<DOCUMENT>
<TYPE>EX-99.(B)
<SEQUENCE>4
<FILENAME>b48195isexv99wxby.txt
<DESCRIPTION>AMENDED AND RESTATED BY-LAWS
<TEXT>
<PAGE>

                                                                   EXHIBIT 99(b)

                              AMENDED AND RESTATED

                                     BY-LAWS

                                       OF

                      JOHN HANCOCK INCOME SECURITIES TRUST

                             DATED DECEMBER 6, 1996
                           AS AMENDED AND RESTATED ON
                                 AUGUST 26, 2003

<PAGE>

                                Table of Contents

<TABLE>
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ARTICLE I     DEFINITIONS....................................................................................     1

ARTICLE II    OFFICES........................................................................................     1
     Section 2.1.  Principal Office..........................................................................     1
     Section 2.2.  Other Offices.............................................................................     1

ARTICLE III   SHAREHOLDERS...................................................................................     1
     Section 3.1.  Meetings..................................................................................     1
     Section 3.2.  Annual Meetings...........................................................................     1
     Section 3.3.  Notice of Meetings........................................................................     1
     Section 3.4.  Record Date for Meetings and Other Purposes...............................................     2
     Section 3.5.  Proxies...................................................................................     2
     Section 3.6.  Abstentions and Broker Non-Votes..........................................................     2
     Section 3.7.  Quorum....................................................................................     3
     Section 3.8.  Action at Meeting.........................................................................     3
     Section 3.9.  Action without Meeting....................................................................     3
     Section 3.10. Inspection of Records.....................................................................     3
     Section 3.11. Special Meetings..........................................................................     3
     Section 3.12. Nominations and Proposals by Shareholders.................................................     6

ARTICLE IV    TRUSTEES.......................................................................................     8
     Section 4.1.  Meetings of the Trustees..................................................................     8
     Section 4.2.  Quorum and Manner of Acting...............................................................     8

ARTICLE V     COMMITTEES.....................................................................................     8
     Section 5.1.  Executive and Other Committees............................................................     8
     Section 5.2.  Meetings, Quorum and Manner of Acting.....................................................     9

ARTICLE VI    OFFICERS.......................................................................................     9
     Section 6.1.  General Provisions........................................................................     9
     Section 6.2.  Election, Term of Office and Qualifications...............................................     9
     Section 6.3.  Removal...................................................................................     9
     Section 6.4.  Powers and Duties of the Chairman.........................................................    10
     Section 6.5.  Powers and Duties of the Vice Chairman....................................................    10
     Section 6.6.  Powers and Duties of the President........................................................    10
     Section 6.7.  Powers and Duties of Vice Presidents......................................................    10
     Section 6.8.  Powers and Duties of the Treasurer........................................................    10
     Section 6.9.  Powers and Duties of the Secretary........................................................    10
     Section 6.10. Powers and Duties of Assistant Officers...................................................    11
     Section 6.11. Powers and Duties of Assistant Secretaries................................................    11
     Section 6.12. Compensation of Officers and Trustees and Members
                   of the Advisory Board.....................................................................    11
</TABLE>

                                      -i-

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<S>                                                                                                             <C>
ARTICLE VII   SHARES OF BENEFICIAL INTEREST..................................................................    11
     Section 7.1.  Share certificates........................................................................    11
     Section 7.2.  Transfers of Pledged Shares...............................................................    11
     Section 7.3.  Regulations...............................................................................    12
     Section 7.4.  Lost, Destroyed or Mutilated Certificates.................................................    12

ARTICLE VIII  TERMS OF AUCTION PREFERRED SHARES..............................................................    12
     Section 8.1.  Designation...............................................................................    12
     Section 8.2.  Definitions...............................................................................    13
     Section 8.3.  Investment Company Act Preferred Share Asset Coverage and Preferred Shares Basic
     Maintenance Amount Coverage.............................................................................    38
     Section 8.4.  Dividends.................................................................................    41
     Section 8.5.  Liquidation Rights........................................................................    48
     Section 8.6.  Redemption................................................................................    49
     Section 8.7.  Voting Rights.............................................................................    53
     Section 8.8.  Other Restrictions........................................................................    57
     Section 8.9.  Auction Procedures........................................................................    60

ARTICLE IX    Terms of Common Shares.........................................................................    73
     Section 9.1.  Designation...............................................................................    73
     Section 9.2.  Common Shares.............................................................................    73

ARTICLE X     FISCAL YEAR....................................................................................    73

ARTICLE XI    SEAL...........................................................................................    74

ARTICLE XII   SUFFICIENCY AND WAIVERS OF NOTICE..............................................................    74

ARTICLE XIII  AMENDMENTS.....................................................................................    74
</TABLE>

                                      -ii-

<PAGE>

                              AMENDED AND RESTATED

                                   BY-LAWS OF

                      JOHN HANCOCK INCOME SECURITIES TRUST

                                 AUGUST 26, 2003

         The Amended and Restated By-Laws (the "By-Laws") of the John Hancock
Income Securities Trust (the "Trust") have been adopted pursuant to the
authority granted by Section 2.10 of the Trust's Amended and Restated
Declaration of Trust (the "Declaration of Trust") dated August 26, 2003 and
filed in the Office of the Secretary of The Commonwealth of Massachusetts.

                                   ARTICLE I

                                  DEFINITIONS

         All capitalized terms have the respective meanings given them in the
Declaration of Trust, as amended or restated from time to time.

                                   ARTICLE II

                                     OFFICES

         Section 2.1. Principal Office. Until changed by the Trustees, the
principal office of the Trust shall be in Boston, Massachusetts.

         Section 2.2. Other Offices. The Trust may have offices in such other
places without as well as within The Commonwealth of Massachusetts as the
Trustees may from time to time determine.

                                  ARTICLE III

                                  SHAREHOLDERS

         Section 3.1. Meetings. Meetings of the Shareholders of the Trust or a
Series or Class thereof shall be held as provided in the Declaration of Trust or
required by the 1940 Act at such place within or without The Commonwealth of
Massachusetts as the Trustees shall designate.

         Section 3.2. Annual Meetings. The annual meeting of the Shareholders of
the Trust for the election of Trustees and the transaction of other proper
business shall be held on a date, not a legal holiday, and at a time and place
to be set annually by resolution of the Trustees.

         Section 3.3. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail or telegraphic means to each Shareholder at his
address as recorded on the register of the Trust mailed at least seven (7) days
before the meeting, provided, however, that notice of a meeting need not be
given

                                      -1-
<PAGE>

to a Shareholder to whom such notice need not be given under the proxy rules of
the Commission under the 1940 Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Any adjourned meeting may be held as adjourned
without further notice. No notice need be given to any Shareholder who shall
have failed to inform the Trust of his current address or if a written waiver of
notice, executed before or after the meeting by the Shareholder or his attorney
thereunto authorized, is filed with the records of the meeting.

         Section 3.4. Record Date for Meetings and Other Purposes. For the
purpose of determining the Shareholders who are entitled to notice of and to
vote at any meeting, or to participate in any distribution, or for the purpose
of any other action, the Trustees may from time to time close the transfer books
for such period, not exceeding sixty (60) days, as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date not more than
ninety (90) days prior to the date of any meeting of Shareholders or
distribution or other action as a record date for the determination of the
persons to be treated as Shareholders of record for such purposes, except for
dividend payments which shall be governed by the Declaration of Trust.

         Section 3.5. Proxies. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken. A
proxy shall be deemed signed if the Shareholder's name is placed on the proxy
(whether by manual signature, typewriting or telegraphic transmission) by the
Shareholder or the Shareholder's attorney-in-fact. Proxies may be solicited in
the name of one or more Trustees or one or more of the officers of the Trust.
Only Shareholders of record shall be entitled to vote. Each whole share shall be
entitled to one vote as to any matter on which it is entitled by the Declaration
of Trust to vote and fractional shares shall be entitled to a proportionate
fractional vote. When any Share is held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect of such Share, but
if more than one of them shall be present at such meeting in person or by proxy,
and such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy,
including a photographic or similar reproduction thereof and a telegram,
cablegram, wireless or similar transmission thereof, purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise, and the burden of proving invalidity shall rest on the
challenger. If the holder of any such Share is a minor or a person of unsound
mind, and subject to guardianship or the legal control of any other person as
regards the charge or management of such Share, he may vote by his guardian or
such other person appointed or having such control, and such vote may be given
in person or by proxy. The placing of a Shareholder's name on a proxy pursuant
to telephonic or electronically transmitted instructions obtained pursuant to
procedures reasonably designed to verify that such instructions have been
authorized by such Shareholder shall constitute execution of such proxy by or on
behalf of such Shareholder.

         Section 3.6. Abstentions and Broker Non-Votes. Outstanding Shares
represented in person or by proxy (including Broker Non-Votes and Shares which
abstain with respect to one or more proposals presented for Shareholder
approval) will be counted for purposes of determining whether a quorum is
present at a meeting. Except as otherwise provided by law, abstentions will

                                      -2-
<PAGE>

be treated as Shares that are present and entitled to vote for purposes of
determining the number of Shares that are present and entitled to vote with
respect to any particular proposal, but will not be counted as a vote cast on
such proposal. A "Broker Non-Vote" occurs if a broker or nominee holding Shares
in "street name" indicates on the proxy that it does not have discretionary
authority to vote as to a particular proposal. For avoidance of any doubt,
Broker Non-Votes shall not include preferred shares which the broker is
permitted to proportionately vote in accordance with applicable law or rules of
a national securities exchange. Except as otherwise provided by law, Broker
Non-Votes will be treated as present and entitled to vote for purposes of
determining the number of Shares that are present and entitled to vote with
respect to such proposal, but will not be counted as a vote cast on such
proposal.

         Section 3.7. Quorum. Except as otherwise provided by law, the Trust's
Declaration of Trust or these By-laws, the holders of a majority of the Shares
issued and outstanding and entitled to vote at the meeting, present in person,
present by means of remote communication in a manner, if any, authorized by the
Board of Trustees in its sole discretion, or represented by proxy, shall
constitute a quorum for the transaction of business. A quorum, once established
at a meeting, shall not be broken by the withdrawal of enough votes to leave
less than a quorum.

         Section 3.8. Action at Meeting. When a quorum is present at any
meeting, any matter other than the election of Trustees to be voted upon by the
Shareholders at such meeting shall be decided by the vote of the holders of
Shares having a majority of the votes cast by the holders of all of the Shares
present or represented and voting on such matter (or if there are two or more
classes of shares entitled to vote as separate classes, then in the case of each
such class, the holders of a majority of the shares of that class present or
represented and voting on such matter), except when a different vote is required
by law, the Trust's Declaration of Trust or these By-laws. When a quorum is
present at any meeting, any election by Shareholders of Trustees shall be
determined by a plurality of the votes cast by the Shareholders entitled to vote
on the election.

         Section 3.9. Action without Meeting. For as long as there are under one
hundred fifty (150) shareholders, any action which may be taken by Shareholders
may be taken without a meeting if a majority of Outstanding Shares entitled to
vote on the matter (or such larger proportion thereof as shall be required by
law, the Declaration of Trust, or the By-laws) consent to the action in writing
and the written consents are filed with the records of the meetings of
Shareholders. Such consents shall be treated for all purposes as a vote taken at
a meeting of Shareholders.

         Section 3.10. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.

         Section 3.11. Special Meetings.

         (a)      Special meetings of the Shareholders may be called at any time
by the Chairman, the President or the Trustees. Subject to subsection (c) of
this Section 3.11, a special meeting of Shareholders shall also be called by the
Secretary of the Trust upon the written request of the Shareholders entitled to
cast the percentage of the outstanding votes specified in the Declaration

                                      -3-
<PAGE>

of Trust and only if the Shareholder is seeking to call a meeting on a matter
with respect to which the Shareholders are entitled to vote under the
Declaration of Trust without prior action by the Trustees.

         (b)      Any Shareholder of record seeking to have Shareholders request
a special meeting shall, by sending written notice to the Secretary (the "Record
Date Request Notice") by registered mail, return receipt requested, request the
Trustees to fix a record date to determine the Shareholders entitled to request
a special meeting (the "Requested Record Date"). The Record Date Request Notice
shall set forth the purpose of the meeting and the matters proposed to be acted
on, shall be signed by one or more Shareholders of record as of the date of
signature (or their duly authorized agents), shall bear the date of signature of
each such Shareholder (or other agent) and shall set forth all information
relating to each such Shareholder that must be disclosed in solicitations of
proxies for election of trustees in an election contest (even if an election
contest is not involved), or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act and the rules thereunder. Upon receiving
the Record Date Request Notice, the Trustees may fix a Requested Record Date.
The Requested Record Date shall not precede and shall not be more than ten (10)
days after the close of business on the date on which the resolution fixing the
Requested Record Date is adopted by the Trustees. If the Trustees, within thirty
(30) days after the date on which a valid Record Date Request Notice is
received, fails to adopt a resolution fixing the Requested Record Date and make
a public announcement of such Requested Record Date, the Requested Record Date
shall be the close of business on the 30th after the first date on which the
Record Date Request Notice is received by the Secretary.

         (c)      In order for any Shareholder to request a special meeting, one
or more written requests for a special meeting signed by Shareholders of record
(or their duly authorized agents) as of the Requested Record Date entitled to
cast the percentage of the outstanding shares specified in the Declaration of
Trust (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 it (which shall be
limited to the matters set forth in the Record Date Request Notice received by
the Secretary), shall bear the date of signature of each such Shareholder (or
other agent) signing the Special Meeting Request, shall set forth the name and
address, as they appear in the Trust's books, of each Shareholder signing such
request (or on whose behalf the Special Meeting Request is signed) and the class
and number of shares of the Trust which are owned of record and beneficially by
each such Shareholder, shall be sent to the Secretary by registered mail, return
receipt requested, and shall be received by the Secretary within sixty (60) days
after the Requested Record Date. Any requesting Shareholder may revoke his, her
or its request for a special meeting at any time by written revocation delivered
to the Secretary.

         (d)      The Secretary shall inform the requesting Shareholders of the
reasonably estimated cost of preparing and mailing the notice of meeting
(including the Trust's proxy materials). The Secretary shall not be required to
call a special meeting upon Shareholder request and such meeting shall not be
held unless, in addition to the documents required by paragraphs (b) and (c) of
this Section 3.11, the Secretary receives payment of such reasonably estimated
cost prior to the mailing of any notice of the special meeting.

                                      -4-
<PAGE>

         (e)      Except as provided in the next sentence, any special meeting
shall be held at such place, date and time as may be designated by the
President, Chairman or Trustees, whoever has called the meeting. In the case of
any special meeting called by the Secretary upon the request of Shareholders (a
"Shareholder Requested Meeting"), such meeting shall be held at such place, date
and time as may be designated by the Trustees; provided, however, that the date
of any Shareholder Requested Meeting shall be not more than ninety (90) days
after the record date for such meeting (the "Meeting Record Date"); and provided
further that if the Trustees fail to designate, within thirty (30) 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 Shareholder Requested
Meeting, then such meeting shall be held at 2:00 p.m. Eastern Time on the 90th
day after the Delivery Date or, if such 90th day is not a business day, on the
first preceding business day; and provided further that in the event that the
Trustees fail to designate a place for a Shareholder Requested Meeting within
thirty (30) days after the Delivery Date, then such meeting shall be held at the
principal executive offices of the Trust. In fixing a date for any special
meeting, the President, Chairman or Trustees may consider such factors as he,
she, or they deem(s) 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 Trustees to call an annual meeting or a special meeting. In
the case of any Shareholder Requested Meeting, if the Trustees fail to fix a
Meeting Record Date that is a date within thirty (30) days after the Delivery
Date, then the close of business on the 30th day after the Delivery Date shall
be the Meeting Record Date.

         (f)      If at any time as a result of written revocations of requests
for the special meeting, Shareholders of record (or their duly authorized
agents) as of the Requested Record Date shall have delivered and not revoked
requests for a 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 (10) days
prior to the meeting if the Secretary has first sent to all other requesting
Shareholders written notice of such revocation and of 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.

         (g)      The Chairman, the President or the Trustees may appoint
regionally or nationally recognized independent inspectors of elections to act
as the agent of the Trust 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 delivered to the
Secretary until the earlier of (i) five (5) business days after receipt by the
Secretary of such purported request and (ii) such date as the independent
inspectors certify to the Trust 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 (g) shall in any way be construed to suggest or imply that the Trust
or any Shareholder shall not be entitled to contest the validity of any request,
whether during or after such five (5) 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).

                                      -5-
<PAGE>

         Section 3.12. Nominations and Proposals by Shareholders.

         (a)      Annual Meetings of Shareholders. Nominations of persons for
election as a Trustee and the proposal of business to be considered by the
Shareholders may be made at an annual meeting of Shareholders (i) pursuant to
the Trust's notice of meeting, (ii) by or at the direction of the Trustees or
(iii) by any Shareholder of the Trust who was a Shareholder of record both at
the time of giving of notice provided for in this Section 3.12(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 3.12(a). For
nominations for election to the Trustees or other business to be properly
brought before an annual meeting by a Shareholder pursuant to this Section
3.12(a), the Shareholder must have given timely notice thereof in writing to the
Secretary of the Trust and such other business must otherwise be a proper matter
for action by Shareholders. To be timely, a Shareholder's notice must be
delivered to the Secretary at the principal executive office of the Trust by not
later than the close of business on the 90th 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 for the annual meeting is advanced or delayed by more than thirty
(30) days from the anniversary date of the mailing of the notice for the
preceding year's annual meeting, notice by the Shareholder 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 such annual meeting and not later than the
close of business on the later of the 90th day prior to the date of mailing of
the notice for such annual meeting or the 10th day following the day on which
public announcement of the date of mailing of the notice for such meeting is
first made by the Trust. In no event shall the public announcement of a
postponement of the mailing of the notice for such annual meeting or of an
adjournment or postponement of an annual meeting to a later date or time
commence a new time period for the giving of a Shareholder's notice as described
above. A Shareholder's notice to be proper must set forth (i) as to each person
whom the Shareholder proposes to nominate for election or reelection as a
trustee (A) the name, age, business address and residence address of such
person, (B) the class and number of shares of the Trust that are beneficially
owned or owned of record by such person and (C) all other information relating
to such person that is required to be disclosed in solicitations of proxies for
election of trustees in an election contest, 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 the proxy
statement as a nominee and to serving as a trustee if elected); (ii) as to any
other business that the Shareholder 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 Shareholder (including any anticipated benefit to the
Shareholder therefrom) and of each beneficial owner, if any, on whose behalf the
proposal is made; and (iii) as to the Shareholder 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 Shareholder, as they appear on the Trust's
stock ledger and current name and address, if different, and of such beneficial
owner, and (y) the class and number of shares of stock of the Trust which are
owned beneficially and of record by such Shareholder and such beneficial owner.
Notwithstanding anything in the second sentence of paragraph (a)(2) of this
Section 3.12 to the contrary, in the event that the number of trustees to be
elected to the Board of Trustees is increased and there is no public
announcement by the Trust of such action or

                                      -6-
<PAGE>

specifying the size of the increased Trustees at least one hundred (100) days
prior to the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting, a Shareholder's notice required by this Section
3.8(a) shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if the notice is delivered to the
Secretary at the principal executive offices of the Trust not later than the
close of business on the 10th day immediately following the day on which such
public announcement is first made by the Trust.

         (b)      Special Meetings of Shareholders. Only such business shall be
conducted at a special meeting of Shareholders as shall have been brought before
the special meeting pursuant to the Trust's notice of meeting. Nominations of
persons for election to the Trustees may be made at a special meeting of
Shareholders at which trustees are to be elected (i) pursuant to the Trust's
notice of meeting, (ii) by or at the direction of the Trustees or (iii) provided
that the Trustees have determined that trustees shall be elected at such special
meeting, by any Shareholder of the Trust who is a Shareholder of record both at
the time of giving of notice provided for in this Section 3.12(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 3.12(b). In the
event the Trust calls a special meeting of Shareholders for the purpose of
electing one or more Trustees, any such Shareholder may nominate a person or
persons (as the case may be) for election to such position as specified in the
Trust's notice of meeting, if the Shareholder's notice containing the
information required by this Section 3.12(b) shall have been delivered to the
Secretary at the principal executive offices of the Trust 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 90th day prior to such special
meeting or the 10th day following the day on which public announcement is first
made of the date of the special meeting and the nominees proposed by the
Trustees to be elected at such meeting. In no event shall the public
announcement of a postponement or adjournment of a special meeting to a later
date or time commence a new time period for the giving of a Shareholder's notice
as described above.

         (c)      General. Only such persons who are nominated by the Board of
Trustees and in accordance with the procedures set forth in this Section 3.12
shall be eligible to serve as trustee, and only such business shall be conducted
at a meeting of Shareholders as shall have been brought before the meeting in
accordance with the procedures set forth in this Section 3.12. 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 3.12 and, if any proposed nomination or other business is not in
compliance with this Section 3.12, to declare that such nomination or proposal
shall be disregarded. For purposes of this Section 3.12, (a) the "date of
mailing of the notice" shall mean the date of the proxy statement for the
solicitation of proxies for election of trustees and (b) "public announcement"
shall mean disclosure (i) in a press release either transmitted to the principal
securities exchange on which Shares of the Trust's common stock are traded or
reported by a recognized news service or (ii) in a document publicly filed by
the Trust with the Commission.

         (d)      Compliance with State and Federal Law. Notwithstanding the
foregoing provisions of this Section 3.12, a Shareholder 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

                                      -7-
<PAGE>

matters set forth in this Section 3.12. Nothing in this Section 3.12 shall be
deemed to affect any right of a Shareholder to request inclusion of a proposal
in, nor the right of the Trust to omit a proposal from, the Trust's proxy
statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange
Act.

                                   ARTICLE IV

                                    TRUSTEES

         Section 4.1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the President,
the Chairman or by any one of the Trustees, at the time being in office. Notice
of the time and place of each meeting other than regular or stated meetings
shall be given by the Secretary or an Assistant Secretary or by the officer or
Trustee calling the meeting and shall be mailed to each Trustee at least two
days before the meeting, or shall be given by telephone, cable, wireless,
facsimile or electronic means to each Trustee at his business address, or
personally delivered to him at least one day before the meeting. Such notice
may, however, be waived by any Trustee. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any Trustee who attends
the meeting without protesting prior thereto or at its commencement the lack of
notice to him. A notice or waiver of notice need not specify the purpose of any
meeting. The Trustees may meet by means of a telephone conference circuit or
similar communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by such means
shall be deemed to have been held at a place designated by the Trustees at the
meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any meeting of the Trustees may be taken by the Trustees without a meeting if
a majority of the Trustees consent to the action in writing and the written
consents are filed with the records of the Trustees' meetings. Such consents
shall be treated as a vote for all purposes.

         Section 4.2. Quorum and Manner of Acting. A majority of the Trustees
shall be present in person at any regular or special meeting of the Trustees in
order to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration of Trust or these By-laws)
the act of a majority of the Trustees present at any such meeting, at which a
quorum is present, shall be the act of the Trustees. In the absence of a quorum,
a majority of the Trustees present may adjourn the meeting from time to time
until a quorum shall be present. Notice of an adjourned meeting need not be
given.

                                   ARTICLE V

                                   COMMITTEES

         Section 5.1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than two (2) members to hold office at the
pleasure of the Trustees, which shall have the power

                                      -8-
<PAGE>

to conduct the current and ordinary business of the Trust while the Trustees are
not in session, including the purchase and sale of securities and the
designation of securities to be delivered upon redemption of Shares of the
Trust, and such other powers of the Trustees as the Trustees may, from time to
time, delegate to them except those powers which by law, the Declaration of
Trust or these By-laws they are prohibited from delegating. The Trustees may
also elect from their own number other Committees from time to time; the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation
the Committee may elect its own Chairman.

         Section 5.2. Meetings, Quorum and Manner of Acting. The Trustees may
(1) provide for stated meetings of any Committee, (2) specify the manner of
calling and notice required for special meetings of any Committee, (3) specify
the number of members of a Committee required to constitute a quorum and the
number of members of a Committee required to exercise specified powers delegated
to such Committee, (4) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.

         The Executive Committee shall keep regular minutes of its meetings and
records of decisions taken without a meeting and cause them to be recorded in a
book designated for that purpose and kept in the office of the Trust.

                                   ARTICLE VI

                                    OFFICERS

         Section 6.1. General Provisions. The officers of the Trust shall be a
Chairman, a President, a Treasurer and a Secretary, who shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Secretaries, and one or more Assistant Treasurers. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.

         Section 6.2. Election, Term of Office and Qualifications. The officers
of the Trust (except those appointed pursuant to Section 6.10) shall be elected
by the Trustees. Except as provided in Sections 6.3 and 6.4 of this Article VI,
each officer elected by the Trustees shall hold office at the pleasure of the
Trustees. Any two or more offices may be held by the same person. The Chairman
of the Board shall be selected from among the Trustees and may hold such office
only so long as he/she continues to be a Trustee. Any Trustee or officer may be
but need not be a Shareholder of the Trust.

         Section 6.3. Removal. The Trustees, at any regular or special meeting
of the Trustees, may remove any officer with or without cause, by a vote of a
majority of the Trustees then in office. Any officer or agent appointed by an
officer or committee may be removed with or without cause by such appointing
officer or committee.

                                      -9-
<PAGE>

         Section 6.4. Powers and Duties of the Chairman. The Chairman shall
preside at the meetings of the Shareholders and of the Trustees. He may call
meetings of the Trustees and of any committee thereof whenever he deems it
necessary. He shall be the Chief Executive Officer of the Trust and shall have,
with the President, general supervision over the business and policies of the
Trust.

         Section 6.5. Powers and Duties of the Vice Chairman. The Trustees may,
but need not, appoint one or more Vice Chairman of the Trust. A Vice Chairman
shall be an executive officer of the Trust and shall have the powers and duties
of a Vice President of the Trust as provided in Section 6.7 of this Article VI.
The Vice Chairman shall perform such duties as may be assigned to him or her
from time to time by the Trustees or the Chairman.

         Section 6.6. Powers and Duties of the President. The President shall
preside at all meetings of the Shareholders in the absence of the Chairman.
Subject to the control of the Trustees and to the control of any Committees of
the Trustees, within their respective spheres as provided by the Trustees, he
shall at all times exercise general supervision over the business and policies
of the Trust. He shall have the power to employ attorneys and counsel for the
Trust and to employ such subordinate officers, agents, clerks and employees as
he may find necessary to transact the business of the Trust. He shall also have
the power to grant, issue, execute or sign such powers of attorney, proxies or
other documents as may be deemed advisable or necessary in furtherance of the
interests of the Trust. The President shall have such other powers and duties,
as from time to time may be conferred upon or assigned to him by the Trustees.

         Section 6.7. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees, shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees and the President.

         Section 6.8. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. He shall deliver
all funds of the Trust which may come into his hands to such Custodian as the
Trustees may employ. He shall render a statement of condition of the finances of
the Trust to the Trustees as often as they shall require the same and he shall
in general perform all the duties incident to the office of a Treasurer and such
other duties as from time to time may be assigned to him by the Trustees. The
Treasurer shall give a bond for the faithful discharge of his duties, if
required so to do by the Trustees, in such sum and with such surety or sureties
as the Trustees shall require.

         Section 6.9. Powers and Duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the Trustees and of the Shareholders in
proper books provided for that purpose; he shall have custody of the seal of the
Trust; he shall have charge of the Share transfer books, lists and records
unless the same are in the charge of a transfer agent. He shall attend to the
giving and serving of all notices by the Trust in accordance with the provisions
of these By-laws and as required by law; and subject to these By-laws, he shall
in general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.

                                      -10-
<PAGE>

         Section 6.10. Powers and Duties of Assistant Officers. In the absence
or disability of the Treasurer, any officer designated by the Trustees shall
perform all the duties, and may exercise any of the powers, of the Treasurer.
Each officer shall perform such other duties as from time to time may be
assigned to him by the Trustees. Each officer performing the duties and
exercising the powers of the Treasurer, if any, and any Assistant Treasurer,
shall give a bond for the faithful discharge of his duties, if required so to do
by the Trustees, in such sum and with such surety or sureties as the Trustees
shall require.

         Section 6.11. Powers and Duties of Assistant Secretaries. In the
absence or disability of the Secretary, any Assistant Secretary designated by
the Trustees shall perform all the duties, and may exercise any of the powers,
of the Secretary. Each Assistant Secretary shall perform such other duties as
from time to time may be assigned to him by the Trustees.

         Section 6.12. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable provisions of the Declaration of
Trust, the compensation of the officers and Trustees and members of an advisory
board shall be fixed from time to time by the Trustees or, in the case of
officers, by any Committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation as
such officer by reason of the fact that he is also a Trustee.

                                  ARTICLE VII

                          SHARES OF BENEFICIAL INTEREST

         Section 7.1. Share certificates. The Trustees may issue Shares either
in certificated or uncertificated form, and if they have issued Shares in
certificated form, they may, by written notice to the holders of such Shares,
require the surrender of their certificates to the Trust for cancellation, which
surrender and cancellation shall not affect the ownership of such Shares. For
any Shares issued without certificates, the Trust or its transfer agent may
either issue receipts therefor or may keep accounts upon the books of the Trust
for the record holders of such Shares, who shall in either case be deemed, for
all purposes hereunder, to be the holders of such Shares as if they had received
certificates therefor and shall be held to have expressly assented and agreed to
the terms hereof and of the Declaration of Trust. For any Shares for which the
Trustees shall issue certificates, each holder of such Shares shall be entitled
to a certificate stating the number of Shares owned by him in such form as shall
be prescribed from time to time by the Trustees. The certificates representing
Shares shall be signed by the President or a Vice-President and by the Secretary
or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, and
sealed with the seal of the Trust. Any or all of the signatures or the seal of
the Trust on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate which shall have ceased to be such officer, transfer agent or
registrar before such certificate shall be issued, it may be issued by the Trust
with the same effect as if such officer, transfer agent or registrar were still
in office at the date of issue.

         Section 7.2. Transfers of Pledged Shares. Unless otherwise provided
herein, a pledgee of Shares pledged as collateral security shall be entitled to
a new certificate in his name as pledgee, in the case of certificated Shares, or
to be registered as the holder in pledge of such

                                      -11-
<PAGE>

Shares in the case of uncertificated Shares; provided, that the instrument of
pledge substantially describes the debt or duty that is intended to be secured
thereby. Any such new certificate shall express on its face that it is held as
collateral security, and the name of the pledgor shall be stated thereon, and
any such registration of uncertificated Shares shall be in a form which
indicates that the registered holder holds such Shares in pledge. After such
issue or registration, and unless and until such pledge is released, such
pledgee and his successors and assigns shall alone be entitled to the rights of
a Shareholder, and entitled to vote such Shares.

         Section 7.3. Regulations. The Trustees may make such additional rules
and regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the issue, transfer and registration of certificates for Shares of
the Trust. They may appoint, or authorize any officer or officers to appoint,
one or more transfer agents or one or more transfer clerks and one or more
registrars and may require all certificates for Shares to bear the signature or
signatures of any of them.

         Section 7.4. Lost, Destroyed or Mutilated Certificates. The holder of
any certificates representing Shares of the Trust shall immediately notify the
Trust of any loss, destruction or mutilation of such certificate, and the Trust
may issue a new certificate in the place of any certificate theretofore issued
by it which the owner thereof shall allege to have been lost or destroyed or
which shall have been mutilated, and the Trustees may, in their discretion,
require such owner or his legal representative to give to the Trust a bond in
such sum, limited or unlimited, and in such form and with such surety or
sureties, as the Trustees in their absolute discretion shall determine, to
indemnify the Trust against any claim that may be made against it on account of
the alleged loss or destruction of any such certificate or issuance of a new
certificate.

                                  ARTICLE VIII

                        TERMS OF AUCTION PREFERRED SHARES

         Section 8.1. Designation.

         (a)      Pursuant to authority expressly vested in the Board of
         Trustees by the Declaration of Trust, the Board of Trustees authorizes
         the establishment, designation and issuance of an unlimited number of
         shares of a class of the Trust's Preferred Shares, which class is
         designated as the Trust's Auction Preferred Shares (the "Auction
         Preferred Shares"). The Auction Preferred Shares shall be issuable in
         such series as are designated from time to time in these By-Laws and
         shall have the preferences, voting powers, restrictions, limitations as
         to dividends, qualifications, terms and conditions of redemption, and
         other rights and limitations set forth in this Article VIII.

         (b)      (i) Auction Preferred Shares, Series A: An unlimited number of
                  Auction Preferred Shares, without par value, liquidation
                  preference $25,000 per Auction Preferred Share plus
                  accumulated but unpaid dividends, if any, thereon (whether or
                  not earned or declared), is hereby designated "Auction
                  Preferred Shares, Series A." Each share of Auction Preferred
                  Shares, Series A (sometimes referred to herein as "Series A
                  APS") may be issued on a date to be determined by the

                                      -12-
<PAGE>

                  Board of Trustees of the Trust or pursuant to their delegated
                  authority; have an Initial Dividend Rate and an Initial
                  Dividend Payment Date as shall be determined in advance of the
                  issuance thereof by the Board of Trustees of the Trust or
                  pursuant to their delegated authority and have such other
                  preferences as provided herein or as may be determined in
                  advance of the issuance thereof by the Board of Trustees or
                  pursuant to their delegated authority. The Series A APS shall
                  constitute a separate series of Auction Preferred Shares, and
                  each share of Series A APS shall be identical.

                  (ii) Auction Preferred Shares, Series B: An unlimited number
                  of Auction Preferred Shares, without par value, liquidation
                  preference $25,000 per Auction Preferred Share plus
                  accumulated but unpaid dividends, if any, thereon (whether or
                  not earned or declared), is hereby designated "Auction
                  Preferred Shares, Series B." Each share of Auction Preferred
                  Shares, Series B (sometimes referred to herein as "Series B
                  APS") may be issued on a date to be determined by the Board of
                  Trustees of the Trust or pursuant to their delegated
                  authority; have an Initial Dividend Rate and an Initial
                  Dividend Payment Date as shall be determined in advance of the
                  issuance thereof by the Board of Trustees of the Trust or
                  pursuant to their delegated authority and have such other
                  preferences as provided herein or as may be determined in
                  advance of the issuance thereof by the Board of Trustees or
                  pursuant to their delegated authority. The Series B APS shall
                  constitute a separate series of Auction Preferred Shares, and
                  each share of Series B APS shall be identical.

         (c)      The preferences, voting powers restrictions, limitations as to
         dividends, qualifications, terms and conditions of redemption, and
         other rights and limitations of the shares of the Auction Preferred
         Shares, Series A, Auction Preferred Shares, Series B, and each other
         series of APS now or hereafter described in these By-Laws are or shall
         be as set forth in these By-Laws. No fractional APS shall be issued.

         Section 8.2. Definitions.

         Unless the context or use indicates another or different meaning, the
following terms shall have the following meanings, whether used in the singular
or plural:

         (a)      "AA Financial Composite Commercial Paper Rate" on any date
         means (i) (A) the Interest Equivalent of the 30-day rate (for Dividend
         Periods fewer than or equal to 31 days), the 60-day rate (for Dividend
         Periods greater than 31 days but fewer than or equal to 61 days) and
         the 90-day rate (for Dividend Periods greater than 61 days but fewer
         than or equal to 91 days) on commercial paper on behalf of issuers
         whose corporate bonds are rated AA by S&P, or the equivalent of such
         rating by another Rating Agency, as announced by the Federal Reserve
         Bank of New York for the close of business on the Business Day
         immediately preceding such date; and (B) for Dividend Periods greater
         than 91 days but fewer than 184 days, the rate described in clause (ii)
         below; or (ii) if the Federal Reserve Bank of New York does not make
         available such a rate, or with respect to Dividend Periods greater than
         91 days but fewer than 184 days, then the arithmetic average of the
         Interest Equivalent of such rates on commercial paper placed on behalf
         of

                                      -13-
<PAGE>

         such issuers, as quoted on a discount basis or otherwise by the
         Commercial Paper Dealers to the Auction Agent for the close of business
         on the Business Day immediately preceding such date (rounded to the
         next highest one-thousandth (0.001) of 1%). If any Commercial Paper
         Dealer does not quote a rate required to determine the "AA Financial
         Composite Commercial Paper Rate", such rate shall be determined on the
         basis of the quotations (or quotation) furnished by the remaining
         Commercial Paper Dealers (or Dealer), if any, or, if there are no such
         Commercial Paper Dealers, by the Auction Agent.

         For purposes of this definition, (A) "Commercial Paper Dealers" shall
         mean (1) UBS Securities LLC; (2) in lieu of any thereof, its respective
         affiliate or successor; and (3) in the event that any of the foregoing
         shall cease to quote rates for commercial paper of issuers of the sort
         described above, in substitution therefor, a nationally recognized
         dealer in commercial paper of such issuers then making such quotations
         selected by the Trust, and (B) "Interest Equivalent" of a rate stated
         on a discount basis for commercial paper of a given number of days'
         maturity shall mean a number equal to the quotient (rounded upward to
         the next higher one-thousandth (0.001) of 1%) of (1) such rate
         expressed as a decimal, divided by (2) the difference between (x) 1.00
         and (y) a fraction, the numerator of which shall be the product of such
         rate expressed as a decimal, multiplied by the number of days in which
         such commercial paper shall mature and the denominator of which shall
         be 360.

         (b)      "Adviser" means the Trust's investment adviser, John Hancock
         Advisers, LLC.

         (c)      "Affected Series" has the meaning specified in Section
         8.7(b)(i).

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

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

         (f)      "Annual Valuation Date" means the last Business Day of each
         fiscal year of the Trust.

         (g)      "Applicable Percentage" means the percentage determined based
         on the credit rating assigned to the series of APS on such date by
         Moody's as follows:

<TABLE>
<CAPTION>
Moody's Credit Rating     Applicable Percentage
---------------------     ---------------------
<S>                       <C>
         Aaa                      125%
      Aa3 to Aa1                  150%
       A3 to A1                   200%
     Baa3 to Baa1                 250%
      Below Baa3                  300%
</TABLE>

         The Applicable Percentage as so determined shall be further subject to
         upward but not downward adjustment in the discretion of the Board of
         Trustees after consultation with

                                      -14-
<PAGE>

         the Broker-Dealers, provided that immediately following any such
         increase the Trust would be in compliance with the Preferred Shares
         Basic Maintenance Amount. The Trust shall take all reasonable action
         necessary to enable Moody's to provide a rating for each series of APS.
         If Moody's shall not make such a rating available, the Trust shall
         select another Rating Agency to act as a Substitute Rating Agency.
         Notwithstanding the foregoing, the Trust shall not be required to have
         more than one Rating Agency provide a rating for any series of the APS.

         (h)      "Applicable Rate" means the rate per annum at which cash
         dividends are payable on a series of APS for any Dividend Period.

         (i)      "APS" means the Series A APS and the Series B APS.

         (j)      "Auction" means a periodic operation of the Auction
         Procedures.

         (k)      "Auction Agent" means Deutsche Bank Trust Company Americas
         unless and until another commercial bank, trust company or other
         financial institution appointed by a resolution of the Board of
         Trustees or a duly authorized committee thereof enters into an
         agreement with the Trust to follow the Auction Procedures for the
         purpose of determining the Applicable Rate and to act as transfer
         agent, registrar, dividend disbursing agent and redemption agent for
         the APS.

         (l)      "Auction Date" with respect to any series of APS and any Rate
         Period means the Business Day immediately preceding the first day of
         such Rate Period.

         (m)      "Auction Procedures" means the procedures set forth in Section
         8.9.

         (n)      "Auditor's Confirmation" has the meaning specified in Section
         8.3(d).

         (o)      "Available APS" has the meaning specified in Section
         8.9(c)(i)(A).

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

         (q)      "Bid" and "Bids" have the respective meanings specified in
         Section 8.9(a)(i)(C).

         (r)      "Bidder" and "Bidders" have the respective meanings specified
         in Section 8.9(a)(i)(C); provided, however, that neither the Trust nor
         any affiliate thereof shall be permitted to be a Bidder in an Auction,
         except that any Broker-Dealer that is an affiliate of the Trust may be
         a Bidder in an Auction, but only if the Orders placed by such
         Broker-Dealer are not for its own account.

         (s)      "Board of Trustees" means the Board of Trustees of the Trust.

         (t)      "Broker-Dealer" means any broker-dealer, or other entity
         permitted by law to perform the functions required of a Broker-Dealer
         in Section 8.9, that has been selected

                                      -15-
<PAGE>

         by the Trust and has entered into a Broker-Dealer Agreement with the
         Auction Agent that remains effective.

         (u)      "Broker-Dealer Agreement" means an agreement between the
         Auction Agent and a Broker-Dealer pursuant to which such Broker-Dealer
         agrees to follow the procedures specified in Section 8.9.

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

         (w)      "Closing Transactions" has the meaning set forth in Section
         8.8(b)(iv)(A).

         (x)      "Code" means the Internal Revenue Code of 1986, as amended
         from time to time. Each reference herein to a section of the Code shall
         be deemed to include the United States Treasury Regulations in effect
         thereunder and applicable to the APS or the use of proceeds thereof,
         and also includes all applicable amendments or successor provisions
         unless the context requires otherwise.

         (y)      "Commercial Paper Dealers" has the meaning set forth in the
         definition of " `AA' Financial Composite Commercial Paper Rate."

         (z)      "Common Shares" means the shares of beneficial interest
         designated as common shares, no par value, of the Trust.

         (aa)     "Cure Date" means the Preferred Shares Basic Maintenance Cure
         Date or the Investment Company Act Cure Date.

         (bb)     "Date of Original Issue" means, with respect any series of
         APS, the date on which the Trust first issues such share.

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

         (dd)     "Discount Factor" means a "Moody's Discount Factor."

         (ee)     "Discounted Value" of any asset of the Trust means, with
         respect to a Moody's Eligible Asset, the quotient of the Market Value
         thereof divided by the applicable Moody's Discount Factor.

         (ff)     "Dividend Payment Date" means, with respect to APS, any date
         on which dividends are payable for shares of such series pursuant to
         Section 8.4(a)(iv).

         (gg)     "Dividend Period" means, with respect to the APS, the period
         from and including the Date of Original Issue to but excluding the
         Initial Dividend Payment Date for such shares and any period thereafter
         from and including one Dividend Payment Date for such shares to but
         excluding the next succeeding Dividend Payment Date for such shares.

                                      -16-
<PAGE>

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

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

         (jj)     "Exposure Period" on a Valuation Date means the period
         commencing on such date and ending 42 days thereafter, as such exposure
         period may be modified by resolution of the Board of Trustees and
         without amending the By-Laws of the Trust; provided, however, that the
         Trust shall have received confirmation in writing from the Rating
         Agency that any such modification shall not adversely affect such
         Rating Agency's then-current rating of the APS.

         (kk)     "Failure to Deposit," means, with respect to shares of a
         series of APS, a failure by the Trust to pay to the Auction Agent, not
         later than 12:00 noon, New York City time, (A) on the Business Day
         immediately preceding any Dividend Payment Date for shares of such
         series, in funds available on such Dividend Payment Date in the City of
         New York, New York, the full amount of any dividend (whether or not
         earned or declared) to be paid on such Dividend Payment Date on any
         share of such series or (B) on the Business Day immediately preceding
         any redemption date in funds available on such redemption date for
         shares of such series in the City of New York, New York, the Redemption
         Price to be paid on such redemption date for any share of such series
         after Notice of Redemption is mailed pursuant to Section 8.6; provided,
         however, that the foregoing clause (B) shall not apply to the Trust's
         failure to pay the Redemption Price with respect to APS when the
         related Notice of Redemption provides that redemption of such shares is
         subject to one or more conditions precedent and any such condition
         precedent shall not have been satisfied at the time or times and in the
         manner specified in such Notice of Redemption.

         (ll)     "Holder" means an individual or entity in whose name an
         outstanding Share of the APS is registered on the Share Books.

         (mm)     "Hold Order" and "Hold Orders" have the respective meanings
         specified in Section 8.9(a)(i)(C).

         (nn)     "Independent Accountant" means a nationally recognized
         accounting firm that is, with respect to the Trust, an independent
         certified public accountant under the Securities Act of 1933, as
         amended, and serving as such for the Trust.

         (oo)     "Initial Rate Period" with respect to shares of a series of
         APS, means the period from the Date of Initial Issuance to and
         including the day immediately prior to the Dividend Payment Date for
         the Initial Rate Period specified with respect to shares of such series
         in Section 8.4(a).

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

                                      -17-
<PAGE>

         (qq)     "Investment Company Act Cure Date," with respect to the
         failure by the Trust to maintain the Investment Company Act Preferred
         Share Asset Coverage (as required by Section 8.3(a) as of the last
         Business Day of each month, means the last Business Day of the
         following month.

         (rr)     "Investment Company Act Preferred Share Asset Coverage" means
         asset coverage, as defined in Section 18(h) of the Investment Company
         Act, of at least 200% with respect to all outstanding senior securities
         of the Trust which are shares of beneficial interest including all
         outstanding APS (or such other asset coverage as may in the future be
         specified in or under the Investment Company Act as the minimum asset
         coverage for senior securities which are shares or stock of a
         closed-end investment company as a condition of declaring dividends on
         its common shares or stock).

         (ss)     "Late Charge" has the meaning specified in Section
         8.4(b)(ii)(B).

         (tt)     "Liens" means any material lien, mortgage, pledge, security
         interest or security agreement of any kind.

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

         (vv)     "Market Value" means the price determined by a pricing service
         acceptable to the Rating Agency and which (i) with respect to an
         investment which is listed on an exchange or traded over-the-counter
         and quoted on the NASDAQ System, the last sale price on the day of
         valuation (using prices as of the close of trading) or, if there has
         been no sale that day, the last bid price reported on the day of
         valuation or, if not a Business Day, the last bid price reported as of
         the close of business on the preceding Business Day, (ii) with respect
         to an investment which is not listed on an exchange or quoted on the
         NASDAQ System, either (A) the market value thereof determined by a
         Pricing Service or (B) the lower of the bid prices, as of the close of
         business on the Business Day immediately preceding the date of
         determination, quoted (at least one of such quotes being in writing) to
         the Trust by two or more members of the National Association of
         Securities Dealers, Inc. making a market in such investment at the
         time. By resolution of the Board of Trustees and without amending the
         By-Laws of the Trust, the calculation of Market Values may be made on
         bases other than those set forth above if the Rating Agency has advised
         the Trust in writing that the revised method of calculation of Market
         Values would not adversely affect its then-current rating of the
         Preferred Shares, provided that the Trust shall cause to be made
         available a written statement setting forth such revised method for
         inspection by the Holders at the principal executive office of the
         Trust.

         (ww)     "Maximum Applicable Rate" means, with respect to APS for any
         Dividend Period, the Applicable Percentage of the Reference Rate. The
         Auction Agent will round each applicable Maximum Applicable Rate to the
         nearest one-thousandth (0.001) of one percent per annum, with any such
         number ending in five ten-thousandths of one percent being rounded
         upwards to the nearest one-thousandth (0.001) of one percent.

                                      -18-
<PAGE>

         (xx)     "Minimum Rate Period" means a period of seven (7) Rate Period
         days.

         (yy)     "Moody's" means Moody's Investors Service, Inc. or any
         successor thereto.

         (zz)     "Moody's Discount Factor" means, for purposes of determining
         the Discounted Value of any Moody's Eligible Asset, the percentage
         determined as follows:

                  (i)      Preferred Stock with cumulative dividends: The
                  Moody's Discount Factor for preferred stock shall be: Aaa
                  150%, Aa 155%, A 160%, Baa 165%, Ba 196%, B 216%, < B and Not
                  Rated 250%, for auction rate preferred stocks 350%. For
                  investment grade DRD preferreds 165%, and non-investment grade
                  DRD preferreds 216%. Preferred securities that have a 144A
                  classification, the discount factor will be multiplied 120%
                  for purposes of calculating the Discounted Value.

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

                             MOODY'S RATING CATEGORY

<TABLE>
<CAPTION>
TERMS TO MATURITY OF CORPORATE                                                                     BELOW B AND
         DEBT SECURITY (1)               Aaa         Aa       A       Baa         Ba      B        UNRATED (2)
-----------------------------------      ----       ----     ----     ----       ----    ----      -----------
<S>                                      <C>        <C>      <C>      <C>        <C>     <C>       <C>
1 year or less.....................      109%       112%     115%     118%       137%    150%         250%

2 years or less (but longer than 1
year)..............................      115        118      122      125        146     160          250

3 years or less (but longer than 2
years).............................      120        123      127      131        153     168          250

4 years or less (but longer than 3
years).............................      126        129      133      138        161     176          250

5 years or less (but longer than 4
years).............................      132        135      139      144        168     185          250

7 years or less (but longer than 5
years).............................      139        143      147      152        179     197          250

10 years or less (but longer than
7 years)...........................      145        150      155      160        189     208          250

15 years or less (but longer than
10 years)..........................      150        155      160      165        196     216          250

20 years or less (but longer than
15 years)..........................      150        155      160      165        196     228          250

30 years or less (but longer than
20 years)..........................      150        155      160      165        196     229          250
</TABLE>

                                      -19-
<PAGE>

<TABLE>
<S>                                      <C>        <C>      <C>      <C>        <C>     <C>          <C>
Greater than 30 years..............      165        173      181      189        205     240          250
</TABLE>

---------------------------------------
(1)     The Moody's Discount Factor for debt securities shall also be applied to
        any interest rate swap or cap, in which case the rating of the
        counterparty shall determine the appropriate rating category.

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

                  For corporate debt securities that do not pay interest in U.S.
                  dollars, the Trust will contact Moody's to obtain the
                  applicable currency conversion rate.

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

<TABLE>
<CAPTION>
                                                  U.S. GOVERNMENT AND
                                                   AGENCY SECURITIES         U.S. TREASURY STRIPS
          REMAINING TERM TO MATURITY                DISCOUNT FACTOR             DISCOUNT FACTOR
--------------------------------------------     --------------------        --------------------
<S>                                              <C>                         <C>
1 year or less...............................              107%                     107%
2 years or less (but longer than 1 year).....              113                      115
3 years or less (but longer than 2 years)....              118                      121
4 years or less (but longer than 3 years)....              123                      128
5 years or less (but longer than 4 years)....              128                      135
7 years or less (but longer than 5 years)....              135                      147
10 years or less (but longer than 7 years)...              141                      163
15 years or less (but longer than 10 years)..              146                      191
20 years or less (but longer than 15 years)..              154                      218
30 years or less (but longer than 20 years)..              154                      244
</TABLE>

                  (iv) Short-Term Instruments and Cash: The Moody's Discount
                  Factor applied to short-term portfolio securities, including
                  without limitation short-term corporate debt securities, Short
                  Term Money Market Instruments and short-term municipal debt
                  obligations, will be (A) 100%, so long as such portfolio
                  securities mature or have a demand feature at par exercisable
                  within the Moody's Exposure Period; (B) 115%, so long as such
                  portfolio securities do not mature within the Moody's Exposure
                  Period or have a demand feature at par not exercisable within
                  the Moody's Exposure Period; and (C) 125%, if such securities
                  are not rated by Moody's, so long as such portfolio securities
                  are rated at least A-1+/AA or SP-1+/AA by S&P and mature or
                  have a demand feature at par exercisable within the Moody's
                  Exposure Period. A Moody's Discount Factor of 100% will be
                  applied to cash. Moody's rated 2a-7 money market funds will
                  also have a Discount Factor of 100%.

                  (v) Rule 144A Securities: The Moody's Discount Factor applied
                  to Rule 144A Securities for Rule 144A Securities whose terms
                  include rights to registration under the Securities Act within
                  one year and Rule 144A Securities

                                      -20-
<PAGE>

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

                  (vi)     Convertible Securities (including Convertible
                  Preferred Securities):

<TABLE>
<CAPTION>
Moody's Rating            Utility   Industrial   Financial    Transportation
----------------------------------------------------------------------------
<S>                       <C>       <C>          <C>          <C>
Aaa                        162%        256%         233%           250%
Aa                         167%        261%         238%           265%
A                          172%        266%         243%           275%
Baa                        188%        282%         259%           285%
Ba                         195%        290%         265%           290%
B                          199%        293%         270%           295%
Below B and Unrated (1)    300%        300%         300%           300%
</TABLE>

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

                  (vii)    Common Stock: The following Discount Factors will be
                  applied to the Common Stock holdings:

<TABLE>
<CAPTION>
Common Stocks             Utility   Industrial   Financial
-------------             -------   ----------   ---------
<S>                       <C>       <C>          <C>
7 week exposure period      170%       264%         241%
</TABLE>

                  (viii)   Common Stock and Preferred Stock of REITs and Other
                  Real Estate Companies:

<TABLE>
<CAPTION>
                                                        Moody's Discount Factor (1)(2)(3)
                                                        ---------------------------------
<S>                                                     <C>
Common Stock of REITs                                                  154%

Preferred Stock of REITs
     with senior implied Moody's (or S&P) rating:                      154%
     without senior implied Moody's (or S&P) rating:                   208%
-----------------------------------------------------------------------------------------

Preferred Stock of other real estate companies
     with senior implied Moody's (or S&P) rating:                      208%
     without senior implied Moody's (or S&P) rating:                   250%
</TABLE>

---------------------------------------
(1)      A Moody's Discount Factor of 250% will be applied to those assets in a
         single Moody's real estate industry / property sector classification
         which exceed 30% of Moody's Eligible Assets but are not greater than
         35% of Moody's Eligible Assets.

(2)      A Moody's Discount Factor of 250% will be applied if dividends on such
         securities have not been paid consistently (either quarterly or
         annually) over the previous three years, or for such shorter time
         period that such securities have been outstanding.

                                      -21-
<PAGE>

(3)      A Moody's Discount Factor of 250% will be applied if the market
         capitalization (including common stock and preferred stock) of an
         issuer is below $500 million.

                  (ix)     Debt Securities of REITs and Other Real Estate
                  Companies:

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

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

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

                  (x)      Bank Loans: The Moody's Discount Factor applied to
                           bank loans means Senior Loans(1) with outstanding
                           amounts greater than $250 million(2).

<TABLE>
<CAPTION>
Split Baa and Ba     Split Ba, B, and Split B     Caa and Split Caa
                                                  incl. Distressed
----------------     ------------------------     -----------------
<S>                 <C>                          <C>
         136%                   149%                     250%

</TABLE>

(1)  Non-senior Loans to be discounted using the above factors plus 10%.

(2)  Loans with outstandings less than $250 million accorded discounts above
     plus incremental discounts of 20%.

                                      -22-
<PAGE>

                  (xi)     Asset-Backed and Mortgage-Backed Securities: The
                  Moody's Discount Factor applied to asset-backed securities
                  shall be 131%. The Moody's Discount Factor applied to
                  collateralized mortgage obligations, planned amortization
                  class bonds and targeted amortization class bonds shall be
                  determined by reference to the weighted average life of the
                  security in accordance with the table set forth below.

<TABLE>
<CAPTION>
        Remaining Term to Maturity             Moody's Discount Factor
        --------------------------             -----------------------
<S>                                            <C>
3 years or less                                         133 %
7 years or less (but longer than 3 years)               142
10 years or less (but longer than 7 years)              158
20 years or less (but longer than 10 years)             174
</TABLE>

                  The Moody's Discount Factor applied to residential mortgage
                  pass-throughs (including private-placement mortgage
                  pass-throughs) shall be determined by reference to the coupon
                  paid by such security in accordance with the table set forth
                  below.
<TABLE>
<CAPTION>
  Coupon              Moody's Discount Factor
  ------              -----------------------
<S>                   <C>
    5%                            166 %
    6%                            162
    7%                            158
    8%                            154
    9%                            151
   10%                            148
   11%                            144
   12%                            142
   13%                            139
adjustable                        165
</TABLE>

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

                  The Moody's Discount Factor applied to whole loans shall be
                  determined by reference to the coupon paid by such security in
                  accordance with the table set forth below.

<TABLE>
<CAPTION>
Coupon              Moody's Discount Factor
------              -----------------------
<S>                 <C>
  5%                          172 %
  6%                          167
  7%                          163
  8%                          159
  9%                          155
</TABLE>

                                      -23-
<PAGE>

<TABLE>
<S>               <C>
    10%           151
    11%           148
    12%           145
    13%           142
adjustable        170
</TABLE>

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

<TABLE>
<CAPTION>
Exposure Period                Aaa      Aa        A       Baa     MIG-1 (1)     MIG-1 (2)    Unrated (3)
---------------                ---      ---      ---      ---     ---------     ---------    -----------
<S>                            <C>      <C>      <C>      <C>     <C>           <C>          <C>
7 weeks                        151%     159%     160%     173%      135%          148%           225%

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

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

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

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

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

         By resolution of the Board of Trustees and without amending the By-Laws
of the Trust or otherwise submitting such resolution for Shareholder approval,
(i) the Moody's Discount Factors may be changed from those set forth above and
(ii) additional Moody's Discount Factors may be established for other Eligible
Assets if, in each case, the Rating Agency has advised the Trust in writing that
such change or addition would not adversely affect its then-current rating of
the Auction Preferred Shares, provided that the Trust shall cause to be made
available a written statement setting forth the Moody's Discount Factors, as
changed or as supplemented, for inspection by the Holders at the principal
executive office of the Trust.

         (aaa)    "Moody's Eligible Assets" means:

                  (i)      Cash (including interest and dividends due on assets
                  rated (A) Baa3 or higher by Moody's if the payment date is
                  within five Business Days of the Valuation Date, (B) A2 or
                  higher if the payment date is within thirty days of the

                                      -24-
<PAGE>

                  Valuation Date, and (C) A1 or higher if the payment date is
                  within Moody's Exposure Period) and receivables for Moody's
                  Eligible Assets sold if the receivable is due within five
                  Business Days of the Valuation Date, and if the trades which
                  generated such receivables are (A) settled through clearing
                  house firms with respect to which the Trust has received prior
                  written authorization from Moody's or (B) (1) with
                  counterparties having Moody's long-term debt rating of at
                  least Baa3 or (2) with counterparties having Moody's Short
                  Term Money Market Instrument rating of at least P-1;

                  (ii)     Short Term Money Market Instruments, so long as (A)
                  such securities are rated at least P-1, (B) in the case of
                  demand deposits, time deposits and overnight funds, the
                  supporting entity is rated at least A2, or (C) in all other
                  cases, the supporting entity (1) is rated A2 and the security
                  matures within one month, (2) is rated A1 and the security
                  matures within three months or (3) is rated at least Aa3 and
                  the security matures within six months. In addition, Moody's
                  rated 2a-7 money market funds are also eligible investments.

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

                  (iv)     Rule 144A Securities;

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


                                      -25-
<PAGE>
                  (vi)     Preferred stocks if (A) dividends on such preferred
                  stock are cumulative, (B) such securities provide for the
                  periodic payment of dividends thereon in cash in U.S. dollars
                  or euros and do not provide for conversion or exchange into,
                  or have warrants attached entitling the holder to receive,
                  equity capital at any time over the respective lives of such
                  securities, (C) the issuer of such a preferred stock has
                  common stock listed on either the New York Stock Exchange or
                  the American Stock Exchange, (D) the issuer of such a
                  preferred stock has a senior debt rating from Moody's of Baa1
                  or higher or a preferred stock rating from Moody's of Baa3 or
                  higher and (E) such preferred stock has paid consistent cash
                  dividends in U.S. dollars or euros over the last three years
                  or has a minimum rating of A1 (if the issuer of such preferred
                  stock has other preferred issues outstanding that have been
                  paying dividends consistently for the last three years, then a
                  preferred stock without such a dividend history would also be
                  eligible). In addition, the preferred stocks must have the
                  following diversification requirements: (X) the preferred
                  stock issue must be greater than $50 million and (Y) the
                  minimum holding by the Trust of each issue of preferred stock
                  is $500,000 and the maximum holding of preferred stock of each
                  issue is $5 million. In addition, preferred stocks issued by
                  transportation companies will not be considered Moody's
                  Eligible Assets.

                  (vii)    Common stocks (i) which (A) are traded on a
                  nationally recognized stock exchange or in the
                  over-the-counter market, (B) if cash dividend paying, pay cash
                  dividends in US dollars and (C) may be sold without
                  restriction by the corporation; provided, however, that (y)
                  common stock which, while a Moody's Eligible Asset owned by
                  the Trust, ceases paying any regular cash dividend will no
                  longer be considered a Moody's Eligible Asset until 71 days
                  after the date of the announcement of such cessation, unless
                  the issuer of the common stock has senior debt securities
                  rated at least A3 by Moody's and (z) the aggregate Market
                  Value of the Trust's holdings of the common stock of any
                  issuer in excess of 4% in the case of utility common stock and
                  6% in the case of non-utility common stock of the aggregate
                  Market Value of the Trust's holdings shall not be Moody's
                  Eligible Assets, (ii) which are securities denominated in any
                  currency other than the US dollar or securities of issuers
                  formed under the laws of jurisdictions other than the United
                  States, its states and the District of Columbia for which
                  there are dollar-denominated American Depository Receipts
                  ("ADRs") or their equivalents which are traded in the United
                  States on exchanges or over-the-counter and are issued ---- by
                  banks formed under the laws of the United States, its states
                  or the District of Columbia or (iii) which are securities of
                  issuers formed under the laws of jurisdictions other than the
                  United States (and in existence for at least five years) for
                  which no ADRs are traded; provided, however, that the
                  aggregate

                                      -26-
<PAGE>

                  Market Value of the Trust's holdings of securities denominated
                  in currencies other than the US dollar and ADRs in excess of
                  (A) 6% of the aggregate Market Value of the Outstanding shares
                  of common stock of such issuer thereof or (B) 10% of the
                  Market Value of the Trust's Moody's Eligible Assets with
                  respect to issuers formed under the laws of any single such
                  non-U.S. jurisdiction other than Australia, Belgium, Canada,
                  Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
                  Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland
                  and the United Kingdom, shall not be a Moody's Eligible Asset;

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

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

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

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

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

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

                                      -27-
<PAGE>

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

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

                  (G) Whole loans (e.g., direct investments in mortgages)
              provided that (1) at least 65% of such loans (a) have seasoning of
              no less than 6 months, (b) are secured by single-family detached
              residences, (c) are owner-occupied primary residences, (d) are
              secured by a first-lien, fully-documented mortgage, (e) are
              neither currently delinquent (30 days or more) nor delinquent
              during the preceding year, (f) have loan-to-value ratios of 80% or
              below, (g) carry normal hazard insurance and title insurance, as
              well as special hazard insurance, if applicable, (h) have original
              terms to maturity not greater than 30 years, with at least one
              year remaining to maturity, (i) have a minimum of $10,000
              remaining principal balance, (j) for loans underwritten after
              January 1, 1978, FNMA and/or FHLMC forms are used for fixed-rate
              loans, and (k) such loans are whole loans and not participations;
              (2) for loans that do not satisfy the requirements set forth in
              the foregoing clause (1), (a) non-owner occupied properties
              represent no greater than 15% of the aggregate of either the
              adjustable-rate pool or the fixed-rate pool, (b) multi-family
              properties (those with five or more units) represent no greater
              than 15% of the aggregate of either the adjustable-rate pool or
              the fixed-rate pool, (c) condominiums represent no greater than
              10% of the aggregate of either the adjustable-rate pool or the
              fixed-rate pool, and any condominium project must be 80% occupied
              at the time the loan is originated, (d) properties with
              loan-to-value ratios exceeding 80% represent no greater than 25%
              of the aggregate of either the adjustable-rate pool or the
              fixed-rate pool and the portion of the mortgage on any such
              property that exceeds a loan-to-value ratio of 80% is insured with
              Primary Mortgage Insurance from an insurer rated at least Baa3 by
              Moody's and (e) loan balances in excess of the current FHLMC limit
              plus $75,000 represent no greater than 25% of the aggregate of
              either the adjustable-rate pool or the fixed-rate pool, loan
              balances in excess of $350,000 represent no greater than 10% of
              the aggregate of either the adjustable-rate pool or the fixed-rate
              pool, and loan balances in excess of $1,000,000 represent no
              greater than 5% of the aggregate of either the adjustable-rate
              pool or the fixed-rate pool; (3) no greater than 5% of the pool of
              loans is concentrated in any one zip code; (4) the pool of loans
              contains at least 100 loans or $2 million in loans per servicer;
              (5) for adjustable-rate mortgages ("ARMs"), (a) any ARM is indexed
              to the National Cost of Funds index, the 11th District Cost of
              Funds index,

                                      -28-
<PAGE>

              the 1-year Treasury or the 6-month Treasury, (b) the margin over
              the given index is between 0.15% and 0.25% for either
              cost-of-funds index and between 0.175% and 0.325% for Treasuries,
              (c) the maximum yearly interest rate increase is 2%, (d) the
              maximum life-time interest rate increase is 6.25% and (e) ARMs may
              include Federal Housing Administration and Department of Veterans
              Affairs loans; (6) for "teaser" loans, (a) the initial discount
              from the current ARM market rate is no greater than 2%, (b) the
              loan is underwritten at the market rate for ARMs, not the "teaser"
              rate, and (c) the loan is seasoned six months beyond the "teaser"
              period.

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

                  (x)      Structured Notes and rated TRACERs; and TRAINS;

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

         Additionally, in order to merit consideration as a Moody's Eligible
Asset, securities should be issued by entities which:

                  -        Have not filed for bankruptcy with the past year

                  -        Are current on all principle and interest in their
                           fixed income obligations

                  -        Are current on all preferred stock dividends

                  -        Possess a current, unqualified auditor's report
                           without qualified, explanatory language.

         The table below establishes maximum limits for inclusion of corporate
bonds and preferred stocks except convertibles and common stocks as Moody's
Eligible Assets prior to applying Moody's Discount Factors to eligible
securities:

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

                                      -29-
<PAGE>

------------
(1) Refers to the preferred stock and senior debt rating of the portfolio
holding.

(2) Companies subject to common ownership of 25% or more are considered as one
issuer.

(3) Percentages represent a portion of the aggregate Market Value of the
portfolio.

(4) Industries are determined according to Moody's Industry Classifications, as
defined herein.

(5) Except for preferred stock, which has a minimum issue size of $50 million.

(6) Portfolio holdings from issues ranging from $50 million to $100 million and
are limited to 20% of the Trust's total assets.

         Where the Trust sells an asset and agrees to repurchase such asset in
the future, the Discounted Value of such asset will constitute a Moody's
Eligible Asset and the amount the Trust is required to pay upon repurchase of
such asset will count as a liability for the purposes of the Preferred Shares
Basic Maintenance Amount. Where the Trust purchases an asset and agrees to sell
it to a third party in the future, cash receivable by the Trust thereby will
constitute a Moody's Eligible Asset if the long-term debt of such other party is
rated at least A2 by Moody's and such agreement has a term of 30 days or less;
otherwise the Discounted Value of such purchased asset will constitute a Moody's
Eligible Asset. For the purposes of calculation of Moody's Eligible Assets,
portfolio securities which have been called for redemption by the issuer thereof
shall be valued at the lower of Market Value or the call price of such portfolio
securities.

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

         (bbb)    "Moody's Hedging Transactions" has the meaning set forth in
         Section 8.8.

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

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

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

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

                                      -30-
<PAGE>

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

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

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

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

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

         9.       Diversified/Conglomerate Manufacturing

         10.      Diversified/Conglomerate Service

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

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

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

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

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

         16.      Grocery: Grocery Stores, Convenience Food Stores

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

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

         19.      Hotels, Motels, Inns and Gaming

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

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

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

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

                                      -31-
<PAGE>

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

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

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

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

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

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

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

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

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

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

         (ddd)    "NASDAQ System" means the electronic inter-dealer quotation
         system operated by NASDAQ, Inc., a subsidiary of the National
         Association of Securities Dealers, Inc.

         (eee)    "NRSRO" means any nationally recognized statistical rating
         organization.

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

         (ggg)    "Non-Payment Period Rate" means 300% of the applicable `AA'
         Financial Composite Commercial Paper Rate, provided that the Board of
         Trustees shall have the authority to adjust, modify, alter or change
         from time to time the initial Non-Payment Period Rate if the Board of
         Trustees determines and Moody's (or any Substitute Rating Agency in
         lieu of Moody's in the event Moody's shall not rate the APS) advises
         the Trust in writing that such adjustment, modification, alteration or
         change will not adversely affect its then current ratings on the APS.

         (hhh)    "Notice of Redemption" has the meaning specified in Section
         8.6(c).

         (iii)    "Notice of Special Rate Period" means any notice with respect
         to a Special Rate Period of APS pursuant to Sections 8.4(c).

         (jjj)    "Optional Redemption Price" means $25,000 per share plus an
         amount equal to accumulated but unpaid dividends (whether or not earned
         or declared) to the date fixed for redemption plus any applicable
         redemption premium attributable to the designation of a Premium Call
         Period.

                                      -32-
<PAGE>

         (kkk)    "Order" and "Orders" have the respective meanings specified in
         Section 8.9(a)(i)(C).

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

         (mmm)    "Person" means and includes an individual, a partnership, a
         trust, an unincorporated association, a joint venture or other entity
         or government agency or political subdivision thereof.

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

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

         (ppp)    "Preferred Shares Basic Maintenance Amount," as of any
         Valuation Date, means the dollar amount equal (i) to 130% of the sum of
         (A) the product of the number of APS outstanding on such date
         multiplied by $25,000 (plus the product of the number of shares of any
         other series of preferred shares outstanding on such date multiplied by
         the liquidation preference of such shares), plus any redemption premium
         applicable to the APS (or other preferred shares) then subject to
         redemption; (B) the aggregate amount of dividends that will have
         accumulated at the respective Applicable Rates (whether or not earned
         or declared) to (but not including) the first respective Dividend
         Payment Dates for each series of APS outstanding that follow such
         Valuation Date (plus the aggregate amount of dividends, whether or not
         earned or declared, that will have accumulated in respect of other
         outstanding preferred shares to, but not including, the first
         respective dividend payment dates for such other shares that follow
         such Valuation Date); (C) the aggregate amount of dividends that would
         accumulate on shares of each series of the APS outstanding from such
         first respective Dividend Payment Date therefor through the 42nd day
         after such Valuation Date, at the Maximum Applicable Rate (calculated
         as if such Valuation Date were the Auction Date for the Rate Period
         commencing on such Dividend Payment Date) for a Minimum Rate Period of
         shares of such series to commence on such Dividend Payment Date,
         assuming, solely for purposes of the foregoing, that if on such
         Valuation Date the Trust shall have delivered a Notice of Special Rate
         Period to the Auction Agent pursuant to Section 8.4(c) with respect to
         shares of such series, such Maximum Applicable Rate shall be the
         Maximum Applicable Rate for the Special Rate

                                      -33-
<PAGE>

         Period of shares of such series to commence on such Dividend Payment
         Date (except that (1) if such Valuation Date occurs at a time when a
         Failure to Deposit (or, in the case of preferred shares other than the
         APS, a failure similar to a Failure to Deposit) has occurred that has
         not been cured, the dividend for purposes of calculation would
         accumulate at the current dividend rate then applicable to the shares
         in respect of which such failure has occurred and (2) for those days
         during the period described in this subparagraph (C) in respect of
         which the Applicable Rate in effect immediately prior to such Dividend
         Payment Date will remain in effect (or, in the case of preferred shares
         other than the APS, in respect of which the dividend rate or rates in
         effect immediately prior to such respective dividend payment dates will
         remain in effect), the dividend for purposes of calculation would
         accumulate at such Applicable Rate (or other rate or rates, as the case
         may be) in respect of those days); (D) the amount of anticipated
         expenses of the Trust for the 42 days subsequent to such Valuation
         Date; (E) any current liabilities as of such Valuation Date to the
         extent not reflected in any of (i)(A) through (i)(D) (including,
         without limitation, any payables for portfolio securities of the Trust
         purchased as of such Valuation Date and any liabilities incurred for
         the purpose of clearing securities transactions) less (ii) the value
         (i.e., the face value of cash, short-term securities rated MIG-1,
         VMIG-1, or P-1, and short-term securities that are the direct
         obligation of the U.S. government, provided in each case that such
         securities mature on or prior to the date upon which any of (i)(A)
         through (i)(E) become payable, otherwise the Discounted Value) of any
         of the Trust's assets irrevocably deposited by the Trust for the
         payment of any of (i)(A) through (i)(E).

         (qqq)    "Preferred Shares Basic Maintenance Cure Date," with respect
         to the failure by the Trust to satisfy the Preferred Shares Basic
         Maintenance Amount (as required by Section 8.3) as of a given Valuation
         Date, means the sixth Business Day following such Valuation Date.

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

         (sss)    "Preferred Shares Paying Agent" means Deutsche Bank Trust
         Company Americas unless and until another bank or trust company has
         been appointed as Preferred Shares Paying Agent by a resolution of the
         Board of Trustees and thereafter such substitute bank or trust company.

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

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

                                      -34-
<PAGE>

         (vvv)    "Rate Period" means, with respect to shares of a series of
         APS, the Initial Rate Period of such Series and any Subsequent Rate
         Period, including any Special Rate Period, of such Series.

         (www)    "Reference Rate" means (i) with respect to a seven-day
         Dividend Period or a Short Term Dividend Period having fewer than 183
         days, the applicable "AA" Financial Composite Commercial Paper Rate,
         (ii) with respect to any Short Term Dividend Period having 183 or more
         but fewer than 364 days, the applicable U.S. Treasury Bill Rate and
         (iii) with respect to any Long Term Dividend Period, the applicable
         U.S. Treasury Note Rate.

         (xxx)    "Response" has the meaning set forth in Section 8.4(c) of
         these By-laws.

         (yyy)    "Rating Agency," on any date of determination, means (i)
         Moody's if Moody's is then rating the APS, or (ii) if Moody's is then
         not rating the APS, any NRSRO rating the APS at the request of the
         Trust. In the event that Moody's is not rating the APS, any reference
         to a rating by Moody's in this Article VIII shall be deemed to be a
         reference to the equivalent rating by such substitute NRSRO

         (zzz)    "Redemption Price" has the meaning set forth in Section 8.6.

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

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

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

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

         (eeee)   "Sell Order" and "Sell Orders" have the respective meanings
         specified in Section 8.9(a)(i)(C).

         (ffff)   "Share Books" means the Share transfer books of the Trust
         maintained by the Preferred Shares Paying Agent with respect to the
         Preferred Shares.

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

         (hhhh)   "Short Term Money Market Instruments" means the following
         types of instruments if, on the date of purchase or other acquisition
         thereof by the Trust, the

                                      -35-
<PAGE>

         remaining term to maturity thereof is not in excess of 180 days (or 270
         days for instruments rated at least Aaa for purposes of determining
         Moody's Eligible Assets):

                  (i)      commercial paper rated either F1 by Fitch or A-1 by
                  S&P if such commercial paper matures in 30 days or P-1 by
                  Moody's and either F1+ by Fitch or A-1+ by S&P if such
                  commercial paper matures in over 30 days;

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

                  (iii)    overnight funds;

                  (iv)     U.S. Government Securities; and

                  (v)      Eurodollar demand or time deposits in, or
                  certificates of deposit of, the head office or the London
                  branch office of a depository institution or trust company if
                  the certificates of deposit, if any, and the long-term
                  unsecured debt obligations (other than such obligations the
                  ratings of which are based on the credit of a person or entity
                  other than such depository institution or trust company) of
                  such depository institution or trust company that have (1)
                  credit ratings on each Valuation Date of at least P-1 from
                  Moody's and either F1+ from Fitch or A-1+ from S&P, in the
                  case of commercial paper or certificates of deposit, and (2)
                  credit ratings on each Valuation Date of at least Aa3 from
                  Moody's and either AA- from Fitch or AA- from S&P, in the case
                  of long-term unsecured debt obligations; provided, however,
                  that in the case of any such investment that matures in no
                  more than one Business Day from the date of purchase or other
                  acquisition by the Trust, all of the foregoing requirements
                  shall be applicable except that the required long-term
                  unsecured debt credit rating of such depository institution or
                  trust company from Moody's, Fitch and S&P shall be at least
                  A2, A and A, respectively; and provided further, however, that
                  the foregoing credit rating requirements shall be deemed to be
                  met with respect to a depository institution or trust company
                  if (1) such depository institution or trust company is the
                  principal depository institution in a holding company system,
                  (2) the certificates of deposit, if any, of such depository
                  institution or trust company are not rated on any Valuation
                  Date below P-1 by Moody's, F1+ by Fitch or A-1+ by S&P and
                  there is no long-term rating, and (3) the holding company
                  shall meet all of the foregoing credit rating requirements
                  (including the preceding proviso in the case of investments
                  that mature in no more than one Business Day from the date of
                  purchase or other acquisition by the Trust); and provided
                  further, that the interest receivable by the Trust shall not
                  be subject to any withholding or similar taxes.

                                      -36-
<PAGE>

         (iiii)   "Special Rate Period," with respect to shares of a series of
         APS, has the meaning specified in Section 8.4(c).

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

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

         (llll)   "Submission Deadline" means 1:30 P.M., New York city time, on
         any Auction Date or such other time on any Auction Date by which
         Broker-Dealers are required to submit Orders to the Auction Agent as
         specified by the Auction Agent from time to time.

         (mmmm)   "Submitted Bid" And "Submitted Bids" have the respective
         meanings specified in Section 8.9(c)(i).

         (nnnn)   "Submitted Hold Order" and "Submitted Hold Orders" have the
         respective meanings specified in Section 8.9(c)(i).

         (oooo)   "Submitted Order" and "Submitted Orders" have the respective
         meanings specified in Section 8.9(c)(i).

         (pppp)   "Subsequent Rate Period," means, with respect to shares of a
         series of APS, the period from and including the first day following
         the Initial Rate Period of shares of such series to but excluding the
         next Dividend Payment Date for shares of such series and any period
         thereafter from and including one Dividend Payment Date for shares of
         such series to but excluding the next succeeding Dividend Payment Date
         for shares of such series; provided, however, that if any Subsequent
         Rate Period is also a Special Rate Period, such term shall mean the
         period commencing on the first day of such Special Rate Period and
         ending on the last day of the last Dividend Period thereof.

         (qqqq)   "Substitute Rating Agency" means a Rating Agency selected by
         the Trust to act as the substitute Rating Agency to determine the
         credit ratings of the APS.

         (rrrr)   "Treasury Bonds" means U.S. Treasury Bonds or notes.

                                      -37-
<PAGE>

         (ssss)   "U.S. Treasury Bill Rate" on any date means (i) the Interest
         Equivalent of the rate on the actively traded Treasury Bill with a
         maturity most nearly comparable to the length of the related Dividend
         Period, as such rate is made available on a discount basis or otherwise
         by the Federal Reserve Bank of New York in its Composite 3:30 P.M.
         Quotations for U.S. Government Securities report for such Business Day,
         or (ii) if such yield as so calculated is not available, the Alternate
         Treasury Bill Rate on such date. For purposes of determining the "U.S.
         Treasury Bill Rate" the "Alternate Treasury Bill Rate" on any date
         means the Interest Equivalent of the yield as calculated by reference
         to the arithmetic average of the bid price quotations of the actively
         traded Treasury Bill with a maturity most nearly comparable to the
         length of the related Dividend Period, as determined by bid price
         quotations as of any time on the Business Day immediately preceding
         such ate, obtained from at least three recognized primary U. S.
         Government securities dealers selected by the Auction Agent.

         (tttt)   "U.S. Treasury Note Rate" on any date means (i) the yield as
         calculated by reference to the bid price quotation of the actively
         treaded, current coupon Treasury Note with a maturity most nearly
         comparable to the length of the related Dividend Period, as such bid
         price quotation is published on the Business day immediately preceding
         such date by the Federal Reserve Bank of New York in its Composite 3:30
         P.M. Quotations for U. S Government Securities report for such Business
         Day, or (ii) if such yield as so calculated is not available, the
         Alternate Treasury Note Rate on such date. For purposes of determining
         the U.S. Treasury Note rate, the "Alternate Treasury Note Rate" on any
         date means the yield as calculated by reference to the arithmetic
         average of the bid price quotations of the actively traded current
         coupon Treasury Note with a maturity most nearly comparable to the
         length of the related Dividend Period, as determined by the bid price
         quotations as of any time on the Business Day immediately preceding
         such date, obtained from at least three recognized primary U.S.
         Government securities dealers selected by the Auction Agent.

         (uuuu)   "U.S. Treasury Securities" means obligations issued by the
         United States of America which are not zero coupon securities (other
         than Treasury bills), except that, for purposes of determining Eligible
         Assets, such obligations must be direct obligations of the United
         States Government (not including zero coupon securities).

         (vvvv)   "Valuation Date" means, for purposes of determining whether
         the Trust is maintaining the Preferred Shares Basic Maintenance Amount,
         the last Business Day of each week commencing with the Date of Original
         Issue or such other date as agreed to by the Rating Agency.

         (wwww)   "Winning Bid Rate" has the meaning specified in Section
         8.9(c)(i)(C).

         All references in these By-Laws to securities ratings by Standard &
Poor's or Moody's shall, unless otherwise indicated, include all securities
within such rating categories (i.e. (+), (-) or without either modifier for
Standard & Poor's or a numerical modifier for Moody's).

         Section 8.3. Investment Company Act Preferred Share Asset Coverage and
Preferred Shares Basic Maintenance Amount Coverage.

                                      -38-
<PAGE>

         (a)      The Trust shall maintain, as of the last Business Day of each
         month in which any APS are Outstanding, the Investment Company Act
         Preferred Share Asset Coverage.

         (b)      So long as APS are Outstanding, the Trust shall maintain, on
         each Valuation Date, and shall verify to its satisfaction that it is
         maintaining on such Valuation Date, Moody's Eligible Assets having an
         aggregate Discounted Value equal to or greater than the Preferred
         Shares Basic Maintenance Amount (if Moody's is then rating the APS).

         (c)      On or before 5:00 P.M., New York City time, on the third
         Business Day after a Valuation Date on which the Trust fails to satisfy
         the Preferred Shares Basic Maintenance Amount, and on the third
         Business Day after the Preferred Shares Basic Maintenance Cure Date
         with respect to such Valuation Date, the Trust shall complete and
         deliver to the Independent Accountant and the Auction Agent a Preferred
         Shares Basic Maintenance Report as of the date of such failure or such
         Preferred Shares Basic Maintenance Cure Date, as the case may be, which
         will be deemed to have been delivered to the Auction Agent if the
         Auction Agent receives a copy or telecopy, telex or other electronic
         transcription thereof and on the same day the Trust mails to the
         Auction Agent for delivery on the next Business Day the full Preferred
         Shares Basic Maintenance Report. The Trust shall also deliver a
         Preferred Shares Basic Maintenance Report to (i) the Auction Agent as
         of the last Valuation Date of each calendar month (or, if such day is
         not a Business Day, the immediately prior Business Day) and (ii) the
         Independent Accountant as of the last Valuation Date of each calendar
         month (or, if such day is not a Business Day, the immediately prior
         Business Day), in each case on or before the third Business Day after
         such day. A failure by the Trust to deliver a Preferred Shares Basic
         Maintenance Report pursuant to the preceding sentence shall be deemed
         to be delivery of a Preferred Shares Basic Maintenance Report
         indicating the Discounted Value for all assets of the Trust is less
         than the Preferred Shares Basic Maintenance Amount, as of the relevant
         Valuation Date.

         (d)      Within ten Business Days after the date of delivery of a
         Preferred Shares Basic Maintenance Report in accordance with paragraph
         (c) of this Section 8.3 relating to each Annual Valuation Date, the
         Trust shall cause the Independent Accountant to confirm in writing to
         Moody's (if Moody's is then rating the APS) and the Auction Agent (i)
         the mathematical accuracy of the calculations reflected in such
         Preferred Shares Basic Maintenance Report (and in any other Preferred
         Shares Basic Maintenance Report, randomly selected by the Independent
         Accountant, that was prepared by the Trust during the quarter ending on
         such Annual Valuation Date), (ii) that, in such Preferred Shares Basic
         Maintenance Report (and in such randomly selected Preferred Shares
         Basic Maintenance Report), the Trust correctly determined in accordance
         with these By-Laws the assets of the Trust which constitute Moody's
         Eligible Assets (if Moody's is then rating the APS), (iii) that, in
         such Preferred Shares Basic Maintenance Report (and in such randomly
         selected Preferred Shares Basic Maintenance Report), the Trust
         determined whether the Trust had, at such Annual Valuation Date (and at
         the Valuation Date addressed in such randomly selected Report) in
         accordance with these By-Laws, Moody's Eligible Assets of an aggregate
         Discounted Value at least equal to the Preferred Shares Basic
         Maintenance Amount, (iv) with respect to the S&P ratings on portfolio
         securities of the Trust, the issuer name, issue size and coupon rate,
         if any, listed in such

                                      -39-
<PAGE>

         Report, that the Independent Accountant has requested that S&P verify
         such information with respect to a sample of portfolio securities the
         number of which is agreed upon by the Rating Agency and the Independent
         Accountant shall provide a listing in its letter of any differences,
         (v) with respect to the Moody's ratings on portfolio securities of the
         Trust, the issuer name, issue size and coupon rate, if any, listed in
         such Preferred Shares Basic Maintenance Report, that such information
         has been verified by Moody's (in the event such information is not
         verified by Moody's, the Independent Accountant will inquire of Moody's
         what such information is, and provide a listing in its letter of any
         differences) and (vi) with respect to the bid or mean price (or such
         alternative permissible factor used in calculating the Market Value)
         provided by the custodian of the Trust's assets to the Trust for
         purposes of valuing securities in the Trust's portfolio, the
         Independent Accountant has traced the price used in such Preferred
         Shares Basic Maintenance Report to the bid or mean price listed in such
         Preferred Shares Basic Maintenance Report as provided to the Trust and
         verified that such information agrees (in the event such information
         does not agree, the Independent Accountant will provide a listing in
         its letter of such differences) (such confirmation is herein called the
         "Auditor's Confirmation").

         (e)      Within ten Business Days after the date of delivery of a
         Preferred Shares Basic Maintenance Report in accordance with paragraph
         (c) of this Section 8.3 relating to any Valuation Date on which the
         Trust failed to satisfy the Preferred Shares Basic Maintenance Amount,
         and relating to the Preferred Shares Basic Maintenance Cure Date with
         respect to such failure to satisfy the Preferred Shares Basic
         Maintenance Amount, the Trust shall cause the Independent Accountant to
         provide to Moody's (if Moody's is then rating the APS) and the Auction
         Agent an Auditor's Confirmation as to such Preferred Shares Basic
         Maintenance Report.

         (f)      If any Auditor's Confirmation delivered pursuant to paragraph
         (d) or (e) of this Section 8.3 shows that an error was made in the
         Preferred Shares Basic Maintenance Report for a particular Valuation
         Date for which such Auditor's Confirmation was required to be
         delivered, or shows that a lower aggregate Discounted Value for the
         aggregate of all Moody's Eligible Assets (if Moody's is then rating the
         APS) of the Trust was determined by the Independent Accountant, the
         calculation or determination made by such Independent Accountant shall
         be final and conclusive and shall be binding on the Trust, and the
         Trust shall accordingly amend and deliver the Preferred Shares Basic
         Maintenance Report to Moody's (if Moody's is then rating the APS) and
         the Auction Agent promptly following receipt by the Trust of such
         Auditor's Confirmation.

         (g)      On or before 5:00 p.m., New York City time, on the fifth
         Business Day after the Date of Original Issue of any APS, the Trust
         shall complete and deliver to Moody's (if Moody's is then rating the
         APS) a Preferred Shares Basic Maintenance Report as of the close of
         business on such Date of Original Issue.

         (h)      On or before 5:00 p.m., New York City time, on the third
         Business Day after either (i) the Trust shall have redeemed Common
         Shares or (ii) on any Valuation Date, the Discounted Value of Moody's
         Eligible Assets is less than or equal to the Preferred Shares Basic
         Maintenance Amount, or (iii) whenever requested by Moody's, the Trust

                                      -40-
<PAGE>

         shall complete and deliver to Moody's (if Moody's is then rating the
         APS) a Preferred Shares Basic Maintenance Report as of the date of such
         event.

         Section 8.4. Dividends.

         (a)      GENERAL.

                  (i)      Ranking. The shares of a series of the APS shall rank
                  on a parity with each other, with shares of any other series
                  of the APS and with shares of any other series of preferred
                  shares that is not designated as junior to the APS as to the
                  payment of dividends by the Trust.

                  (ii)     Cumulative Cash Dividends. The Holders of any series
                  of APS shall be entitled to receive, when, as and if declared
                  by the Board of Trustees, out of funds legally available
                  therefor in accordance with the Declaration of Trust, these
                  By-Laws and applicable law, cumulative cash dividends at the
                  Applicable Rate for shares of such series, determined as set
                  forth in Section 8.4(b), and no more, payable on the Dividend
                  Payment Dates with respect to shares of such series determined
                  pursuant to paragraph (b) of this Section 8.4. Holders of APS
                  shall not be entitled to any dividend, whether payable in
                  cash, property or shares, in excess of full cumulative
                  dividends, as herein provided, on APS. No interest, or sum of
                  money in lieu of interest, shall be payable in respect of any
                  dividend payment or payments on APS which may be in arrears,
                  and, except to the extent set forth in Section 8.4(b)(ii), no
                  additional sum of money shall be payable in respect of any
                  such arrearage.

                  (iii)    Dividends Cumulative From Date of Original Issue.
                  Dividends on any series of APS shall accumulate at the
                  Applicable Rate for shares of such series from the Date of
                  Original Issue thereof.

                  (iv)     Dividend Payment Dates and Adjustment Thereof.

                  (A)      The Dividend Payment Dates with respect the APS, for
                  the Initial Rate Period, shall be on as set forth in the
                  following table:

<TABLE>
<CAPTION>
 SERIES                INITIAL DIVIDEND PAYMENT DATE
-----------------------------------------------------
<S>                    <C>
Series A                       [      ], 2003
-----------------------------------------------------
Series B                       [      ], 2003
-----------------------------------------------------
</TABLE>

                  (B)      The Dividend Payment Date for any Subsequent Rate
                  Period shall be (i) with respect to any Dividend Period of
                  seven days and any Short Term Dividend Period of 35 or fewer
                  days, on the Business Day next succeeding the last day of such
                  Subsequent Rate Period, and (ii) with respect to any Short
                  Term Dividend Period of more than 35 days and with respect to
                  any Long Term Dividend Period, monthly on the first Business
                  Day of each calendar month

                                      -41-
<PAGE>

                  during such Short Term Dividend Period or Long Term Dividend
                  Period and on the Business Day next succeeding the last day of
                  such Subsequent Rate Period (each such date referred to in
                  clause (i) or (ii) being herein referred to as a Normal
                  Dividend Payment Date"), except that if such Normal Dividend
                  Payment Date is not a Business Day, then the Dividend Payment
                  Date shall be the first Business Day next succeeding such
                  Normal Dividend Payment Date. Although any particular Dividend
                  Payment Date may not occur on the originally scheduled date
                  because of the exceptions discussed above, the next succeeding
                  Dividend Payment Date, subject to such exceptions, will occur
                  on the next following originally scheduled date; and

                  (C)      Notwithstanding the foregoing, the Trust in its
                  discretion may establish the Dividend Payment Dates other than
                  as provided in Section 8.4(a)(iv) in respect of any Special
                  Rate Period of shares of a series of APS consisting of more
                  than seven Rate Period days; provided, however, that such
                  dates shall be set forth in the Notice of Special Rate Period
                  relating to such Special Rate Period, as delivered to the
                  Auction Agent, which Notice of Special Rate Period shall be
                  filed with the Secretary of the Trust; and further provided
                  that (1) any such Dividend Payment Date shall be a Business
                  Day and (2) the last Dividend Payment Date in respect of such
                  Special Rate Period shall be the Business Day immediately
                  following the last day thereof.

                  (D)      The Dividend Payment Dates for any series of APS
                  subsequently established by the Trust shall be as set forth in
                  resolutions of the Board of Trustees establishing such series.

         (b)      DIVIDEND RATES AND CALCULATIONS OF DIVIDENDS.

                  (i)      Dividend Rates. The dividend rate on the APS during
                  the period from and after the Date of Original Issue of shares
                  of such series to and including the last day of the Initial
                  Rate Period of shares of such series shall be equal to the
                  rate per annum set forth below:

<TABLE>
<CAPTION>
 SERIES             INITIAL DIVIDEND RATE
<S>                 <C>
Series A                   [    ]%
Series B                   [    ]%
</TABLE>

                  The initial dividend rate on any series of APS subsequently
                  established by the Trust shall be the rate set forth in or
                  determined in accordance with the resolutions of the Board of
                  Trustees establishing such series.

                  (ii)     For each Subsequent Rate Period of shares of such
                  series thereafter, the dividend rate on shares of such series
                  shall be equal to the rate per annum that results from an
                  Auction for shares of such series on the Auction Date
                  immediately preceding such Subsequent Rate Period; provided,
                  however, that if:

                                      -42-
<PAGE>

                           (A)      an Auction for any such Subsequent Rate
                           Period is not held for any reason other than as
                           described below, the dividend rate on shares of such
                           series for such Subsequent Rate Period will be the
                           Maximum Applicable Rate for shares of such series on
                           the Auction Date therefor;

                           (B)      any Failure to Deposit shall have occurred
                           with respect to shares of such series during any Rate
                           Period thereof, but, prior to 12:00 Noon, New York
                           City time, on the third Business Day next succeeding
                           the date on which such Failure to Deposit occurred,
                           such Failure to Deposit shall have been cured in
                           accordance with Section 8.4(b)(iv) and the Trust
                           shall have paid to the Auction Agent a late charge
                           ("Late Charge") equal to the sum of (1) if such
                           Failure to Deposit consisted of the failure timely to
                           pay to the Auction Agent the full amount of dividends
                           with respect to any Dividend Period of the shares of
                           such series, an amount computed by multiplying (X)
                           300% of the 'AA' Financial Composite Commercial Paper
                           Rate for the Rate Period during which such Failure to
                           Deposit occurs on the Dividend Payment Date for such
                           Dividend Period by (Y) a fraction, the numerator of
                           which shall be the number of days for which such
                           Failure to Deposit has not been cured in accordance
                           with Section 8.4(b)(iv) (including the day such
                           Failure to Deposit occurs and excluding the day such
                           Failure to Deposit is cured) and the denominator of
                           which shall be 360, and applying the rate obtained
                           against the aggregate Liquidation Preference of the
                           outstanding shares of such series and (2) if such
                           Failure to Deposit consisted of the failure timely to
                           pay to the Auction Agent the Redemption Price of the
                           shares, if any, of such series for which Notice of
                           Redemption has been mailed by the Trust pursuant to
                           Section 8.6(c), an amount computed by multiplying (x)
                           300% of the `AA' Financial Composite Commercial Paper
                           Rate for the Rate Period during which such Failure to
                           Deposit occurs on the redemption date by (y) a
                           fraction, the numerator of which shall be the number
                           of days for which such Failure to Deposit is not
                           cured in accordance with Section 8.4(b)(iv)
                           (including the day such Failure to Deposit occurs and
                           excluding the day such Failure to Deposit is cured)
                           and the denominator of which shall be 360, and
                           applying the rate obtained against the aggregate
                           Liquidation Preference of the outstanding shares of
                           such series to be redeemed, no Auction will be held
                           in respect of shares of such series for the
                           Subsequent Rate Period thereof and the dividend rate
                           for shares of such series for such Subsequent Rate
                           Period will be the Maximum Applicable Rate for shares
                           of such series on the Auction Date for such
                           Subsequent Rate Period; and

                           (C)      any Failure to Deposit shall have occurred
                           with respect to shares of such series during any Rate
                           Period thereof, and, prior to 12:00 Noon, New York
                           City time, on the third Business Day next succeeding
                           the date on which such Failure to Deposit occurred,
                           such Failure to Deposit shall not have been cured in
                           accordance with Section 8.4(b)(iv) or the Trust shall
                           not have paid the applicable Late Charge to the
                           Auction Agent, no Auction will be held in respect of
                           shares of such series for the first

                                      -43-
<PAGE>

                           Subsequent Rate Period thereof thereafter (or for any
                           Rate Period thereof thereafter to and including the
                           Rate Period during which (1) such Failure to Deposit
                           is cured in accordance with Section 8.4(b)(iv) and
                           (2) the Trust pays the applicable Late Charge to the
                           Auction Agent (the condition set forth in this clause
                           (2) to apply only in the event Moody's is rating such
                           shares at the time the Trust cures such Failure to
                           Deposit), in each case no later than 12:00 Noon, New
                           York City time, on the fourth Business Day prior to
                           the end of such Rate Period), and the dividend rate
                           for shares of such series for each such Subsequent
                           Rate Period shall be a rate per annum equal to the
                           Non-Payment Period Rate for shares of such series on
                           the Auction Date for such Subsequent Rate Period.

                  (iii)    Calculation of Dividends. The amount of dividends per
                  share payable on shares of a series of APS on any date on
                  which dividends shall be payable on shares of such series
                  shall be computed by multiplying the Applicable Rate for
                  shares of such series in effect for such Dividend Period or
                  Dividend Periods or part thereof for which dividends have not
                  been paid by a fraction, the numerator of which shall be the
                  number of days in such Dividend Period or Dividend Periods or
                  part thereof and the denominator of which shall be 365 if such
                  Dividend Period consists of seven Rate Period days or is a
                  Short Term Dividend Period and 360 for any Long Term Dividend
                  Period, and applying the rate obtained against $25,000. The
                  amount so obtained shall be rounded to the nearest cent.

                  (iv)     Curing a Failure to Deposit. A Failure to Deposit
                  with respect to shares of a series of APS shall have been
                  cured (if such Failure to Deposit is not solely due to the
                  willful failure of the Trust to make the required payment to
                  the Auction Agent) with respect to any Rate Period of shares
                  of such series if, within the respective time periods
                  described in Section 8.4(b)(ii), the Trust shall have paid to
                  the Auction Agent (A) all accumulated and unpaid dividends on
                  shares of such series and (B) without duplication, the
                  Redemption Price for shares, if any, of such series for which
                  Notice of Redemption has been mailed by the Trust pursuant to
                  Section 8.6(c); provided, however, that the foregoing clause
                  (B) shall not apply to the Trust's failure to pay the
                  Redemption Price in respect of APS when the related Notice of
                  Redemption provides that redemption of such shares is subject
                  to one or more conditions precedent and any such condition
                  precedent shall not have been satisfied at the time or times
                  and in the manner specified in such Notice of Redemption.

                  (v)      Dividend Payments by Trust to Auction Agent. The
                  Trust shall pay to the Auction Agent, not later than 12:00
                  Noon, New York City time, on the Business Day next preceding
                  each Dividend Payment Date for shares of a series of APS, an
                  aggregate amount of funds available on the next Business Day
                  in the City of New York, New York, equal to the dividends to
                  be paid to all Holders of shares of such series on such
                  Dividend Payment Date.

                                      -44-
<PAGE>

                  (vi)     Auction Agent as Trustee of Dividend Payments by
                  Trust. All moneys paid to the Auction Agent for the payment of
                  dividends (or for the payment of any Late Charge) shall be
                  held in trust for the payment of such dividends (and any such
                  Late Charge) by the Auction Agent for the benefit of the
                  Holders specified in Section 8.4(a)(vi). Any moneys paid to
                  the Auction Agent in accordance with the foregoing but not
                  applied by the Auction Agent to the payment of dividends (and
                  any such Late Charge) will, to the extent permitted by law, be
                  repaid to the Trust at the end of 90 days from the date on
                  which such moneys were so to have been applied.

                  (vii)    Dividends Paid to Holders. Each dividend on APS shall
                  be paid on the Dividend Payment Date therefor to the Holders
                  thereof as their names appear on the record books of the Trust
                  on the Business Day next preceding such Dividend Payment Date.

                  (viii)   Dividends Credited Against Earliest Accumulated but
                  Unpaid Dividends. Any dividend payment made on APS shall first
                  be credited against the earliest accumulated but unpaid
                  dividends due with respect to such shares. Dividends in
                  arrears for any past Dividend Period may be declared and paid
                  at any time, without reference to any regular Dividend Payment
                  Date, to the Holders as their names appear on the record books
                  of the Trust on such date, not exceeding 15 days preceding the
                  payment date thereof, as may be fixed by the Board of
                  Trustees.

         (c)      DESIGNATION OF SPECIAL RATE PERIODS.

                  (i)      The Trust, at its option and to the extent permitted
                  by law, by telephonic and written notice (a "Request for
                  Special Dividend Period") to the Auction Agent and to each
                  Broker-Dealer, may request that the next succeeding Dividend
                  Period for any series of APS will be a number of days (other
                  than seven days) evenly divisible by seven, and not fewer than
                  fourteen nor more than 364 in the case of a Short Term
                  Dividend Period or one whole year or more but not greater than
                  five years in the case of a Long Term Dividend Period,
                  specified in such notice, provided that the Trust may not give
                  a Request for Special Dividend Period (and any such request
                  will be null and void) unless, for any Auction occurring after
                  the initial Auction, Sufficient Clearing Bids were made in the
                  last occurring Auction and unless full cumulative dividends
                  and any amounts due with respect to redemptions have been paid
                  in full, and provided further that the Trust may not request a
                  Special Dividend Period that is a Long Term Dividend Period
                  unless the Trust shall have received written confirmation from
                  Moody's (or any Substitute Rating Agency) that the Trust's
                  election of the proposed Long Term Dividend Period would not
                  impair the rating then assigned by Moody's (or any Substitute
                  Rating Agency) of the applicable series of APS. Such Request
                  for Special Dividend Period, in the case of a Short Term
                  Dividend Period, shall be given on or prior to the second
                  Business Day but

                                      -45-
<PAGE>

                  not more than seven Business Days prior to an Auction Date for
                  the APS of that series and, in the case of a Long Term
                  Dividend Period, shall be given on or prior to the second
                  Business Day but not more than 28 days prior to an Auction
                  Date for the APS of that series. Upon receiving such Request
                  for Special Dividend Period, the Broker-Dealers jointly shall
                  determine the Optional Redemption Price of the APS of that
                  series during such Special Dividend Period and the Specific
                  Redemption Provisions and shall give the Trust and the Auction
                  Agent written notice (a "Response") of such determination by
                  no later than the second Business Day prior to such Auction
                  date. In making such determination, the Broker-Dealers will
                  consider (i) existing short-term and long-term market rates
                  and indices of such short-term and long-term rates, (ii)
                  existing market supply and demand for short-term and long-term
                  securities, (iii) existing yield curves for short-term and
                  long-term securities comparable to the APS, (iv) industry and
                  financial conditions which may affect the APS of that series,
                  (v) the investment objectives of the Trust and (vi) the
                  Dividend Periods and dividend rates at which current and
                  potential beneficial holders of the APS would remain or become
                  beneficial holders.

                  (ii)     After providing the Request for Special Dividend
                  Period to the Auction Agent and each Broker-Dealer as set
                  forth above, the Trust, by no later than the second Business
                  Day prior to such Auction Date, may give a notice (a "Notice
                  of Special Dividend Period") to the Auction Agent, the
                  Securities Depository, each Broker-Dealer and the Rating
                  Agency which notice will specify the duration of the Special
                  Dividend Period. The Trust will not give a Notice of Special
                  Dividend Period and, if such Notice of Special Dividend Period
                  was given already, will give telephonic and written notice of
                  its revocation (a "Notice of Revocation") to the Auction
                  Agent, each Broker-Dealer, the Securities Depository and the
                  Rating Agency on or prior to the Business Day prior to the
                  relevant Auction Date if (x) either the Investment Company Act
                  Preferred Shares Asset Coverage or the Preferred Shares Basic
                  Maintenance Amount is not satisfied, on each of the two
                  Business Days immediately preceding the Business Day prior to
                  the relevant Auction Date or (y) sufficient funds for the
                  payment of dividends payable on the immediately succeeding
                  Dividend Payment Date have not been irrevocably deposited with
                  the Auction Agent by the close of business on the third
                  Business Day preceding the Auction Date immediately preceding
                  such Dividend Payment Date. The Trust also shall provide a
                  copy of such Notice of Special Dividend Period to the Rating
                  Agency. If the Trust is prohibited from giving a Notice of
                  Special Dividend Period as a result of the factors enumerated
                  in clause (x) or (y) above or if the Trust gives a Notice of
                  Revocation with respect to a Notice of Special Dividend
                  Period, the next succeeding Dividend Period for that series of
                  APS will be a seven day Dividend Period. In addition, in the
                  event Sufficient Clearing Bids are not made in an Auction, or
                  if an Auction is not held for any reason, the next succeeding
                  Dividend Period will be a seven day Dividend Period, and the
                  Trust may not again give a Notice of Special Dividend Period
                  (and any such attempted notice will be null and void) until
                  Sufficient Clearing Bids have been made in an Auction with
                  respect to a seven day Dividend Period.

         (d)      RESTRICTIONS ON DIVIDENDS.

                                      -46-
<PAGE>

                  (i)      Dividends on Shares Other Than the APS. Except as set
                  forth in the next sentence, no dividends shall be declared or
                  paid or set apart for payment on the shares of any class or
                  series of shares of beneficial interest of the Trust ranking,
                  as to the payment of dividends, on a parity with the APS for
                  any period unless full cumulative dividends have been or
                  contemporaneously are declared and paid on the shares of each
                  series of the APS through its most recent Dividend Payment
                  Date. When dividends are not paid in full upon the shares of
                  each series of the APS through its most recent Dividend
                  Payment Date or upon the shares of any other class or series
                  of shares of beneficial interest of the Trust ranking on a
                  parity as to the payment of dividends with the APS through
                  their most recent respective dividend payment dates, all
                  dividends declared upon the APS and any other such class or
                  series of shares of beneficial interest ranking on a parity as
                  to the payment of dividends with APS shall be declared pro
                  rata so that the amount of dividends declared per share on APS
                  and such other class or series of shares of beneficial
                  interest shall in all cases bear to each other the same ratio
                  that accumulated dividends per share on the Trust and such
                  other class or series of shares of beneficial interest bear to
                  each other (for purposes of this sentence, the amount of
                  dividends declared per share of APS shall be based on the
                  Applicable Rate for such share for the Dividend Periods during
                  which dividends were not paid in full).

                  (ii)     Dividends and Other Distributions with Respect to
                  Common Shares Under the Investment Company Act. The Board of
                  Trustees shall not declare any dividend (except a dividend
                  payable in Common Shares), or declare any other distribution,
                  upon the Common Shares, or purchase Common Shares, unless in
                  every such case the APS have, at the time of any such
                  declaration or purchase, an asset coverage (as defined in and
                  determined pursuant to the Investment Company Act) of at least
                  200% (or such other asset coverage as may in the future be
                  specified in or under the Investment Company Act as the
                  minimum asset coverage for senior securities which are shares
                  or stock of a closed- end investment company as a condition of
                  declaring dividends on its common shares or stock) after
                  deducting the amount of such dividend, distribution or
                  purchase price, as the case may be.

                  (iii)    Other Restrictions on Dividends and Other
                  Distributions. For so long as any APS are outstanding, and
                  except as set forth in Section 8.4(d) and Section 8.6(b), (A)
                  the Trust shall not declare, pay or set apart for payment any
                  dividend or other distribution (other than a dividend or
                  distribution paid in shares of, or in options, warrants or
                  rights to subscribe for or purchase, Common Shares or other
                  shares, if any, ranking junior to the APS as to the payment of
                  dividends and the distribution of assets upon dissolution,
                  liquidation or winding up) in respect of the Common Shares or
                  any other shares of the Trust ranking junior to or on a parity
                  with the APS as to the payment of dividends or the
                  distribution of assets upon dissolution, liquidation or
                  winding up, or call for redemption, redeem, purchase or
                  otherwise acquire for consideration any Common Shares or any
                  other such junior shares (except by

                                      -47-
<PAGE>

                  conversion into or exchange for shares of the Trust ranking
                  junior to the APS as to the payment of dividends and the
                  distribution of assets upon dissolution, liquidation or
                  winding up), or any such parity shares (except by conversion
                  into or exchange for shares of the Trust ranking junior to or
                  on a parity with APS as to the payment of dividends and the
                  distribution of assets upon dissolution, liquidation or
                  winding up), unless (i) full cumulative dividends on shares of
                  each series of APS through its most recently ended Dividend
                  Period shall have been paid or shall have been declared and
                  sufficient funds for the payment thereof deposited with the
                  Auction Agent and (ii) the Trust has redeemed the full number
                  of APS required to be redeemed by any provision for mandatory
                  redemption pertaining thereto, and (B) the Trust shall not
                  declare, pay or set apart for payment any dividend or other
                  distribution (other than a dividend or distribution paid in
                  shares of, or in options, warrants or rights to subscribe for
                  or purchase, Common Shares or other shares, if any, ranking
                  junior to APS as to the payment of dividends and the
                  distribution of assets upon dissolution, liquidation or
                  winding up) in respect of Common Shares or any other shares of
                  the Trust ranking junior to APS as to the payment of dividends
                  or the distribution of assets upon dissolution, liquidation or
                  winding up, or call for redemption, redeem, purchase or
                  otherwise acquire for consideration any Common Shares or any
                  other such junior shares (except by conversion into or
                  exchange for shares of the Trust ranking junior to APS as to
                  the payment of dividends and the distribution of assets upon
                  dissolution, liquidation or winding up), unless immediately
                  after such transaction the Discounted Value of Moody's
                  Eligible Assets (if Moody's is then rating the APS) would at
                  least equal the Preferred Shares Basic Maintenance Amount.

         Section 8.5. Liquidation Rights.

         (a)      The shares of a series of APS shall rank on a parity with each
         other, with shares of any other series of preferred shares not
         designated as junior to the APS and with shares of any other series of
         APS as to the distribution of assets upon dissolution, liquidation or
         winding up of the affairs of the Trust. Upon the liquidation,
         dissolution or winding up of the affairs of the Trust, whether
         voluntary or involuntary, Holders shall be entitled to receive, out of
         the assets of the Trust available for distribution to Shareholders
         after satisfying claims of creditors but before any payment or
         distribution to the holders of the Common Shares or on any other class
         of Shares ranking junior to the shares of each series of APS upon
         liquidation, a liquidation distribution in the amount of $25,000 per
         share of each series of APS plus an amount equal to accumulated and
         unpaid dividends on each shares of such series (whether or not earned
         or declared) to the date of such distribution. Unless and until payment
         in full has been made to the Holders of the liquidation distributions
         to which they are entitled as provided in this Section 8.5, no
         dividends or distributions will be made to holders of the Common Shares
         or any other Shares junior to or on parity with the APS on liquidation,
         and no purchase, redemption or other acquisition for any consideration
         by the Trust will be made in respect of the Common Shares or any other
         Shares ranking junior to or on parity with the APS upon liquidation.
         After the payment to Holders of the full amount of the liquidation
         distributions to which they are entitled pursuant to the first sentence
         of this Section 8.5(a), Holders (in their capacity as such Holders)
         shall have no right or claim to any of the remaining assets of the
         Trust.

                                      -48-
<PAGE>

         (b)      Neither the sale, lease or exchange (for cash, stock,
         securities or other consideration) of all or substantially all of the
         property and assets of the Trust, nor the merger or consolidation of
         the Trust into or with any other corporation, association, trust or
         other organization, nor the merger or consolidation of any other
         corporation, association, trust or other organization into or with the
         Trust, shall be deemed to be a dissolution, liquidation or winding up,
         voluntary or involuntary, for the purposes of this Section 8.5.

         (c)      If the assets of the Trust available for distribution to the
         Holders upon the dissolution, liquidation or winding up of the Trust,
         whether voluntary or involuntary, shall be insufficient to pay the full
         amount of the liquidation distributions to which the Holders are
         entitled pursuant to Section 8.5(a) above, then such assets shall be
         distributed among the Holders, together with the holders of any other
         class or series of preferred shares ranking on parity with the APS,
         ratably in proportion to the full amount of distribution to which each
         Holder would have been entitled under such Section 8.5(a).

         Section 8.6. Redemption.

         The shares of each series of APS shall be redeemable by the Trust as
         provided below:

         (a)      OPTIONAL REDEMPTION.

                  (i)      Except to the extent prohibited by Massachusetts law
                  or the Investment Company Act, the Trust, at its option, may
                  without the consent of the Holders of the APS, redeem APS, in
                  whole or in part, on the Business Day after the last day of a
                  Dividend Period upon not less than 15 calendar days' and not
                  more than 40 calendar days' prior notice; provided that no
                  share of APS may be redeemed at the option of the Trust during
                  (A) the Initial Dividend Period with respect to a series of
                  shares or (B) a Non-Call Period to which such share is
                  subject. Except with respect to a Call Premium Period, the
                  optional redemption price per share will be $25,000 per share,
                  plus an amount equal to accumulated but unpaid dividends
                  thereon (whether or not earned or declared) to the date fixed
                  for redemption.

                  (ii)     If fewer than all of the outstanding shares of a
                  series of APS are to be redeemed pursuant to subparagraph (i)
                  of this Section 8.6(a), the number of shares of such series to
                  be redeemed shall be determined by the Board of Trustees, and
                  such shares shall be redeemed pro rata from the Holders of
                  shares of such series in proportion to the number of shares of
                  such series held by such Holders.

                  (iii)    The Trust may not on any date mail a Notice of
                  Redemption pursuant to Section 8.6(c) in respect of a
                  redemption contemplated to be effected pursuant to this
                  Section 8.6(a) unless on such date (A) the Trust has available
                  Deposit Securities with maturity or tender dates not later
                  than the day preceding the applicable redemption date and
                  having a value not less than the amount (including any
                  applicable premium) due to Holders of APS by reason of the
                  redemption of such shares on such redemption date, and (B) the
                  Discounted Value of Moody's Eligible Assets (if Moody's is
                  then rating the APS) at least equals the Preferred

                                      -49-
<PAGE>

                  Shares Basic Maintenance Amount, and would at least equal the
                  Preferred Shares Basic Maintenance Amount immediately
                  subsequent to such redemption if such redemption were to occur
                  on such date. For purposes of determining in clause (B) of the
                  preceding sentence whether the Discounted Value of Moody's
                  Eligible Assets at least equals the Preferred Shares Basic
                  Maintenance Amount, the Moody's Discount Factors applicable to
                  Moody's Eligible Assets shall be determined by reference to
                  the first Exposure Period longer than the Exposure Period then
                  applicable to the Trust.

         (b)      MANDATORY REDEMPTION. The Trust shall redeem, at a redemption
         price equal to $25,000 per share plus accumulated but unpaid dividends
         thereon (whether or not earned or declared) to (but not including) the
         date fixed by the Board of Trustees for redemption, certain of the APS,
         if the Trust fails to have Moody's Eligible Assets with a Discounted
         Value greater than or equal to the Preferred Shares Basic Maintenance
         Amount or fails to maintain the Investment Company Act Preferred Share
         Asset Coverage, in accordance with the requirements of the rating
         agency or agencies then rating the APS, and such failure is not cured
         on or before the Preferred Shares Basic Maintenance Cure Date or the
         Investment Company Act Cure Date, as the case may be. The number of APS
         to be redeemed shall be equal to the lesser of (i) the minimum number
         of APS, together with all other preferred shares subject to redemption
         or retirement, the redemption of which, if deemed to have occurred
         immediately prior to the opening of business on the Cure Date, would
         have resulted in the Trust's having Moody's Eligible Assets with a
         Discounted Value greater than or equal of the Preferred Shares Basic
         Maintenance Amount or maintaining the Investment Company Act Preferred
         Shares Asset Coverage, as the case may be, on such Cure Date (provided,
         however, that if there is no such minimum number of APS and other
         preferred shares the redemption or retirement of which would have had
         such result, all APS and other preferred shares then outstanding shall
         be redeemed), and (ii) the maximum number of APS, together with all
         other preferred shares subject to redemption or retirement, that can be
         redeemed out of funds expected to be legally available therefor in
         accordance with the Declaration of Trust and applicable law. In
         determining the APS required to be redeemed in accordance with the
         foregoing, the Trust shall allocate the number required to be redeemed
         to satisfy the requirement of the Trust's having Moody's Eligible
         Assets with a Discounted Value greater than or equal the Preferred
         Shares Basic Maintenance Amount or the Investment Company Act Preferred
         Share Asset Coverage, as the case may be, pro rata among APS and other
         preferred shares (and, then, pro rata among each series of APS) subject
         to redemption or retirement; provided that, shares of APS which may not
         be redeemed at the option of the Trust due to the designation of a
         Non-Call Period applicable to such shares (A) will be subject to
         mandatory redemption only to the extent that other shares are not
         available to satisfy the number of shares required to be redeemed and
         (B) will be selected for redemption in an ascending order of
         outstanding number of days in the Non-Call Period (with shares with the
         lowest number of days to be redeemed first) and by lot in the event of
         shares having an equal number of days in such Non-Call Period. The
         Trust shall effect such redemption on the date fixed by the Trust
         therefor, which date shall not be earlier than 20 days nor later than
         40 days after such Cure Date, except that if the Trust does not have
         funds legally available for the redemption of all of the required
         number of the APS and other preferred shares which are subject to
         redemption or retirement or the Trust

                                      -50-
<PAGE>

         otherwise is unable to effect such redemption on or prior to 40 days
         after such Cure Date, the Trust shall redeem those APS and other
         preferred shares which it was unable to redeem on the earliest
         practicable date on which it is able to effect such redemption. If
         fewer than all of the outstanding shares of a series of APS are to be
         redeemed pursuant to this paragraph (b), the shares of such series to
         be redeemed shall be selected by lot or such other method that the
         Trust deems fair and equitable.

         (c)      NOTICE OF REDEMPTION. If the Trust shall determine or be
         required to redeem shares of a series of APS pursuant to paragraph (a)
         or (b) of this Section 8.6, it shall mail a Notice of Redemption with
         respect to such redemption by first-class mail, postage prepaid, to
         each Holder of the shares of such series to be redeemed, at such
         Holder's address as the same appears on the record books of the Trust
         on the record date established by the Board of Trustees and to the
         Auction Agent. Such Notice of Redemption shall be so mailed not less
         than 15 nor more than 40 days prior to the date fixed for redemption.
         Each such Notice of Redemption shall state: (i) the redemption date;
         (ii) the number of APS to be redeemed and the series thereof; (iii) the
         CUSIP number for shares of such series; (iv) the Redemption Price; (v)
         the place or places where the certificate(s) for such shares (properly
         endorsed or assigned for transfer, if the Board of Trustees shall so
         require and the Notice of Redemption shall so state) are to be
         surrendered for payment of the Redemption Price; (vi) that dividends on
         the shares to be redeemed will cease to accumulate on such redemption
         date; (vii) that the Holders of any shares of a series of APS being so
         redeemed shall not participate in the Auction, if any, immediately
         preceding the redemption date; and (viii) the provisions of this
         Section 8.6 under which such redemption is made. If fewer than all
         shares of a series of APS held by any Holder are to be redeemed, the
         Notice of Redemption mailed to such Holder shall also specify the
         number of shares of such series to be redeemed from such Holder. The
         Trust may provide in any Notice of Redemption relating to a redemption
         contemplated to be effected pursuant to paragraph (a) of this Section
         8.6 that such redemption is subject to one or more conditions precedent
         and that the Trust shall not be required to effect such redemption
         unless each such condition shall have been satisfied at the time or
         times and in the manner specified in such Notice of Redemption.

         (d)      NO REDEMPTION UNDER CERTAIN CIRCUMSTANCES. Notwithstanding the
         provisions of paragraphs (a) or (b) of this Section 8.6, if any
         dividends on shares of a series of APS (whether or not earned or
         declared) are in arrears, no shares of such series shall be redeemed
         unless all outstanding shares of such series are simultaneously
         redeemed, and the Trust shall not purchase or otherwise acquire any
         shares of such series; provided, however, that the foregoing shall not
         prevent the purchase or acquisition of all outstanding shares of such
         series pursuant to the successful completion of an otherwise lawful
         purchase or exchange offer made on the same terms to, and accepted by,
         Holders of all outstanding shares of such series.

         (e)      ABSENCE OF TRUSTS AVAILABLE FOR REDEMPTION. To the extent that
         any redemption for which Notice of Redemption has been mailed is not
         made by reason of the absence of legally available funds therefor in
         accordance with the Declaration of Trust or applicable law, such
         redemption shall be made as soon as practicable to the extent such
         funds become available. Failure to redeem APS shall be deemed to exist
         at

                                      -51-
<PAGE>

         any time after the date specified for redemption in a Notice of
         Redemption when the Trust shall have failed, for any reason whatsoever,
         to deposit in trust with the Auction Agent the Redemption Price with
         respect to any shares for which such Notice of Redemption has been
         mailed; provided, however, that the foregoing shall not apply in the
         case of the Trust's failure to deposit in trust with the Auction Agent
         the Redemption Price with respect to any shares where (1) the Notice of
         Redemption relating to such redemption provided that such redemption
         was subject to one or more conditions precedent and (2) any such
         condition precedent shall not have been satisfied at the time or times
         and in the manner specified in such Notice of Redemption.
         Notwithstanding the fact that the Trust may not have redeemed APS for
         which a Notice of Redemption has been mailed, dividends may be declared
         and paid on APS and shall include those APS for which a Notice of
         Redemption has been mailed.

         (f)      AUCTION AGENT AS TRUSTEE OF REDEMPTION PAYMENTS BY THE TRUST.
         All moneys paid to the Auction Agent for payment of the Redemption
         Price of APS called for redemption shall be held in trust by the
         Auction Agent for the benefit of Holders of shares so to be redeemed.

         (g)      SHARES FOR WHICH NOTICE OF REDEMPTION HAS BEEN GIVEN ARE NO
         LONGER OUTSTANDING. Provided a Notice of Redemption has been mailed
         pursuant to Section 8.6(c), upon the deposit with the Auction Agent (on
         the Business Day next preceding the date fixed for redemption thereby,
         in funds available on the next Business Day in The City of New York,
         New York) of funds sufficient to redeem the APS that are the subject of
         such notice, dividends on such shares shall cease to accumulate and
         such shares shall no longer be deemed to be outstanding for any
         purpose, and all rights of the Holders of the shares so called for
         redemption shall cease and terminate, except the right of such Holders
         to receive the Redemption Price, but without any interest or other
         additional amount, except as provided in Section 8.4(b)(ii). The
         Auction Agent shall pay the Redemption Price to the Holders of APS
         subject to redemption upon surrender of the certificates for the shares
         (properly endorsed or assigned for transfer, if the Board of Trustees
         shall so require and the Notice of Redemption shall so state) to be
         redeemed in accordance with the Notice of Redemption. In the case that
         fewer than all of the shares represented by any such certificate are
         redeemed, a new certificate shall be issued, representing the
         unredeemed shares, without cost to the Holder thereof. The Trust shall
         be entitled to receive from the Auction Agent, promptly after the date
         fixed for redemption, any cash deposited with the Auction Agent in
         excess of (i) the aggregate Redemption Price of the APS called for
         redemption on such date and (ii) all other amounts to which Holders of
         APS called for redemption may be entitled. Any funds so deposited that
         are unclaimed at the end of 90 days from such redemption date shall, to
         the extent permitted by law, be repaid to the Trust, after which time
         the Holders of APS so called for redemption may look only to the Trust
         for payment of the Redemption Price and all other amounts to which they
         may be entitled.

         (h)      COMPLIANCE WITH APPLICABLE LAW. In effecting any redemption
         pursuant to this Section 8.6, the Trust shall use its best efforts to
         comply with all applicable conditions precedent to effecting such
         redemption under the Investment Company Act and any

                                      -52-
<PAGE>

         applicable Massachusetts law, but shall effect no redemption except in
         accordance with the Investment Company Act and any applicable
         Massachusetts law.

         (i)      ONLY WHOLE APS MAY BE REDEEMED. In the case of any redemption
         pursuant to this Section 8.6, only whole APS shall be redeemed, and in
         the event that any provision of the Declaration of Trust would require
         redemption of a fractional share, the Auction Agent shall be authorized
         to round up so that only whole shares are redeemed.

         (j)      MODIFICATION OF REDEMPTION PROCEDURES. Notwithstanding any of
         the foregoing provisions of this Section 8.6, the Trust may modify any
         or all of the requirements relating to the Notice of Redemption
         provided that (i) any such modification does not materially and
         adversely affect any Holder of the relevant series of APS, and (ii) the
         Trust receives written notice from Moody's (if Moody's is then rating
         the APS) that such modification would not impair the ratings assigned
         by Moody's to shares of APS.

         Section 8.7. Voting Rights.

         (a)      GENERAL. Except as otherwise provided by law and as specified
         by this Section 8.7, the Holders of APS shall have equal voting rights
         with the holders of Common Shares and shall be entitled to one vote for
         each share of a series of APS on each matter submitted to a vote of the
         Shareholders of the Trust. For purposes of determining any right of the
         Holders to vote on any matter, whether such right is created by the
         Declaration of Trust or these By-Laws, or otherwise, no Holder shall be
         entitled to vote and no Share of a series of APS shall be deemed to be
         "outstanding" for the purpose of voting or determining the number of
         Shares required to constitute a quorum, if prior to or concurrently
         with the time of determination of Shares entitled to vote or Shares
         deemed outstanding for quorum purposes, as the case may be, sufficient
         funds for the redemption of such APS have been deposited in trust with
         the Preferred Shares Paying Agent for that purpose and the requisite
         Notice of Redemption with respect to such APS shall have been given as
         provided in Section 8.6(c) above.

         (b)      HOLDERS OF APS TO VOTE ON CERTAIN OTHER MATTERS.

                  (i)      So long as any APS are outstanding, the Trust shall
                  not, without the affirmative vote or consent of the Holders of
                  at least a majority of the APS outstanding at the time, in
                  person or by proxy, either in writing or at a meeting, voting
                  as a separate class: (A) authorize, create or issue any class
                  or series of shares ranking prior to or on a parity with the
                  APS with respect to the payment of dividends or the
                  distribution of assets upon dissolution, liquidation or
                  winding up of the affairs of the Trust, or authorize, create
                  or issue additional shares of any series of APS (except that,
                  notwithstanding the foregoing, the Board of Trustees, without
                  the vote or consent of the Holders of APS, may from time to
                  time authorize and create, and the Trust may from time to time
                  issue, additional shares of any series of APS or classes or
                  series of other preferred shares ranking on a parity with APS
                  with respect to the payment of dividends and the distribution
                  of assets upon dissolution, liquidation or winding up of the
                  affairs of the Trust, if the Trust obtains written
                  confirmation from Moody's (if Moody's is then rating the

                                      -53-
<PAGE>

                  APS) or any Substitute Rating Agency (if any such Substitute
                  Rating Agency is then rating the APS) that the issuance of a
                  class or series would not impair the rating then assigned by
                  such rating agency to the APS and the Trust continues to
                  comply with Section 13 of the Investment Company Act, the
                  Investment Company Act Preferred Share Asset Coverage and the
                  Preferred Shares Basic Maintenance Amount requirements); or
                  (B) amend, alter or repeal the provisions of the Declaration
                  of Trust or the By-Laws, whether by merger, consolidation or
                  otherwise, so as to adversely affect any preference, right or
                  power of such APS or the Holders thereof; provided, however,
                  that (x) none of the actions permitted by the exception to (A)
                  above will be deemed to affect such preferences, rights or
                  powers, (y) a division of APS will be deemed to affect such
                  preferences, rights or powers only if the terms of such
                  division adversely affect the Holders of APS and (z) the
                  authorization, creation and issuance of classes or series of
                  shares ranking junior to the APS with respect to the payment
                  of dividends and the distribution of assets upon dissolution,
                  liquidation or winding up of the affairs of the Trust, will be
                  deemed to affect such preferences, rights or powers only if
                  Moody's is then rating the APS and such issuance would, at the
                  time thereof, cause the Trust not to satisfy the Investment
                  Company Act Preferred Share Asset Coverage or the Preferred
                  Shares Basic Maintenance Amount. So long as any shares of the
                  APS are outstanding, the Trust shall not, without the
                  affirmative vote or consent of the Holders of at least 66 2/3%
                  of the APS outstanding at the time, in person or by proxy,
                  either in writing or at a meeting, voting as a separate class,
                  file a voluntary application for relief under Federal
                  bankruptcy law or any similar application under state law for
                  so long as the Trust is solvent and does not foresee becoming
                  insolvent. If any action set forth above would adversely
                  affect the rights of one or more series (the "Affected
                  Series") of APS in a manner different from any other series of
                  APS, the Trust will not approve any such action without the
                  affirmative vote or consent of the Holders of at least a
                  majority of the shares of each such Affected Series
                  outstanding at the time, in person or by proxy, either in
                  writing or at a meeting (each such Affected Series voting as a
                  separate class).

                  (ii)     Unless a higher percentage is provided for in the
                  Declaration of Trust, (A) the affirmative vote of the Holders
                  of at least a majority of the APS outstanding at the time,
                  voting as a separate class, shall be required to approve any
                  conversion of the Trust from a closed-end to an open-end
                  investment company, (B) the affirmative vote of the Holders of
                  at least a majority of the APS outstanding at the time, voting
                  as a separate class, shall be required to amend the provisions
                  of the Declaration of Trust, which provides for the
                  classification of the Board of Trustees into three classes,
                  and (C) the affirmative vote of the Holders of a "majority of
                  the outstanding APS," voting as a separate class, shall be
                  required to approve any plan of reorganization (as such term
                  is used in the Investment Company Act) adversely affecting
                  such shares. The affirmative vote of the holders of a
                  "majority of the outstanding APS," voting as a separate class,
                  shall be required to approve any action not described in the
                  first sentence of this Section 8.7(b)(ii) requiring a vote of
                  security holders of the Trust under section 13(a) of the
                  Investment Company Act. For purposes of the foregoing,
                  "majority of the outstanding APS" means (i) 67% or more of
                  such shares present at a meeting, if

                                      -54-
<PAGE>

                  the Holders of more than 50% of such shares are present or
                  represented by proxy, or (ii) more than 50% of such shares,
                  whichever is less. In the event a vote of Holders of APS is
                  required pursuant to the provisions of section 13(a) of the
                  Investment Company Act, the Trust shall, not later than ten
                  Business Days prior to the date on which such vote is to be
                  taken, notify Moody's (if Moody's is then rating the APS) that
                  such vote is to be taken and the nature of the action with
                  respect to which such vote is to be taken. The Trust shall,
                  not later than ten Business Days after the date on which such
                  vote is taken, notify Moody's (if Moody's is then rating the
                  APS) of the results of such vote.

         (c)      ELECTION OF TRUSTEES; RIGHT TO ELECT MAJORITY OF BOARD
         TRUSTEES.

                  (i)      The Holders of the APS and any other class of APS of
                  the Trust that may be outstanding from time to time, voting
                  separately as a single class, shall be entitled to elect two
                  members of the Board of Trustees, and the holders of the
                  Common Shares, voting separately as a single class, shall be
                  entitled to elect the remaining members of the Board of
                  Trustees. If at any time, however, dividends on any of the APS
                  shall be unpaid in an amount equal to two full years'
                  dividends (whether or not earned or declared) or the Holders
                  of Preferred Shares, including the Auction Preferred Shares
                  are otherwise entitled under the Investment Company Act to
                  elect a majority of the Trustees, then the number of Trustees
                  constituting the Board of Trustees shall automatically be
                  increased by the smallest number such that, when added to the
                  number of Trustees then constituting the Board of Trustees,
                  the incumbent Trustees then elected solely by the Holders of
                  the APS plus such additional Trustees shall constitute a
                  majority of such increased number of Trustees; and at a
                  special meeting of Shareholders, which shall be called and
                  held as provided in Section 8.7(d), and at all subsequent
                  meetings at which Trustees are to be elected, the Holders of
                  the APS and holders of any other class of preferred shares of
                  the Trust ranking on parity with the APS, by majority vote,
                  voting separately as a single class (to the exclusion of the
                  holders of all other series and classes of Shares of the Trust
                  ranking junior to the APS), shall be entitled to elect such
                  smallest number of additional Trustees of the Trust who will
                  constitute a majority of the total number of Trustees of the
                  Trust as so increased. The terms of office of the persons who
                  are Trustees at the time of that election shall continue. If
                  the Trust thereafter shall pay, or declare and set apart for
                  payment, in full all dividends payable on all outstanding APS
                  for all past Dividend Periods, the voting rights stated in the
                  preceding sentence shall cease, and the terms of office of all
                  of the additional Trustees elected by the Holders of the APS
                  and holders of any other class of preferred shares of the
                  Trust ranking on parity with the APS (but not the terms of the
                  two incumbent Trustees elected by the Holders of the APS and
                  the remaining incumbent Trustees elected by the Common Shares)
                  shall terminate automatically, subject to the revesting of the
                  rights of the Holders of the APS as provided in the second
                  sentence of this paragraph in the event of any subsequent
                  arrearage in the payment of two full years' dividends on the
                  APS

                                      -55-
<PAGE>

                  (ii)     Any vacancy in the office of any Trustees elected by
                  the Holders of the APS may be filled by the remaining Trustees
                  (or Trustee) so elected or, if not so filled, by the Holders
                  of the APS and any other class of preferred shares of the
                  Trust ranking on parity with the APS, voting separately as a
                  single class, at any meeting of Shareholders for the election
                  of Trustees held thereafter. Any vacancy in the office of any
                  Trustees elected by the holders of the Common Shares may be
                  filled by the remaining Trustees (or Trustee) so elected or,
                  if not so filled, by the Holders of the Common Shares, voting
                  separately as a single class, at any meeting of Shareholders
                  for the election of Trustees held thereafter. Unless as
                  otherwise provided in the Declaration of Trust, a Trustee
                  elected by the Holders of the APS and any other class of
                  preferred shares of the Trust ranking on parity with the APS
                  may be removed with or without cause, but only by action taken
                  by the Holders of at least a majority of the outstanding APS
                  and any other class of preferred shares of the Trust ranking
                  on parity with the APS. Unless as otherwise provided in the
                  Declaration of Trust, a Trustee elected by the holders of the
                  Common Shares may be removed but only for cause by action
                  taken by the holders of at least 75% of the outstanding Common
                  Shares; provided, however, that if such termination is
                  recommended by two-thirds of the total number of Trustees then
                  in office elected by the holders of the Common Shares, the
                  vote of the holders of at least a majority of the Common
                  Shares then outstanding shall be sufficient authorization.

         (d)      VOTING PROCEDURES.

         As soon as practicable after the accrual of any right of the Holders to
         elect Trustees at a special meeting of Shareholders as described in
         Section 8.7(c), the Trust shall notify the Auction Agent and the
         Auction Agent shall call or cause to be called such special meeting by
         mailing or causing to be mailed a notice of such special meeting to the
         Holders upon not less than 10 nor more than 45 days prior to the date
         fixed for the meeting. If the Trust fails to send such notice to the
         Auction Agent or if the Auction Agent does not call such special
         meeting, it may be called by any Holder on like notice.

         The record date for determining the Holders entitled to notice of and
         to vote at such meeting shall be the close of business on the fifth
         Business Day preceding the day on which such notice is mailed.

         The Holders of a majority of the APS then outstanding, present in
         person or by proxy, will constitute a quorum for the election of
         additional Trustees. At any such meeting or adjournment thereof in the
         absence of a quorum, a majority of the Holders present in person or by
         proxy shall have the power to adjourn the meeting for the election of
         additional Trustees without notice, other than an announcement at the
         meeting, until a quorum is present, and, subject to Section 8.7(b), to
         take any other action as shall properly come before such meeting.

         If the right to elect additional Trustees shall have terminated as
         provided in Section 8.7(c) after the notice of a special meeting
         provided for in this Section 8.7(d) has been given but before the
         special meeting shall have been held, the Trust shall, as soon as
         practicable

                                      -56-
<PAGE>

         after such termination, mail or cause to be mailed to the Holders a
         notice of cancellation of such special meeting.

         (e)      BOARD MAY TAKE CERTAIN ACTIONS WITHOUT SHAREHOLDER APPROVAL.
         The Board of Trustees, without the vote or consent of the shareholders
         of the Trust, may from time to time amend, alter or repeal any or all
         of the definitions of the terms listed below, and any provision of
         these By-Laws viewed by Moody's as a predicate for any such definition,
         and any such amendment, alteration or repeal will not be deemed to
         affect the preferences, rights or powers of APS or the Holders thereof;
         provided, however, that the Board of Trustees receives written
         confirmation from Moody's (such confirmation being required to be
         obtained only in the event Moody's is rating the APS) that any such
         amendment, alteration or repeal would not impair the ratings then
         assigned by Moody's to the APS:

         Annual Valuation Date
         Auditor's Confirmation
         Business Day
         Closing Transaction
         Commercial Paper Dealer
         Deposit Securities
         Discount Factor
         Discounted Value
         Eligible Assets
         Exposure Period
         Failure to Deposit
         Independent Accountant
         Investment Company Act Cure Date
         Investment Company Act Preferred Asset Coverage
         Market Value
         Maximum Applicable Rate
         Moody's Discount Factor
         Moody's Eligible Assets
         Moody's Hedging Transaction
         Moody's Industry Classifications
         Preferred Shares Basic Maintenance Amount
         Preferred Shares Basic Maintenance Cure Date
         Preferred Shares Basic Maintenance Report
         Pricing Service
         Rating Agency
         Reference Rate Response
         Short Term Money Market Instruments
         Specific Redemption Provisions
         Structured Notes
         Treasury Bonds
         Valuation Date

         (f)      VOTING RIGHTS SET FORTH HEREIN ARE SOLE VOTING RIGHTS. Unless
         otherwise required by law, the Holders of APS shall not have any
         relative rights or preferences or other special rights other than those
         specifically set forth herein.

         (g)      NO PREEMPTIVE RIGHTS OR CUMULATIVE VOTING. The Holders of APS
         shall have no preemptive rights or rights to cumulative voting.

         (h)      VOTING FOR TRUSTEES SOLE REMEDY FOR TRUST'S FAILURE TO PAY
         DIVIDENDS. In the event that the Trust fails to pay any dividends on
         the APS, the exclusive remedy of the Holders shall be the right to vote
         for trustees pursuant to the provisions of this Section 8.7.

         Section 8.8. OTHER RESTRICTIONS.

         (a)      The Trustees may from time to time in their sole discretion
         impose restrictions on certain investment practices of the Trust in
         order to comply with guidelines established by Moody's or any other
         Rating Agency that may be rating the Trust's APS at the time.

                                      -57-
<PAGE>

         (b)      For so long as any APS are rated by Moody's, the Trust will
         not, without the prior consent of Moody's:

                  (i)      issue senior securities representing indebtedness as
                  defined under the Investment Company Act;

                  (ii)     merge or consolidate into or with any other fund;

                  (iii)    engage in interest rate swaps, caps and floors,
                  except that the Trust may, without obtaining the written
                  consent described above, engage in interest rate swaps, caps
                  and floors, if; (1) the unsecured senior debt or claims paying
                  ability of the counterparty to the swap, cap or floor is rated
                  Aa3 or better by Moody's or A/A-1 or better by S&P and; (2)
                  the swap, collar or floor is marked-to-market daily by the
                  counterparty; (3) a swap, collar or floor that is "in the
                  money" is valued at 95% of the accrued net excess of the
                  Trust's entitlements over its obligations for purposes of
                  calculating the Investment Company Act Preferred Shares Asset
                  Coverage; (4) 100% of any accrued net excess of the Trust's
                  obligations over it entitlements with respect to a swap, cap
                  or floor that has not been defeased through the segregation of
                  liquid assets on the Trust's books and records is included as
                  a liability of the Trust for the purposes of calculating the
                  Preferred Share Basic Maintenance Amount; (5) the swap, cap or
                  floor notional amount does not exceed the liquidation
                  preference of the Outstanding Preferred Shares and (6) the
                  Trust intends to terminate the swap, cap or floor if the Trust
                  fails to maintain the Investment Company Preferred Shares
                  Asset Coverage on the last Business Day of any two consecutive
                  months.

                  (iv)     buy or sell financial futures contracts, write,
                  purchase or sell call options on financial futures contracts
                  or purchase put options on financial futures contracts or
                  write call options (except covered call options) on portfolio
                  securities unless it receives written confirmation from
                  Moody's that engaging in such transactions would not impair
                  the ratings then assigned to the APS by Moody's, except that
                  the Trust may purchase or sell exchange-traded financial
                  futures contracts based on any index approved by Moody's or
                  Treasury Bonds, and purchase, write or sell exchange-traded
                  put options on such financial futures contracts, any index
                  approved by Moody's or Treasury Bonds, and purchase, write or
                  sell exchange-traded call options on such financial futures
                  contracts, any index approved by Moody's or Treasury Bonds
                  (collectively "Moody's Hedging Transactions"), subject to the
                  following limitations:

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

                                    (1)      outstanding financial futures
                           contracts based on such index exceeding in number 10%
                           of the average number of daily traded financial

                                      -58-
<PAGE>

                           futures contracts based on such index in the 30 days
                           preceding the time of effecting such transaction as
                           reported by The Wall Street Journal; or

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

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

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

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

                                    (3)      for purposes of the foregoing
                           clauses (1) and (2), the Trust shall be deemed to own
                           the number of financial futures contracts that
                           underlie any outstanding options written by the
                           Trust;

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

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

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

                                      -59-
<PAGE>

                           (F)      the Trust (1) will not engage in options and
                           futures transactions for leveraging or speculative
                           purposes, except that an option or futures
                           transaction shall not for these purposes be
                           considered a leveraged position or speculative so
                           long as the combination of the Trust's non-derivative
                           positions, together with the relevant option or
                           futures transaction, produces a synthetic investment
                           position, or the same economic result, that could be
                           achieved by an investment, consistent with the
                           Trust's investment objectives and policies, in a
                           security that is not an option or futures
                           transaction, and (2) will not write any call options
                           or sell any financial futures contracts for the
                           purposes of hedging the anticipated purchase of an
                           asset prior to completion of such purchase; and

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

         Section 8.9. AUCTION PROCEDURES.

         (a)      ORDERS.

                  (i)      Prior to the Submission Deadline on each Auction Date
                  for shares of a series of APS:

                           (A)      each Beneficial Owner of shares of such
                           series may submit to its Broker-Dealer by telephone
                           or otherwise information as to:

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

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

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

                           (B)      one or more Broker-Dealers, using lists of
                           Potential Beneficial Owners, shall in good faith for
                           the purpose of conducting a competitive

                                      -60-
<PAGE>

                           Auction in a commercially reasonable manner, contact
                           Potential Beneficial Owners (by telephone or
                           otherwise), including Persons that are not Beneficial
                           Owners, on such lists to determine the number of
                           shares, if any, of such series which each such
                           Potential Beneficial Owner offers to purchase if the
                           Applicable Rate for shares of such series for the
                           next succeeding Rate Period of shares of such series
                           shall not be less than the rate per annum specified
                           by such Potential Beneficial Owner.

                           (C)      For the purposes hereof, the communication
                           by a Beneficial Owner or Potential Beneficial Owner
                           to a Broker-Dealer, or by a Broker-Dealer to the
                           Auction Agent, of information referred to in clause
                           (A)(1), (A)(2), (A)(3) or (B) of this Section
                           8.9(a)(i) is hereinafter referred to as an "Order"
                           and collectively as "Orders" and each Beneficial
                           Owner and each Potential Beneficial Owner placing an
                           Order with a Broker-Dealer, and such Broker-Dealer
                           placing an order with the Auction Agent, is
                           hereinafter referred to as a "Bidder" and
                           collectively as "Bidders"; an Order containing the
                           information referred to in clause (A)(1) of this
                           Section 8.9(a)(i) is hereinafter referred to as a
                           "Hold Order" and collectively as "Hold Orders"; an
                           Order containing the information referred to in
                           clause (A)(2) or (B) of this Section 8.9(a)(i) is
                           hereinafter referred to as a "Bid" and collectively
                           as "Bids"; and an Order containing the information
                           referred to in clause (A)(3) of this Section
                           8.9(a)(i) is hereinafter referred to as a "Sell
                           Order" and collectively as "Sell Orders."

                           (D)      A Bid by a Beneficial Owner or an Existing
                           Holder of shares of a series of APS subject to an
                           Auction on any Auction Date shall constitute an
                           irrevocable offer to sell:

                                             (1)      the number of Outstanding
                                    shares of such series specified in such Bid
                                    if the Applicable Rate for shares of such
                                    series determined on such Auction Date shall
                                    be less than the rate specified therein;

                                             (2)      such number or a lesser
                                    number of Outstanding shares of such series
                                    to be determined as set forth in Section
                                    8.9(d)(i)(A)(4) if the Applicable Rate for
                                    shares of such series determined on such
                                    Auction Date shall be equal to the rate
                                    specified therein; or

                                             (3)      the number of Outstanding
                                    shares of such series specified in such Bid
                                    if the rate specified therein shall be
                                    higher than the Maximum Applicable Rate for
                                    shares of such series, or such number or a
                                    lesser number of Outstanding shares of such
                                    series to be determined as set forth in
                                    Section 8.9(d)(i)(A)(4) if the rate
                                    specified therein shall be higher than the
                                    Maximum Applicable Rate for shares of such
                                    series and Sufficient Clearing Bids for
                                    shares of such series do not exist.

                                      -61-
<PAGE>

                           (E)      A Sell Order by a Beneficial Owner or an
                           Existing Holder of shares of a series of APS subject
                           to an Auction on any Auction Date shall constitute an
                           irrevocable offer to sell:

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

                                             (2)      such number or a lesser
                                    number of Outstanding shares of such series
                                    as set forth in Section 8.9(d)(i)(B)(3) if
                                    Sufficient Clearing Bids for shares of such
                                    series do not exist; provided, however, that
                                    a Broker-Dealer that is an Existing Holder
                                    with respect to shares of a series of APS
                                    shall not be liable to any Person for
                                    failing to sell such shares pursuant to a
                                    Sell Order described in the proviso to
                                    paragraph (iii) of Section 8.9(b) if (X)
                                    such shares were transferred by the
                                    Beneficial Owner thereof without compliance
                                    by such Beneficial Owner or its transferee
                                    Broker-Dealer (or other transferee person,
                                    if permitted by the Trust) with the
                                    provisions of Section 8.9(f) or (Y) such
                                    Broker-Dealer has informed the Auction Agent
                                    pursuant to the terms of its Broker-Dealer
                                    Agreement that, according to such
                                    Broker-Dealer's records, such Broker Dealer
                                    believes it is not the Existing Holder of
                                    such shares.

                           (F)      A Bid by a Potential Beneficial Holder or a
                           Potential Holder of shares of a series of APS subject
                           to an Auction on any Auction Date shall constitute an
                           irrevocable offer to purchase:

                                             (1)      the number of Outstanding
                                    shares of such series specified in such Bid
                                    if the Applicable Rate for shares of such
                                    series determined on such Auction Date shall
                                    be higher than the rate specified therein;
                                    or

                                             (2)      such number or a lesser
                                    number of Outstanding shares of such series
                                    as set forth in Section 8.9(d)(i)(A)(5) if
                                    the Applicable Rate for shares of such
                                    series determined on such Auction Date shall
                                    be equal to the rate specified therein.

                  (ii)     No Order for any number of APS other than whole
                  shares shall be valid.

         (b)      SUBMISSION OF ORDERS BY BROKER-DEALERS TO AUCTION AGENT.

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

                                      -62-
<PAGE>

                  submitted to it by Potential Beneficial Owners, and shall
                  specify with respect to each Order for such shares:

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

                           (B)      the aggregate number of shares of such
                           series that are the subject of such Order;

                           (C)      to the extent that such Bidder is an
                           Existing Holder of shares of such series:

                                             (1)      the number of shares, if
                                    any, of such series subject to any Hold
                                    Order of such Existing Holder;

                                             (2)      the number of shares, if
                                    any, of such series subject to any Bid of
                                    such Existing Holder and the rate specified
                                    in such Bid; and

                                             (3)      the number of shares, if
                                    any, of such series subject to any Sell
                                    Order of such Existing Holder; and

                           (D)      to the extent such Bidder is a Potential
                           Holder of shares of such series, the rate and number
                           of shares of such series specified in such Potential
                           Holder's Bid.

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

                  (iii)    If an Order or Orders covering all of the outstanding
                  APS of a series held by any Existing Holder is not submitted
                  to the Auction Agent prior to the Submission Deadline, the
                  Auction Agent shall deem a Hold Order to have been submitted
                  by or on behalf of such Existing Holder covering the number of
                  Outstanding shares of such series held by such Existing Holder
                  and not subject to Orders submitted to the Auction Agent;
                  provided, however, that if an Order or Orders covering all of
                  the Outstanding shares of such series held by any Existing
                  Holder is not submitted to the Auction Agent prior to the
                  Submission Deadline for an Auction relating to a Special Rate
                  Period consisting of more than 91 days, the Auction Agent
                  shall deem a Sell order to have been submitted by or on behalf
                  of such Existing Holder covering the number of outstanding
                  shares of such series held by such Existing Holder and not
                  subject to Orders submitted to the Auction Agent.

                  (iv)     If one or more Orders of an Existing Holder is
                  submitted to the Auction Agent covering in the aggregate more
                  than the number of Outstanding APS of a series subject to an
                  Auction held by such Existing Holder, such Orders shall be
                  considered valid in the following order of priority:

                                      -63-
<PAGE>

                           (A)      all Hold Orders for shares of such series
                           shall be considered valid, but only up to and
                           including in the aggregate the number of Outstanding
                           shares of such series held by such Existing Holder,
                           and if the number of shares of such series subject to
                           such Hold Orders exceeds the number of Outstanding
                           shares of such series held by such Existing Holder,
                           the number of shares subject to each such Hold Order
                           shall be reduced pro rata to cover the number of
                           Outstanding shares of such series held by such
                           Existing Holder;

                           (B)

                                             (1)      any Bid for shares of such
                                    series shall be considered valid up to and
                                    including the excess of the number of
                                    Outstanding shares of such series held by
                                    such Existing Holder over the number of
                                    shares of such series subject to any Hold
                                    Orders referred to in clause (A) above;

                                             (2)      subject to subclause (1),
                                    if more than one Bid of an Existing Holder
                                    for shares of such series is submitted to
                                    the Auction Agent with the same rate and the
                                    number of Outstanding shares of such series
                                    subject to such Bids is greater than such
                                    excess, such Bids shall be considered valid
                                    up to and including the amount of such
                                    excess, and the number of shares of such
                                    series subject to each Bid with the same
                                    rate shall be reduced pro rata to cover the
                                    number of shares of such series equal to
                                    such excess;

                                             (3)      subject to subclauses (1)
                                    and (2), if more than one Bid of an Existing
                                    Holder for shares of such series is
                                    submitted to the Auction Agent with
                                    different rates, such Bids shall be
                                    considered valid in the ascending order of
                                    their respective rates up to and including
                                    the amount of such excess;

                                             (4)      in any such event, the
                                    number, if any, of such Outstanding shares
                                    of such series subject to any portion of
                                    Bids considered not valid in whole or in
                                    part under this clause (B) shall be treated
                                    as the subject of a Bid for shares of such
                                    series by or on behalf of a Potential Holder
                                    at the rate therein specified; and

                           (C)      all Sell Orders for shares of such series
                           shall be considered valid up to and including the
                           excess of the number of Outstanding shares of such
                           series held by such Existing Holder over the sum of
                           shares of such series subject to valid Hold Orders
                           referred to in clause (A) above and valid Bids
                           referred to in clause (B) above.

                  (v)      If more than one Bid for one or more shares of a
                  series of APS is submitted to the Auction Agent by or on
                  behalf of any Potential Holder, each such

                                      -64-
<PAGE>

                  Bid submitted shall be a separate Bid with the rate and number
                  of shares therein specified.

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

         (c)      DETERMINATION OF SUFFICIENT CLEARING BIDS, WINNING BIDS RATE
         AND APPLICABLE RATE.

                  (i)      Not earlier than the Submission Deadline on each
                  Auction Date for shares of a series of APS, the Auction Agent
                  shall assemble all valid Orders submitted or deemed submitted
                  to it by the Broker-Dealers in respect of shares of such
                  series (each such Order as submitted or deemed submitted by a
                  Broker-Dealer being hereinafter referred to individually as a
                  "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell
                  Order," as the case may be, or as a "Submitted Order" and
                  collectively as "Submitted Hold Orders," "Submitted Bids" or
                  "Submitted Sell Orders," as the case may be, or as "Submitted
                  Orders") and shall determine for such series:

                           (A)      the excess of the number of Outstanding
                           shares of such series over the number of Outstanding
                           shares of such series subject to Submitted Hold
                           Orders (such excess being hereinafter referred to as
                           the "Available APS" of such series);

                           (B)      from the Submitted Orders for shares of such
                           series whether:

                                             (1)      the number of Outstanding
                                    shares of such series subject to Submitted
                                    Bids of Potential Holders specifying one or
                                    more rates equal to or lower than the
                                    Maximum Applicable Rate for shares of such
                                    series exceeds or is equal to the sum of:

                                             (2)      the number of Outstanding
                                    shares of such series subject to Submitted
                                    Bids of Existing Holders specifying one or
                                    more rates higher than the Maximum
                                    Applicable Rate for shares of such series;
                                    and

                                             (3)      the number of Outstanding
                                    shares of such series subject to Submitted
                                    Sell Orders

(in the event such excess or such equality exists (other than because the number
of shares of such series in subclauses (2) and (3) above is zero because all of
the Outstanding shares of such series are subject to Submitted Hold Orders),
such Submitted Bids in subclause (1) above being hereinafter referred to
collectively as "Sufficient Clearing Bids" for shares of such series); and

                           (C)      if Sufficient Clearing Bids for shares of
                           such series exist, the lowest rate specified in such
                           Submitted Bids (the "Winning Bid Rate" for shares of
                           such series) which if:

                                      -65-
<PAGE>

                                             (1)      (X) each such Submitted
                                    Bid of Existing Holders specifying such
                                    lowest rate and (Y) all other such Submitted
                                    Bids of Existing Holders specifying lower
                                    rates were rejected, thus entitling such
                                    Existing Holders to continue to hold the
                                    shares of such series that are subject to
                                    such Submitted Bids; and

                                             (2)      (X) each such Submitted
                                    Bid of Potential Holders specifying such
                                    lowest rate and (Y) all other such Submitted
                                    Bids of Potential Holders specifying lower
                                    rates were accepted would result in such
                                    Existing Holders described in Section
                                    8.9(c(i)(B)(2) (1) above continuing to hold
                                    an aggregate number of Outstanding shares of
                                    such series which, when added to the number
                                    of Outstanding shares of such series to be
                                    purchased by such Potential Holders
                                    described in Section 8.9(c(i)(B)(2), would
                                    equal not less than the Available APS of
                                    such series.

                  (ii)     Promptly after the Auction Agent has made the
                  determinations pursuant to paragraph (i) of this Section
                  8.9(c), the Auction Agent shall advise the Trust of the
                  Maximum Applicable Rate for shares of the series of APS for
                  which an Auction is being held on the Auction Date and, based
                  on such determination the Applicable Rate for shares of such
                  series for the next succeeding Rate Period thereof as follows:

                           (A)      if Sufficient Clearing Bids for shares of
                           such series exist, that the Applicable Rate for all
                           shares of such series for the next succeeding Rate
                           Period thereof shall be equal to the Winning Bid Rate
                           for shares of such series so determined;

                           (B)      if Sufficient Clearing Bids for shares of
                           such series do not exist (other than because all of
                           the Outstanding shares of such series are subject to
                           Submitted Hold Orders), that the Applicable Rate for
                           all shares of such series for the next succeeding
                           Rate Period thereof shall be equal to the Maximum
                           Applicable Rate for shares of such series; or

                           (C)      if all of the Outstanding shares of such
                           series are subject to Submitted Hold Orders, that the
                           Dividend Period shall be a Dividend Period of seven
                           Rate Period Days and the Applicable Rate for all
                           shares of such series for the next succeeding Rate
                           Period thereof shall be the applicable "AA" Financial
                           Composite Commercial Paper Rate on such Auction Date.

         (d)      ACCEPTANCE AND REJECTION OF SUBMITTED BIDS AND SUBMITTED SELL
         ORDERS AND ALLOCATION OF SHARES.

                  (i)      Existing Holders shall continue to hold the APS that
                  are subject to Submitted Hold Orders, and, based on the
                  determinations made pursuant to Section 8.9(c)(i)(A), the
                  Submitted Bids and Submitted Sell Orders shall be

                                      -66-
<PAGE>

                  accepted or rejected by the Auction Agent and the Auction
                  Agent shall take such other action as set forth below:

                           (A)      If Sufficient Clearing Bids for shares of a
                           series of APS have been made, all Submitted Sell
                           Orders with respect to shares of such series shall be
                           accepted and, subject to the provisions of paragraphs
                           (iv) and (v) of Section 8.9(d), Submitted Bids with
                           respect to shares of such series shall be accepted or
                           rejected as follows in the following order of
                           priority and all other Submitted Bids with respect to
                           shares of such series shall be rejected:

                                             (1)      Existing Holders'
                                    Submitted Bids for shares of such series
                                    specifying any rate that is higher than the
                                    Winning Bid Rate for shares of such series
                                    shall be accepted, thus requiring each such
                                    Existing Holder to sell the APS subject to
                                    such Submitted Bids;

                                             (2)      Existing Holders'
                                    Submitted Bids for shares of such series
                                    specifying any rate that is lower than the
                                    Winning Bid Rate for shares of such series
                                    shall be rejected, thus entitling each such
                                    Existing Holder to continue to hold the APS
                                    subject to such Submitted Bids;

                                             (3)      Potential Holders'
                                    Submitted Bids for shares of such series
                                    specifying any rate that is lower than the
                                    Winning Bid Rate for shares of such series
                                    shall be accepted;

                                             (4)      each Existing Holder's
                                    Submitted Bid for shares of such series
                                    specifying a rate that is equal to the
                                    Winning Bid Rate for shares of such series
                                    shall be rejected, thus entitling such
                                    Existing Holder to continue to hold the APS
                                    subject to such Submitted Bid, unless the
                                    number of Outstanding APS subject to all
                                    such Submitted Bids shall be greater than
                                    the number of APS ("remaining shares") in
                                    the excess of the Available APS of such
                                    series over the number of APS subject to
                                    Submitted Bids described in Sections
                                    8.9(d)(i)(A) and (C), in which event such
                                    Submitted Bid of such Existing Holder shall
                                    be rejected in part, and such Existing
                                    Holder shall be entitled to continue to hold
                                    APS subject to such Submitted Bid, but only
                                    in an amount equal to the number of APS of
                                    such series obtained by multiplying the
                                    number of remaining shares by a fraction,
                                    the numerator of which shall be the number
                                    of Outstanding APS held by such Existing
                                    Holder subject to such Submitted Bid and the
                                    denominator of which shall be the aggregate
                                    number of Outstanding APS subject to such
                                    Submitted Bids made by all such Existing
                                    Holders that specified a rate equal to the
                                    Winning Bid Rate for shares of such series;
                                    and

                                      -67-
<PAGE>

                                             (5)      each Potential Holder's
                                    Submitted Bid for shares of such series
                                    specifying a rate that is equal to the
                                    Winning Bid Rate for shares of such series
                                    shall be accepted but only in an amount
                                    equal to the number of shares of such series
                                    obtained by multiplying the number of shares
                                    in the excess of the Available APS of such
                                    series over the number of APS subject to
                                    Submitted Bids described in clauses (2)
                                    through (4) of this Section 8.9(i)(A) by a
                                    fraction, the numerator of which shall be
                                    the number of Outstanding APS subject to
                                    such Submitted Bid and the denominator of
                                    which shall be the aggregate number of
                                    Outstanding APS subject to such Submitted
                                    Bids made by all such Potential Holders that
                                    specified a rate equal to the Winning Bid
                                    Rate for shares of such series.

                           (B)      If Sufficient Clearing Bids for shares of a
                           series of APS have not been made (other than because
                           all of the Outstanding shares of such series are
                           subject to Submitted Hold Orders), subject to the
                           provisions of Section 8.9(d)(4), Submitted Orders for
                           shares of such series shall be accepted or rejected
                           as follows in the following order of priority and all
                           other Submitted Bids for shares of such series shall
                           be rejected:

                                             (1)      Existing Holders'
                                    Submitted Bids for shares of such series
                                    specifying any rate that is equal to or
                                    lower than the Maximum Applicable Rate for
                                    shares of such series shall be rejected,
                                    thus entitling such Existing Holders to
                                    continue to hold the APS subject to such
                                    Submitted Bids;

                                             (2)      Potential Holders'
                                    Submitted Bids for shares of such series
                                    specifying any rate that is equal to or
                                    lower than the Maximum Applicable Rate for
                                    shares of such series shall be accepted; and

                                             (3)      Each Existing Holder's
                                    Submitted Bid for shares of such series
                                    specifying any rate that is higher than the
                                    Maximum Applicable Rate for shares of such
                                    series and the Submitted Sell Orders for
                                    shares of such series of each Existing
                                    Holder shall be accepted, thus entitling
                                    each Existing Holder that submitted or on
                                    whose behalf was submitted any such
                                    Submitted Bid or Submitted Sell Order to
                                    sell the shares of such series subject to
                                    such Submitted Bid or Submitted Sell Order,
                                    but in both cases only in an amount equal to
                                    the number of shares of such series obtained
                                    by multiplying the number of shares of such
                                    series subject to Submitted Bids described
                                    in clause (2) of this paragraph (B) by a
                                    fraction, the numerator of which shall be
                                    the number of Outstanding shares of such
                                    series held by such Existing Holder subject
                                    to such Submitted Bid or Submitted Sell
                                    Order and the denominator of which shall be
                                    the aggregate number of

                                      -68-
<PAGE>

                                    Outstanding shares of such series subject to
                                    all such Submitted Bids and Submitted Sell
                                    Orders.

                           (C)      If all of the Outstanding shares of a series
                           of APS are subject to Submitted Hold Orders, all
                           Submitted Bids for shares of such series shall be
                           rejected.

                           (D)      If, as a result of the procedures described
                           in clause (4) or (5) of paragraph (A) or clause (3)
                           of paragraph (B) of this Section 8.9(d)(i), any
                           Existing Holder would be entitled or required to
                           sell, or any Potential Holder would be entitled or
                           required to purchase, a fraction of a share of a
                           series of APS on any Auction Date, the Auction Agent
                           shall, in such manner as it shall determine in its
                           sole discretion, round up or down the number of APS
                           of such series to be purchased or sold by any
                           Existing Holder or Potential Holder on such Auction
                           Date as a result of such procedures so that the
                           number of shares so purchased or sold by each
                           Existing Holder or Potential Holder on such Auction
                           Date shall be whole APS.

                           (E)      If, as a result of the procedures described
                           in clause (5) of Section 8.9(d)(i)(A), any Potential
                           Holder would be entitled or required to purchase less
                           than a whole share of a series of APS on any Auction
                           Date, the Auction Agent shall, in such manner as it
                           shall determine in its sole discretion, allocate APS
                           of such series for purchase among Potential Holders
                           so that only whole shares of APS of such series are
                           purchased on such Auction Date as a result of such
                           procedures by any Potential Holder, even if such
                           allocation results in one or more Potential Holders
                           not purchasing APS of such series on such Auction
                           Date.

                           (F)      Based on the results of each Auction for
                           shares of a series of APS, the Auction Agent shall
                           determine the aggregate number of shares of such
                           series to be purchased and the aggregate number of
                           shares of such series to be sold by Potential Holders
                           and Existing Holders and, with respect to each
                           Potential Holder and Existing Holder, to the extent
                           that such aggregate number of shares to be purchased
                           and such aggregate number of shares to be sold
                           differ, determine to which other Potential Holder(s)
                           or Existing Holder(s) they shall deliver, or from
                           which other Potential Holder(s) or Existing Holder(s)
                           they shall receive, as the case may be, APS of such
                           series. Notwithstanding any provision of the Auction
                           Procedures to the contrary, in the event an Existing
                           Holder or Beneficial Owner of a series of APS with
                           respect to whom a Broker-Dealer submitted a Bid to
                           the Auction Agent for such shares that was accepted
                           in whole or in part, or submitted or is deemed to
                           have submitted a Sell Order for such shares that was
                           accepted in whole or in part, fails to instruct its
                           Agent Member to deliver such shares against payment
                           therefor, partial deliveries of APS that have been
                           made in respect of Potential Holders' or Potential
                           Beneficial Owners' submitted Bids for shares of such
                           series that have been

                                      -69-
<PAGE>

                           accepted in whole or in part shall constitute good
                           delivery to such Potential Holders and Potential
                           Beneficial Owners.

                           (G)      None of the Trust, the Adviser, nor the
                           Auction Agent nor any affiliate of either shall have
                           any responsibility or liability with respect to the
                           failure of an Existing Holder, a Potential Holder, a
                           Beneficial Owner, a Potential Beneficial Owner or its
                           respective Agent Member to deliver APS of any series
                           or to pay for APS of any series sold or purchased
                           pursuant to the Auction Procedures or otherwise.

         (e)      AUCTION AGENT.

         For so long as any APS are outstanding, the Auction Agent, duly
appointed by the Trust to so act, shall be in each case a commercial bank, trust
company or other financial institution independent of the Trust and its
Affiliates (which however may engage or have engaged in business transactions
with the Trust or its Affiliates) and at no time shall the Trust or any of its
affiliates act as the Auction Agent in connection with the Auction Procedures.
If the Auction Agent resigns or for any reason its appointment is terminated
during any period that any APS are outstanding, the Board of Trustees shall use
its best efforts promptly thereafter to appoint another qualified commercial
bank, trust company or financial institution to act as the Auction Agent. The
Auction Agent's registry of Existing Holders of a series of APS shall be
conclusive and binding on the Broker-Dealers. A Broker-Dealer may inquire of the
Auction Agent between 3:00 p.m. on the Business Day preceding an Auction for a
series of APS and 9:30 a.m. on the Auction Date for such Auction to ascertain
the number of shares of such series in respect of which the Auction Agent has
determined such Broker-Dealer to be an Existing Holder. If such Broker-Dealer
believes it is the Existing Holder of fewer shares of such series than specified
by the Auction Agent in response to such Broker-Dealer's inquiry, such
Broker-Dealer may so inform the Auction Agent of that belief. Such Broker-Dealer
shall not, in its capacity as Existing Holder of shares of such series, submit
Orders in such Auction in respect of shares of such series covering in the
aggregate more than the number of shares of such series specified by the Auction
Agent in response to such Broker-Dealer's inquiry.

         (f)      TRANSFER OF APS.

         Unless otherwise permitted by the Trust, a Beneficial Owner or an
Existing Holder may sell, transfer or otherwise dispose of APS only in whole
shares and only pursuant to a Bid or Sell Order placed with the Auction Agent in
accordance with the procedures described in this Section 8.9 or to a
Broker-Dealer; provided, however, that (a) a sale, transfer or other disposition
of APS from a customer of a Broker-Dealer who is listed on the records of that
Broker-Dealer as the holder of such shares to that Broker-Dealer or another
customer of that Broker-Dealer shall not be deemed to be a sale, transfer or
other disposition for purposes of this Section 8.9 if such Broker-Dealer remains
the Existing Holder of the shares so sold, transferred or disposed of
immediately after such sale, transfer or disposition and (b) in the case of all
transfers other than pursuant to Auctions, the Broker-Dealer (or other Person,
if permitted by the Trust) to whom such transfer is made shall advise the
Auction Agent of such transfer.

                                      -70-
<PAGE>

         (g)      GLOBAL CERTIFICATE.

         Prior to the commencement of a any period in which the holders of
Preferred Shares are entitled to elect a majority of the Board of Trustees, (i)
all of the shares of a series of APS outstanding from time to time shall be
represented by one global certificate registered in the name of the Securities
Depository or its nominee and (ii) no registration of transfer of shares of a
series of APS shall be made on the books of the Trust to any Person other than
the Securities Depository or its nominee.

                                      -71-
<PAGE>

         (h)      FORCE MAJEURE.

                  (i)      Notwithstanding anything else set forth herein, if an
                  Auction Date is not a Business Day because the New York Stock
                  Exchange is closed for business due to an act of God, natural
                  disaster, act of war, civil or military disturbance, act of
                  terrorism, sabotage, riots or a loss or malfunction of
                  utilities or communications services or the Auction Agent is
                  not able to conduct an Auction in accordance with the Auction
                  Procedures for any such reason, then the Auction Rate for the
                  next Dividend Period shall be the Auction Rate determined on
                  the previous Auction Date.

                  (ii)     Notwithstanding anything else set forth herein, if a
                  Dividend Payment Date is not a Business Day because the New
                  York Stock Exchange is closed for business due to an act of
                  God, natural disaster, act of war civil or military
                  disturbance, act of terrorism, sabotage, riots or a loss or
                  malfunction of utilities or communications services or the
                  dividend payable on such date can not be paid for any such
                  reason, then:

                           (A)      the Dividend Payment Date for the affected
                           Dividend Period shall be the next Business Day on
                           which the Trust and its paying agent, if any, are
                           able to cause the dividend to be paid using their
                           reasonable best efforts;

                           (B)      the affected Dividend Period shall end on
                           the day it would have ended had such event not
                           occurred and the Dividend Payment Date had remained
                           the scheduled date; and

                           (C)      the next Dividend Period will begin and end
                           on the dates on which it would have begun and ended
                           had such event not occurred and the Dividend Payment
                           Date remained the scheduled date.

         (i)      MISCELLANEOUS.

                  The Board of Trustees may interpret the provisions of this
         Section 8.9 to resolve any inconsistency or ambiguity, remedy any
         formal defect or make any other change or modification that does not
         materially adversely affect the rights of Existing Holders of the
         Preferred Shares, and if such inconsistency, ambiguity or formal defect
         reflects an inaccurate provision hereof, the Board of Trustees may, in
         appropriate circumstances, amend this Section 8.9. An Existing Holder
         (A) may sell, transfer or otherwise dispose of Preferred Shares only
         pursuant to a Bid or Sell Order in accordance with the procedures
         described in this Section 8.9 or to or through a Broker-Dealer,
         provided that in the case of all transfers other than pursuant to
         Auctions such Existing Holder or its Broker-Dealer or its Agent Member
         advises the Auction Agent of such transfer, and (B) shall have the
         ownership of the Preferred Shares held by it maintained in book-entry
         form by the Securities Depository in the account of its Agent Member,
         which in turn will maintain records of such Existing Holder's
         beneficial ownership. Neither the Trust nor any affiliated person of
         the Trust (as defined under the Investment Company Act) shall

                                      -72-
<PAGE>

         submit any Order in any Auction. All of the Outstanding Preferred
         Shares shall be represented by one certificate registered in the name
         of the nominee of the Securities Depository. Each such certificate
         shall bear a legend substantially to the effect that transfer of the
         Shares represented by such certificate is subject to the restrictions
         specified in Section 8.9(f). Neither the Trust nor any of its agents,
         including, without limitation, the Auction Agent, shall have any
         liability with respect to the failure of a Potential Holder, Existing
         Holder or Agent Member to deliver, or to pay for, Preferred Shares sold
         or purchased in an Auction or otherwise.

                                   ARTICLE IX

                             TERMS OF COMMON SHARES

         Section 9.1. DESIGNATION. A class of common shares of beneficial
interest, without par value, is hereby designated "Common Shares" (the "Common
Shares").

         Section 9.2. COMMON SHARES.

         (a)      The Common Shares shall rank junior to the Preferred Shares
with respect to payment of dividends and distributions on liquidation or
dissolution and shall have such other qualifications, limitations or
restrictions as provided in the Declaration.

         (b)      Except as otherwise provided herein or by law and the
Declaration, the holders of the Common Shares shall be entitled to one vote for
each Share on each matter submitted to a vote of the Shareholders of the Trust.
The holders of the Common Shares and the holders of the Preferred Shares shall
vote together as a single class except as herein provided or to the extent
otherwise required by the 1940 Act or the Declaration.

         (c)      After all accumulated and unpaid dividends upon all
outstanding Preferred Shares for all previous dividend periods have been paid,
and full dividends on all outstanding Preferred Shares for the then-current
dividend period have been paid or declared and a sum sufficient for the payment
thereof set apart therefore, then and not otherwise, dividends or other
distributions may be declared upon and paid to the holders of the Common Shares,
to the exclusion of the holders of the Preferred Shares.

         (d)      In the event of the dissolution, liquidation, or winding up of
the Trust, whether voluntary or involuntary, after payment in full of the
amounts, if any, required to be paid to the holders of the Preferred Shares, the
holders of the Common Shares shall be entitled, to the exclusion of the holders
of the Preferred Shares, to share ratably in all remaining assets of the Trust.

                                   ARTICLE X

                                   FISCAL YEAR

         The fiscal year of the Trust shall be established by resolution of the
Trustees.

                                      -73-
<PAGE>

                                   ARTICLE XI

                                      SEAL

         The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe
but the absence of a seal shall not impair the validity or execution of any
document.

                                  ARTICLE XII

                        SUFFICIENCY AND WAIVERS OF NOTICE

         Whenever any notice whatever is required to be given by law, the
Declaration of Trust or these By-laws, 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 equivalent thereto. A notice shall be deemed to
have been sent by mail, telegraph, cable, wireless, facsimile or electronic
means for the purposes of these By-laws when it has been delivered to a
representative of any entity holding itself out as capable of sending notice by
such means with instructions that it be so sent.

                                  ARTICLE XIII

                                   AMENDMENTS

         These By-laws, or any of them, may be altered, amended or repealed, or
new By-laws may be adopted by a vote of a majority of the Trustees, provided,
however, that no By-law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to federal or state law,
the Declaration of Trust or these By-laws, a vote of the Shareholders.

                                 END OF BY-LAWS

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