGENT HEREUNDER, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED
WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE.

6.  Optional Services and Standards.

         6.1    Optional Services.

To the extent that Customer elects to engage the Transfer Agent
to provide the services listed below the Customer shall engage
the Transfer Agent to provide such services upon terms and fees
to be agreed upon by the parties:

                (a)   Employee plan services;

                (b)   Employee Stock Purchase Plan Programs; and

                (c)   Corporate actions (including inter alia,
                      odd lot buy backs, exchanges, mergers,


                               11



<PAGE>

                      redemptions, subscriptions, capital
                      reorganization, coordination of post-merger
                      services and special meetings).

         6.2    Standards.

         Optional Services shall be provided as follows:

                (a)   Transfer Agent shall, as exercise and sales
                      agent for Customer in connection with the
                      Employee Stock Option Plan, execute the
                      Options granted by Customer to Participants
                      and sell any related Shares in accordance
                      with Transfer Agent's generally applicable
                      guidelines for plans of this type.
                      Transfer Agent shall establish an Account
                      for each such Participant and shall
                      maintain a record of each transaction in
                      such Account.

                (b)   In executing purchases and sales of Shares
                      in connection with the Plans, Transfer
                      Agent shall act independently of Customer
                      and shall not consult with or be directed
                      or influenced by Customer in any way.
                      Subject only to the provisions of the
                      Agreement, Transfer Agent shall have full
                      discretion as to all matters relating to
                      such purchases, including determining the
                      number of Shares, if any, to be purchased
                      on any day or at any time of that day, the
                      prices paid for such Shares, the markets on
                      which such purchases are made, and the
                      persons (including the brokers-dealers)
                      from or through whom such purchases are
                      made.

                (c)   Transfer Agent shall not be obligated to
                      purchase Shares for any Participant of the
                      Employee Stock Purchase Plan until Transfer
                      Agent (i) is advised by ELP of its receipt
                      from the Customer for each such purchase of
                      available funds (which, in the case of
                      funds transmitted by check, shall mean
                      funds cleared for payment by ELP's bank),
                      (ii) receives the Payroll File from
                      Customer, and (iii) reconciles the funds
                      received by ELP with the Payroll File to
                      determine that the aggregate amount of
                      funds received correspond to the aggregate



                               12



<PAGE>

                      of the amounts specified in the Payroll
                      File.

                (d)   Transfer Agent shall provide Enrollment
                      Materials to Customer for distribution to
                      each potential Participant, which materials
                      shall include, when properly completed, the
                      forms accepted by Transfer Agent to
                      establish an Account.  These Enrollment
                      Materials shall be Transfer Agent's
                      standard forms (unless otherwise requested
                      by Customer and agreed to in advance by
                      Transfer Agent, in which event, Customer
                      shall be charged a fee).  In the event
                      another firm has previously provided
                      services similar to those provided by
                      Transfer Agent hereunder in respect to the
                      Plan, Transfer Agent shall not be obligated
                      to receive in any Account assets from such
                      firm until it has accepted properly
                      completed Enrollment Materials from each
                      Participant involved and reconciled the
                      assets received with information received
                      from such firm or Customer detailing the
                      allocation of those assets to each relevant
                      Account; provided that Transfer Agent shall
                      have no responsibility for determining the
                      accuracy of the information received or for
                      the reconciling of such information with
                      any Participant's entitlements under the
                      Plan.

                (e)   Transfer Agent shall provide exercise forms
                      and information materials regarding SESO to
                      Customer for distribution to each
                      Participant in the Employee Stock Option
                      Plan, which material shall include, when
                      properly completed, authorization for
                      Transfer Agent to sell the Shares.  These
                      materials shall be Transfer Agent's
                      standard forms (unless otherwise requested
                      by Customer and agreed to in advance by
                      Transfer Agent, in which event, Customer
                      shall be charged a fee pursuant to Section
                      8 of this Agreement).

                (f)   Transfer Agent shall transmit to each
                      Participant all proxy statements, annual
                      reports, meeting notices and other
                      materials received from Customer with
                      respect to Shares acquired pursuant to the


                               13



<PAGE>

                      Plan and held in the Participant's Account.
                      Proxies shall be voted with respect to full
                      Shares held in a Participant's Account in
                      accordance with the Participant's
                      instructions duly delivered to Transfer
                      Agent.

                (g)   Transfer Agent shall prepare and distribute
                      periodically to each Participant a
                      statement as to the Share acquired for the
                      Participant's Account under the Plan.
                      Transfer Agent shall provide Customer with
                      summary data regarding Plan Accounts as
                      reasonably requested by Customer and
                      replacement transaction information upon
                      request.

                (h)   Transfer Agent shall maintain a record of
                      all Options granted by Customer to
                      Participants of the Employee Stock Option
                      Plan including any restricted share awards,
                      and the date each Option granted vests in
                      each account.  Transfer Agent shall report
                      to Customer the date on which such
                      Participant exercises an Option and, on a
                      periodic basis, any and all Account
                      information reasonably requested by
                      Customer, in such form as mutually agreed
                      to by the parties. Transfer Agent shall
                      prepare and distribute to each Participant
                      a statement as to the Options granted,
                      Shares acquired and Shares sold for each
                      Account under the Plan.

7.  Customer Responsibilities For Employee Plan Services.

         7.1    Payroll Files.  Customer shall furnish to
Transfer Agent, in a format prescribed by Transfer Agent, all
Payroll Files and employee payroll and other information which,
Transfer Agent may require in order to perform its Services or
calculate its fees under the Agreement.  In particular, but not
by way of limitation, Customer shall notify Transfer Agent in the
manner specified by Transfer Agent of the name and Account number
of each Participant who terminates participation in the Plan
whether by reason of termination of employment with Customer,
cessation of payroll deductions or otherwise. Transfer Agent
shall be entitled to rely upon the accuracy and completeness of
all information which it reasonably believes to have been
furnished to it by Customer or at Customer's direction and shall
have no duty to inquire about such information or about the



                               14



<PAGE>

application of any funds, securities or other assets held by
Customer under the Plan.

         7.2    Enrollment Materials.  Customer shall distribute
to each of its employees, and to each employee of any subsidiary
or affiliate of Customer participating in the Plan who is
eligible to become a Participant, a copy of the Enrollment
Materials or a copy of the SESO exercise form and shall be solely
responsible for collecting and delivering to Transfer Agent a new
account application properly completed and executed by each
Participant.  Customer shall in no event permit an employee who
has not attained the age of majority in the state in which the
employee resides to become a Participant and shall refuse to
accept Enrollment Materials completed by such an individual.

         7.3    Employee Deductions.  Customer shall collect all
amounts deductible pursuant to the
Employee Share Purchase Plan from the compensation of
Participants and any other amounts contributed by the
Participants pursuant to the Plan and shall make all required
contributions, if any, in accordance with such Plan, and shall
hold such amounts until delivered to ELP.

         7.4    Payroll and Grant Files.  Customer shall deliver
each Payroll File and grant file ("Grant File") to Transfer Agent
in a machine-readable format conforming to specifications
furnished by Transfer Agent from time to time.  If a Payroll File
or Grant File does not conform to such specifications, processing
of such Payroll File by Transfer Agent shall not be required.
Each Payroll File shall be reconciled by Customer against the
funds and/or Shares referenced in such file prior to delivery of
the file to Transfer Agent.  If any Payroll File or Grant File
submitted to Transfer Agent is incomplete, incorrect or
subsequently changed by Customer, Transfer Agent shall not be
required to correct, change or otherwise prepare such file for
processing unless Customer pays additional fees for customized
and manual processing.

         7.5    Payment of Funds.  All remittances of funds by
Customer to ELP with
respect to the Employee Share Purchase Plan shall be made either
by check or by wire transfer in accordance with instructions
received from ELP.  All Payroll Files and Grant Files shall be
delivered to Transfer Agent at the place and in the manner
specified in instructions transmitted by Transfer Agent to
Customer.

         7.6    Customer Deliveries.  All funds paid to ELP and
all Payroll Files and Grant Files delivered to Transfer Agent on
behalf of Customer and any of its subsidiaries participating in
the Plan, as well as all other notices and instructions relating


                               15



<PAGE>

to the plan or this Agreement, shall be delivered by the
department, office or source within Customer, or other person
acting on behalf of Customer, specified by Customer.  For
purposes of the Agreement, any action taken by any person acting
on behalf of Customer shall be considered as an action by
Customer.  Delivery of funds or Payroll Files or Grant Files
other than in accordance with Section 7.4 and Section 7.5 shall
not constitute delivery within the meaning of the Agreement.

         7.7    Reports and Statements.  Each report and
statement issued by Transfer Agent shall be deemed correct unless
Transfer Agent receives written notice of any incorrectness,
incompleteness or inaccuracy in the report or statement within
thirty (30) days.

         7.8    Content of Communications.  Customer shall obtain
the prior written consent of Transfer Agent to any reference to
Transfer Agent or to Services to be furnished by Transfer Agent
in any communication or document pertaining to the Plan not
prepared by Transfer Agent; provided that Transfer Agent shall
have no responsibility or liability for the content of any such
communication or document.

         7.9    Errors.  Customer will promptly notify Transfer
Agent of any errors or omissions in information supplied by
Customer.  In such an event, or in the event Transfer Agent
executes a purchase of Shares and subsequently discovers an error
or omission in information supplied to it by Customer, Transfer
Agent's sole obligation shall be to use reasonable efforts to
correct any resulting errors in any reports prepared for Customer
or any Participant, and Customer assumes responsibility for any
loss incurred by Transfer Agent.

         7.10   Account Agreements.  Each Account established for
a Participant may be used by the Participant for transactions in
such securities (including securities not issued by Customer) and
other assets as are allowable for investment by Transfer Agent.
The relationship between Transfer Agent and each Participant with
respect to the Account and transactions therein shall be governed
by a separate agreement between them (an "Account Agreement")
which constitutes part of the Enrollment Materials.  Each Account
Agreement, unless previously terminated, shall survive the
termination of the Agreement, and each Account Agreement and the
fees and commissions applied thereunder may be amended from time
to time in accordance with the terms thereof without notice to or
consent from Customer.  Transfer Agent may, at its own expense,
solicit indications of interest from or make offers to the
Participants regarding securities, or other assets or services
upon the consent of Customer, but Customer shall have no
responsibility to assist Transfer Agent or make any
recommendations to Participants in this regard.


                               16



<PAGE>

8.  Fees and Expenses.

         8.1  Fee and Service Schedules.  Customer agrees to pay
Transfer Agent the fees for Services performed pursuant to this
Agreement as set forth in the Fee and Service Schedule attached
hereto, for the initial term of the Agreement (the "Initial
Term").

         8.2    COLA/Fee Increases.  After the Initial Term of
the Agreement, providing that service mix and volumes remain
constant, the fees listed in the Fee and Service Schedule shall
be increased (a) by the accumulated change in the National
Employment Cost Index for Service Producing Industries (Finance,
Insurance, Real Estate) for the preceding years of the contract,
as published by the Bureau of Labor Statistics of the United
States Department of Labor or (b) to the Transfer Agent's minimum
fee then in effect, whichever is greater.  Fees will be increased
on this basis on each successive contract anniversary thereafter.

         8.3    Adjustments.  Notwithstanding Section 8.1 above,
fees, and the out-of-pocket expenses and advances identified
under Section 8.4 below, may be changed from time to time as
agreed upon in writing between the Transfer Agent and the
Customer.

         8.4    Out-of-Pocket Expenses.  In addition to the fees
paid under Section 8.1 above, the Customer agrees to reimburse
the Transfer Agent for out-of-pocket expenses, including but not
limited to postage, forms, telephone, microfilm, microfiche,
taxes, records storage, exchange and broker fees, or advances
incurred by the Transfer Agent for the items set out in Exhibit A
attached hereto.  Out-of-pocket expenses may include the costs to
transfer agent of administrative expenses.  In addition, any
other expenses incurred by the Transfer Agent at the request or
with the consent of the Customer, will be reimbursed by the
Customer.

         8.5    Conversion Funds.  Conversion funding required by
any out of proof condition caused by a prior agents' services
shall be advanced to Transfer Agent prior to the commencement of
services.

         8.6    Postage.  Postage for mailing of dividends,
proxies, Customer reports and other mailings to all Shareholder
Accounts shall be advanced to the Transfer Agent by the Customer
prior to commencement of the mailing date of such materials.

         8.7    Invoices.  The Customer agrees to pay all fees
and reimbursable expenses within 30 days of the date of the
respective billing notice, except for any fees or expenses that
are subject to good faith dispute.  In the event of such a


                               17



<PAGE>

dispute, the Customer may only withhold that portion of the fee
or expense subject to the good faith dispute. The Customer shall
notify the Transfer Agent in writing within twenty-one (21)
calendar days following the receipt of each billing notice if the
Customer is disputing any amounts in good faith.  If the Customer
does not provide such notice of dispute within the required time,
the billing notice will be deemed accepted by the Customer.  The
Customer shall settle such disputed amounts within five (5)
business days of the day on which the parties agree on the amount
to be paid by payment of the agreed amount.  If no agreement is
reached, then such disputed amounts shall be settled as may be
required by law or legal process.

         8.8    Taxes.  Customer shall pay all sales or use taxes
in lieu thereof with respect to the Services (if applicable)
provided by Transfer Agent under this Agreement.

         8.9    Late Payments.

         (a)  If any undisputed amount in an invoice of the
Transfer Agent (for fees or reimbursable expenses) is not paid
when due, the Customer shall pay the Transfer Agent interest
thereon (from the due date to the date of payment) at a per annum
rate equal to one percent (1.0%) plus the Prime Rate (that is,
the base rate on corporate loans posted by large domestic banks)
published by The Wall Street Journal (or, in the event such rate
is not so published, a reasonably equivalent published rate
selected by Customer on the first day of publication during the
month when such amount was due).  Notwithstanding any other
provision hereof, such interest rate shall be no greater than
permitted under applicable provisions of Massachusetts or New
Jersey law.

         (b)  The failure by Customer to pay an invoice within 90
days after receipt of such invoice or the failure by the Customer
to timely pay two consecutive invoices shall constitute a
material breach pursuant to Section 17.4(a) below.  The Transfer
Agent may terminate this Agreement for such material breach
immediately and shall not be obligated to provide the Customer
with 30 days to cure such breach.

         8.10   Services Required by Legislation.  Services
required by legislation or regulatory mandate that become
effective after the Effective Date of this Agreement shall not be
part of the Services, and shall be billed by appraisal.

         8.11   Overtime Charges.  Overtime charges will be
assessed in the event of a late delivery to the Transfer Agent of
Customer material for mailings to Shareholders, unless the mail
date is rescheduled.  Such material includes, but is not limited



                               18



<PAGE>

to, proxy statements, quarterly and annual reports, dividend
enclosures and news releases.

         8.12   Bank Accounts.  The Customer acknowledges that
the bank accounts maintained by ELP in connection with the
Services will be in its name and that ELP may receive investment
earnings in connection with the investment at ELP's risk and for
its benefit of funds held in those accounts from time to time.

9.  Representations and Warranties of Transfer Agent.

         9.1    Governance.  The Trust Company is a federally
chartered limited purpose national bank duly organized under the
laws of the United States and ELP is a limited partnership
validly existing and in good standing under the laws of the State
of Delaware and each has full corporate power, authority and
legal right to execute, deliver and perform this Agreement.  The
execution, delivery and performance of this Agreement by Transfer
Agent has been duly authorized by all necessary corporate action
and constitutes the legal valid and binding obligation of
Transfer Agent enforceable against Transfer Agent in accordance
with its terms.

         9.2    Compliance.  The execution, delivery and
performance of the Agreement by Transfer Agent will not violate,
conflict with or result in the breach of any material term,
condition or provision of, or require the consent of any other
party to, (i) any existing law, ordinance, or governmental rule
or regulation to which Transfer Agent is subject, (ii) any
judgement, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or
authority which is applicable to Transfer Agent, (iii) the
incorporation documents or by-laws of , or any material agreement
to which Transfer Agent is a party.

         9.3    Facilities.  The Transfer Agent has and will
continue to have access to the necessary facilities, equipment
and personnel to perform its duties and obligations under this
Agreement.

         9.4    Computer Services.  DATA ACCESS SERVICE AND ALL
COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION
THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS.  TRANSFER
AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY
STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.  CUSTOMER HEREBY ACKNOWLEDGES THAT THE DATA ACCESS
SERVICE MAY NOT BE OR BECOME AVAILABLE DUE TO ANY NUMBER OF
FACTORS INCLUDING WITHOUT LIMITATION PERIODIC SYSTEM MAINTENANCE,
SCHEDULED OR UNSCHEDULED, ACTS OF GOD, TECHNICAL FAILURE,
TELECOMMUICATIONS INFRASTRUCTURE OR DELAY OR DISRUPTION


                               19



<PAGE>

ATTRIBUTATLE TO VIRUSES, DENIAL OF SERVICE ATTACKS, INCREASED OR
FLUCTUATING DEMAND, AND ACTIONS AND OMISSIONS OF THIRD PARTIES.
THEREFORE TRANSFER AGENT EXPRESSLY DISCLAIMS ANY EXPRESS OR
IMPLIED WARRANTY REGARDING SYSTEM AND/OR DATA ACCESS SERVICE
AVAILABILITY, ACCESSABILITY, OR PERFORMANCE.

10.  Representations and Warranties of Customer.

         The Customer represents and warrants to the Transfer
Agent that:

         10.1   Organizations.  It is a corporation duly
organized and existing and in good standing under the laws of
___________;

         10.2   Governance.  It is empowered under applicable
laws and by its Articles of Incorporation and By-Laws to enter
into and perform this Agreement.  All corporate proceedings
required by said Articles of Incorporation, By-Laws and
applicable law have been taken to authorize it to enter into and
perform this Agreement; and

         10.3   Securities Act of 1933.  A registration statement
under the Securities Act of 1933, as amended (the "1933 Act") has
been filed and is currently effective, or will be effective prior
to the sale of any Shares, and will remain so effective, and all
appropriate state securities law filings have been made with
respect to all the Shares of the Customer being offered for sale
except for any Shares which are offered in a transaction or
series of transactions which are exempt from the registration
requirements of the 1933 Act and state securities laws;
information to the contrary will result in immediate notification
to the Transfer Agent.

11.  Indemnification/Limitation of Liability.

         11.1   Standard of Care.  The Transfer Agent shall at
all times act in good faith and agrees to use its best efforts
within reasonable time limits to insure the accuracy of all
services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith
or willful misconduct or that of its employees as set forth and
subject to the limitations set forth in Section 11.4 below.

         11.2   Customer Indemnity.  The Transfer Agent shall not
be responsible for, and the Customer shall indemnify and hold the
Transfer Agent harmless from and against, any and all losses,
claims, damages, costs, charges, counsel fees and expenses,
payments, expenses and liability arising out of or attributable
to:


                               20



<PAGE>

                (a)   All actions of the Transfer Agent or its
                      agents or subcontractors required to be
                      taken pursuant to this Agreement, provided
                      such actions are taken in good faith and
                      without negligence or willful misconduct;

                (b)   The Customer's lack of good faith,
                      negligence or willful misconduct or the
                      breach of any representation or warranty of
                      the Customer hereunder;

                (c)   The reliance or use by the Transfer Agent
                      or its agents or subcontractors of
                      information, records and documents which
                      (i) are received by the Transfer Agent or
                      its agents or subcontractors and furnished
                      to it by or on behalf of the Customer, and
                      (ii) have been prepared and /or maintained
                      by the Customer or any other person or firm
                      on behalf of the Customer.  Such other
                      person or firm shall include any former
                      transfer agent or former registrar, or co-
                      transfer agent or co-registrar or any
                      current registrar where the Transfer Agent
                      is not the current registrar;

                (d)   The reliance or use by the Transfer Agent
                      or its agents or subcontractors of any
                      paper or document reasonably believed to be
                      genuine and to have been signed by the
                      proper person or persons including
                      Shareholders or electronic instruction from
                      Shareholders submitted through the
                      shareholder Internet Services or other
                      electronic means pursuant to security
                      procedures established by the Transfer
                      Agent;

                (e)   The reliance on, or the carrying out by the
                      Transfer Agent or its agents or
                      subcontractors of any instructions or
                      requests of the Customer's representatives;

                (f)   The offer or sale of Shares in violation of
                      any federal or state securities laws
                      requiring that such Shares be registered or
                      in violation of any stop order or other
                      determination or ruling by any federal or
                      state agency with respect to the offer or
                      sale of such Shares;



                               21



<PAGE>

                      (g)The negotiations and processing of all
                      checks, including checks made payable to
                      prospective or existing shareholders which
                      are tendered to the Transfer Agent for the
                      purchase of Shares (commonly known as
                      "third party checks");

                (h)   Any actions taken or omitted to be taken by
                      any former agent of Customer and arising
                      from Transfer Agent's reliance on the
                      certified list of holders; and

                (i)   The negotiation, presentment, delivery or
                      transfer of Shares through the Direct
                      Registration System Profile System.

         11.3   Instructions.  At any time the Transfer Agent may
apply to any officer of the Customer for instruction, and may
consult with legal counsel for the Transfer Agent or the Customer
with respect to any matter arising in connection with the
services to be performed by the Transfer Agent under this
Agreement, and Transfer Agent and its agents and subcontractors
shall not be liable and shall be indemnified by the Customer for
any action taken or omitted by it in reliance upon such
instructions or upon the advice or opinion of such counsel.  The
Transfer Agent, its agents and subcontractors shall be protected
and indemnified in acting upon any paper or document reasonably
believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data,
records or documents provided the Transfer Agent or its agents or
subcontractors by telephone, in person, machine readable input,
telex, CRT data entry or similar means authorized by the
Customer, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof
from the Customer.  The Transfer Agent, its agents and
subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of officers of the
Customer, and the proper countersignature of any former transfer
agent or former registrar, or of a co-transfer agent or co-
registrar.

         11.4   Transfer Agent Indemnification/Limitation of
Liability. Transfer Agent shall be responsible for and shall
indemnify and hold the Customer harmless  from and against any
and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to Transfer
Agent's refusal or failure to comply with the terms of this
Agreement, or which arise out of Transfer Agent's negligence or
willful misconduct or which arise out of the breach of any
representation or warranty of Transfer Agent hereunder, for which


                               22



<PAGE>

Transfer Agent is not entitled to indemnification under this
Agreement; provided, however, that Transfer Agent's aggregate
liability during any term of this Agreement with respect to,
arising from, or arising in connection  with  this  Agreement, or
from all services provided or omitted to be provided under this
Agreement, whether in contract, or in tort, or otherwise, is
limited to, and shall not exceed, the amounts paid hereunder by
the Customer to Transfer Agent as fees and charges, but not
including reimbursable expenses, during the six (6) calendar
months immediately preceding the event for which recovery from
the Transfer Agent is being sought.

         11.5   Notice. In order that the indemnification
provisions contained in this Section shall
apply, upon the assertion of a claim for which one party may be
required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to
all developments concerning such claim.  The indemnifying party
shall have the option to participate with the indemnified party
in the defense of such claim or to defend against said claim in
its own name or the name of the indemnified party.  The
indemnified party shall in no case confess any claim or make any
compromise in any case in which the indemnifying party may be
required to indemnify it except with the indemnifying party's
prior written consent.

12.      Damages.

NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING, BUT
NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, OCCASIONED BY A
BREACH OF ANY PROVISION OF THIS AGREEMENT EVEN IF APPRISED OF THE
POSSIBILITY OF SUCH DAMAGES.

13.  Responsibilities of the Transfer Agent.

         The Transfer Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and
conditions, by all of which the Customer, by its acceptance
hereof, shall be bound:

         13.1   Whenever in the performance of its duties
hereunder the Transfer Agent shall deem it necessary or desirable
that any fact or matter be proved or established prior to taking
or suffering any action hereunder, such fact or matter may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant treasurer, the Secretary
or any Assistant Secretary of the Customer and delivered to the
Transfer Agent.  Such certificate shall be full authorization to


                               23



<PAGE>

the recipient for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate.

         13.2   The Customer agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by
the Transfer Agent for the carrying out, or performing by the
Transfer Agent of the provisions of this Agreement.

         13.3   Transfer Agent, any of its affiliates or
subsidiaries, and any stockholder,
director, officer or employee of the Transfer Agent may buy, sell
or deal in the securities of the Customer or become pecuniary
interested in any transaction in which the Customer may be
interested, or contract with or lend money to the Customer or
otherwise act as fully and freely as though it were not appointed
as agent under this Agreement.  Nothing herein shall preclude the
Transfer Agent from acting in any other capacity for the Customer
or for any other legal entity.

         13.4   No provision of this Agreement shall require the
Transfer Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if it shall believe in
good faith that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.

14.  Covenants of the Customer and Transfer Agent.

         14.1   Customer Corporate Authority.  The Customer shall
furnish to the Transfer Agent the following:

                (a)   A copy of the Articles of Incorporation and
                      By-Laws of the Customer;

                (b)   Copies of all material amendments to its
                      Articles of Incorporation or By-Laws made
                      after the date of this Agreement, promptly
                      after such amendments are made; and

                (c)   A certificate of the Customer as to the
                      Shares authorized, issued and outstanding,
                      as well as a description of all reserves of
                      unissued Shares relating to the exercise of
                      options, warrants or a conversion of
                      debentures or otherwise.




                               24



<PAGE>

         14.2   Transfer Agent Facilities.  The Transfer Agent
hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Customer for the safekeeping of
stock certificates, check forms and facsimile signature
imprinting devices, if any, and for the preparation, use, and
recordkeeping of such certificates, forms and devices.

         14.3   Records.  The Transfer Agent shall keep records
relating to the services to be performed hereunder, in the form
and manner as it may deem advisable.  The Transfer Agent agrees
that all such records prepared or maintained by it relating to
the services performed hereunder are the property of the Customer
and will be preserved, maintained and made available in
accordance with the requirements of law, and will be surrendered
promptly to the Customer on and in accordance with its request.

         14.4   Confidentiality.  The  Transfer Agent and the
Customer agree that all books, records, information and data
pertaining to the  business of the other party which are
exchanged or received pursuant to the negotiation or the carrying
out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be
required by law.

         14.5   Non-Solicitation of Transfer Agent Employees.
Customer shall not attempt to hire or assist with the hiring of
an employee of EquiServe or affiliated companies or encourage any
employee to terminate their relationship with EquiServe or its
affiliated companies.

         14.6   Notification.  Customer shall notify Transfer
Agent as soon as possible in advance of any stock split, stock
dividend similar event which may affect the Shares, and any
bankruptcy, insolvency, moratorium or other proceeding regarding
Customer affecting the enforcement of creditors' rights.
Notwithstanding any other provision of the Agreement to the
contrary, Transfer Agent will have no obligation to perform any
Services under the Agreement subsequent to the commencement of
any bankruptcy, insolvency, moratorium or other proceeding
regarding Customer affecting the enforcement of creditor' rights
unless Transfer Agent receives assurance satisfactory to it that
it will receive full payment for such services.  Further,
Customer may not assume the Agreement after the filing of a
bankruptcy petition without transfer agents written consent.

15.      Data Access Service and Proprietary Information.

         15.1   Transfer Agent has developed a data access
service that enables the Customer to access the Customer's
shareholder records maintained on Transfer Agent's computer
system through the Internet or remote access, as the case may be


                               25



<PAGE>

(the "Data Access Service").  The Customer wishes to use such
Data Access Service subject to the terms and conditions set forth
herein. Therefore, the Customer and Transfer Agent agree as
follows:

         15.2   Access to Shareholder Data.

         The Data Access Service provided to the Customer
pursuant to this Agreement shall include granting the Customer
access to the Customer's unique shareholder information
("Shareholder Data") maintained on the records database of the
computer system, at EquiServe for the purpose of examining with
respect to an individual shareholder of the Customer such
Shareholder's (a) name, (b) social security or other taxpayer
identification number, (c) number of Shares, (d) address, and (e)
limited dividend payment history.

         15.3   Procedures for Access.

         To use the Data Access Service, the Customer must access
through the Internet or remote terminal, as the case may be,
pursuant to the procedures provided by Transfer Agent.  Such
access is accomplished by entering a unique Customer
identification ("Customer ID(s)") and passwords ("Password(s)")
assigned to the Customer by Transfer Agent.  Each Customer ID and
Password assigned to the Customer is for use only by the
Customer.  The Customer shall establish and maintain reasonable
security and control over all such Customer IDs and Passwords.
Transfer Agent shall maintain reasonable security and control
over each Customer ID.  After Transfer Agent assigns the Customer
a Password, the Customer shall change the Password.  The Customer
recognizes that Transfer Agent does not have knowledge of the
Password, which is selected by the Customer and is within the
Customer's exclusive control after the necessary change.  The
Customer may change any Password thereafter at any time.
Customer agrees to notify Transfer Agent immediately if any
employee of Customer granted access to the Data Access Service
leaves the employ of the Customer, in order to enable Transfer
Agent to terminate such employee's access.

         15.4   Proprietary Information.

         The Customer acknowledges that the databases, computer
programs, screen formats, report formats, interactive design
techniques, and documentation manuals furnished to the Customer
by the Transfer Agent as part of the Data Access Service to
access Shareholder Data maintained by the Transfer Agent on data
bases under the control and ownership of the Transfer Agent or
other third party constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information")
of substantial value to the Transfer Agent or other third party.


                               26



<PAGE>

In no event shall Proprietary Information be deemed Shareholder
Data.  The Customer agrees to treat all Proprietary Information
as proprietary to the Transfer Agent and further agrees that it
shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder.  Without
limiting the foregoing, the Customer agrees for itself and its
employees and agents:

                (a)   to refrain from copying or duplicating in
                      any way the Proprietary Information, other
                      than to print out pages reflecting
                      Shareholder Data to provide to shareholders
                      or for Customer's internal use;

                (b)   to refrain from obtaining unauthorized
                      access to any portion of the Proprietary
                      Information, and if such access is
                      inadvertently obtained, to inform Transfer
                      Agent in a timely manner of such fact and
                      dispose of such information in accordance
                      with Transfer Agent's instructions;

                (c)   to refrain from causing or allowing the
                      Proprietary Information from being
                      retransmitted to any other computer
                      facility or other location, except with the
                      prior written consent of Transfer Agent;

                (d)   that the Customer shall have access only to
                      those authorized transactions agreed upon
                      by the parties; and

                (e)   to honor all reasonable written requests
                      made by Transfer Agent to protect at
                      Transfer Agent's expense the rights of
                      Transfer Agent Proprietary Information at
                      common law, under federal copyright law and
                      under other federal or state law.

Each party shall take reasonable efforts to advise its employees
of their obligations pursuant to this Section 15.

         15.5   Content.  If the Customer notifies the Transfer
Agent that any part of the Data Access Service does not operate
in material compliance with the user documentation provided by
the Transfer Agent for such service, the Transfer Agent shall
endeavor in a timely manner to correct such failure.
Organizations from which the Transfer Agent may obtain certain
data included in the Services are solely responsible for the
contents of such data and the Customer agrees to make no claim
against the Transfer Agent arising out of the contents of such


                               27



<PAGE>

third party data, including, but not limited to, the accuracy
thereof.

         15.6   Transactions.  If the transactions available to
the Customer include the ability to originate electronic
instructions to the Transfer Agent in order to (i) effect the
transfer or movement of Shares or direct ELP to transfer cash or
(ii) transmit Shareholder information or other information, then
in such event the Transfer Agent shall be entitled to rely on the
validity and authenticity of such instructions without
undertaking any further inquiry as long as such instructions are
undertaken in conformity with security procedures established by
the Transfer Agent from time to time.

16.      Confidentiality.

         16.1   Covenant.  The Transfer Agent and the Customer
agree that they will not, at any time during the term of this
Agreement or after its termination, reveal, divulge, or make
known to any person, firm, corporation or other business
organization, any customers' lists, trade secrets, cost figures
and projections, profit figures and projections, or any other
secret or confidential information whatsoever, whether of the
Transfer Agent or of the Customer, used or gained by the Transfer
Agent or the Customer during performance under this Agreement.
The Customer and the Transfer Agent further covenant and agree to
retain all such knowledge and information acquired during and
after the term of this Agreement respecting such lists, trade
secrets, or any secret or confidential information whatsoever in
trust for the sole benefit of the Transfer Agent or the Customer
and their successors and assigns.  The above prohibition of
disclosure shall not apply to the extent that the Transfer Agent
must disclose such data to its sub-contractor or agent for
purposes of providing services under this Agreement.

         16.2   Request for Records.  In the event that any
requests or demands are made for the inspection of the
Shareholder records of the Customer, other than request for
records of Shareholders pursuant to standard subpoenas from state
or federal government authorities (e.g., in divorce and criminal
actions), the Transfer Agent will endeavor to notify the Customer
and to secure instructions from an authorized officer of the
Customer as to such inspection.  The Transfer Agent expressly
reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by counsel that it may be
held liable for the failure to exhibit the Shareholder records to
such person or if required by law or court order.






                               28



<PAGE>

17.  Term and Termination.

         17.1   Term.  The Initial Term of this Agreement shall
be three (3) years from the date first stated above unless
terminated pursuant to the provisions of this Section 17.  Unless
a terminating party gives written notice to the other party sixty
(60) days before the expiration of the Initial Term this
Agreement will renew automatically from year to year ("Renewal
Term").  Sixty (60) days before the expiration of the Initial
Term or a Renewal Term the parties to this Agreement will agree
upon a Fee Schedule for the upcoming Renewal Term.  If no new fee
schedule is agreed upon, the fees will increase as set forth in
Section 8.2.

         17.2   Early Termination.  Notwithstanding anything
contained in this Agreement to the contrary, should Customer
desire to move any of its Services provided by the Transfer Agent
hereunder to a successor service provider prior to the expiration
of the then current Initial or Renewal Term, or without the
required notice period, the Transfer Agent shall make a good
faith effort to facilitate the conversion on such prior date,
however, there can be no guarantee that the Transfer Agent will
be able to facilitate a conversion of Services on such prior
date.  In connection with the foregoing, should Services be
converted to a successor service provider, or if the Customer is
liquidated or its assets merged or purchased or the like with
another entity which does not utilize the services of the
Transfer Agent, the fees payable to the Transfer Agent shall be
calculated as if the services had remained with the Transfer
Agent until the expiration of the then current Initial or Renewal
Term and calculated at existing rates on the date notice of
termination was given to the Transfer Agent, and the payment of
fees to the Transfer Agent as set forth herein shall be
accelerated to the date prior to the conversion or termination of
services.  Section 17.2 shall not apply if the Transfer Agent is
terminated for cause under Section 17.4(a) of this Agreement.

         17.3   Expiration of Term.  After the expiration of the
Initial Term or Renewal Term whichever currently in effect,
should either party exercise its right to terminate, all
reasonable out-of-pocket expenses or costs associated with the
movement of records and material will be borne by the Customer.
Additionally, the Transfer Agent reserves the right to charge for
any other reasonable expenses associated with such termination
and a de-conversion/transition fee in an amount equal to 25% of
the aggregate fees incurred by Customer during the immediately
preceding twelve (12) month period, provided, however, such fee
shall in no event be less than $3,750.00





                               29



<PAGE>

         17.4   Termination.

         This Agreement may be terminated in accordance with the
following:

                (a)   at any time by any party upon a material
                      breach of a representation, covenant or
                      term of this Agreement by any other
                      unaffiliated party which is not cured
                      within a period not to exceed thirty (30)
                      days after the date of written notice
                      thereof by one of the other parties; and

                (b)   by Transfer Agent, at any time, in the
                      event that during the term of this
                      Agreement, a bankruptcy or insolvency
                      proceeding is filed by or against Customer
                      or a trustee or receiver is appointed for
                      any substantial part of Customer's property
                      (and in a case of involuntary bankruptcy,
                      insolvency or receivership proceeding,
                      there is entered an order for relief, or
                      order appointing a receiver or some similar
                      order or decree and Customer does not
                      succeed in having such order lifted or
                      stayed within sixty (60) days from the date
                      of its entry), or Customer makes an
                      assignment of all or substantially all of
                      its property for  the benefit of creditors
                      or ceases to conduct its operations in the
                      normal course or business.

         17.5    Records.  Upon receipt of written notice of
termination, the parties will use commercially practicable
efforts to effect an orderly termination of this Agreement.
Without limiting the foregoing, Transfer Agent will deliver
promptly to Customer, in machine readable form on media as
reasonably requested by Customer, all Shareholder and other
records, files and data supplied to or compiled by Transfer Agent
on behalf of Customer.

18.  Assignment.

         18.1   Affiliates.  The Transfer Agent may, without
further consent of the Customer assign its rights and obligations
hereunto to any affiliated transfer agent registered under
Section 17(A)(c)(2) of the Securities and Exchange Act.

         18.2   Sub-contractors.  Transfer Agent may, without
further consent on the part of Customer, subcontract with other
subcontractors for telephone and mailing services as may be


                               30



<PAGE>

required from time to time; provided, however, that the Transfer
Agent shall be as fully responsible to the Customer for the acts
and omissions of any subcontractor as it is for its own acts and
omissions.

19.  Unaffiliated Third Parties.

         Nothing herein shall impose any duty upon the Transfer
Agent in connection with or make the Transfer Agent liable for
the actions or omissions to act of unaffiliated third parties
such as, by way of example and not limitation, airborne services,
the U.S. mails and telecommunication companies, provided, if the
Transfer Agent selected such company, the Transfer Agent shall
have exercised due care in selecting the same.

20.      Miscellaneous.

         20.1   Notices.

         Any notice or communication by the Transfer Agent or the
Customer to the other is duly given if in writing and delivered
in person or mailed by first class mail, postage prepaid, telex,
telecopier or overnight air courier guaranteeing next day
delivery, to the other's address:

         If to the Customer:

         Company Name
         Address
         Address, Zip
         Telecopy No.:  (   )   xxx-xxxx
         Attn:

         If to the Transfer Agent:
         EquiServe Trust Company, N.A.
         c/o EquiServe Limited Partnership
         150 Royall Street
         Canton, MA  02021
         Telecopy No.: (781) 575-4188.........................
         Attn:  General Counsel

         The Transfer Agent and the Customer may, by notice to
the other, designate additional or different addresses for
subsequent notices or communications.

         20.2   Successors.

         All the covenants and provisions of this agreement by or
for the benefit of the Customer or the Transfer Agent shall bind
and inure to the benefit of their respective successors and
assigns hereunder.


                               31



<PAGE>

         20.3   Amendments.

         This Agreement may be amended or modified by a written
amendment executed by the parties hereto and, to the extent
required, authorized or approved by a resolution of the Board of
Directors of the Customer.

         20.4   Severability.

         If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of
the terms, provision, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.

         20.5   Governing Law.

         This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts.

         20.6   Force Majeure.

         Notwithstanding anything to the contrary contained
herein, Transfer Agent shall not be liable for any delays or
failures in performance resulting from acts beyond its reasonable
control including, without limitation, acts of God, shortage of
supply, breakdowns or malfunctions, interruptions or malfunction
of computer facilities, or loss of data due to power failures or
mechanical difficulties with information storage or retrieval
systems, labor difficulties, war, or civil unrest.

         20.7   Descriptive Headings.

         Descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions
hereof.

         20.8   Third Party Beneficiaries.

         The provisions of this Agreement are intended to benefit
only the Transfer Agent, the Customer and their respective
permitted successors and assigns.  No rights shall be granted to
any other person by virtue of this agreement, and there are no
third party beneficiaries hereof.







                               32



<PAGE>

         20.9   Survival.

         All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and protection
of proprietary rights and trade secrets shall survive the
termination of this Agreement.

         20.10  Priorities.

         In the event of any conflict, discrepancy, or ambiguity
between the terms and conditions contained in this Agreement and
any schedules or attachments hereto, the terms and conditions
contained in this Agreement shall take precedence.

         20.11  Merger  of Agreement.

         This agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof, whether oral or written.

         20.12  Counterparts.

         This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.

                IN WITNESS WHEREOF, each of the parties hereto
has caused this Agreement to be executed by one of its officers
thereunto duly authorized, all as of the date first written
above.

ALLIANCE NATIONAL MUNICIPAL INCOME FUND, INC.


By: _________________________
Name:  ______________________
Title: ______________________


EQUISERVE LIMITED PARTNERSHIP


By: _________________________
Name: _______________________
Title: ______________________


EQUISERVE TRUST COMPANY, N.A.




                               33



<PAGE>

By: _________________________
Name: _______________________
Title: ______________________


















































                               34
00250209.AL0

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2K OTH CONTRCT
<SEQUENCE>12
<FILENAME>k2_00250209an2.txt
<TEXT>



<PAGE>

             ALLIANCE GLOBAL INVESTOR SERVICES, INC.

              SHAREHOLDER INQUIRY AGENCY AGREEMENT

         AGREEMENT, dated as of [____________], 2001, between
Alliance National Municipal Income Fund, Inc., a Maryland
Corporation and a closed-end investment company registered with
the Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940 (the "Investment Company Act"),
having its principal place of business at 1345 Avenue of
Americas, New York, New York 10105 (the "Fund"), and ALLIANCE
GLOBAL INVESTOR SERVICES, INC., a Delaware corporation, having
its principal place of business at 500 Plaza Drive, Secaucus, New
Jersey 07094 ("AGIS").

         WHEREAS, AGIS has agreed to act as shareholder inquiry
agent to the Fund for the purpose of responding to telephone
inquiries concerning the Fund and matters relating thereto from
Shareholders and others;

         NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the parties do hereby
agree as follows:

         SECTION 1. Upon the terms set forth in this Agreement,
the Fund hereby appoints AGIS as its shareholder inquiry agent,
and AGIS agrees to act in that capacity.  Capitalized terms used
in this Agreement and not otherwise defined shall have the
meanings assigned to them in SECTION 10.

         SECTION 2.

         (a)  As shareholder inquiry agent hereunder, AGIS shall
respond to telephone inquiries concerning the Fund and matters
relating thereto from Shareholders and others.

         (b)  In responding to the inquiries referred to in
SECTION 2(a), AGIS shall be limited to providing information that
is otherwise publicly available.

         (c)  With respect to any inquiries that AGIS is unable
to respond to or which are beyond the scope of its services under
this Agreement, to the extent reasonable under the circumstances,
AGIS shall direct such inquiries to the appropriate person.

         SECTION 3. The Fund shall provide AGIS with copies of
any materials relating to the Fund that are reasonably requested
by AGIS for the purposes of performing its services under this
Agreement.




<PAGE>

         SECTION 4. Upon the declaration of each dividend and
each capital gains distribution by the Fund's Directors, the Fund
shall notify AGIS of the date of such declaration, the amount
payable per Share, the record date for determining the
Shareholders entitled to payment, the payment and the
reinvestment date price.

         SECTION 5. Nothing contained in this Agreement is
intended to or shall require AGIS to perform any functions or
duties on any day other than a Business Day.  Functions or duties
normally scheduled to be performed on any day which is not a
Business Day shall be performed on, and as of, the next Business
Day, unless otherwise required by law.

         SECTION 6. For the services rendered by AGIS as
described above, the Fund shall pay to AGIS a fee at a rate to be
mutually agreed upon from time to time, provided that in no event
shall the fee be more than the cost to AGIS of providing such
services.

         SECTION 7. AGIS shall not be liable for any taxes,
assessments or governmental charges that may be levied or
assessed on any basis whatsoever in connection with the Fund or
any Shareholder, excluding taxes assessed against AGIS for
compensation received by it hereunder.

         SECTION 8.

         (a)  AGIS shall at all times act in good faith and with
reasonable care in performing the services to be provided by it
under this Agreement, but shall not be liable for any loss or
damage unless such loss or damage is caused by the negligence,
bad faith or willful misconduct of AGIS or its employees or
agents.

         (b)  Without limiting the foregoing:

              (i)  AGIS may rely upon the statements and
instructions of Fund officers and advice of the Fund or counsel
to the Fund or AGIS.  AGIS shall not be liable for any action
taken in good faith reliance upon such instructions or advice;

              (ii) AGIS shall not be liable for any action
reasonably taken in good faith reliance upon any such
instructions or advice or upon a certified copy of any resolution
of the Fund's Directors.  AGIS may rely upon the genuineness of
any document, or copy thereof, reasonably believed by AGIS in
good faith to have been validly executed;

              (iii)  AGIS may rely, and shall be protected by the
Fund in acting, upon any signature, instruction, request, opinion


                                2



<PAGE>

of counsel, statement, report, notice or other document
reasonably believed by it in good faith to be genuine and to have
been duly signed or presented on behalf of the Fund.

         (c)  The Fund shall indemnify AGIS and hold it harmless
from any and all losses, costs, damages, liabilities and
expenses, including reasonable expenses of counsel, incurred by
it resulting from any claim, demand, action or suit in connection
with the performance of its duties hereunder, including any
error, omission, inaccuracy or other deficiency contained in
materials provided to AGIS by the Fund, or as a result of acting
upon any instruction reasonably believed by it to have been
properly given by a duly authorized officer of the Fund, or out
of the failure of the Fund to provide any information in the
Fund's possession needed by AGIS to knowledgeably perform its
functions; provided the Fund shall have no obligation to
indemnify AGIS or hold it harmless with respect to any expenses,
damages, claims, suits, liabilities, actions, demands or losses
caused directly or indirectly by acts or omissions of AGIS, and
provided that this indemnification shall not apply to actions or
omissions of AGIS in cases of its own bad faith, willful
misconduct or negligence, and provided further that if in any
case the Fund may be asked to indemnify or hold AGIS harmless
pursuant to this Section, the Fund shall have been fully and
promptly advised by AGIS of all material facts concerning the
situation in question.  The Fund shall have the option to defend
AGIS against any claim which may be the subject of this
indemnification, and in the event that the Fund so elects, it
will so notify AGIS, and thereupon the Fund shall retain
competent counsel to undertake defense of the claim, and AGIS
shall in such situations incur no further legal or other expenses
for which it may seek indemnification under this Section.

         SECTION 9. This Agreement may be amended from time to
time by a written supplemental agreement executed by the Fund and
AGIS and without notice to or approval of the Shareholders;
provided this Agreement may not be amended in any manner which
would substantially increase the Fund's obligations hereunder
unless the amendment is first approved by the Fund's Directors,
including a majority of the Directors who are not a party to this
Agreement or interested persons of any such party, at a meeting
called for such purpose, and thereafter is approved by the
Shareholders if such approval is required under the Investment
Company Act or the rules and regulations thereunder.  The parties
hereto may adopt procedures as may be appropriate or practical
under the circumstances, and AGIS may conclusively rely on the
determination of the Fund that any procedure that has been
approved by the Fund does not conflict with or violate any
requirement of its Articles of Incorporation or By-Laws, or any
rule, regulation or requirement of any regulatory body.



                                3



<PAGE>

         SECTION 10. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or supplement
hereto, shall have the meanings specified below, insofar as the
context will allow.

         (a)  Business Day: The term Business Day shall mean any
day on which the Fund is open for business as described in its
Prospectus.

         (b)  Shareholders: The term Shareholders shall mean the
registered owners from time to time of the Shares, as reflected
on the stock registry records of the Fund.

         (c)  Shares: The term Shares shall mean all or any part
of each class of the shares of capital stock of the Fund which
from time to time are authorized and/or issued by the Fund.

         SECTION 11. AGIS shall not be liable for any delays or
errors occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military
authorities, national emergencies, fire, flood or catastrophe,
acts of God, insurrection, war, riot, or failure of
transportation, communication or power supply, except to the
extent that AGIS shall have failed to use its best efforts to
minimize the likelihood of occurrence of such circumstances or to
mitigate any loss or damage to the Fund caused by such
circumstances.

         SECTION 12. The Fund may give AGIS sixty (60) days and
AGIS may give the Fund ninety (90) days written notice of the
termination of this Agreement, such termination to take effect at
the time specified in the notice.  Upon notice of termination,
the Fund may, but is not required to, appoint a successor
shareholder inquiry agent.  Upon receipt from the Fund of written
notice of the appointment of the successor shareholder inquiry
agent and related instructions, AGIS shall, upon request of the
Fund and the successor shareholder inquiry agent and upon payment
of AGIS' reasonable charges and disbursements, promptly transfer
to the successor shareholder inquiry agent all materials held by
AGIS hereunder and cooperate with, and provide reasonable
assistance to, the successor shareholder inquiry agent in the
transition to carry out its responsibilities hereunder.

         SECTION 13. Any notice or other communication required
by or permitted to be given in connection with this Agreement
shall be in writing, and shall be delivered in person or sent by
first-class mail, postage prepaid, to the respective parties.

         Notice to the Fund shall be given as follows until
further notice:



                                4



<PAGE>

              Alliance National Municipal Income Fund, Inc. 1345
Avenue of the Americas New York, New York 10105 Attention;
Secretary

         Notice to AGIS shall be given as follows until further
notice:

              Alliance Global Investor Services, Inc. 500 Plaza
Drive Secaucus, New Jersey 07094

         SECTION 14. The Fund represents and warrants to AGIS
that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly
authorized by resolution of the Fund's Directors, AGIS represents
and warrants to the Fund that the execution and delivery of this
Agreement by the undersigned officer of AGIS has also been duly
and validly authorized.

         SECTION 15. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original,
and shall become effective as of [___________], 2001, unless
otherwise agreed by the parties.  Unless sooner terminated
pursuant to SECTION 12, this Agreement will continue until
[______________], 2002 and will continue in effect thereafter for
successive 12 month periods only if such continuance is
specifically approved at least annually by the Directors or by a
vote of the Shareholders and in either case by a majority of the
Directors who are not parties to this Agreement or interested
persons of any such party, at a meeting called for the purpose of
voting on this Agreement.

         SECTION 16. This Agreement shall extend to and shall
bind the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of AGIS or by
AGIS without the written consent of the Fund, authorized or
approved by a resolution of the Fund's Directors.
Notwithstanding the foregoing, either party may assign this
Agreement without the consent of the other party so long as the
assignee is an affiliate, parent or subsidiary of the assigning
party and is qualified to act under the Investment Company Act,
as amended from time to time.

         SECTION 17. This Agreement shall be governed by the laws
of the state of New York.








                                5



<PAGE>

         WITNESS the following signatures;

                 Alliance National Municipal Income Fund, Inc.


                 By:______________________________


                 Title:___________________________



                 ALLIANCE GLOBAL INVESTOR SERVICES, INC.


                 By:______________________________


                 Title:___________________________


































                                6
00250209.AN2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2P STOCK LTR
<SEQUENCE>13
<FILENAME>p_00250209ao0.txt
<TEXT>



<PAGE>


                Alliance Capital Management L.P.
                   1345 Avenue of the Americas
                    New York, New York  10105


                        January 18, 2002


Alliance National Municipal
  Income Fund, Inc.
1345 Avenue of the Americas
New York, New York  10105

Ladies and Gentlemen:

         This is to confirm that, in connection with our purchase
of 6,667 shares of Common Stock of Alliance National Municipal
Income Fund, Inc. (the "Corporation") for an aggregate cash
consideration of One Hundred Thousand Five Dollars ($100,005), we
are buying such shares for investment for our account only and
not with a view to reselling or otherwise distributing them.

                             Very truly yours,

                             ALLIANCE CAPITAL MANAGEMENT L.P.

                             By:  Alliance Capital Management
                                    Corporation,
                                    its General Partner



                             By:  /s/
                                  ---------------------------


















00250209.AO0

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