-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
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 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 WDTlKWwsy27ExEX9TDMNBH6CJq2HFBoW3zVVr94AhEmW6M9mB5sxl4IOSCUChhdy
 HRn2cilzdYQPtqsBFX+26Q==

<SEC-DOCUMENT>0000853770-05-000001.txt : 20050128
<SEC-HEADER>0000853770-05-000001.hdr.sgml : 20050128
<ACCEPTANCE-DATETIME>20050128172328
ACCESSION NUMBER:		0000853770-05-000001
CONFORMED SUBMISSION TYPE:	NSAR-B
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20041130
FILED AS OF DATE:		20050128
DATE AS OF CHANGE:		20050128
EFFECTIVENESS DATE:		20050128

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COLONIAL HIGH INCOME MUNICIPAL TRUST
		CENTRAL INDEX KEY:			0000845606
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		NSAR-B
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05754
		FILM NUMBER:		05559314

	BUSINESS ADDRESS:	
		STREET 1:		ONE FINANCIAL CTR
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02111
		BUSINESS PHONE:		6174263750
</SEC-HEADER>
<DOCUMENT>
<TYPE>NSAR-B
<SEQUENCE>1
<FILENAME>answer.fil
<TEXT>
<PAGE>      PAGE  1
000 B000000 11/30/2004
000 C000000 0000845606
000 D000000 N
000 E000000 NF
000 F000000 Y
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000 J000000 A
001 A000000 COLONIAL HIGH INCOME MUNICIPAL TRUST
001 B000000 811-5754
001 C000000 6174263750
002 A000000 ONE FINANCIAL CENTER
002 B000000 BOSTON
002 C000000 MA
002 D010000 02111
003  000000 N
004  000000 N
005  000000 N
006  000000 N
007 A000000 N
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007 C010100  1
007 C010200  2
007 C010300  3
007 C010400  4
007 C010500  5
007 C010600  6
007 C010700  7
007 C010800  8
007 C010900  9
007 C011000 10
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008 B000001 A
008 C000001 801-5930
008 D010001 BOSTON
008 D020001 MA
008 D030001 02110
011 A000001 PAINEWEBBER INCORPORATED
011 B000001 8-16267
011 C010001 NEW YORK
011 C020001 NY
011 C030001 10019
011 A000002 A.G. EDWARDS & SONS, INC.
011 B000002 8-13580
011 C010002 ST. LOUIS
011 C020002 MO
011 C030002 63103
011 A000003 THOMSON MCKINNON SECURITIES INC.
011 B000003 8-14450
011 C010003 NEW YORK
<PAGE>      PAGE  2
011 C020003 NY
011 C030003 10005
011 A000004 MORGAN KEEGAN & COMPANY, INC.
011 B000004 8-15001
011 C010004 MEMPHIS
011 C020004 TN
011 C030004 38103
011 A000005 PIPER JAFFRAY & HOPWOOD INCORPORATED
011 B000005 8-15204
011 C010005 MINNEAPOLIS
011 C020005 MN
011 C030005 55440
011 A000006 RAYMOND JAMES & ASSOCIATES, INC.
011 B000006 8-10999
011 C010006 ST. PETERSBURG
011 C020006 FL
011 C030006 33716
012 A000001 EQUISERVE TRUST CO., N.A.
012 B000001 84-999
012 C010001 PROVIDENCE
012 C020001 RI
012 C030001 02940
012 C040001 3010
013 A000001 PRICEWATERHOUSECOOPERS LLP
013 B010001 BOSTON
013 B020001 MA
013 B030001 02110
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014 B000001 8-40537
014 A000002 FLEET SPECIALISTS, INC.
014 B000002 8-52439
014 A000003 FLEET SECURITIES, INC.
014 B000003 8-23522
014 A000004 QUICK & REILLY, INC.
014 B000004 8-017986
014 A000005 COLUMBIA FUNDS DISTRIBUTOR, INC.
014 B000005 8-30683
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014 B000006 8-33805
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014 B000007 8-42263
014 A000008 BANC OF AMERICA ADVISORS, LLC
014 B000008 8-9999
015 A000001 CITIBANK, N.A.
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015 C010001 BUENOS AIRES
015 D010001 ARGENTINA
015 E040001 X
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015 C010002 SYDNEY
<PAGE>      PAGE  3
015 D010002 AUSTRALIA
015 E040002 X
015 A000003 ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN
015 B000003 S
015 C010003 VIENNA
015 D010003 AUSTRIA
015 E040003 X
015 A000004 HSBC BANK MIDDLE EAST
015 B000004 S
015 C010004 MANAMA
015 D010004 BAHRAIN
015 E040004 X
015 A000005 STANDARD CHARTERED BANK
015 B000005 S
015 C010005 DHAKA
015 D010005 BANGLADESH
015 E040005 X
015 A000006 FORTIS BANK NV-SA
015 B000006 S
015 C010006 BRUSSELS
015 D010006 BELGIUM
015 E040006 X
015 A000007 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000007 S
015 C010007 ABIDJAN, IVORY COAST
015 D010007 BENIN
015 E040007 X
015 A000008 BANK OF BERMUDA LIMITED
015 B000008 S
015 C010008 HAMILTON
015 D010008 BERMUDA
015 E040008 X
015 A000009 CITIBANK, N.A.
015 B000009 S
015 C010009 LA PAZ
015 D010009 BOLIVIA
015 E040009 X
015 A000010 BARCLAYS BANK OF BOTSWANA LIMITED
015 B000010 S
015 C010010 GABORONE
015 D010010 BOTSWANA
015 E040010 X
015 A000011 CITIBANK, N.A.
015 B000011 S
015 C010011 SAO PAULO
015 D010011 BRAZIL
015 E040011 X
015 A000012 ING BANK N.V.
015 B000012 S
015 C010012 SOFIA
015 D010012 BULGARIA
<PAGE>      PAGE  4
015 E040012 X
015 A000013 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000013 S
015 C010013 ABIDJAN, IVORY COAST
015 D010013 BURKINA FASO
015 E040013 X
015 A000014 STATE STREET TRUST COMPANY CANADA
015 B000014 S
015 C010014 TORONTO
015 D010014 CANADA
015 E040014 X
015 A000015 BANKBOSTON, N.A.
015 B000015 S
015 C010015 SANTIAGO
015 D010015 CHILE
015 E040015 X
015 A000016 HONGKONG AND SHANGHAI BANKING CORP LIMITED
015 B000016 S
015 C010016 SHANGHAI
015 D010016 CHINA
015 E040016 X
015 A000017 HONGKONG AND SHANGHAI BANKING CORP LIMITED
015 B000017 S
015 C010017 SHENZHEN
015 D010017 CHINA
015 E040017 X
015 A000018 CITITRUST COLOMBIA S.A. SOCIEDAD FIDUCIARIA
015 B000018 S
015 C010018 BOGOTA
015 D010018 COLOMBIA
015 E040018 X
015 A000019 BANCO BCT S.A.
015 B000019 S
015 C010019 SAN JOSE
015 D010019 COSTA RICA
015 E040019 X
015 A000020 PRIVREDNA BANKA ZAGREB D.D.
015 B000020 S
015 C010020 ZAGREB
015 D010020 CROATIA
015 E040020 X
015 A000021 CYPRUS POPULAR BANK LIMITED
015 B000021 S
015 C010021 NICOSIA
015 D010021 CYPRUS
015 E040021 X
015 A000022 CESKOSLOVENSKA OBCHODNIBANKA A.S.
015 B000022 S
015 C010022 PRAGUE
015 D010022 CZECH REPUBLIC
015 E040022 X
<PAGE>      PAGE  5
015 A000023 DANSKE BANK A/S
015 B000023 S
015 C010023 COPENHAGEN
015 D010023 DENMARK
015 E040023 X
015 A000024 CITIBANK, N.A.
015 B000024 S
015 C010024 QUITO
015 D010024 ECUADOR
015 E040024 X
015 A000025 HSBC BANK EQYPT S.A.E.
015 B000025 S
015 C010025 CAIRO
015 D010025 EGYPT
015 E040025 X
015 A000026 HANSAPANK (HANSABANK)
015 B000026 S
015 C010026 TALLINN
015 D010026 ESTONIA
015 E040026 X
015 A000027 EUROCLEAR
015 B000027 S
015 C010027 BRUSSELS
015 D010027 EUROCLEAR
015 E040027 X
015 A000028 NORDEA BANK FINLAND PLC
015 B000028 S
015 C010028 HELSINKI
015 D010028 FINLAND
015 E040028 X
015 A000029 BNP PARIBAS SECURITIES SERVICES, S.A.
015 B000029 S
015 C010029 PARIS
015 D010029 FRANCE
015 E040029 X
015 A000030 DRESDNER BANK AG
015 B000030 S
015 C010030 FRANKFURT
015 D010030 GERMANY
015 E040030 X
015 A000031 BNP PARIBAS SECURITIES SERVICES, S.A.
015 B000031 S
015 C010031 FRANKFURT
015 D010031 GERMANY
015 E040031 X
015 A000032 BARCLAYS BANK OF GHANA LIMITED
015 B000032 S
015 C010032 ACCRA
015 D010032 GHANA
015 E040032 X
015 A000033 NATIONAL BANK OF GREECE S.A.
<PAGE>      PAGE  6
015 B000033 S
015 C010033 ATHENS
015 D010033 GREECE
015 E040033 X
015 A000034 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000034 S
015 C010034 ABIDJAN, IVORY COAST
015 D010034 GUINEA-BISSAU
015 E040034 X
015 A000035 STANDARD CHARTERED BANK
015 B000035 S
015 C010035 HONG KONG
015 D010035 HONG KONG (SAR)
015 E040035 X
015 A000036 HVB BANK HUNGARY RT.
015 B000036 S
015 C010036 BUDAPEST
015 D010036 HUNGARY
015 E040036 X
015 A000037 ICEBANK LIMITED
015 B000037 S
015 C010037 REYKJAVIK
015 D010037 ICELAND
015 E040037 X
015 A000038 HONGKONG AND SHANGHAI BANKING CORP LIMITED
015 B000038 S
015 C010038 MUMBAI
015 D010038 INDIA
015 E040038 X
015 A000039 DEUTSCHE BANK AG
015 B000039 S
015 C010039 MUMBAI
015 D010039 INDIA
015 E040039 X
015 A000040 STANDARD CHARTERED BANK
015 B000040 S
015 C010040 JAKARTA
015 D010040 INDONESIA
015 E040040 X
015 A000041 BANK OF IRELAND
015 B000041 S
015 C010041 DUBLIN
015 D010041 IRELAND
015 E040041 X
015 A000042 BANK HAPOALIM B.M.
015 B000042 S
015 C010042 TEL AVIV
015 D010042 ISRAEL
015 E040042 X
015 A000043 BNP PARIBAS SECURITIES SERVICES, S.A.
015 B000043 S
<PAGE>      PAGE  7
015 C010043 MILAN
015 D010043 ITALY
015 E040043 X
015 A000044 SCOTIABANK JAMAICA TRUST & MERCHANT BANK LTD
015 B000044 S
015 C010044 KINGSTON
015 D010044 JAMAICA
015 E040044 X
015 A000045 THE FUJI BANK, LIMITED
015 B000045 S
015 C010045 TOKYO
015 D010045 JAPAN
015 E040045 X
015 A000046 SUMITOMO MITSUI BANKING CORPORATION
015 B000046 S
015 C010046 TOKYO
015 D010046 JAPAN
015 E040046 X
015 A000047 HSBC BANK MIDDLE EAST
015 B000047 S
015 C010047 AMMAN
015 D010047 JORDAN
015 E040047 X
015 A000048 BARCLAYS BANK OF KENYA LIMITED
015 B000048 S
015 C010048 NAIROBI
015 D010048 KENYA
015 E040048 X
015 A000049 HONGKONG AND SHANGHAI BANKING CORP LIMITED
015 B000049 S
015 C010049 SEOUL
015 D010049 REPUBIC OF KOREA
015 E040049 X
015 A000050 A/S HANSABANKA
015 B000050 S
015 C010050 RIGA
015 D010050 LATVIA
015 E040050 X
015 A000051 HSBC BANK MIDDLE EAST
015 B000051 S
015 C010051 BEIRUT
015 D010051 LEBANON
015 E040051 X
015 A000052 VILNIAUS BANKAS AB
015 B000052 S
015 C010052 VILNIUS
015 D010052 LITHUANIA
015 E040052 X
015 A000053 CLEARSTREAM BANKING
015 B000053 S
015 C010053 LUXEMBOURG
<PAGE>      PAGE  8
015 D010053 LUXEMBOURG
015 E040053 X
015 A000054 STANDARD CHARTERED BANK MALAYSIA BERHAD
015 B000054 S
015 C010054 KUALA LUMPUR
015 D010054 MALAYSIA
015 E040054 X
015 A000055 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000055 S
015 C010055 ABIDJAN, IVORY COAST
015 D010055 MALI
015 E040055 X
015 A000056 HONGKONG AND SHANGHAI BANKING CORP LIMITED
015 B000056 S
015 C010056 PORT LOUIS
015 D010056 MAURITIUS
015 E040056 X
015 A000057 BANCO NACIONAL DE MEXICO S.A.
015 B000057 S
015 C010057 MEXICO CITY
015 D010057 MEXICO
015 E040057 X
015 A000058 BANQUE COMMERCIALE DU MAROC
015 B000058 S
015 C010058 CASABLANCA
015 D010058 MOROCCO
015 E040058 X
015 A000059 STANDARD BANK NAMIBIA LIMITED
015 B000059 S
015 C010059 WINDHOEK
015 D010059 NAMIBIA
015 E040059 X
015 A000060 FORTIS BANK (NEDERLAND) N.V.
015 B000060 S
015 C010060 AMSTERDAM
015 D010060 NETHERLANDS
015 E040060 X
015 A000061 WESTPAC BANKING CORPORATION
015 B000061 S
015 C010061 WELLINGTON
015 D010061 NEW ZEALAND
015 E040061 X
015 A000062 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000062 S
015 C010062 ABIDJAN, IVORY COAST
015 D010062 NIGER
015 E040062 X
015 A000063 STANBIC BANK NIGERIA LIMITED
015 B000063 S
015 C010063 LAGOS
015 D010063 NIGERIA
<PAGE>      PAGE  9
015 E040063 X
015 A000064 NORDEA BANK NORGE ASA
015 B000064 S
015 C010064 OSLO
015 D010064 NORWAY
015 E040064 X
015 A000065 HSBC BANK MIDDLE EAST
015 B000065 S
015 C010065 MUSCAT
015 D010065 OMAN
015 E040065 X
015 A000066 DEUTSCHE BANK AG
015 B000066 S
015 C010066 KARACHI
015 D010066 PAKISTAN
015 E040066 X
015 A000067 HSBC BANK MIDDLE EAST
015 B000067 S
015 C010067 RAMALLAH
015 D010067 PALESTINE
015 E040067 X
015 A000068 BANKBOSTON, N.A.
015 B000068 S
015 C010068 PANAMA CITY
015 D010068 PANAMA
015 E040068 X
015 A000069 CITIBANK, N.A.
015 B000069 S
015 C010069 LIMA
015 D010069 PERU
015 E040069 X
015 A000070 STANDARD CHARTERED BANK
015 B000070 S
015 C010070 MANILA
015 D010070 PHILIPPINES
015 E040070 X
015 A000071 BANK HANDLOWY W WARSZAWIE S.A.
015 B000071 S
015 C010071 WARSAW
015 D010071 POLAND
015 E040071 X
015 A000072 BANCO COMERCIAL PORTUGUES
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015 C010072 LISBON
015 D010072 PORTUGAL
015 E040072 X
015 A000073 CITIBANK, N.A.
015 B000073 S
015 C010073 SAN JUAN
015 D010073 PUERTO RICO
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<PAGE>      PAGE  10
015 A000074 HSBC BANK MIDDLE EAST
015 B000074 S
015 C010074 DOHA
015 D010074 QATAR
015 E040074 X
015 A000075 ING BANK N.V.
015 B000075 S
015 C010075 BUCHAREST
015 D010075 ROMANIA
015 E040075 X
015 A000076 CREDIT SUISSE FIRST BOSTON AO
015 B000076 S
015 C010076 MOSCOW
015 D010076 RUSSIA
015 E040076 X
015 A000077 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000077 S
015 C010077 ABIDJAN, IVORY COAST
015 D010077 SENEGAL
015 E040077 X
015 A000078 THE DEVELOPMENT BANK OF SINGAPORE LIMITED
015 B000078 S
015 C010078 SINGAPORE
015 D010078 SINGAPORE
015 E040078 X
015 A000079 CESKOSLOVENSKA OBCHODNI BANKA A.S.
015 B000079 S
015 C010079 BRATISLAVA
015 D010079 SLOVAK REPUBLIC
015 E040079 X
015 A000080 BANK AUSTRIA CREDITANSTALT D.D.
015 B000080 S
015 C010080 LJUBLJANA
015 D010080 SLOVENIA
015 E040080 X
015 A000081 STANDARD BANK OF SOUTH AFRICA LIMITED
015 B000081 S
015 C010081 JOHANNESBURG
015 D010081 SOUTH AFRICA
015 E040081 X
015 A000082 SANTANDER CENTRAL HISPANO S.A.
015 B000082 S
015 C010082 MADRID
015 D010082 SPAIN
015 E040082 X
015 A000083 HONGKONG AND SHANGHAI BANING CORP LIMITED
015 B000083 S
015 C010083 COLOMBO
015 D010083 SRI LANKA
015 E040083 X
015 A000084 STANDARD BANK SWAZILAND LIMITED
<PAGE>      PAGE  11
015 B000084 S
015 C010084 MBABANE
015 D010084 SWAZILAND
015 E040084 X
015 A000085 SKANDINAVISKA ENSKILDA BANKEN
015 B000085 S
015 C010085 STOCKHOLM
015 D010085 SWEDEN
015 E040085 X
015 A000086 UBS AG
015 B000086 S
015 C010086 ZURICH
015 D010086 SWITZERLAND
015 E040086 X
015 A000087 CENTRAL TRUST OF CHINA
015 B000087 S
015 C010087 TAIPEI
015 D010087 TAIWAN (R.O.C)
015 E040087 X
015 A000088 STANDARD CHARTERED BANK
015 B000088 S
015 C010088 BANGKOK
015 D010088 THAILAND
015 E040088 X
015 A000089 SOCIETE GENERALE DE BANQUES EN COTE DIVOIRE
015 B000089 S
015 C010089 ABIDJAN, IVORY COAST
015 D010089 TOGO
015 E040089 X
015 A000090 REPUBLIC BANK LIMITED
015 B000090 S
015 C010090 PORT-OF-SPAIN
015 D010090 TRINIDAD & TOBAGO
015 E040090 X
015 A000091 BANQUE INTERNATIONALE ARABE DE TUNISIE
015 B000091 S
015 C010091 TUNIS
015 D010091 TUNISIA
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015 A000092 CITIBANK, N.A.
015 B000092 S
015 C010092 ISTANBUL
015 D010092 TURKEY
015 E040092 X
015 A000093 ING BANK UKRAINE
015 B000093 S
015 C010093 KIEV
015 D010093 UKRAINE
015 E040093 X
015 A000094 HSBC BANK MIDDLE EAST
015 B000094 S
<PAGE>      PAGE  12
015 C010094 DUBAI
015 D010094 UNITED ARAB EMIRATES
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015 A000095 STATE STREET BANK AND TRUST COMPANY
015 B000095 S
015 C010095 LONDON
015 D010095 UNITED KINGDOM
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015 A000096 STATE STREET BANK AND TRUST COMPANY
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015 C010096 BOSTON
015 C020096 MA
015 C030096 02110
015 D010096 UNITED STATES
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015 A000097 BANKBOSTON, N.A.
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015 C010097 MONTEVIDEO
015 D010097 URUGUAY
015 E040097 X
015 A000098 CITIBANK, N.A.
015 B000098 S
015 C010098 CARACAS
015 D010098 VENEZUELA
015 E040098 X
015 A000099 HONGKONG AND SHANGHAI BANKING CORP LIMITED
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015 C010099 HO CHI MINH CITY
015 D010099 VIETNAM
015 E040099 X
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019 B000000  132
019 C000000 COLUMBIAFD
020 A000001 BC ZIEGLER AND CO TRUST
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<PAGE>      PAGE  13
022 A000002 MERRILL LYNCH & CO., INC.
022 B000002 13-5674085
022 C000002     15675
022 D000002     11800
022 A000003 BEAR STEARNS & CO.
022 B000003 13-4946705
022 C000003     15452
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022 B000004 41-0953246
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022 B000007 13-3082694
022 C000007      4688
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022 B000008 15-1163076
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022 D000008      4841
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022 B000009 13-5108880
022 C000009      2387
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022 B000010 14-1391446
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<PAGE>      PAGE  14
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SIGNATURE   DOUGLAS RODES
TITLE       VICE PRESIDENT


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Columbia High Income Municipal Trust
77B Accountants Report on Internal Control


[PricewaterhouseCoopers logo]
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110-9862
                    Report of Independent Registered Public Accounting Firm

To the Trustees and the Shareholders of
Colonial High Income Municipal Trust

In planning and performing our audits of the financial statements of Colonial
High Income Municipal Trust (the "Fund") for the year ended November 30, 2004,
we considered their internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal control.

The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.

Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that controls may become inadequate
because of changes in conditions or that the effectiveness of their design and
operation may deteriorate.

Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the Public Company Accounting Oversight Board (United States). A
material weakness, for purposes of this report, is a condition in which the
design or operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements caused by error or
fraud in amounts that would be material in relation to the financial statements
being audited may occur and not be detected within a timely period by employees
in the normal course of performing their assigned functions. However, we noted
no matters involving internal control and its operation, including controls for
safeguarding securities, that we consider to be material weaknesses as defined
above as of November 30, 2004.

This report is intended solely for the information and use of the Board of
Trustees, management and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.


/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
January 28, 2005






77E Legal Proceedings
Recently, the Fund has been named as a nominal defendant in several derivative
actions under Sections 34(b), 36(b) and 48(a) of the Investment Company Act of
1940, as amended, alleging, among other things, that the fees and expenses paid
by the Fund are excessive. Cohen v. FleetBoston Financial Corporation was filed
in the U.S. District Court for the District of Massachusetts on August 2, 2004;
Osburn v. FleetBoston Financial Corporation was filed in the U.S. District Court
for the District of Massachusetts on August 10, 2004; Slicker v. FleetBoston
Financial Corporation was filed in the U.S. District Court for the District of
Massachusetts on August 11, 2004; and Simmonds v. FleetBoston Financial
Corporation was filed in the U.S. District Court for the District of
Massachusetts on September 8, 2004. The Fund and the other defendants to these
actions, including Columbia Management Advisors, Inc. ("CMA") and various of its
affiliates, certain other mutual funds advised by CMA and its affiliates, and
various directors of the Fund and such funds, have denied these allegations and
are contesting the plaintiffs' claims.

Additionally, various civil individual, class and derivative actions have been
filed in regard to certain market timing allegations. As of October 31, 2004, we
have received the following complaints.

(1)   George Slaybe et al, Plaintiffs, v. Columbia Management Advisors, Inc.,
      Defendant United States District Court District of Massachusetts
      Case # 04 10534 PBS

(2)   David Armetta derivatively on behalf of the Columbia Common Stock Fund,
      Plaintiff, v. FleetBoston Financial Corporation, et al.

         United States District Court
         District of Massachusetts
         Case # 04 10555 MLW

(3)    Edward I. Segel and Iris Segel derivatively on behalf of Columbia Acorn
       Fund, Columbia Acorn Trust and the Columbia Funds, Plaintiffs, v.
       FleetBoston Financial Corporation, et al.

         United States District Court
         District of Massachusetts
         Case # 04-10567MEL

(4)     Catherine Dukes, Individually and On Behalf of All Others Similarly
        Situated v. Columbia Funds, et al.

         United States District Court
         District of Massachusetts
         Case # 04-10315-PBS

(5)    AB Medical Equipment Corp., Individually and On Behalf of All Others
       Similarly Situated, Plaintiff, v. FleetBoston Financial Corporation, et
       al.

         United States District Court
         District of Massachusetts
         Case # 04-10355PBS

(6)    Karen M. McKenna, Individually and on Behalf of All Others Similarly
       Situated, Plaintiff, v. Columbia Funds, et al.

         United States District Court
         Southern District of New York
         Case # 04 CV 1576

(7)     Lawrence S. Wick, as custodian for Ryan S. Wick, Andrew T. Wick, and
        Hayley L. Wick, and Ryan S. Wick, Andrew T. Wick, and Hayley L. Wick
        individually and on behalf of others similarly situated, Plaintiffs, v.
        FleetBoston Financial Corporation, et al.

         United States District Court
         District of Massachusetts
         Case # 04-10408HEL

(8)    Steven B. Ehrlich, Custodian for Cory Ryan Ehrlich UTMA/Florida,
       Individually and On Behalf of All Others Similarly Situated v.
          Columbia Funds, et al.

         United States District Court
         District of Massachusetts
         Case # 04 10405 PBS

(9)    Harold Beardsley, et al on behalf of Columbia Disciplined Value Fund (the
       "Columbia Funds") v. FleetBoston Financial Corporation, et al
       United States District Court
         District of Massachusetts
         Case # 04 10978 PBS

77Q Exhibits
Amended By-Laws
                   As Amended-12/13/00-Article 12, Section 12.10(a)(v)
                   As Amended- 2/13/01-Article 2.1
                   As Amended- 5/8/01- Article 2.1
                   As Amended  6/20/01-Article 2.1; Article 4.6
                   As Amended - 12/9/03 - Article 12, Part II
                   As Amended 8/11/04 -   Article 3.3; Article 4.5; Article 4.8

                          AMENDED AND RESTATED BY-LAWS
                                       OF
                      COLONIAL HIGH INCOME MUNICIPAL TRUST

Article 1.
             Agreement and Declaration of Trust and Principal Office

1.1. Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Colonial High Income Municipal Trust, a
Massachusetts business trust established by the Declaration of Trust (the
"Trust").

1.2. Principal Office of the Trust. The principal office of the Trust shall be
located in Boston, Massachusetts.

Article 2.
                                                        Shareholders

2.1. Shareholders Meetings. The annual meeting of the shareholders of the Trust
shall be held between April 1 and May 31 in each year, beginning in 1990, on a
date and at a time within that period set by the Trustees; provided, however,
that the 2001 annual meeting shall be held between September 1 and October 31,
2001, on a date and time within that period set by the Trustees. A special
meeting of the shareholders of the Trust may be called at any time by the
Trustees, by the president or, if the Trustees and the president shall fail to
call any meeting of shareholders for a period of 30 days after written
application of one or more shareholders who hold at least 10% of all outstanding
shares of the Trust, then such shareholders may call such meeting. Each call of
a meeting shall state the place, date, hour and purposes of the meeting.

2.2. Place of Meetings. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust, at such other place within the United States as shall be designated by
the Trustees or the president of the Trust.

2.3. Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the secretary or an assistant secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.

2.4. Ballots. No ballot shall be required for any election unless requested by a
shareholder present or represented at the meeting and entitled to vote in the
election.

2.5. Proxies. Shareholders entitled to vote may vote either in person or by
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. 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.

Article 3.
                                                          Trustees

3.1. Committees and Advisory Board. The Trustees may appoint from their number
an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to consist of not less than
two nor more than five members. The members of the advisory board shall be
compensated in such manner as the Trustees may determine and shall confer with
and advise the Trustees regarding the investments and other affairs of the
Trust. Each member of the advisory board shall hold office until the first
meeting of the Trustees following the next meeting of the shareholders and until
his successor is elected and qualified, or until he sooner dies, resigns, is
removed, or becomes disqualified, or until the advisory board is sooner
abolished by the Trustees.

         In addition, the Trustees may appoint a Dividend Committee of not less
than three persons, at least one of whom shall be a Trustee of the Trust.

         No special compensation shall be payable to members of the Dividend
Committee. Each member of the Dividend Committee will hold office until his or
her successor is elected and qualified or until the member dies, resigns, is
removed, becomes disqualified or until the Committee is abolished by the
Trustees.

3.2. Regular Meetings. Regular meetings of the Trustees may be held without call
or notice at such places and at such times as the Trustees may from time to time
determine, provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees.

3.3. Special Meetings. Special meetings of the Trustees may be held at any time
and at any place designated in the call of the meeting, when called by the board
chair, the president or the treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the secretary or an assistant
secretary or by the board chair, the officer or one of the Trustees calling the
meeting.

3.4. Notice. It shall be sufficient notice to a Trustee to send notice by mail
at least forty-eight hours or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.

3.5. Quorum. At any meeting of the Trustees one-third of the Trustees then in
office shall constitute a quorum; provided, however, a quorum shall not be less
than two unless the number of Trustees then in office shall be one. Any meeting
may be adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.

Article 4.
                               Officers and Agents

4.1. Enumeration; Qualification. The officers of the Trust shall be a president,
a treasurer, a secretary and such other officers, if any, as the Trustees from
time to time may in their discretion elect or appoint or as the elected officers
may appoint pursuant to section 4.3 of these By-Laws. The Trust may also have
such agents, if any, as the Trustees from time to time may in their discretion
appoint. Any officer may be but none need be a Trustee or shareholder. Any two
or more offices may be held by the same person.

4.2. Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate, including without limitation the power to make purchases and
sales of portfolio securities of the Trust pursuant to recommendations of the
Trust's investment adviser in accordance with the policies and objectives of the
Trust set forth in its prospectus and with such general or specific instructions
as the Trustees may from time to time have issued.

4.3. Election. The president, the treasurer and the secretary shall be elected
annually by the Trustees at their first meeting following the annual meeting of
the shareholders. Other elected officers, if any, may be elected or appointed by
the Trustees at said meeting or at any other time. Assistant officers may be
appointed by the elected officers.

4.4. Tenure. The president, the treasurer and the secretary shall hold office
until their respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed or becomes disqualified. Each
other officer shall hold office at the pleasure of the Trustees. Each agent
shall retain his or her authority at the pleasure of the Trustees.

4.5. President and Vice Presidents. The president shall be the chief executive
officer of the Trust. The president shall preside at all meetings of the
shareholders at which he or she is present, except as otherwise voted by the
Trustees. Any vice president shall have such duties and powers as shall be
designated from time to time by the Trustees.

4.6. Treasurer, Controller and Chief Accounting Officer. The treasurer shall be
the chief financial officer of the Trust and, subject to any arrangement made by
the Trustees with a bank or trust company or other organization as custodian or
transfer or shareholder services agent, shall be in charge of its valuable
papers and shall have such duties and powers as shall be designated from time to
time by the Trustees or by the president. Any assistant treasurer shall have
such duties and powers as shall be designated from time to time by the Trustees.

          The controller shall be the officer of the Trust primarily responsible
for ensuring all expenditures of the Trust are reasonable and appropriate. The
controller shall be responsible for oversight and maintenance of liquidity and
leverage facilities available to the Trust and shall have such other duties and
powers as may be designated from time to time by the Trustees or the President.

         The chief accounting officer of the Trust shall be in charge of its
books and accounting records. The chief accounting officer shall be responsible
for preparation of financial statements of the Trust and shall have such other
duties and powers as may be designated from time to time by the Trustees or the
President.

4.7. Secretary and Assistant Secretaries. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the secretary from any meeting of shareholders or Trustees, an assistant
secretary, or if there be none or he or she is absent, a temporary clerk chosen
at the meeting shall record the proceedings thereof in the aforesaid books.

         4.8. Board Chair. The Trustees shall annually elect one of their number
to serve as their chair. The board chair shall hold such position until his or
her successor is chosen and qualified, or until he or she sooner dies, resigns,
is removed or becomes disqualified. The board chair shall hold such position at
the pleasure of the Trustees. The board chair shall preside at all meetings of
the Trustees at which he or she is present and shall perform any other duties
and responsibilities prescribed from time to time by the Trustees. In the
absence of the board chair, or in the event that such position is vacant, the
Trustees present at any meeting shall designate one of their number to preside
at such meeting. The board chair shall not be considered an officer of the
Trust.


Article 5.
                            Resignations and Removals

         Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the president, the treasurer or
the secretary or to a meeting of the Trustees. The Trustees may remove any
officer elected by them with or without cause by the vote of a majority of the
Trustees then in office. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee, officer, or advisory board member
resigning, and no officer or advisory board member removed, shall have any right
to any compensation for any period following his or her resignation or removal,
or any right to damages on account of such removal.
Article 6.
                                    Vacancies

         A vacancy in any office may be filled at any time. Each successor shall
hold office for the unexpired term, and in the case of the president, the
treasurer and the secretary, until his or her successor is chosen and qualified,
or in each case until he or she sooner dies, resigns, is removed or becomes
disqualified.

Article 7.
                          Shares of Beneficial Interest

7.1. Share Certificates. Except as provided in Section 12.1, each shareholder
shall be entitled to a certificate stating the number of shares owned by him or
her, in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the president or a vice president and by the
treasurer or an assistant treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent or by a registrar who is not a
Trustee, officer or employee of the Trust. In case any officer who has signed or
whose facsimile signature has been placed on such certificate shall have ceased
to be such officer before such certificate is issued, it may be issued by the
Trust with the same effect as if he or she were such officer at the time of its
issue.

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

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

7.3. Discontinuance of Issuance of Certificates. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates of the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.

Article 8.
                     Record Date and Closing Transfer Books

         The Trustees may fix in advance a time, which shall not be more than 90
days before the date of any meeting of shareholders or the date for the payment
of any dividend or making of any other distribution to shareholders, as the
record date for determining the shareholders having the right to notice and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right, notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the transfer books for all or any part
of such period.

Article 9.
                                      Seal

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

Article 10.
                               Execution of Papers

         Except as the Trustees may generally or in particular cases authorize
the execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the Trust shall be signed, and all transfers of securities standing
in the name of the Trust shall be executed, by the president or by one of the
vice presidents or by the treasurer or by whomsoever else shall be designated
for that purpose by the vote of the Trustees and need not bear the seal of the
Trust.

Article 11.
                                   Fiscal Year

         Except as from time to time otherwise provided by the Trustees, the
fiscal year of the Trust shall end on December 31.

Article 12.
                          Shares of Beneficial Interest

         The Trust has an unlimited number of common shares, without par value,
which may be issued from time to time by the Trustees of the Trust. The Trust
also has 4,800 preferred shares, without par value, which may be issued by the
Trustees from time to time in one or more series and with such designations,
preferences and other rights, qualifications, limitations and restrictions as
are determined by the Board of Trustees or a duly authorized committee thereof
and set forth in this Article 12.

12.1.          Statement Creating Two Series of Municipal Auction Rate
               Cumulative Preferred. There are two separate series of Municipal
               Auction Rate Cumulative Preferred Shares.
                                     PART I
                                   DESIGNATION

         SERIES T: A series of 2,400 preferred shares, without par value,
liquidation preference $25,000 per share plus accumulated but unpaid dividends,
if any, thereon (whether or not earned or declared), is hereby designated
"Municipal Auction Rate Cumulative Preferred Shares, Series T" and is referred
to below as "Series T Municipal Preferred." Each share of Series T Municipal
Preferred shall be issued on August 26, 1999; have an Applicable Rate for its
Initial Rate Period equal to 3.40% per annum; have an initial Dividend Payment
Date of Wednesday, September 1, 1999; and have such other preferences,
limitations and relative voting and other rights, in addition to those required
by applicable law or set forth in the Trust's Declaration of Trust, as are set
forth in Part I and Part II of this Section 12.1. Series T Municipal Preferred
shall constitute a separate series of Municipal Preferred of the Trust.

         SERIES W: A series of 2,400 preferred shares, without par value,
liquidation preference $25,000 per share plus accumulated but unpaid dividends,
if any, thereon (whether or not earned or declared), is hereby designated
"Municipal Auction Rate Cumulative Preferred Shares, Series W" and is referred
to below as "Series W Municipal Preferred." Each share of Series W Municipal
Preferred shall be issued on August 26, 1999; have an Applicable Rate for its
Initial Rate Period equal to 3.40% per annum; have an initial Dividend Payment
Date of Thursday, September 2, 1999; and have such other preferences,
limitations and relative voting and other rights, in addition to those required
by applicable law or set forth in the Trust's Declaration of Trust, as are set
forth in Part I and Part II of this Section 12.1. Series W Municipal Preferred
shall constitute a separate series of Municipal Preferred of the Trust.

         The Board of Trustees of the Trust may, in their discretion, increase
the number of shares of Municipal Preferred authorized under these By-laws to
authorize the issuance of another series of Municipal Preferred so long as such
issuance is permitted by paragraph 5 of Part I of this Section 12.1.

1. Definitions . Unless the context or use indicates another or different
meaning or intent, in Part I and Part II of this Section 12.1 the following
terms have the following meanings, whether used in the singular or plural:

         "'AA' Composite Commercial Paper Rate," on any date for any Rate Period
of shares of a series of Municipal Preferred, shall mean (i) (A) in the case of
any Minimum Rate Period or any Special Rate Period of fewer than 49 Rate Period
Days, the interest equivalent of the 30-day rate; provided, however, that if
such Rate Period is a Minimum Rate Period and the "AA" Composite Commercial
Paper Rate is being used to determine the Applicable Rate for shares of such
series when all of the Outstanding shares of such series are subject to
Submitted Hold Orders, then the interest equivalent of the seven-day rate, and
(B) in the case of any Special Rate Period of (1) 49 or more but fewer than 70
Rate Period Days, the interest equivalent of the 60-day rate; (2) 70 or more but
fewer than 85 Rate Period Days, the arithmetic average of the interest
equivalent of the 60-day and 90-day rates; (3) 85 or more but fewer than 99 Rate
Period Days, the interest equivalent of the 90-day rate; (4) 99 or more but
fewer than 120 Rate Period Days, the arithmetic average of the interest
equivalent of the 90-day and 120-day rates; (5) 120 or more but fewer than 141
Rate Period Days, the interest equivalent of the 120-day rate; (6) 141 or more
but fewer than 162 Rate Period Days, the arithmetic average of the interest
equivalent of the 120-day and 180-day rates; and (7) 162 or more but fewer than
183 Rate Period Days, the interest equivalent of the 180-day rate, in each case
on commercial paper placed on behalf of issuers whose corporate bonds are rated
"AA" by S&P or the equivalent of such rating by S&P or another rating agency, as
made available on a discount basis or otherwise by the Federal Reserve Bank of
New York for the Business Day next preceding such date; or (ii) in the event
that the Federal Reserve Bank of New York does not make available any such rate,
then the arithmetic average of such rates, 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 next preceding such date. If any Commercial Paper
Dealer does not quote a rate required to determine the "AA" Composite Commercial
Paper Rate, the "AA" Composite Commercial Paper Rate shall be determined on the
basis of the quotation or quotations furnished by the remaining Commercial Paper
Dealer or Commercial Paper Dealers and any Substitute Commercial Paper Dealer or
Substitute Commercial Paper Dealers selected by the Trust to provide such rate
or rates not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers, as the case may be, or, if the Trust does not select any such
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers, by
the remaining Commercial Paper Dealer or Commercial Paper Dealers. For purposes
of this definition, the "interest equivalent" of a rate stated on a discount
basis (a "discount rate") for commercial paper of a given days' maturity shall
be equal to the quotient (rounded upwards to the next higher one-thousandth
(.001) of 1% of (A) the discount rate divided by (B) the difference between (x)
1.00 and (y) a fraction the numerator of which shall be the product of the
discount rate times the number of days in which such commercial paper matures
and the denominator of which shall be 360.

         "Accountant's Confirmation" shall have the meaning specified in
paragraph 7(c) of Part I of this Section 12.1.

         "Affiliate" shall mean, for purposes of the definition of
"Outstanding," any Person known to the Auction Agent to be controlled by, in
control of or under common control with the Trust; provided, however, that no
Broker-Dealer controlled by, in control of or under common control with the
Trust shall be deemed to be an Affiliate nor shall any corporation or any Person
controlled by, in control of or under common control with such corporation, one
of the trustees, directors or executive officers of which is a trustee of the
Trust be deemed to be an Affiliate solely because such trustee, director or
executive officer is also a trustee of the Trust.

         "Agent Member" shall mean a member of or participant in the Securities
Depository that will act on behalf of a Bidder.

         "Anticipation Notes" shall mean Tax Anticipation Notes (TANs), Revenue
Anticipation Notes (RANs), Tax and Revenue Anticipation Notes (TRANs), Grant
Anticipation Notes (GANs) that are rated by S&P and Bond Anticipation Notes
(BANs).

         "Applicable Rate" shall have the meaning specified in paragraph 2(e)(i)
of Part I of this Section 12.1.

         "Auction" shall mean each periodic implementation of the Auction
Procedures.

         "Auction Agency Agreement" shall mean the agreement between the Trust
and the Auction Agent which provides, among other things, that the Auction Agent
will follow the Auction Procedures for purposes of determining the Applicable
Rate for shares of a series of Municipal Preferred so long as the Applicable
Rate for shares of such series is to be based on the results of an Auction.

         "Auction Agent" shall mean the entity appointed as such by a resolution
of the Board of Trustees in accordance with paragraph 6 of Part II of this
Section 12.1.

         "Auction Date," with respect to any Rate Period, shall mean the
Business Day next preceding the first day of such Rate Period.

         "Auction Procedures" shall mean the procedures for conducting Auctions
set forth in Part II of this Section 12.1.

         "Available Municipal Preferred" shall have the meaning specified in
paragraph 3(a) of Part II of this Section 12.1.

         "Benchmark Rate" shall have the meaning specified in paragraph 3(c) of
Part II of this Section 12.1.

         "Beneficial Owner" with respect to shares of a series of Municipal
Preferred, means a customer of a Broker-Dealer who is listed on the records of
that Broker-Dealer (or, if applicable, the Auction Agent) as a holder of shares
of such series.

         "Bid" and "Bids" shall have the respective meanings specified in
paragraph 1(a) of Part II of this Section 12.1.

         "Bidder" and "Bidders" shall have the respective meanings specified in
paragraph 1(a) of Part II of this Section 12.1; 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.

         "Board of Trustees" shall mean the Board of Trustees of the Trust or
any duly authorized committee thereof.

         "Broker-Dealer" shall mean any broker-dealer, commercial bank or other
entity permitted by law to perform the functions required of a Broker-Dealer in
Part II of this Section 12.1, that is a member of, or a participant in, the
Securities Depository or is an affiliate of such member or participant, has been
selected by the Trust and has entered into a Broker-Dealer Agreement that
remains effective.

         "Broker-Dealer Agreement" shall mean an agreement among the Trust, the
Auction Agent and a Broker-Dealer pursuant to which such Broker-Dealer agrees to
follow the procedures specified in Part II of this Section 12.1.

         "Business Day" shall mean a day on which the New York Stock Exchange is
open for trading, and which is neither a Saturday, Sunday nor any other day on
which banks in The City of New York, New York are authorized by law to close.

         "By-laws" means these Amended and Restated By-laws of the Trust.

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

         "Commercial Paper Dealers" means Lehman Commercial Paper Incorporated,
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
such other commercial paper dealer or dealers as the Trust may from time to time
appoint, or, in lieu of any thereof, their respective affiliates or successors.

         "Common Shares" means the common shares of beneficial interest, without
par value, of the Trust.

         "Cure Date" shall have the meaning specified in paragraph 11(b) of Part
I of this Section 12.1.

         "Date of Original Issue" with respect to shares of a series of
Municipal Preferred, shall mean the date on which the Trust originally issued
such shares.

         "Declaration" shall mean the Agreement and Declaration of Trust dated
January 9, 1989 of the Trust, as amended by Amendment No. 1 dated February 8,
1989 to the Agreement and Declaration of Trust of the Trust and Amendment No. 2
dated July 30, 1999 to the Agreement and Declaration of Trust of the Trust, all
on file with the Secretary of The Commonwealth of Massachusetts and as hereafter
restated or amended from time to time.

         "Deposit Securities" shall mean cash and Municipal Obligations rated at
least A-1+ or SP-1+ by S&P, except that, for purposes of subparagraph (a)(v) of
paragraph 11 of Part I of this Section 12.1, such Municipal Obligations shall be
considered "Deposit Securities" only if they are also rated P-1, MIG-1 or VMIG-1
by Moody's.

         "Discounted Value," as of any Valuation Date, shall mean, (i) with
respect to an S&P Eligible Asset, the quotient of the Market Value thereof
divided by the applicable S&P Discount Factor and (ii) (a) with respect to a
Moody's Eligible Asset that is not currently callable as of such Valuation Date
at the option of the issuer thereof, the quotient of the Market Value thereof
divided by the applicable Moody's Discount Factor, or (b) with respect to a
Moody's Eligible Asset that is currently callable as of such Valuation Date at
the option of the issuer thereof, the quotient of (1) the lesser of the Market
Value or call price thereof, including any call premium, divided by (2) the
applicable Moody's Discount Factor.

         "Dividend Payment Date," with respect to shares of a series of
Municipal Preferred, shall mean any date on which dividends are payable on
shares of such series pursuant to the provisions of paragraph 2(d) of Part I of
this Section 12.1.

         "Dividend Period," with respect to shares of a series of Municipal
Preferred, shall mean the period from and including the Date of Original Issue
of shares of such series to but excluding the initial 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 the
Dividend Periods for each of Series T Municipal Preferred and Series W Municipal
Preferred will never be co-extensive with the Dividend Period of any other
series of Municipal Preferred unless the Trust has received an opinion of tax
counsel that having such co-extensive periods will not affect the deductibility,
for federal income tax purposes, of dividends paid on the different series of
Municipal Preferred.

         "Escrowed Bonds" means Municipal Obligations that (i) have been
determined to be legally defeased in accordance with S&P's legal defeasance
criteria, (ii) have been determined to be economically defeased in accordance
with S&P's economic defeasance criteria and assigned a rating of AAA by S&P,
(iii) are not rated by S&P but have been determined to be legally defeased by
Moody's, or (iv) have been determined to be economically defeased by Moody's and
assigned a rating no lower than the rating that is Moody's equivalent of S&P's
AAA rating.

         "Existing Holder," with respect to shares of a series of Municipal
Preferred, shall mean a Broker-Dealer (or any such other Person as may be
permitted by the Trust) that is listed on the records of the Auction Agent as a
holder of shares of such series.

         "Failure to Deposit," with respect to shares of a series of Municipal
Preferred, shall mean 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 next
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 next 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 shares of such series after
notice of redemption is mailed pursuant to paragraph 11(c) of Part I of this
Section 12.1; provided, however, that the foregoing clause (B) shall not apply
to the Trust's failure to pay the Redemption Price in respect of shares of
Municipal Preferred 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.

         "Federal Tax Rate Increase" shall have the meaning specified in the
definition of "Moody's Volatility Factor."

         "Gross-up Payment" in respect of any dividend means payment to a Holder
of shares of a series of Municipal Preferred of an amount which, giving effect
to the Taxable Allocations made with respect to such dividend, would cause such
Holder's after-tax returns (taking into account both the Taxable Allocations and
the Gross-up Payment) to be equal to the after-tax return the Holder would have
received if no such Taxable Allocations had occurred. Such Gross-up Payment
shall be calculated: (i) without consideration being given to the time value of
money; (ii) assuming that no Holder of shares of Municipal Preferred is subject
to the Federal alternative minimum tax with respect to dividends received from
the Trust; and (iii) assuming that each Holder of shares of Municipal Preferred
is taxable at the maximum marginal regular Federal individual income tax rate
applicable to ordinary income or net capital gain, as applicable, or the maximum
marginal regular Federal corporate income tax rate applicable to ordinary income
or net capital gain, as applicable, whichever is greater, in effect at the time
such Gross-up Payment is made.

         "Holder," with respect to shares of a series of Municipal Preferred,
shall mean the Registered Holder of such shares as the same appears on the
record books of the Trust.

         "Hold Order" and "Hold Orders" shall have the respective meanings
specified in paragraph 1(a) of Part II of this Section 12.1.

         "Independent Accountant" shall mean a nationally recognized accountant,
or firm of accountants, that is, with respect to the Trust, an independent
public accountant or firm of independent public accountants under the Securities
Act of 1933, as amended from time to time.

         "Initial Margin" means the amount of cash or securities deposited with
a broker as a margin payment at the time of purchase or sale of a futures
contract.

         "Initial Rate Period," with respect to shares of a series of Municipal
Preferred, shall mean the period from and including the Date of Original Issue
for such series to but excluding the initial Dividend Payment Date for such
series.

         "Interest Equivalent" shall mean a yield on a 360-day basis of a
discount basis security which is equal to the yield on an equivalent
interest-bearing security.

         "Inverse Floater" shall mean trust certificates or other instruments
evidencing interests in one or more municipal securities that qualify as S&P
Eligible Assets (and satisfy the issuer and size requirements of the definition
of S&P Eligible Assets) the interest rates on which are adjusted at short-term
intervals on a basis that is inverse to the simultaneous readjustment of the
interest rates on corresponding floating rate trust certificates or other
instruments issued by the same issuer, provided that the ratio of the aggregate
dollar amount of floating rate instruments to inverse floating rate instruments
issued by the same issuer does not exceed one to one at their time or original
issuance unless the floating rate instrument has only one reset remaining until
maturity.

         "Kenny Index" shall have the meaning set forth under the definition of
"Taxable Equivalent of the Short-Term Municipal Bond Rate."

         "Late Charge" shall have the meaning specified in paragraph 2(e)(i)(B)
of Part I of this Section 12.1.

         "Liquidation Preference," with respect to a given number of shares of
Municipal Preferred, means $25,000 times that number.

         "Market Value" of any asset of the Trust means the market value thereof
determined by the pricing service designated from time to time by the Board of
Trustees. Market Value of any asset shall include any interest accrued thereon.
The pricing service will use current industry standards to value portfolio
securities. The pricing service may employ electronic data processing techniques
or a matrix system, or both, to determine valuations. Securities for which
quotations are not readily available shall be valued at fair value as determined
by the pricing service using methods which include consideration of: yields or
prices of municipal bonds of comparable quality, type of issue, coupon, maturity
and rating; indications as to value from dealers; and general market conditions.
In the event the pricing service is unable to value a security, the security
shall be valued at the lower of two dealer bids obtained by the Trust from
dealers who are nationally recognized members of the National Association of
Securities Dealers, Inc. who are independent of the investment advisor to the
Trust and make a market in the security, at least one of which shall be in
writing. Futures contracts and options are valued at closing prices for such
instruments established by the exchange or board of trade on which they are
traded, or if market quotations are not readily available, are valued at fair
value on a consistent basis using methods determined in good faith by the
Trustees.

         "Maximum Potential Gross-up Payment Liability," as of any Valuation
Date, shall mean the aggregate amount of Gross-up Payments that would be due if
the Trust were to make Taxable Allocations, with respect to any taxable year,
estimated based upon dividends paid and the amount of undistributed realized net
capital gains and other taxable income earned by the Trust, as of the end of the
calendar month immediately preceding such Valuation Date, and assuming such
Gross-up Payments are fully taxable.

         "Maximum Rate," for shares of a series of Municipal Preferred on any
Auction Date for shares of such series, shall mean:

(i)      in the case of any Auction Date which is not the Auction Date
         immediately prior to the first day of any proposed Special Rate Period
         designated by the Trust pursuant to paragraph 4 of Part I of this
         Section 12.1, the product of (A) the Reference Rate on such Auction
         Date for the next Rate Period of shares of such series and (B) the Rate
         Multiple on such Auction Date, unless shares of such series have or had
         a Special Rate Period (other than a Special Rate Period of 28 Rate
         Period Days or fewer) and an Auction at which Sufficient Clearing Bids
         existed has not yet occurred for a Minimum Rate Period of shares of
         such series after such Special Rate Period, in which case the higher
         of:

(A)      the dividend rate on shares of such series for the then-ending Rate
         Period; and

(B) the product of (1) the higher of (x) the Reference Rate on such Auction Date
for a Rate Period  equal in length to the  then-ending  Rate Period of shares of
such series,  if such then-ending Rate Period was 364 Rate Period Days or fewer,
or the Treasury Note Rate on such Auction Date for a Rate Period equal in length
to the  then-ending  Rate Period of shares of such series,  if such  then-ending
Rate Period was more than 364 Rate Period Days,  and (y) the  Reference  Rate on
such  Auction Date for a Rate Period equal in length to such Special Rate Period
of shares of such  series,  if such Special Rate Period was 364 Rate Period Days
or fewer, or the Treasury Note Rate on such Auction Date for a Rate Period equal
in length to such Special Rate Period, if such Special Rate Period was more than
364 Rate Period Days and (2) the Rate Multiple on such Auction Date; or

(ii) in the case of any Auction Date which is the Auction Date immediately prior
to the first day of any  proposed  Special Rate Period  designated  by the Trust
pursuant to paragraph 4 of Part I of this Section  12.1,  the product of (A) the
highest of (1) the  Reference  Rate on such Auction Date for a Rate Period equal
in length to the  then-ending  Rate  Period  of shares of such  series,  if such
then-ending  Rate Period was 364 Rate Period Days or fewer, or the Treasury Note
Rate on such Auction  Date for a Rate Period equal in length to the  then-ending
Rate Period of shares of such series,  if such  then-ending Rate Period was more
than 364 Rate Period Days,  (2) the Reference  Rate on such Auction Date for the
Special  Rate  Period for which the Auction is being held if such  Special  Rate
Period  is 364  Rate  Period  Days or fewer or the  Treasury  Note  Rate on such
Auction  Date for the Special Rate Period for which the Auction is being held if
such  Special  Rate  Period  is more  than 364  Rate  Period  Days,  and (3) the
Reference  Rate on such  Auction  Date for Minimum Rate Periods and (B) the Rate
Multiple on such Auction Date.

         "Minimum Rate Period" shall mean any Rate Period consisting of 7 Rate
Period Days.

         "Moody's" shall mean Moody's Investors Service, Inc., a Delaware
 corporation, and its successors.

         "Moody's Discount Factor" shall mean, for purposes of determining the
Discounted Value of any Moody's Eligible Asset, 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:

                       Rating Category_________________________________
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Exposure Period         Aaa*     Aa*      A*       Baa*      Other**    (V)MIG-1***    SP-1+****    Unrated*****
- ---------------         ----     ---      --       ----      -------    -----------    ---------    -----------
7 weeks                 151%     159%     166%     173%      187%       136%           148%         225%
8 weeks or less but
greater than seven
weeks                   154      161      168      176       190        137            149          231
9 weeks or less but     156      163      170      177       192        138            150          240
greater than eight
weeks


..........*        Moody's rating.
..........**       Municipal Obligations not rated by Moody's but rated BBB by S&P.
         ***      Municipal Obligations rated MIG-1 or VMIG-1, which do not
                  mature or have a demand feature at par exercisable in 30 days
                  and which do not have a long-term rating.
         ****     Municipal Obligations not rated by Moody's but rated SP-1+ by
                  S&P, which do not mature or have a demand feature at par
                  exercisable in 30 days and which do not have a long-term
                  rating.
         *****    Municipal Obligations rated less than Baa3 by Moody's or less
                  than BBB by S&P or not rated by Moody's or S&P.
</TABLE>
         Notwithstanding the foregoing, (i) the Moody's Discount Factor for
short-term Municipal Obligations will be 115%, so long as such Municipal
Obligations are rated at least MIG-1, VMIG-1 or P-1 by Moody's and mature or
have a demand feature at par exercisable in 30 days or less, or 125%, so long as
such Municipal Obligations are rated at least A-1+/AA or SP-1+/AA by S&P and
mature or have a demand feature at par exercisable in 30 days or less, and (ii)
no Moody's Discount Factor will be applied to cash or to Receivables for
Municipal Obligations Sold or futures, options and similar instruments (to the
extent such securities are Moody's Eligible Assets); provided, however, that for
purposes of determining the Moody's Discount Factor applicable to a Municipal
Obligation, any Municipal Obligation (excluding any short-term Municipal
Obligation) not rated by Moody's but rated by S&P shall be deemed to have a
Moody's rating which is one full rating category lower than its S&P rating.

         "Moody's Eligible Asset" shall mean cash, Receivables for Municipal
Obligations Sold, futures, options and similar instruments (other than Inverse
Floaters and index warrants) or a Municipal Obligation that (i) pays interest in
cash, (ii) does not have its Moody's rating, if applicable, suspended by
Moody's, (iii) is part of an issue of Municipal Obligations of at least
$10,000,000, and (iv) is not subject to a covered call or a covered put option
written by the Trust. Municipal Obligations issued by any one issuer and not
rated by Moody's or rated lower than Baa3 by Moody's and not rated by S&P or
rated lower than BBB by S&P ("Unrated Moody's Municipal Obligations") may
comprise no more than 4% of total Moody's Eligible Assets; such Unrated Moody's
Municipal Obligations, if any, together with any Municipal Obligations issued by
the same issuer and rated BBB by S&P may comprise no more than 4% of total
Moody's Eligible Assets; such BBB-rated Municipal Obligations and Unrated
Moody's Municipal Obligations, if any, together with any Municipal Obligations
issued by the same issuer and rated Baa by Moody's or A by S&P may comprise no
more than 6% of total Moody's Eligible Assets; such BBB, Baa and A-rated
Municipal Obligations and Unrated Moody's Municipal Obligations, if any,
together with any Municipal Obligations issued by the same issuer and rated A by
Moody's or AA by S&P, may comprise no more than 10% of total Moody's Eligible
Assets; and such BBB, Baa, A and AA-rated Municipal Obligations and Unrated
Moody's Municipal Obligations, if any, together with any Municipal Obligations
issued by the same issuer and rated Aa by Moody's or AAA by S&P, may comprise no
more than 20% of total Moody's Eligible Assets. For purposes of the foregoing
sentence, any Municipal Obligation backed by the guaranty, letter of credit or
insurance issued by a third party shall be deemed to be issued by such third
party if the issuance of such third-party credit is the sole determinant of the
rating on such Municipal Obligations. Municipal Obligations issued by issuers
located within a single state or territory and not rated by Moody's or rated
lower than Baa3 by Moody's and not rated by S&P or rated lower than BBB by S&P
may comprise no more than 12% of total Moody's Eligible Assets; such Unrated
Moody's Municipal Obligations, if any, together with any Municipal Obligations
issued by issuers located within the same state or territory and rated BBB by
S&P may comprise no more than 12% of total Moody's Eligible Assets; such
BBB-rated Municipal Obligations and Unrated Moody's Municipal Obligations, if
any, together with any Municipal Obligations issued by issuers located within
the same state or territory and rated Baa by Moody's or A by S&P, may comprise
no more than 20% of total Moody's Eligible Assets; such BBB, Baa and A-rated
Municipal Obligations and Unrated Moody's Municipal Obligations, if any,
together with any Municipal Obligations issued by issuers located within the
same state or territory and rated A by Moody's or AA by S&P, may comprise no
more than 40% of total Moody's Eligible Assets; and such BBB, Baa, A and
AA-rated Municipal Obligations and Unrated Moody's Municipal Obligations, if
any, together with any Municipal Obligations issued by issuers located within
the same state or territory and rated Aa by Moody's or AAA by S&P, may comprise
no more than 60% of total Moody's Eligible Assets. Municipal Obligations which
are not rated by Moody's or S&P may comprise no more than 40% of the aggregate
Market Value of Moody's Eligible Assets; provided, however, that if the Market
Value of such Municipal Obligations exceeds 40% of the aggregate Market Value of
Moody's Eligible Assets, a portion of such Municipal Obligations (selected by
the Trust) shall not be considered Moody's Eligible Assets, so that the Market
Value of such Municipal Obligations (excluding such portion) does not exceed 40%
of the aggregate Market Value of Moody's Eligible Assets; provided, however,
that no such unrated Municipal Obligation shall be considered a Moody's Eligible
Asset if such Municipal Obligation shall be in "default", which term shall mean
for purposes of this definition, either (a) the nonpayment by the issuer of
interest or principal when due or (b) the notification of the Trust by the
trustee under the underlying indenture or other governing instrument for such
Municipal Obligation that the issuer will fail to pay when due principal or
interest on such Municipal Obligation. For purposes of applying the foregoing
requirements, a Municipal Obligation shall be deemed to be rated BBB by S&P if
rated BBB-, BBB or BBB+ by S&P, Moody's Eligible Assets shall be calculated
without including cash, and Municipal Obligations rated MIG-1, VMIG-1 or P-1 or,
if not rated by Moody's, rated A-1+/Aa or SP-1+/AA by S&P, shall be considered
to have a long-term rating of A. When the Trust sells a Municipal Obligation and
agrees to repurchase such Municipal Obligation at a future day, such Municipal
Obligation shall be valued at its Discounted Value for purposes of determining
Moody's Eligible Assets, and the amount of the repurchase price of such
Municipal Obligation shall be included as a liability for purposes of
calculating the Municipal Preferred Basic Maintenance Amount. When the Trust
purchases a Moody's Eligible Asset and agrees to sell it at a future date, such
Eligible Asset shall be valued at the amount of cash to be received by the Trust
upon such future date, provided that the counterparty to the transaction has a
long-term debt rating of at least A2 and a short-term debt rating of at least P1
from Moody's and the transaction has a term of no more than 30 days; otherwise
such Eligible Asset shall be valued at the Discounted Value of such Eligible
Asset. For purposes of determining the aggregate Discounted Value of Moody's
Eligible Assets, such aggregate amount shall be reduced with respect to any
futures contracts as set forth in paragraph 10(a) of Part I of this Section
12.1.

         Notwithstanding the foregoing, an asset will not be considered a
Moody's Eligible Asset to the extent it is (i) subject to any material lien,
mortgage, pledge, security interest or security agreement of any kind
(collectively, "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 Colonial Management Associates, Inc., The Chase
Manhattan Bank or the Auction Agent and (d) Liens by virtue of any repurchase
agreement or futures contract; or (ii) deposited irrevocably for the payment of
any liabilities for purposes of determine the Municipal Preferred Basic
Maintenance Amount.

         "Moody's Exposure Period" shall mean the period commencing on a given
Valuation Date and ending 49 days thereafter.



<PAGE>


24

         "Moody's Volatility Factor" shall mean, as of any Valuation Date, (i)
in the case of any Minimum Rate Period, any Special Rate period of 28 Rate
Period Days or fewer, or any Special Rate Period of 57 Rate Period Days or more,
a multiplicative factor equal to 275%, except as otherwise provided in the last
sentence of this definition; (ii) in the case of any Special Rate Period of more
than 28 but fewer than 36 Rate Period Days, a multiplicative factor equal to
203%; (iii) in the case of any Special Rate Period of more than 35 but fewer
than 43 Rate Period Days, a multiplicative factor equal to 217%; (iv) in the
case of any Special Rate Period of more than 42 but fewer than 50 Rate Period
Days, a multiplicative factor equal to 226%; and (v) in the case of any Special
Rate Period of more than 49 but fewer than 57 Rate Period Days, a multiplicative
factor equal to 235%. If, as a result of the enactment of changes to the Code,
the greater of the maximum marginal Federal individual income tax rate
applicable to ordinary income and the maximum marginal Federal corporate income
tax rate applicable to ordinary income will increase, such increase being
rounded up to the next five percentage points (the "Federal Tax Rate Increase"),
until the effective date of such increase, the Moody's Volatility Factor in the
case of any Rate Period described in (i) above in this definition instead shall
be determined by reference to the following table:

                               Federal Volatility
                  Tax Rate Increase                              Factor

                            5%                                            295%
                           10%                                            317%
                           15%                                            341%
                           20%                                            369%
                           25%                                            400%
                           30%                                            436%
                           35%                                            477%
                           40%                                            525%

         "Municipal Obligations" shall mean "Municipal Obligations" as defined
in the Trust's registration statement on Form N-2 as filed with the Securities
and Exchange Commission on August 20, 1999 (the "Registration Statement").

         "Municipal Preferred" shall mean the Municipal Auction Rate Cumulative
Preferred Shares, Series T, without par value, liquidation preference $25,000
per share, of the Trust, or the Municipal Auction Rate Cumulative Preferred
Shares, Series W, without par value, liquidation preference $25,000 per share,
of the Trust, or both, as the case may be.

         "Municipal Preferred Basic Maintenance Amount," as of any Valuation
Date, shall mean the dollar amount equal to the sum of (i) (A) the product of
the number of shares of Municipal Preferred 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 shares of
Municipal Preferred (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 shares of Municipal Preferred
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 Municipal Preferred outstanding from such first
respective Dividend Payment Date therefor through the 49th day after such
Valuation Date, at the Maximum 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 paragraph 4(d)(i) of Part I of this Section 12.1
with respect to shares of such series, such Maximum Rate shall be the higher of
(a) the Maximum Rate for the Special Rate Period of shares of such series to
commence on such Dividend Payment Date and (b) the Maximum Rate for a Minimum
Rate Period of shares of such series to commence on such Dividend Payment Date,
multiplied by the Volatility Factor applicable to a Minimum Rate Period, or, in
the event the Trust shall have delivered a Notice of Special Rate Period to the
Auction Agent pursuant to paragraph 4(d)(i) of Part I of this Section 12.1 with
respect to shares of such series designating a Special Rate Period consisting of
49 Rate Period Days or more, the Volatility Factor applicable to a Special Rate
Period of that length (plus the aggregate amount of dividends that would
accumulate at the maximum dividend rate or rates on any other Preferred Shares
outstanding from such respective dividend payment dates through the 49th day
after such Valuation Date, as established by or pursuant to the respective
statements establishing and fixing the rights and preferences of such other
Preferred Shares) (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 Municipal
Preferred, 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
the Preferred Shares other than Municipal Preferred, 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 90 days subsequent to such Valuation Date; (E) the amount of the
Trust's Maximum Potential Gross-up Payment Liability in respect of shares of
Municipal Preferred (and similar amounts payable in respect of other Preferred
Shares pursuant to provisions similar to those contained in paragraph 3 of Part
I of this Section 12.1) as of such Valuation Date; and (F) any current
liabilities as of such Valuation Date to the extent not reflected in any of (i)
(A) through (i)(E) (including, without limitation, any payables for Municipal
Obligations purchased as of such Valuation Date and any liabilities incurred for
the purpose of clearing securities transactions) less (ii) the value (i.e., for
purposes of current Moody's guidelines, the face value of cash, short-term
Municipal Obligations 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)(F) become payable, otherwise the Moody's Discounted Value or for purposes of
current S&P guides, the face value of cash, short-term municipal securities
rated "A-1+" or "SP-1+" and mature or have a demand feature exercisable in 30
days or less, 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)(F) become payable, otherwise
S&P's Discounted Value) of any of the Trust's assets irrevocably deposited by
the Trust for the payment of any of (i) (A) through (i)(F).

         "Municipal Preferred Basic Maintenance Cure Date," with respect to the
failure by the Trust to satisfy the Municipal Preferred Basic Maintenance Amount
(as required by paragraph 7(a) of Part I of this Section 12.1) as a given
Valuation Date, shall mean the second Business Day following such Valuation
Date.

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

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

         "1940 Act Cure Date," with respect to the failure by the Trust to
maintain the 1940 Act Municipal Preferred Asset Coverage (as required by
paragraph 7 of Part I of this Section 12.1) as of the last Business Day of each
month, shall mean the last Business Day of the following month.

         "1940 Act Municipal Preferred Asset Coverage" shall mean asset
coverage, as defined in Section 18(h) of the 1940 Act, of at least 200% with
respect to all outstanding senior securities of the Trust which are shares of
beneficial interest, including all outstanding shares of Municipal Preferred (or
such other asset coverage as may in the future be specified in or under the 1940
Act as the minimum asset coverage for senior securities which are shares or
stock of a closed-end investment company as a condition of declaring dividends
on its common shares or stock).

         "Notice of Redemption" shall mean any notice with respect to the
redemption of shares of Municipal Preferred pursuant to paragraph 11(c) of Part
I of this Section 12.1.

         "Notice of Special Rate Period" shall mean any notice with respect to a
Special Rate Period of shares of Municipal Preferred pursuant to paragraph
4(d)(i) of Part I of this Section 12.1.

         "Order" and "Orders" shall have the respective meanings specified in
paragraph 1(a) of Part II of this Section 12.1.

         "Outstanding" shall mean, as of any Auction Date with respect to shares
of any series of Municipal Preferred, the number of shares of such series
theretofore issued by the Trust except, without duplication, (i) any shares of
such series theretofore canceled or delivered to the Auction Agent for
cancellation or redeemed by the Trust, (ii) any shares of such series as to
which the Trust or any Affiliate thereof shall be an Existing Holder and (iii)
any shares of such series represented by any certificate in lieu of which a new
certificate has been executed and delivered by the Trust.

         "Persons" shall mean and include an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.

         "Potential Beneficial Owner," with respect to shares of a series of
Municipal Preferred, shall mean a customer of a Broker-Dealer that is not a
Beneficial Owner of shares of such series but that wishes to purchase shares of
such series, or that is a Beneficial Owner of shares of such series that wishes
to purchase additional shares of such series.

         "Potential Holder," with respect to shares of a series of Municipal
Preferred, shall mean a Broker-Dealer (or any such other person as may be
permitted by the Trust) that is not an Existing Holder of shares of such series
or that is an Existing Holder of shares of such series that wishes to become the
Existing Holder of additional shares of such series.

         "Preferred Shares" shall mean the preferred shares, without par value,
of the Trust, and includes the shares of Municipal Preferred.


         "Rate Multiple," for shares of a series of Municipal Preferred on any
Auction Date for shares of such series, shall mean the percentage, determined as
set forth below, based on the prevailing rating of shares of such series in
effect at the close of business on the Business Day next preceding such Auction
Date:

         Prevailing Rating                               Percentage
         -----------------                               ----------
         "aa3"/AA- or higher...........................      110%
         "a3"/A-.......................................      125%
         "baa3"/BBB-...................................      150%
         "ba3"/BB-.....................................      200%
         Below "ba3"/BB-...............................      250%

provided, however, that in the event the Trust has notified the Auction Agent of
its intent to allocate income taxable for Federal income tax purposes to shares
of such series prior to the Auction establishing the Applicable Rate for shares
of such series, the applicable percentage in the foregoing table shall be
divided by the quantity 1 minus the greater of the maximum marginal regular
Federal individual income tax rate applicable to ordinary income or the maximum
marginal regular Federal corporate income tax rate applicable to ordinary
income.

         For purposes of this definition, the "prevailing rating" of shares of a
series of Municipal Preferred shall be (i) "aa3"/AA- or higher if such shares
have a rating of "aa3" or better by Moody's and AA- or better by S&P or the
equivalent of such ratings by such agencies or a substitute rating agency or
substitute rating agencies selected as provided below, (ii) if not "aa3"/AA- or
higher, then "a3"/A- if such shares have a rating of "a3" or better by Moody's
and A- or better by S&P or the equivalent of such ratings by such agencies or a
substitute rating agency or substitute rating agencies selected as provided
below, (iii) if not "aa3"/AA- or higher or "a3"/A-, then "baa3"/BBB- if such
shares have a rating of "baa3" or better by Moody's and BBB- or better by S&P or
the equivalent of such ratings by such agencies or a substitute rating agency or
substitute rating agencies selected as provided below, (iv) if not "aa3"/AA- or
higher, "a3"/A- or "baa3"/BBB-, then "ba3"/BB- if such shares have a rating of
"ba3" or better by Moody's and BB- or better by S&P or the equivalent of such
ratings by such agencies or a substitute rating agency or substitute rating
agencies selected as provided below, and (v) if not "aa3"/AA- or higher,
"a3"/A-, "baa3"/BBB-, or "ba3"/BB-, then below "ba3"/BB-; provided, however,
that if such shares are rated by only one rating agency, the prevailing rating
will be determined without reference to the rating of any other rating agency.
The Trust shall take all reasonable action necessary to enable either S&P or
Moody's to provide a rating for shares of Municipal Preferred. If neither S&P
nor Moody's shall make such a rating available, Salomon Smith Barney Inc. or its
successor shall select at least one nationally recognized statistical rating
organization (as that term is used in the rules and regulations of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended from time to time) to act as a substitute rating agency in respect of
shares of such series of Municipal Preferred, and the Trust shall take all
reasonable action to enable such rating agency to provide a rating for such
shares.

         "Rate Period," with respect to shares of a series of Municipal
Preferred, shall mean the Initial Rate Period of shares of such series and any
Subsequent Rate Period, including any Special Rate Period, of shares of such
series.

         "Rate Period Days," for any Rate Period or Dividend Period, means the
number of days that would constitute such Rate Period or Dividend Period but for
the application of paragraph 2(d) of Part I of this Section 12.1 or paragraph
4(b) of Part I of this Section 12.1.

         "Receivables for Municipal Obligations Sold" shall mean (A) for
purposes of calculating Moody's Eligible Assets as of any Valuation Date, no
more than the aggregate of the following: (i) the book value of receivables for
Municipal Obligations sold as of or prior to such Valuation Date if such
receivables are due within five business days of such Valuation Date, and if the
trades which generated such receivables are (x) settled through clearing house
firms with respect to which the Trust has received prior written authorization
from Moody's or (y) with counterparties having a Moody's long-term debt rating
of at least Baa3; and (ii) the Moody's Discounted Value of Municipal Obligations
sold as of or prior to such Valuation Date which generated receivables, if such
receivables are due within five business days of such Valuation Date but do not
comply with either of the conditions specified in (i) above, and (B) for
purposes of calculating S&P Eligible Assets as of any Valuation Date, the book
value of receivables for Municipal Obligations sold as of or prior to such
Valuation Date if such receivables are due within five business days of such
Valuation Date.

         "Redemption Price" shall mean the applicable redemption price specified
in paragraph 11(a) or (b) of Part I of this Section 12.1.

         "Reference Rate" shall mean (i) the higher of the Taxable Equivalent of
the Short-Term Municipal Bond Rate and the "AA" Composite Commercial Paper Rate
in the case of Minimum Rate Periods and Special Rate Periods of 28 Rate Period
Days or fewer; (ii) the "AA" Composite Commercial Paper Rate in the case of
Special Rate Periods of more than 28 Rate Period Days but fewer than 183 Rate
Period Days; and (iii) the Treasury Bill Rate in the case of Special Rate
Periods of more than 182 Rate Period Days but fewer than 365 Rate Period Days.

         "Registration Statement" has the meaning specified in the definition of
"Municipal Obligations."

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

         "S&P Discount Factor" shall mean, for purposes of determining the
Discounted Value of any S&P Eligible Asset, the percentage determined by
reference to the rating on such asset and the shortest S&P Exposure Period set
forth opposite such rating that is the same length as or is longer than the S&P
Exposure Period, in accordance with the table set forth below:

                                               Rating Category ______________


<PAGE>

                     41

<TABLE>
<CAPTION>
<S>                                                         <C>       <C>     <C>     <C>     <C>       <C>
Exposure Period                                               AAA*     AA*      A*     BBB*    Unrated**  Zeros***
- ---------------                                               ---      --       -      ---     -------    -----

45 Business Days..........................................    190%     195%     210%   250%      220%     572%
25 Business Days..........................................    170      175      190    230       220      496
10 Business Days..........................................    155      160      175    215       220      426
  7 Business Days.........................................    150      155      170    210       220      411
  3 Business Days.........................................    130      135      150    190       220      388
- --------------
*      S&P rating.
</TABLE>

**     S&P Eligible Assets not rated by S&P or rated less than BBB by S&P and
       not rated at least the equivalent of an "A" rating by another nationally
       recognized credit rating agency.

***    Municipal Obligations rated AAA by S&P which are not interest bearing or
       do not pay interest at least semi-annually.

         Notwithstanding the foregoing, (i) the S&P Discount Factor for
short-term Municipal Obligations will be 115%, so long as such Municipal
Obligations are rated A-1+ or SP-1+ by S&P and mature or have a demand feature
exercisable within 30 days or less, 120% if such Municipal Obligations are rated
A-1 or SP-1- by S&P and mature or have a demand feature exercisable within 30
days or less, or 125% if such Municipal Obligations are not rated by S&P but are
rated VMIG-1, P-1 or MIG-1 by Moody's; provided, however, that any such
Moody's-rated short-term Municipal Obligations which have demand features
exercisable within 30 days or less must be backed by a letter of credit,
liquidity facility or guarantee from a bank or other financial institution with
a short-term rating of at least A-1+ from S&P; and further provided that such
Moody's-rated short-term Municipal Obligations may comprise no more than 50% of
short-term Municipal Obligations that qualify as S&P Eligible Assets; (ii) no
S&P Discount Factor will be applied to cash, options and similar instruments or
to Receivables for Municipal Obligations Sold, except that S&P Discount Factors
will be applied to futures and Inverse Floaters; and (iii) except as set forth
in clause (i) above, in the case of any Municipal Obligation that is not rated
by S&P but qualifies as an S&P Eligible Asset pursuant to clause (iii) of that
definition, such Municipal Obligation will be deemed to have an S&P rating one
full rating category lower than the S&P rating category that is the equivalent
of the rating category in which such Municipal Obligation is placed by such
other nationally recognized credit rating agency. For purposes of the foregoing,
Anticipation Notes rated SP-1+ or, if not rated by S&P, rated MIG-1 or VMIG-1 by
Moody's, which do not mature or have a demand feature at par exercisable in 30
days and which do not have a long-term rating, shall be considered to be
short-term Municipal Obligations.

         "S&P Eligible Asset" shall mean cash (excluding any cash irrevocably
deposited by the Trust for the payment of any liabilities within the meaning of
Municipal Preferred Basic Maintenance Amount), Receivables for Municipal
Obligations Sold, futures, options, Inverse Floaters and similar instruments or
a Municipal Obligation owned by the Trust that (i) is interest bearing and pays
interest at least semi-annually; (ii) is payable with respect to principal and
interest in U.S. Dollars; (iii) is publicly rated BBB or higher by S&P or,
except in the case of Anticipation Notes that are Grant Anticipation Notes or
Bond Anticipation Notes which must be rated by S&P to be included in S&P
Eligible Assets, if not rated by S&P but rated by another nationally recognized
credit rating agency, is rated at least A by such agency; (iv) is not part of a
private placement of Municipal Obligations (except in the case of Inverse
Floaters); (v) is part of an issue of Municipal Obligations with an original
issue size of at least $20 million or, if of an issue with an original issue
size below $20 million (but in no event below $10 million), is issued by an
issuer with a total of at least $50 million of securities outstanding; and (vi)
is not subject to a covered call or covered put option written by the Trust.
Solely for purposes of this definition, the term "Municipal Obligation" means
any obligation the interest on which is exempt from regular Federal income
taxation and which is issued by any of the fifty United States, the District of
Columbia or any of the territories of the United States, their subdivisions,
counties, cities, towns, villages, school districts and agencies (including
authorities and special districts created by the states), and federally
sponsored agencies such as local housing authorities. Notwithstanding the
foregoing limitations:

(1)        Municipal Obligations (excluding Escrowed Bonds) of any one issuer or
           guarantor (excluding bond insurers) shall be considered S&P Eligible
           Assets only to the extent the Market Value of such Municipal
           Obligations does not exceed 10% of the aggregate Market Value of S&P
           Eligible Assets, provided that 2% is added to the applicable S&P
           Discount Factor for every 1% by which the Market Value of such
           Municipal Obligations exceeds 5% of the aggregate Market Value of S&P
           Eligible Assets, and provided that Municipal Obligations (excluding
           Escrowed Bonds) not rated by S&P or rated less than BBB by S&P or not
           rated at least A by another nationally recognized credit rating
           agency of any one issuer or guarantor (excluding bond insurers) shall
           constitute S&P Eligible Assets only to the extent the Market Value of
           such Municipal Obligations does not exceed 5% of the aggregate Market
           Value of S&P Eligible Assets;

(2)     Municipal Obligations not rated at least BBB by S&P or not rated by
        S&P and  not rated at least A by another nationally recognized credit
        rating agency shall be considered S&P Eligible Assets only to the
        extent the Market Value of such Municipal Obligations does not exceed
        50% of the aggregate Market Value of S&P Eligible Assets; provided,
        however, that if the Market Value of such Municipal Obligations exceeds
        50% of the aggregate Market Value of S&P Eligible Assets, a portion of
        such Municipal Obligations (selected by the Trust) shall not be
        considered S&P Eligible Assets, so that the Market Value of such
        Municipal Obligations (excluding such portion) does not exceed 50% of
        the aggregate Market Value of S&P Eligible Assets;

(3)        Long-term Municipal Obligations (excluding Escrowed Bonds) issued by
           issuers in any one state or territory shall be considered S&P
           Eligible Assets only to the extent that the Market Value of such
           Municipal Obligations does not exceed 25% of the aggregate Market
           Value of S&P Eligible Assets; and

(4)        Municipal Obligations which are not interest bearing or do not pay
           interest at least semi-annually shall be considered S&P Eligible
           Assets if rated AAA by S&P.

         For purposes of determining the aggregate Discounted Value of S&P's
Eligible Assets, such aggregate amount shall be reduced with respect to any
futures contracts as set forth in paragraph 10(a) of Part I of this Section
12.1.

         "S&P Exposure Period" shall mean the period commencing on a given
Valuation Date and ending three business days thereafter.

         "S&P Volatility Factor" shall mean, as of any Valuation Date, a
multiplicative factor equal to (i) 305% in the case of any Minimum Rate Period
or any Special Rate Period of 28 Rate Period Days or fewer; (ii) 268% in the
case of any Special Rate Period of more than 28 Rate Period Days but fewer than
183 Rate Period Days; and (iii) 204% in the case of any Special Rate Period of
more than 182 Rate Period Days.

         "Securities Depository" shall mean The Depository Trust Company and its
successors and assigns or any other securities depository selected by the Trust
which agrees to follow the procedures required to be followed by such securities
depository in connection with shares of Municipal Preferred.

         "Sell Order" and "Sell Orders" shall have the respective meanings
specified in paragraph 1(a) of Part II of this Section 12.1.

         "Special Rate Period," with respect to shares of a series of Municipal
Preferred, shall have the meaning specified in paragraph 4(a) of Part I of this
Section 12.1.

         "Special Redemption Provisions" shall have the meaning specified in
paragraph 11(a)(i) of Part I of this Section 12.1.

         "Submission Deadline" shall mean 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.

         "Submitted Bid" and "Submitted Bids" shall have the respective meanings
specified in paragraph 3(a) of Part II of this Section 12.1.

         "Submitted Hold Order" and "Submitted Hold Orders" shall have the
respective meanings specified in paragraph 3(a) of Part II of this Section 12.1.

         "Submitted Order" and "Submitted Orders" shall have the respective
meanings specified in paragraph 3(a) of Part II of this Section 12.1.

         "Submitted Sell Order" and "Submitted Sell Orders" shall have the
respective meanings specified in paragraph 3(a) of Part II of this Section 12.1.

         "Subsequent Rate Period," with respect to shares of a series of
Municipal Preferred, shall mean 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.

         "Substitute Commercial Paper Dealer" shall mean CS First Boston or
Morgan Stanley & Co. Incorporated or their respective affiliates or successors,
if such entity is a commercial paper dealer; provided, however, that none of
such entities shall be a Commercial Paper Dealer.

         "Substitute U.S. Government Securities Dealer" shall mean CS First
Boston and Merrill Lynch, Pierce, Fenner & Smith Incorporated or their
respective affiliates or successors, if such entity is a U.S. Government
securities dealer; provided, however, that none of such entities shall be a U.S.
Government Securities Dealer.

         "Sufficient Clearing Bids" shall have the meaning specified in
paragraph 3(a) of Part II of this Section 12.1.

         "Taxable Allocation" shall have the meaning specified in paragraph 3 of
Part I of this Section 12.1.

         "Taxable Equivalent of the Short-Term Municipal Bond Rate," on any date
for any Minimum Rate Period or Special Rate Period of 28 Rate Period Days or
fewer, shall mean 90% of the quotient of (A) the per annum rate expressed on an
interest equivalent basis equal to the S&P Kenny 30 day High Grade Index or any
successor index (the "Kenny Index") (provided, however, that any such successor
index must be approved by Moody's (if Moody's is then rating the shares of
Municipal Preferred) and S&P (if S&P is then rating the shares of Municipal
Preferred)), made available for the Business Day immediately preceding such date
but in any event not later than 8:30 A.M., New York City time, on such date by
S&P J.J. Kenny Evaluation Services or any successor thereto, based upon 30-day
yield evaluations at par of short-term bonds the interest on which is excludable
for regular Federal income tax purposes under the Code, of "high grade"
component issuers selected by S&P J.J. Kenny Evaluation Services or any such
successor from time to time in its discretion, which component issuers shall
include, without limitation, issuers of general obligation bonds, but shall
exclude any bonds the interest on which constitutes an item of tax preference
under Section 57(a)(5) of the Code, or successor provisions, for purposes of the
"alternative minimum tax," divided by (B) 1.00 minus the greater of the maximum
marginal regular Federal individual income tax rate applicable to ordinary
income or the maximum marginal regular Federal corporate income tax rate
applicable to ordinary income (in each case expressed as a decimal); provided,
however, that if the Kenny Index is not made so available by 8:30 A.M., New York
City time, on such date by S&P J.J. Kenny Evaluation Services or any successor,
the Taxable Equivalent of the Short-Term Municipal Bond Rate shall mean the
quotient of (A) the per annum rate expressed on an interest equivalent basis
equal to the most recent Kenny Index so made available for any preceding
Business Day, divided by (B) 1.00 minus the greater of the maximum marginal
regular Federal individual income tax rate applicable to ordinary income or the
maximum marginal regular Federal corporate income tax rate applicable to
ordinary income (in each case expressed as a decimal).

         "Taxable Income" shall have the meaning specified in paragraph 3(c) of
Part II of this Section 12.1.

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

         "Treasury Bill Rate," on any date for any Rate Period, shall mean (i)
the bond equivalent yield, calculated in accordance with prevailing industry
convention, of the rate on the most recently auctioned Treasury Bill with a
remaining maturity closest to the length of such Rate Period, as quoted in The
Wall Street Journal on such date for the Business Day next preceding such date;
or (ii) in the event that any such rate is not published in The Wall Street
Journal, then the bond equivalent yield, calculated in accordance with
prevailing industry convention, as calculated by reference to the arithmetic
average of the bid price quotations of the most recently auctioned Treasury Bill
with a remaining maturity closest to the length of such Rate Period, as
determined by bid price quotations as of the close of business on the Business
Day immediately preceding such date obtained from the U.S. Government Securities
Dealers to the Auction Agent.

         "Treasury Note" shall mean a direct obligation of the U.S. Government
having a maturity at the time of issuance of five years or less but more than
364 days.

         "Treasury Note Rate," on any date for any Rate Period, shall mean (i)
the yield on the most recently auctioned Treasury Note with a remaining maturity
closest to the length of such Rate Period, as quoted in The Wall Street Journal
on such date for the Business Day next preceding such date; or (ii) in the event
that any such rate is not published in The Wall Street Journal, then the yield
as calculated by reference to the arithmetic average of the bid price quotations
of the most recently auctioned Treasury Note with a remaining maturity closest
to the length of such Rate Period, as determined by bid price quotations as of
the close of business on the Business Day immediately preceding such date
obtained from the U.S. Government Securities Dealers to the Auction Agent. If
any U.S. Government Securities Dealer does not quote a rate required to
determine the Treasury Bill Rate or the Treasury Note Rate, the Treasury Bill
Rate or the Treasury Note Rate shall be determined on the basis of the quotation
or quotations furnished by the remaining U.S. Government Securities Dealer or
U.S. Government Securities Dealers and any Substitute U.S. Government Securities
Dealers selected by the Trust to provide such rate or rates not being supplied
by any U.S. Government Securities Dealer or U.S. Government Securities Dealers,
as the case may be, or, if the Trust does not select any such Substitute U.S.
Government Securities Dealer or Substitute U.S. Government Securities Dealers,
by the remaining U.S. Government Securities Dealer or U.S. Government Securities
Dealers.

         "U.S. Government Securities Dealer" shall mean Lehman Government
Securities Incorporated, Goldman, Sachs & Co., Salomon Smith Barney Inc. and
Morgan Guaranty Trust Company of New York or their respective affiliates or
successors, if such entity is a U.S. government securities dealer.

         "Valuation Date" shall mean, for purposes of determining whether the
Trust is maintaining the Municipal Preferred Basic Maintenance Amount, each
Business Day.

         "Variation Margin" means, in connection with an outstanding futures
contract owned or sold by the Trust, the amount of cash or securities paid to or
received from a broker (subsequent to the Initial Margin payment) from time to
time as the price of such futures contract fluctuates.

         "Volatility Factor" shall mean, as of any Valuation Date, the greater
of the Moody's Volatility Factor and the S&P Volatility Factor.

         "Voting Period" shall have the meaning specified in paragraph 5(b) of
Part I of this Section 12.1.

         "Winning Bid Rate" shall have the meaning specified in paragraph 3(a)
of Part II of this Section 12.1.

2. Dividends.

(a) Ranking. The shares of a series of Municipal Preferred shall rank on a
parity with each other, with shares of any other series of Municipal Preferred
and with shares of any other series of Preferred Shares as to the payment of
dividends by the Trust.

(b) Cumulative Cash Dividends. The Holders of shares of Municipal Preferred of
any series 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, these By-laws and applicable law, cumulative cash dividends at the
Applicable Rate for shares of such series, determined as set forth in
subparagraph (e) of this paragraph 2, and no more (except to the extent set
forth in paragraph 3 of Part I of this Section 12.1), payable on the Dividend
Payment Dates with respect to shares of such series determined pursuant to
subparagraph (d) of this paragraph 2. Holders of shares of any series of
Municipal Preferred shall not be entitled to any dividend, whether payable in
cash, property or shares, in excess of full cumulative dividends, as herein
provided, on shares of such series of Municipal Preferred. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on shares of Municipal Preferred which may be in arrears,
and, except to the extent set forth in subparagraph (e)(i) of this paragraph 2,
no additional sum of money shall be payable in respect of any such arrearage.

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

(d) Dividend Payment Dates and Adjustments Thereof. The Dividend Payment Dates
with respect to shares of a series of Municipal Preferred shall be Wednesday,
September 1, 1999 and each Wednesday thereafter with respect to shares of Series
T Municipal Preferred and Thursday, September 2, 1999 and each Thursday
thereafter with respect to shares of Series W Municipal Preferred; provided,
however, that

                  (i) if the Wednesday or Thursday, as the case may be, on which
         dividends would otherwise be payable on shares of such series is not a
         Business Day, then such dividends shall be payable on shares of such
         series on the first Business Day that falls prior to such Wednesday or
         Thursday, as the case may be; and

                  (ii) notwithstanding the foregoing provisions of this
         paragraph 2(d), the Trust in its discretion may establish the Dividend
         Payment Dates in respect of any Special Rate Period of shares of a
         series of Municipal Preferred consisting of more than 28 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,
         as such last day is determined in accordance with subparagraph (b) of
         paragraph 4 of Part I of this Section 12.1.

(e) Dividend Rates and Calculation of Dividends.

(i) Dividend Rates. The dividend rate on shares of Municipal Preferred of any
  series 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 with
  respect to shares of such series under "Designation" in Part I of this Section
  12.1. 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
  next preceding such Subsequent Rate Period; provided, however, that if:

(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 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  (other  than any  Special  Rate Period
consisting of more than 364 Rate Period Days or any Rate Period  succeeding  any
Special Rate Period  consisting of more than 364 Rate Period Days during which a
Failure to Deposit occurred that has not been cured),  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 subparagraph (f) of this paragraph 2 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) 200% of the
Reference  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  subparagraph  (f) of this  paragraph  2
(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 paragraph  11(c) of Part I of this Section 12.1, an amount
computed  by  multiplying  (x) 200% of the  Reference  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  subparagraph  (f) of this
paragraph 2 (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  Rate  for  shares  of such  series  on the  Auction  Date for such
Subsequent Rate Period;

(C) any Failure to Deposit  shall have  occurred  with respect to shares of such
series  during any Rate  Period  thereof  (other  than any  Special  Rate Period
consisting of more than 364 Rate Period Days or any Rate Period  succeeding  any
Special Rate Period  consisting of more than 364 Rate Period Days during which a
Failure to Deposit occurred that has not been cured),  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 subparagraph (f) of this paragraph 2 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 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  subparagraph (f) of this paragraph 2 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 Maximum Rate for shares of such series on
the Auction Date for such Subsequent Rate Period (but with the prevailing rating
for shares of such series,  for purposes of determining such Maximum Rate, being
deemed to be "Below 'ba3'/BB-"); or

(D) any Failure to Deposit  shall have  occurred  with respect to shares of such
series  during a Special Rate Period  thereof  consisting  of more than 364 Rate
Period  Days,  or during any Rate Period  thereof  succeeding  any Special  Rate
Period  consisting  of more than 364 Rate Period Days during  which a Failure to
Deposit  occurred that has not been cured,  and,  prior to 12:00 Noon,  New York
City time,  on the fourth  Business Day  preceding the Auction Date for the Rate
Period  subsequent  to such Rate Period,  such Failure to Deposit shall not have
been cured in accordance  with  subparagraph  (f) of this paragraph 2 or, in the
event  Moody's is then  rating  such  shares,  the Trust shall not have paid the
applicable  Late Charge to the Auction Agent (such Late Charge,  for purposes of
this  subparagraph  (D), to be calculated by using,  as the Reference  Rate, the
Reference Rate  applicable to a Rate Period (x) consisting of more than 182 Rate
Period Days but fewer than 365 Rate Period Days and (y)  commencing  on the date
on which the Rate Period during which Failure to Deposit occurs  commenced),  no
Auction  will be held in  respect of shares of such  series for such  Subsequent
Rate Period (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
subparagraph  (f) of this paragraph 2 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 Maximum Rate for shares of such series on
the Auction Date for such Subsequent Rate Period (but with the prevailing rating
for shares of such series,  for purposes of determining such Maximum Rate, being
deemed to be "Below  'ba3'/BB-")  (the  rate per  annum of which  dividends  are
payable on shares of a series of Municipal Preferred for any Rate Period thereof
being herein referred to as the "Applicable Rate" for shares of such series).

(ii) Calculation of Dividends. The amount of dividends per share payable on
  shares of a series of Municipal Preferred 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 7 Rate Period Days and
  360 for all other Dividend Periods, and applying the rate obtained against
  $25,000.

(f) Curing a Failure to Deposit. A Failure to Deposit with respect to shares of
  a series of Municipal Preferred shall have been cured (if such Failure to
  Deposit is not solely due to the willful failure of the Trust to make the
  required payments to the Auction Agent) with respect to any Rate Period of
  shares of such series if, within the respective time periods described in
  subparagraph (e)(i) of this paragraph 2, 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 paragraph 11(c) of Part I of this Section 12.1; provided, however,
  that the foregoing clause (B) shall not apply to the Trust's failure to pay
  the Redemption Price in respect of shares of Municipal Preferred when the
  related Redemption Notice 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.

(g) 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
  Municipal Preferred, 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.

(h) 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
  subparagraph (i) of this paragraph 2. 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.

(i) Dividends Paid to Holders. Each dividend on shares of a series of Municipal
  Preferred 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.

(j) Dividends Credited Against Earliest Accumulated But Unpaid Dividends. Any
  dividend payment made on shares of a series of Municipal Preferred 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.

(k) Dividends Designated as Exempt-Interest Dividends. Dividends on shares of a
  series of Municipal Preferred shall be designated as exempt-interest dividends
  up to the amount of tax-exempt income of the Trust, to the extent permitted
  by, and for purposes of, Section 852 of the Code.

3. Gross-up Payments.

         Holders of shares of Municipal Preferred 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, these By-laws and
applicable law, dividends in an amount equal to the aggregate Gross-up Payments
as follows:

(a) Minimum Rate Periods and Special Rate Periods of 28 Rate Period Days or
Fewer. If, in the case of any Minimum Rate Period or any Special Rate Period of
28 Rate Period Days or fewer, the Trust allocates any net capital gain or other
income taxable for Federal income tax purposes to a dividend paid on shares of
Municipal Preferred without having given advance notice thereof to the Auction
Agent as provided in paragraph 5 of Part II of this Section 12.1 (such
allocation being referred to herein as a "Taxable Allocation") solely by reason
of the fact that such allocation is made retroactively as a result of the
redemption of all or a portion of the outstanding shares of Municipal Preferred
or the liquidation of the Trust, the Trust shall, prior to the end of the
calendar year in which such dividend was paid, provide notice thereof to the
Auction Agent and direct the Trust's dividend disbursing agent to send such
notice with a Gross-up Payment to each Holder of such shares that was entitled
to such dividend payment during such calendar year at such Holder's address as
the same appears or last appeared on the record books of the Trust.

(b) Special Rate Periods of More Than 28 Rate Period Days. If, in the case of
any Special Rate Period of more than 28 Rate Period Days, the Trust makes a
Taxable Allocation to a dividend paid on shares of Municipal Preferred, the
Trust shall, prior to the end of the calendar year in which such dividend was
paid, provide notice thereof to the Auction Agent and direct the Trust's
dividend disbursing agent to send such notice with a Gross-up Payment to each
Holder of shares that was entitled to such dividend payment during such calendar
year at such Holder's address as the same appears or last appeared on the record
books of the Trust.

(c) No Gross-up Payments In the Event of a Reallocation. The Trust shall not be
required to make Gross-up Payments with respect to any series of Municipal
Preferred with respect to any net capital gain or other taxable income
determined by the Internal Revenue Service to be allocable in a manner different
from that allocated by the Trust.


<PAGE>



4.                  Designation of Special Rate Periods.

(a)                 Length of and Preconditions for Special Rate Period. The
                    Trust, at its option, may designate any succeeding
                    Subsequent Rate Period of shares of a series of Municipal
                    Preferred as a Special Rate Period consisting of a specified
                    number of Rate Period Days evenly divisible by seven and not
                    more than 1,820, subject to adjustment as provided in
                    subparagraph (b) of this paragraph 4. A designation of a
                    Special Rate Period shall be effective only if (A) notice
                    thereof shall have been given in accordance with
                    subparagraphs (c) and (d)(i) of this paragraph 4, (B) an
                    Auction for shares of such series shall have been held on
                    the Auction Date immediately preceding the first day of such
                    proposed Special Rate Period and Sufficient Clearing Bids
                    for shares of such series shall have existed in such
                    Auction, and (C) if any Notice of Redemption shall have been
                    mailed by the Trust pursuant to paragraph 11(c) of Part I of
                    this Section 12.1 with respect to any shares of such series,
                    the Redemption Price with respect to such shares shall have
                    been deposited with the Auction Agent. In the event the
                    Trust wishes to designate any succeeding Subsequent Rate
                    Period for shares of a series of Municipal Preferred as a
                    Special Rate Period consisting of more than 28 Rate Period
                    Days, the Trust shall notify S&P (if S&P is then rating such
                    series) and Moody's (if Moody's is then rating such series)
                    in advance of the commencement of such Subsequent Rate
                    Period that the Trust wishes to designate such Subsequent
                    Rate Period as a Special Rate Period and shall provide S&P
                    (if S&P is then rating such series) and Moody's (if Moody's
                    is then rating such series) with such documents as either
                    may request.

(b)                 Adjustment of Length of Special Rate Period. In the event
                    the Trust wishes to designate a Subsequent Rate Period as a
                    Special Rate Period, but the day following what would
                    otherwise be the last day of such Special Rate Period is not
                    (a) a Wednesday that is a Business Day in the case of a
                    series of Municipal Preferred designated as "Series T
                    Municipal Preferred" in this Part I, or (b) a Thursday that
                    is a Business Day in the case of a series of Municipal
                    Preferred designated as "Series W Municipal Preferred" in
                    this Part I, then the Trust shall designate such Subsequent
                    Rate Period as a Special Rate Period consisting of the
                    period commencing at the end of the immediately preceding
                    "Rate Period" and ending (a) on the first Tuesday that is
                    followed by a Wednesday that is a Business Day preceding
                    what would otherwise be such last day, in the case of Series
                    T Municipal Preferred, or (b) on the first Wednesday that is
                    followed by a Thursday that is a Business Day preceding what
                    would otherwise be such last day, in the case of Series W
                    Municipal Preferred.

(c)                 Notice of Proposed Special Rate Period. If the Trust
                    proposes to designate any succeeding Subsequent Rate Period
                    of shares of a series of Municipal Preferred as a Special
                    Rate Period pursuant to subparagraph (a) of this paragraph
                    4, not less than 20 (or such lesser number of days as may be
                    agreed to from time to time by the Auction Agent) nor more
                    than 30 days prior to the date the Trust proposes to
                    designate as the first day of such Special Rate Period
                    (which shall be such day that would otherwise be the first
                    day of a Minimum Rate Period), notice shall be (i) published
                    or caused to be published by the Trust in a newspaper of
                    general circulation to the financial community in The City
                    of New York, New York, which carries financial news, and
                    (ii) mailed by the Trust by first-class mail, postage
                    prepaid, to the Holders of shares of such series. Each such
                    notice shall state (A) that the Trust may exercise its
                    option to designate a succeeding Subsequent Rate Period of
                    shares of such series as a Special Rate Period, specifying
                    the first day thereof and (B) that the Trust will, by 11:00
                    A.M., New York City time, on the second Business Day next
                    preceding such date (or by such later time or date, or both,
                    as may be agreed to by the Auction Agent) notify the Auction
                    Agent of either (x) its determination, subject to certain
                    conditions, to exercise such option, in which case the Trust
                    shall specify the Special Rate Period designated, or (y) its
                    determination not to exercise such option.

(d)                 Notice of Special Rate Period. No later than 11:00 A.M., New
                    York City time, on the second Business Day next preceding
                    the first day of any proposed Special Rate Period of shares
                    of a series of Municipal Preferred as to which notice has
                    been given as set forth in subparagraph (c) of this
                    paragraph 4 (or such later time or date, or both, as may be
                    agreed to by the Auction Agent), the Trust shall deliver to
                    the Auction Agent either:

(i) a notice  ("Notice of Special Rate  Period")  stating (A) that the Trust has
determined to designate the next succeeding Rate Period of shares of such series
as a Special Rate Period, specifying the same and the first day thereof, (B) the
Auction Date immediately prior to the first day of such Special Rate Period, (C)
that such Special Rate Period shall not commence if (1) an Auction for shares of
such  series  shall not be held on such  Auction  Date for any  reason or (2) an
Auction  for  shares  of such  series  shall  be held on such  Auction  Date but
Sufficient  Clearing  Bids for  shares  of such  series  shall not exist in such
Auction,  (D) the  scheduled  Dividend  Payment  Dates for shares of such series
during such Special Rate Period and (E) the Special  Redemption  Provisions,  if
any, applicable to shares of such series in respect of such Special Rate Period;
such notice to be accompanied by a Municipal  Preferred Basic Maintenance Report
showing that, as of the third Business Day next preceding such proposed  Special
Rate Period, Moody's Eligible Assets (if Moody's is then rating such series) and
S&P  Eligible  Assets (if S&P is then rating such series) each have an aggregate
Discounted  Value at least equal to the Municipal  Preferred  Basic  Maintenance
Amount  as of  such  Business  Day  (assuming  for  purposes  of  the  foregoing
calculation  that (a) the Maximum Rate is the Maximum Rate on such  Business Day
as if such  Business  Day were the Auction  Date for the  proposed  Special Rate
Period,  and (b) the Moody's  Discount  Factors  applicable to Moody's  Eligible
Assets are determined by reference to the first Exposure  Period longer than the
Exposure  Period then applicable to the Trust, as described in the definition of
Moody's Discount Factor herein); or

(ii)                a notice stating that the Trust has determined not to
                    exercise its option to designate a Special Rate Period of
                    shares of such series and that the next succeeding Rate
                    Period of shares of such series shall be a Minimum Rate
                    Period.

(e)                 Failure to Deliver Notice of Special Rate Period. If the
                    Trust fails to deliver either of the notices described in
                    subparagraphs (d)(i) or (d)(ii) of this paragraph 4 (and, in
                    the case of the notice described in subparagraph (d)(i) of
                    this paragraph 4, a Municipal Preferred Basic Maintenance
                    Report to the effect set forth in such subparagraph (if
                    either Moody's or S&P is then rating the series in
                    question)) with respect to any designation of any proposed
                    Special Rate Period to the Auction Agent by 11:00 A.M., New
                    York City time, on the second Business Day next preceding
                    the first day of such proposed Special Rate Period (or by
                    such later time or date, or both, as may be agreed to by the
                    Auction Agent), the Trust shall be deemed to have delivered
                    a notice to the Auction Agent with respect to such Special
                    Rate Period to the effect set forth in subparagraph (d)(ii)
                    of this paragraph 4. In the event the Trust delivers to the
                    Auction Agent a notice described in subparagraph (d)(i) of
                    this paragraph 4, it shall file a copy of such notice with
                    the Secretary of the Trust, and the contents of such notice
                    shall be binding on the Trust. In the event the Trust
                    delivers to the Auction Agent a notice described in
                    subparagraph (d)(ii) of this paragraph 4, the Trust will
                    provide Moody's (if Moody's is then rating the series in
                    question) and S&P (if S&P is then rating the series in
                    question) a copy of such notice.

5.                  Voting Rights.

(a)                 One Vote Per Share of Municipal Preferred. Except as
                    otherwise provided in the Declaration, this paragraph 5 or
                    as otherwise required by law, (i) each Holder of shares of
                    Municipal Preferred shall be entitled to one vote for each
                    share of Municipal Preferred held by such Holder on each
                    matter submitted to a vote of shareholders of the Trust, and
                    (ii) the holders of outstanding Preferred Shares, including
                    each share of Municipal Preferred, and of Common Shares
                    shall vote together as a single class; provided, however,
                    that, at any meeting of the shareholders of the Trust held
                    for the election of trustees, the holders of outstanding
                    Preferred Shares, including Municipal Preferred, represented
                    in person or by proxy at said meeting, shall be entitled, as
                    a class, to the exclusion of the holders of all other
                    securities and classes of shares of beneficial interest of
                    the Trust, to elect two trustees of the Trust, each
                    Preferred Share, including each share of Municipal
                    Preferred, entitling the holder thereof to one vote. Subject
                    to subparagraph (b) of this paragraph 5, the holders of
                    outstanding Common Shares and Preferred Shares, including
                    Municipal Preferred, voting together as a single class,
                    shall elect the balance of the trustees.

(b)                 Voting For Additional Trustees.

(i)      Voting Period.  During any period in which any one or more of the
         conditions described in subparagraphs
- ----------------------
             (A) or (B) of this subparagraph (b)(i) shall exist (such period
             being referred to herein as a "Voting Period"), the number of
             trustees constituting the Board of Trustees shall be automatically
             increased by the smallest number that, when added to the two
             trustees elected exclusively by the holders of Preferred Shares,
             including shares of Municipal Preferred, would constitute a
             majority of the Board of Trustees as so increased by such smallest
             number; and the holders of Preferred Shares, including Municipal
             Preferred, shall be entitled, voting as a class on a one-vote-per-
             share basis (to the exclusion of the holders of all other
             securities and classes of shares of beneficial interest of the
             Trust), to elect such smallest number of additional trustees,
             together with the two trustees that such holders are in any event
              entitled to elect.  A Voting Period shall commence:

(A)                 if at the close of business on any dividend payment date
                    accumulated dividends (whether or not earned or declared) on
                    any outstanding Preferred Share, including Municipal
                    Preferred, equal to at least two full years' dividends shall
                    be due and unpaid and sufficient cash or specified
                    securities shall not have been deposited with the Auction
                    Agent for the payment of such accumulated dividends; or

(B)       if at any time holders of Preferred Shares are entitled under the
          1940 Act to elect a majority of the trustees of the Trust.

Upon the termination of a Voting Period, the voting rights described in this
subparagraph (b)(i) shall cease, subject always, however, to the revesting of
such voting rights in the Holders upon the further occurrence of any of the
events described in this subparagraph (b)(i).

(ii)     Notice of Special Meeting.  As soon as practicable after the accrual
         of any right of the holders of
- ----------------------------------
Preferred  Shares to elect  additional  trustees as  described  in  subparagraph
(b)(i) of this  paragraph  5, the Trust shall  notify the Auction  Agent and the
Auction Agent shall call a special meeting of such holders,  by mailing a notice
of such special  meeting to such holders,  such meeting to be held not less than
10 nor more than 20 days after the date of mailing of such notice.  If the Trust
fails to send such notice to the Auction  Agent or if the Auction Agent does not
call such a special meeting, it may be called by any such holder on like notice.
The record date for determining the holders entitled to notice of and to vote at
such special  meeting  shall be the close of business on the fifth  Business Day
preceding  the day on which such notice is mailed.  At any such special  meeting
and at each meeting of holders of Preferred  Shares held during a Voting  Period
at which trustees are to be elected,  such holders,  voting  together as a class
(to the exclusion of the holders of all other  securities  and classes of shares
of beneficial  interest of the Trust),  shall be entitled to elect the number of
trustees   prescribed  in   subparagraph   (b)(i)  of  this  paragraph  5  on  a
one-vote-per-share basis.

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

(iv)         Terms of Office of Certain Trustees to Terminate Upon Termination
             of Voting Period. Simultaneously with the termination of a Voting
             Period, the term of office of the additional trustees elected by
             the Holders and holders of other Preferred Shares pursuant to
             subparagraph (b)(i) of this paragraph 5 shall terminate, the
             remaining trustees shall constitute the trustees of the Trust and
             the voting rights of the Holders and such other holders to elect
             additional trustees pursuant to subparagraph (b)(i) of this
             paragraph 5 shall cease, subject to the provisions of the last
             sentence of subparagraph (b)(i) of this paragraph 5.

(c)          Holders of Municipal Preferred To Vote on Certain Other Matters.

(i)       Increases in Capitalization.  So long as any shares of Municipal
          Preferred are outstanding, the Trust
          ---------------------------
shall not,  without the affirmative vote or consent of the Holders of at least a
majority of the shares of Municipal Preferred 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  shares of  Municipal  Preferred  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  Municipal  Preferred  (except  that,   notwithstanding  the
foregoing,  but subject to the  provisions of paragraph  10(c) of Part I of this
Section 12.1, the Board of Trustees,  without the vote or consent of the Holders
of Municipal  Preferred,  may from time to time  authorize  and create,  and the
Trust may from time to time issue,  additional shares of any series of Municipal
Preferred  or classes or series of  Preferred  Shares  ranking on a parity  with
shares of Municipal  Preferred  with respect to the payment of dividends and the
distribution  of assets  upon  dissolution,  liquidation  or  winding  up of the
affairs  of the  Trust;  provided,  however,  that if Moody's or S&P is not then
rating the shares of Municipal Preferred,  the aggregate liquidation  preference
of all  Preferred  Shares of the  Trust  outstanding  after  any such  issuance,
exclusive of accumulated and unpaid dividends,  may not exceed  $120,000,000) or
(b) amend,  alter or repeal the  provisions of the  Declaration  or the By-Laws,
including this Section 12.1, whether by merger,  consolidation or otherwise,  so
as to  materially  affect  any  preference,  right or power  of such  shares  of
Municipal Preferred to the Holders thereof; provided,  however, that (i) none of
the actions  permitted  by the  exception  to (a) above will be deemed to affect
such  preferences,  rights or powers,  (ii) a division  of a share of  Municipal
Preferred  will be deemed to affect such  preferences,  rights or powers only if
the terms of such division  adversely  affect the Holders of shares of Municipal
Preferred  and (iii) the  authorization,  creation  and  issuance  of classes or
series of shares ranking junior to shares of Municipal Preferred 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 or S&P is then rating shares
of Municipal  Preferred and such issuance would, at the time thereof,  cause the
Trust not to satisfy  the 1940 Act  Municipal  Preferred  Asset  Coverage or the
Municipal Preferred Basic Maintenance Amount. So long as any shares of Municipal
Preferred are outstanding,  the Trust shall not, without the affirmative vote or
consent of the Holders of at least 66 2/3% of the shares of Municipal  Preferred
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.

(ii)     1940 Act Matters.  Unless a higher percentage is provided for in the
 Declaration or these By-laws, (A)
- -------------------------
the  affirmative  vote of the  Holders of at least a majority  of the  Preferred
Shares,  including  Municipal  Preferred,  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 and (B) the affirmative vote of the
Holders of a "majority of the outstanding Preferred Shares," including Municipal
Preferred,  voting as a separate class, shall be required to approve any plan of
reorganization  (as such term is used in the 1940 Act) adversely  affecting such
shares.  The  affirmative  vote of the Holders of a "majority of the outstanding
Preferred Shares," including  Municipal  Preferred,  voting as a separate class,
shall be required to approve any action not  described in the first  sentence of
this paragraph  5(c)(ii) requiring a vote of security holders of the Trust under
Section 13(a) of the 1940 Act. For purposes of the  foregoing,  "majority of the
outstanding  Preferred Shares" means (i) 67% or more of such shares present at a
meeting,  if 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 Municipal  Preferred  is required  pursuant to
the provisions of Section 13(a) of the 1940 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 shares of  Municipal  Preferred)  and S&P
(if S&P is then rating the shares of Municipal  Preferred)  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 shares of
Municipal  Preferred)  and S&P (if S&P is then  rating the  shares of  Municipal
Preferred) of the results of such vote.

<PAGE>


                                       42

(iii)    Separate Vote by Series.  To the extent permitted by the 1940 Act,
          with respect to actions set forth in
- --------------------------------
paragraph 5(c)(i) and paragraph 5(c)(ii) above (including amendment,  alteration
or repeal of the provisions of the Declaration of Trust or the By-Laws,  whether
by merger, consolidation or otherwise) that would adversely affect the rights of
one or more series of Municipal  Preferred (the  "Affected  Series") in a manner
different  from any other  series of  Municipal  Preferred,  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 proxy,  either in  writing  or at a meeting  (each  such
Affected Series voting as a separate class).

(d)          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, or any provision
             of this Section 12.1 viewed by Moody's or S&P 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
             shares of Municipal Preferred or the Holders thereof; provided,
             however, that the Board of Trustees receives written confirmation
             from (i) Moody's (such confirmation being required to be obtained
             only in the event Moody's is rating the shares of Municipal
             Preferred and in no event being required to be obtained in the case
             of the definitions of (x) Deposit Securities, Discounted Value,
             Receivables for Municipal Obligations Sold and Other Issues as such
             terms apply to S&P Eligible Asset and (y) S&P Discount Factor, S&P
             Eligible Asset, S&P Exposure Period and S&P Volatility Factor) and
             (ii) S&P (such confirmation being required to be obtained only in
             the event S&P is rating the shares of Municipal Preferred and in no
             event being required to be obtained in the case of the definitions
             of (x) Discounted Value, Receivables for Municipal Obligations Sold
             and Other Issues as such terms apply to Moody's Eligible Asset, and
             (y) Moody's Discount Factor, Moody's Eligible Asset, Moody's
             Exposure Period and Moody's Volatility Factor) that any such
             amendment, alteration or repeal would not impair the ratings then
             assigned by Moody's or S&P, as the case may be, to shares of
             Municipal Preferred:



<PAGE>


CHIMTann04
         Deposit Securities
         Discounted Value
         Escrowed Bonds
         Market Value
         Maximum Potential Gross-up Payment Liability
              Municipal Preferred Basic Maintenance Amount
         Municipal Preferred Basic Maintenance Cure Date
         Municipal Preferred Basic Maintenance Report
         Moody's Discount Factor
         Moody's Eligible Asset


         Moody's Exposure Period
         Moody's Volatility Factor
         1940 Act Cure Date
         1940 Act Municipal Preferred Asset Coverage
         Other Issues

         Receivables for Municipal Obligations Sold
         S&P Discount Factor
         S&P Eligible Asset
         S&P Exposure Period
         S&P Volatility Factor
         Valuation Date
         Volatility Factor


<PAGE>


                                       67
         In addition, the Trust may change its policies to comply with changes
in rating agency requirements upon receiving written notification of such
changes. Such changes will be subject to ratification by the Board of Trustees.

(e) Voting Rights Set Forth Herein Are Sole Voting Rights. Unless otherwise
required by law, these By-laws or by the Declaration, the Holders of shares of
Municipal Preferred shall not have any relative rights or preferences or other
special rights other than those specifically set forth herein.

(f) No Preemptive Rights or Cumulative Voting. The Holders of shares of
Municipal Preferred shall have no preemptive rights or rights to cumulative
voting.

(g) 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 shares of Municipal
Preferred, the exclusive remedy of the Holders shall be the right to vote for
Trustees pursuant to the provisions of this paragraph 5.

(h) Holders Entitled to Vote. For purposes of determining any rights of the
Holders to vote on any matter, whether such right is created by this Section
12.1, by the other provisions of these By-laws or the Declaration, by statute or
otherwise, no Holder shall be entitled to vote any share of Municipal Preferred
and no share of Municipal Preferred 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, the requisite Notice of Redemption with respect to such shares shall
have been mailed as provided in paragraph 11(c) of Part I of this Section 12.1
and the Redemption Price for the redemption of such shares shall have been
deposited in trust with the Auction Agent for that purpose. No shares of
Municipal Preferred held by the Trust or any affiliate of the Trust (except for
shares held by a Broker-Dealer that is an affiliate of the Trust for the account
of its customers) shall have any voting rights or be deemed to be outstanding
for voting or other purposes.

(i) Notwithstanding any provision of these By-Laws to the contrary, neither the
Holders of Municipal Preferred, nor the Holders of any one or more series
thereof, shall be entitled to vote as a separate class with respect to any
matter, if such separate class vote is prohibited by the 1940 Act.

6. 1940 Act Municipal Preferred Asset Coverage.

         The Trust shall maintain, as of the last Business Day of each month in
which any share of Municipal Preferred is outstanding, the 1940 Act Municipal
Preferred Asset Coverage.

7. Municipal Preferred Basic Maintenance Amount.

(a) So long as shares of Municipal Preferred are outstanding, the Trust shall
maintain, on each Valuation Date, and shall verify to its satisfaction that it
is maintaining on such Valuation Date, (i) S&P Eligible Assets having an
aggregate Discounted Value equal to or greater than the Municipal Preferred
Basic Maintenance Amount (if S&P is then rating the shares of Municipal
Preferred) and (ii) Moody's Eligible Assets having an aggregate Discounted Value
equal to or greater than the Municipal Preferred Basic Maintenance Amount (if
Moody's is then rating the shares of Municipal Preferred).

(b) On or before 5:00 P.M., New York City time, on the third Business Day after
a Valuation Date on which the Trust fails to satisfy the Municipal Preferred
Basic Maintenance Amount, and on the third Business Day after the Municipal
Preferred Basic Maintenance Cure Date with respect to such Valuation Date, the
Trust shall complete and deliver to S&P (if S&P is then rating the shares of
Municipal Preferred), Moody's (if Moody's is then rating the shares of Municipal
Preferred) and the Auction Agent (if either S&P or Moody's is then rating the
shares of Municipal Preferred) a Municipal Preferred Basic Maintenance Report as
of the date of such failure or such Municipal Preferred 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 of 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 Municipal Preferred
Basic Maintenance Report.

         The Trust shall also deliver a Municipal Preferred Basic Maintenance
Report to (i) the Auction Agent (if either Moody's or S&P is then rating the
shares of Municipal Preferred) as of (A) the fifteenth day of each month (or, if
such day is not a Business Day, the next succeeding Business Day) and (B) the
last Business Day of each month, (ii) S&P and Moody's, if and when requested for
any Valuation Date, on or before the third Business Day after such request. A
failure by the Trust to deliver a Municipal Preferred Basic Maintenance Report
pursuant to the preceding sentence shall be deemed to be delivery of a Municipal
Preferred Basic Maintenance Report indicating the Discounted Value for all
assets of the Trust is less than the Municipal Preferred Basic Maintenance
Amount, as of the relevant Valuation Date.

(c) As frequently as requested by Moody's (if Moody's is then rating the shares
of Municipal Preferred) or S&P (if S&P is then rating shares of Municipal
Preferred), the Trust shall cause the Independent Accountant to confirm in
writing to S&P (if S&P is then rating the shares of Municipal Preferred),
Moody's (if Moody's is then rating the shares of Municipal Preferred) and the
Auction Agent (if either S&P or Moody's is then rating the shares of Municipal
Preferred) (i) the mathematical accuracy of the calculations reflected in such
Report and (ii) that, in such Report, the Trust determined in accordance with
this paragraph whether the Trust had, at the time of such request, S&P Eligible
Assets (if S&P is then rating the shares of Municipal Preferred) of an aggregate
Discounted Value at least equal to the Municipal Preferred Basic Maintenance
Amount and Moody's Eligible Assets (if Moody's is then rating the shares of
Municipal Preferred) of an aggregate Discounted Value at least equal to the
Municipal Preferred Basic Maintenance Amount (such confirmation being herein
called the "Accountant's Confirmation").

(d) Within ten Business Days after the date of delivery of a Municipal Preferred
Basic Maintenance Report in accordance with subparagraph (b) of this paragraph 7
relating to any Valuation Date on which the Trust failed to satisfy the
Municipal Preferred Basic Maintenance Amount, and relating to the Municipal
Preferred Basic Maintenance Cure Date with respect to such failure to satisfy
the Municipal Preferred Basic Maintenance Amount, the Trust shall cause the
Independent Accountant to provide to S&P (if S&P is then rating the shares of
Municipal Preferred), Moody's (if Moody's is then rating the shares of Municipal
Preferred) and the Auction Agent (if either S&P or Moody's is then rating the
shares of Municipal Preferred) an Accountant's Confirmation as to such Municipal
Preferred Basic Maintenance Report.

(e) If any Accountant's Confirmation delivered pursuant to subparagraph (c) or
(d) of this paragraph 7 shows that an error was made in the Municipal Preferred
Basic Maintenance Report for a particular Valuation Date for which such
Accountant's Confirmation was required to be delivered, or shows that a lower
aggregate Discounted Value for the aggregate of all S&P Eligible Assets (if S&P
is then rating the shares of Municipal Preferred) or Moody's Eligible Assets (if
Moody's is then rating the shares of Municipal Preferred), as the case may be,
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 Municipal Preferred Basic Maintenance Report to S&P (if S&P is then
rating the shares of Municipal Preferred), Moody's (if Moody's is then rating
the shares of Municipal Preferred) and the Auction Agent (if either S&P or
Moody's is then rating the shares of Municipal Preferred) promptly following
receipt by the Trust of such Accountant's Confirmation.

(f) On or before 5:00 p.m., New York City time, on the first Business Day after
the Date of Original Issue of any shares of Municipal Preferred, the Trust shall
complete and deliver to S&P (if S&P is then rating the shares of Municipal
Preferred) and Moody's (if Moody's is then rating the shares of Municipal
Preferred) a Municipal Preferred Basic Maintenance Report as of the close of
business on such Date of Original Issue. Within five Business Days of such Date
of Original Issue, the Trust shall cause the Independent Accountant to confirm
in writing to S&P (if S&P is then rating the shares of Municipal Preferred) (i)
the mathematical accuracy of the calculations reflected in such Report and (ii)
that the Discounted Value of S&P Eligible Assets reflected thereon equals or
exceeds the Municipal Preferred Basic Maintenance Amount reflected thereon.

(g) 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) the ratio of the
Discounted Value of S&P Eligible Assets or the Discounted Value of Moody's
Eligible Assets to the Municipal Preferred Basic Maintenance Amount is less than
or equal to 105%, the Trust shall complete and deliver to S&P (if S&P is then
rating the shares of Municipal Preferred) or Moody's (if Moody's is then rating
the shares of Municipal Preferred), as the case may be, a Municipal Preferred
Basic Maintenance Report as of the date of either such event.

8. [Reserved].

9. Restrictions on Dividends and Other Distributions.

(a) Dividends on Preferred Shares Other Than Municipal Preferred. 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
shares of Municipal Preferred for any period unless full cumulative dividends
have been or contemporaneously are declared and paid on the shares of each
series of Municipal Preferred through its most recent Dividend Payment Date.
When dividends are not paid in full upon the shares of each series of Municipal
Preferred 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 shares of Municipal Preferred
through their most recent respective dividend payment dates, all dividends
declared upon shares of Municipal Preferred and any other such class or series
of shares of beneficial interest ranking on a parity as to the payment of
dividends with shares of Municipal Preferred shall be declared pro rata so that
the amount of dividends declared per share on shares of Municipal Preferred 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
shares of Municipal Preferred 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 Municipal Preferred shall be based on
the Applicable Rate for such shares for the Dividend Periods during which
dividends were not paid in full).

(b) Dividends and Other Distributions With Respect to Common Shares Under the
1940 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
Preferred Shares have, at the time of any such declaration or purchase, an asset
coverage (as defined in and determined pursuant to the 1940 Act) of at least
200% (or such other asset coverage as may in the future be specified in or under
the 1940 Act as the minimum asset coverage for senior securities which are
shares 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.

(c) Other Restrictions on Dividends and Other Distributions. For so long as any
share of Municipal Preferred is outstanding, and except as set forth in
subparagraph (a) of this paragraph 9 and paragraph 12(c) of Part I of this
Section 12.1, (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 shares of Municipal
Preferred 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 shares of
Municipal Preferred 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 the shares of Municipal Preferred 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 Municipal
Preferred 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 Municipal Preferred 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 shares of Municipal Preferred 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 shares of Municipal Preferred 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 shares of Municipal Preferred 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 shares of
Municipal Preferred 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 shares of Municipal Preferred) and S&P Eligible Assets (if S&P
is then rating the shares of Municipal Preferred) would each at least equal the
Municipal Preferred Basic Maintenance Amount.

10. Rating Agency Restrictions.

         For so long as any shares of Municipal Preferred are outstanding and
Moody's or S&P, or both, are rating such shares, the Trust will not, unless it
has received written confirmation from Moody's or S&P, or both, as appropriate,
that any such action would not impair the ratings then assigned by such rating
agency to any series of such shares, engage in any one or more of the following
transactions:

(a)      purchase or sell futures contracts, write, purchase or sell options on
         futures contracts or write put options (except covered put options) or
         call options (except covered call options) on portfolio securities
         except that the Trust may purchase or sell futures contracts based on
         the Bond Buyer Municipal Bond Index (the "Municipal Index") or United
         States Treasury Bonds or Notes ("Treasury Bonds") and write, purchase
         or sell put and call options on such contracts (collectively, "Hedging
         Transactions"), subject to the following limitations:

(i) the Trust will not engage in any Hedging  Transaction based on the Municipal
Index (other than transactions which terminate a futures contract or option held
by the  Trust by the  Trust's  taking an  opposite  position  thereto  ("Closing
Transactions")),  which would cause the Trust at the time of such transaction to
own or have sold the least of (A) more than 1,000 outstanding  futures contracts
based on the Municipal  Index,  (B) outstanding  futures  contracts based on the
Municipal  Index  exceeding in number 25% of the quotient of the Market Value of
the Trust's total assets divided by $1,000 or (C) outstanding  futures contracts
based on the Municipal  Index  exceeding in number 10% of the average  number of
daily open interest  futures  contracts  based on the Municipal  Index in the 30
days  preceding the time of effecting  such  transaction as reported by The Wall
Street Journal.

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

(iii)    the Trust will engage in Closing Transactions to close out any
         outstanding futures contract which the Trust owns or has sold or any
         outstanding option thereon owned by the Trust in the event (A) the
         Trust does not have S&P Eligible Assets or Moody's Eligible Assets, as
         the case may be, with an aggregate Discounted Value equal to or greater
         than the Municipal Preferred Basic Maintenance Amount on two
         consecutive Valuation Dates and (B) the Trust is required to pay
         Variation Margin on the second such Valuation Date;

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

(v) when the Trust writes a futures  contract or option thereon,  it will either
maintain an amount of cash, cash  equivalents or fixed-income  securities  rated
BBB or better by S&P or  Moody's,  as the case may be for S&P  purposes  and any
liquid  assets for Moody's  purposes,  in a segregated  account with the Trust's
custodian,  so that the amount so segregated  plus the amount of Initial  Margin
and Variation  Margin held in the account of or on behalf of the Trust's  broker
with respect to such futures  contract or option  equals the Market Value of the
futures contract or option, or, in the event the Trust writes a futures contract
or option thereon which requires  delivery of an underlying  security,  it shall
hold such underlying security in its portfolio.

         For purposes of determining whether the Trust has S&P Eligible Assets
or Moody's Eligible Assets, as the case may be, with a Discounted Value that
equals or exceeds the Municipal Preferred Basic Maintenance Amount, the
Discounted Value of cash or securities held for the payment of Initial Margin or
Variation Margin shall be zero and the aggregate Discounted Value of S&P
Eligible Assets or Moody's Eligible Assets, as the case may be, shall be reduced
by an amount equal to (I) 30% of the aggregate settlement value, as marked to
market, of any outstanding futures contracts based on the Municipal Index which
are owned by the Trust plus (II) 25% of the aggregate settlement value, as
marked to market, of any outstanding futures contracts based on Treasury Bonds
which contracts are owned by the Trust.

(b)      borrow money, except that the Trust may, without obtaining the written
         confirmation described above, borrow money for the purpose of clearing
         securities transactions if (i) the Municipal Preferred Basic
         Maintenance Amount would continue to be satisfied after giving effect
         to such borrowing (which shall mean, for purposes of the calculation of
         the Municipal Preferred Basic Maintenance Amount, adding the amount of
         the liability for such borrowing to the calculation of the Municipal
         Preferred Basic Maintenance Amount under subparagraph (F) under the
         definition of that term in Part I of this Section 12.1) and (ii) such
         borrowing (A) is privately arranged with a bank or other person and is
         evidenced by a promissory note or other evidence of indebtedness that
         is not intended to be publicly distributed or (B) is for "temporary
         purposes," is evidenced by a promissory note or other evidence of
         indebtedness and is an amount not exceeding 5% of the value of the
         total assets of the Trust at the time of the borrowing; for purposes of
         the foregoing, "temporary purpose" means that the borrowing is to be
         repaid within sixty days and is not to be extended or renewed;

(c)      issue additional shares of any series of Municipal Preferred or any
         class or series of shares ranking prior to or on a parity with shares
         of Municipal Preferred with respect to the payment of dividends or the
         distribution of assets upon dissolution, liquidation or winding up of
         the Trust, or reissue any shares of Municipal Preferred previously
         purchased or redeemed by the Trust;

(d)      engage in any short sales of securities;

(e)      lend securities;

(f)      merge or consolidate into or with any corporation;

(g)      change the pricing service (currently both Muller Data Corporation and
         Standard & Poor's J.J. Kenny Evaluation Services are used by the Trust)
         referred to in the definition of Market Value to a pricing service
         other than Muller Data Corporation or Standard & Poor's J.J. Kenny
         Evaluation Services; or

(h)      enter into reverse repurchase agreements.

11.      Redemption.

(a)      Optional Redemption.

(i) Subject to the  provisions of  subparagraph  (v) of this  subparagraph  (a),
shares of Municipal  Preferred  of any series may be redeemed,  at the option of
the Trust,  as a whole or from time to time in part, on the second  Business Day
preceding  any Dividend  Payment  Date for shares of such  series,  out of funds
legally available therefor,  at a redemption price per share equal to the sum of
$25,000  plus an  amount  equal to  accumulated  but  unpaid  dividends  thereon
(whether or not earned or  declared) to (but not  including)  the date fixed for
redemption;  provided,  however,  that  (1)  shares  of a  series  of  Municipal
Preferred  may not be redeemed in part if after such  partial  redemption  fewer
than 500 shares of such series remain outstanding; (2) unless otherwise provided
herein,  shares of a series of Municipal  Preferred are  redeemable by the Trust
during the Initial  Rate Period  thereof  only on the second  Business  Day next
preceding the last Dividend  Payment Date for such Initial Rate Period;  and (3)
subject to  subparagraph  (ii) of this  subparagraph  (a), the Notice of Special
Rate Period relating to a Special Rate Period of shares of a series of Municipal
Preferred, as delivered to the Auction Agent and filed with the Secretary of the
Trust, may provide that shares of such series shall not be redeemable during the
whole  or  any  part  of  such  Special  Rate  Period  (except  as  provided  in
subparagraph  (iv) of this  subparagraph  (a)) or shall be redeemable during the
whole  or any  part of such  Special  Rate  Period  only  upon  payment  of such
redemption   premium  or  premiums  as  shall  be  specified  therein  ("Special
Redemption Provisions").

(ii)     A Notice of Special Rate Period relating to shares of a series of
         Municipal Preferred for a Special Rate Period thereof may contain
         Special Redemption Provisions only if the Trust's Board of Trustees,
         after consultation with the Broker-Dealer or Broker-Dealers for such
         Special Rate Period of shares of such series, determines that such
         Special Redemption Provisions are in the best interest of the Trust.

(iii)    If fewer than all of the outstanding shares of a series of Municipal
         Preferred are to be redeemed pursuant to subparagraph (i) of this
         subparagraph (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.

(iv) Subject to the provisions of  subparagraph  (v) of this  subparagraph  (a),
shares of any series of Municipal  Preferred  may be redeemed,  at the option of
the Trust, as a whole but not in part, out of funds legally available  therefor,
on the first day following any Dividend Period thereof included in a Rate Period
consisting of more than 364 Rate Period Days if, on the date of determination of
the  Applicable  Rate for  shares  of such  series  for such Rate  Period,  such
Applicable Rate equaled or exceeded on such date of  determination  the Treasury
Note Rate for such Rate Period, at a redemption price per share equal to the sum
of $25,000  plus an amount equal to  accumulated  but unpaid  dividends  thereon
(whether or not earned or declared) to (but not including) to the date fixed for
redemption.

(v) The  Trust  may not on any date  mail a Notice  of  Redemption  pursuant  to
subparagraph (c) of this paragraph 11 in respect of a redemption contemplated to
be effected  pursuant to this subparagraph (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 shares of
Municipal  Preferred  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 shares of  Municipal  Preferred)  and the  Discounted
Value of S&P  Eligible  Assets (if S&P is then  rating  the shares of  Municipal
Preferred) each at least equal the Municipal Preferred Basic Maintenance Amount,
and would at least  equal  the  Municipal  Preferred  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
Municipal  Preferred 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, as described in the definition of Moody's Discount Factor herein.

(b)      Mandatory Redemption. The Trust shall redeem, at a redemption price
         equal to $25,000 per share of each series of Municipal Preferred 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 shares of each series of
         Municipal Preferred, if the Trust fails to have either Moody's Eligible
         Assets with a Discounted Value, or S&P Eligible Assets with a
         Discounted Value, greater than or equal to the Municipal Preferred
         Basic Maintenance Amount or fails to maintain the 1940 Act Municipal
         Preferred Asset Coverage, in accordance with the requirements of the
         rating agency or agencies then rating the shares of Municipal
         Preferred, and such failure is not cured on or before the Municipal
         Preferred Basic Maintenance Cure Date or the 1940 Act Cure Date, as the
         case may be (the "Cure Date"). The number of shares of Municipal
         Preferred to be redeemed shall be equal to the lesser of (i) the
         minimum number of shares of Municipal Preferred, 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 both Moody's Eligible Assets with a Discounted Value,
         and S&P Eligible Assets with a Discounted Value, greater than or equal
         to the Municipal Preferred Basic Maintenance Amount or maintaining the
         1940 Act Municipal Preferred Asset Coverage, as the case may be, on
         such Cure Date (provided, however, that if there is no such minimum
         number of shares of Municipal Preferred and other Preferred Shares the
         redemption or retirement of which would have had such result, all
         shares of Municipal Preferred and Preferred Shares then outstanding
         shall be redeemed), and (ii) the maximum number of shares of Municipal
         Preferred, 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, these
         By-laws and applicable law. In determining the shares of Municipal
         Preferred required to be redeemed in accordance with the foregoing, the
         Trust shall allocate the number required to be redeemed to satisfy the
         Municipal Preferred Basic Maintenance Amount or the 1940 Act Municipal
         Preferred Asset Coverage, as the case may be, pro rata among shares of
         Municipal Preferred and other Preferred Shares (and, then pro rata
         among each series of Municipal Preferred) subject to redemption or
         retirement. 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 shares of Municipal Preferred and other Preferred
         Shares which are subject to redemption or retirement or the Trust
         otherwise is unable to effect such redemption on or prior to 40 days
         after such Cure Date, the Trust shall redeem those shares of Municipal
         Preferred 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
         Municipal Preferred are to be redeemed pursuant to this subparagraph
         (b), the number of shares of such series to be redeemed 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.

(c)      Notice of Redemption. If the Trust shall determine or be required to
         redeem shares of a series of Municipal Preferred pursuant to
         subparagraph (a) or (b) of this paragraph 11, 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. Such
         Notice of Redemption shall be so mailed not less than 20 nor more than
         45 days prior to the date fixed for redemption. Each such Notice of
         Redemption shall state: (i) the redemption date; (ii) the number of
         shares of Municipal Preferred 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; and (vii) the provisions of this paragraph 11 under which such
         redemption is made. If fewer than all shares of a series of Municipal
         Preferred 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 an optional redemption
         contemplated to be effected pursuant to subparagraph (a) of this
         paragraph 11 that such redemption is subject to one or more conditions
         precedent and that the Trust shall not be required to make 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 subparagraphs (a) or (b) of this paragraph 11, if any
         dividends on shares of a series of Municipal Preferred (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 Funds 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, these By-laws and applicable law, such
         redemption shall be made as soon as practicable to the extent such
         funds become available. Failure to redeem shares of Municipal Preferred
         shall be deemed to occur if at any time after the date specified for
         redemption in a Notice of Redemption 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 of 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 shares of
         Municipal Preferred for which a Notice of Redemption has been mailed,
         dividends may be declared and paid on shares of Municipal Preferred and
         shall include those shares of Municipal Preferred for which a Notice of
         Redemption has been mailed.

(f)      Auction Agent as Trustee of Redemption Payments by Trust. All moneys
         paid to the Auction Agent for payment of the Redemption Price of shares
         of Municipal Preferred 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 subparagraph (c) of this paragraph 11, 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 shares of
         Municipal Preferred 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 paragraphs 2(e)(i) and 3 of Part I of this Section 12.1.
         Upon surrender in accordance with the Notice of Redemption of the
         certificates for any shares so redeemed (properly endorsed or assigned
         for transfer, if the Board of Trustees shall so require and the Notice
         of Redemption shall so state), the Redemption Price shall be paid by
         the Auction Agent to the Holders of shares of Municipal Preferred
         subject to 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 shares of Municipal Preferred called for
         redemption on such date and (ii) all other amounts to which Holders of
         shares of Municipal Preferred 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 shares of Municipal
         Preferred 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. The Trust shall be entitled to receive, from time to time
         after the date fixed for redemption, any interest on the funds so
         deposited.

(h)      Compliance With Applicable Law. In effecting any redemption pursuant to
         this paragraph 11, the Trust shall use its best efforts to comply with
         all applicable conditions precedent to effecting such redemption under
         the 1940 Act and any applicable Massachusetts law, but shall effect no
         redemption except in accordance with the 1940 Act and any applicable
         Massachusetts law.

(i)      Only Whole Shares of Municipal Preferred May Be Redeemed. In the case
         of any redemption pursuant to this paragraph 11, only whole shares of
         Municipal Preferred shall be redeemed, and in the event that any
         provision of the Declaration or these By-laws would require redemption
         of a fractional share, the Auction Agent shall be authorized to round
         up so that only whole shares are redeemed.

12.      Liquidation Rights.

(a)      Ranking. The shares of a series of Municipal Preferred shall rank on a
         parity with each other, with shares of any other series of Municipal
         Preferred and with shares of any other series of Preferred Shares as to
         the distribution of assets upon dissolution, liquidation or winding up
         of the affairs of the Trust.

(b)      Distributions Upon Liquidation. Upon the dissolution, liquidation or
         winding up of the affairs of the Trust, whether voluntary or
         involuntary, the Holders of shares of each series of Municipal
         Preferred then outstanding shall be entitled to receive and to be paid
         out of the assets of the Trust available for distribution to its
         shareholders, before any payment or distribution shall be made on the
         Common Shares or on any other class of shares of the Trust ranking
         junior to the Municipal Preferred upon dissolution, liquidation or
         winding up, an amount equal to the Liquidation Preference with respect
         to such shares plus an amount equal to all dividends thereon (whether
         or not earned or declared) accumulated but unpaid to (but not
         including) the date of final distributions in same-day funds, together
         with any payments required to be made pursuant to paragraph 3 of Part I
         of this Section 12.1 in connection with the liquidation of the Trust.
         After the payment to the Holders of the shares of each series of
         Municipal Preferred of the full preferential amounts provided for in
         this subparagraph (b), the holders of Municipal Preferred as such shall
         have no right or claim to any of the remaining assets of the Trust.

(c)      Pro Rata Distributions. In the event the assets of the Trust available
         for distribution to the Holders of shares of Municipal Preferred upon
         any dissolution, liquidation or winding up of the affairs of the Trust,
         whether voluntary or involuntary, shall be insufficient to pay in full
         all amounts to which such Holders are entitled pursuant to subparagraph
         (b) of this paragraph 12, no such distribution shall be made on account
         of any shares of any other class or series of Preferred Shares ranking
         on a parity with the shares of Municipal Preferred with respect to the
         distribution of assets upon such dissolution, liquidation or winding up
         unless proportionate distributive amounts shall be paid on account of
         the shares of Municipal Preferred, ratably, in proportion to the full
         distributable amounts for which holders of all such parity shares are
         respectively entitled upon such dissolution, liquidation or winding up.

(d)      Rights of Junior Shares. Subject to the rights of the holders of shares
         of any series or class or classes of shares ranking on a parity with
         the shares of Municipal Preferred with respect to the distribution of
         assets upon dissolution, liquidation or winding up of the affairs of
         the Trust, after payment shall have been made in full to the Holders of
         the shares of Municipal Preferred as provided in subparagraph (b) of
         this paragraph 12, but not prior thereto, any other series or class or
         classes of shares ranking junior to the shares of Municipal Preferred
         with respect to the distribution of assets upon dissolution,
         liquidation or winding up of the affairs of the Trust shall, subject to
         the respective terms and provisions (if any) applying thereto, be
         entitled to receive any and all assets remaining to be paid or
         distributed, and the Holders of the shares of Municipal Preferred shall
         not be entitled to share therein.

(e)      Certain Events Not Constituting Liquidation. Neither the sale of all or
         substantially all of the property or business of the Trust, nor the
         merger or consolidation of the Trust into or with any Massachusetts
         business trust or corporation nor the merger or consolidation of any
         Massachusetts business trust or corporation into or with the Trust
         shall be a dissolution, liquidation or winding up, whether voluntary or
         involuntary, for the purposes of this paragraph 12.

13.      Miscellaneous.

(a)      Amendment of this Section 12.1 to Add Additional Series. Subject to the
         provisions of subparagraph (c) of paragraph 10 of Part I of this
         Section 12.1, the Board of Trustees may, by resolution duly adopted,
         without shareholder approval (except as otherwise provided by this
         Section 12.1 or required by applicable law), amend Section 12.1 to (1)
         reflect any amendment hereto which the Board of Trustees is entitled to
         adopt pursuant to the terms of this Section 12.1 without shareholder
         approval or (2) add additional series of Municipal Preferred or
         additional shares of a series of Municipal Preferred (and terms
         relating thereto) to the series and shares of Municipal Preferred
         theretofore described thereon. Each such additional series and all such
         additional shares shall be governed by the terms of this Section 12.1.

(b)      [Reserved]

(c)      No Fractional Shares. No fractional shares of Municipal Preferred shall
         be issued.

(d)      Status of Shares of Municipal Preferred Redeemed, Exchanged or
         Otherwise Acquired by the Trust. Shares of Municipal Preferred which
         are redeemed, exchanged or otherwise acquired by the Trust shall return
         to the status of authorized and unissued Preferred Shares without
         designation as to series.

(e)      Board May Resolve Ambiguities. To the extent permitted by applicable
         law, the Board of Trustees may interpret or adjust the provisions of
         this Section 12.1 to resolve any inconsistency or ambiguity or to
         remedy any formal defect, and may amend this Section 12.1 with respect
         to any series of Municipal Preferred prior to this issuance of shares
         of such series.

(f)      Headings Not Determinative. The headings contained in this Section 12.1
         are for convenience of reference only and shall not affect the meaning
         or interpretation of this Section 12.1.

(g)      Notices. All notices or communications, unless otherwise specified in
         these By-Laws or this Section 12.1, shall be sufficiently given if in
         writing and delivered in person or mailed by first-class mail, postage
         prepaid.


<PAGE>



                                     PART II

1.                Orders.

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

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

(A)               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;

(B)               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

(C)               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

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

For 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 (i)(A), (i)(B), (i)(C) or (ii) of this
subparagraph (a) 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 (i)(A) of
this subparagraph (a) is hereinafter referred to as a "Hold Order" and
collectively as "Hold Orders"; an Order containing the information referred to
in clause (i)(B) or (ii) of this subparagraph (a) is hereinafter referred to as
a "Bid" and collectively as "Bids"; and an Order containing the information
referred to in clause (i)(C) of this subparagraph (a) is hereinafter referred to
as a "Sell Order" and collectively as "Sell Orders."

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

(A)              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;

(B)              such number or a lesser number of Outstanding shares of such
                 series to be determined as set forth in paragraph 4(a)(iv) of
                 Part II of this Section 12.1 if the Applicable Rate for shares
                 of such series determined on such Auction Date shall be equal
                 to the rate specified therein; or

(C)              the number of Outstanding shares of such series specified in
                 such Bid if the rate specified therein shall be higher than the
                 Maximum 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 paragraph 4(b)(iii) of Part II of
                 this Section 12.1 if the rate specified therein shall be higher
                 than the Maximum Rate for shares of such series and Sufficient
                 Clearing Bids for shares of such series do not exist.

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

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

(B)               such number or a lesser number of Outstanding shares of such
                  series as set forth in paragraph 4(b)(iii) of Part II of this
                  Section 12.1 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 Municipal Preferred shall not be
         liable to any Person for failing to sell such shares pursuant to a Sell
         Order described in the proviso to paragraph 2(c) of Part II of this
         Section 12.1 if (1) 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 paragraph 7 of Part II of this
         Section 12.1 or (2) 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.

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

                           (A) 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

                           (B) such number or a lesser number of Outstanding
                  shares of such series as set forth in paragraph 4(a)(v) of
                  Part II of this Section 12.1 if the Applicable Rate for shares
                  of such series determined on such Auction Date shall be equal
                  to the rate specified therein.

(c) No Order for any number of shares of Municipal Preferred other than whole
shares shall be valid.

2.       Submission of Orders by Broker-Dealers to Auction Agent.

(a)      Each Broker-Dealer shall submit in writing to the Auction Agent prior
         to the Submission Deadline on each Auction Date all Orders for shares
         of Municipal Preferred 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 submitted to it by Potential Beneficial Owners, and
         shall specify with respect to each Order for such shares:

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

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

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

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

(B)      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

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

(iv)     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.

(b)      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%.

(c)      If an Order or Orders covering all of the Outstanding shares of
         Municipal Preferred 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 28 Rate Period 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.

(d)      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
         shares of Municipal Preferred of a series subject to an Auction held by
         such Existing Holder, such Orders shall be considered valid in the
         following order of priority:

(i)      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 Order 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;

(ii)     (A) 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 (i) above;

(B)             subject to subclause (A), 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;

(C)             subject to subclauses (A) and (B), 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; and

(D)             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 (ii) 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

(iii)           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 (i) above and valid Bids referred
                to in clause (ii) above.

(e)             If more than one Bid for one or more shares of a series of
                Municipal Preferred is submitted to the Auction Agent by or on
                behalf of any Potential Holder, each such Bid submitted shall be
                a separate Bid with the rate and number of shares therein
                specified.

(f)             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.

3.              Determination of Sufficient Clearing Bids, Winning Bid Rate and
                Applicable Rate.

(a)             Not earlier than the Submission Deadline on each Auction Date
                for shares of a series of Municipal Preferred, 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:

(i)             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 Municipal Preferred" of such series);

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

(A)             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 Rate for shares of such
                series;

                  exceeds or is equal to the sum of:

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

(C)             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 (B)
                  and (C) above is zero because all of the Outstanding shares of
                  such series are subject to Submitted Hold Orders), such
                  Submitted Bids in subclause (A) above being hereinafter
                  referred to collectively as "Sufficient Clearing Bids" for
                  shares of such series); and

(iii)             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:

(A)               (I) each such Submitted Bid of Existing Holders specifying
                  such lowest rate and (II) 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

(B)               (I) each such Submitted Bid of Potential Holders specifying
                  such lowest rate and (II) all other such Submitted Bids of
                  Potential Holders specifying lower rates were accepted;

         would result in such Existing Holders described in subclause (A) 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 subclause
         (B) above, would equal not less than the Available Municipal Preferred
         of such series.

(b)      Promptly after the Auction Agent has made the determinations pursuant
         to subparagraph (a) of this paragraph 3, the Auction Agent shall advise
         the Trust of the Maximum Rate for shares of the series of Municipal
         Preferred 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:

(i)      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;

(ii)     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 Rate for shares of such series; or

(iii)    if 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 as set
         forth in subparagraph (c) of this paragraph 3.

(c)      For purposes of subparagraph (b)(iii) of this paragraph 3, the
         Applicable Rate for shares of such series for the next succeeding Rate
         Period of shares of such series shall be equal to the lesser of the
         Kenny Index (if such Rate Period consists of fewer than 183 Rate Period
         Days) or the product of (A) (I) the "AA" Composite Commercial Paper
         Rate on such Auction Date for such Rate Period, if such Rate Period
         consists of fewer than 183 Rate Period Days; (II) the Treasury Bill
         Rate on such Auction Date for such Rate Period, if such Rate Period
         consists of more than 182 but fewer than 365 Rate Period Days; or (III)
         the Treasury Note Rate on such Auction Date for such Rate Period, if
         such Rate Period is more than 364 Rate Period Days (the rate described
         in the foregoing clause (A)(I), (II) or (III), as applicable, being
         referred to herein as the "Benchmark Rate") and (B) 1 minus the greater
         of the maximum marginal regular Federal individual income tax rate
         applicable to ordinary income or the maximum marginal regular Federal
         corporate income tax rate applicable to ordinary income; provided,
         however, that if the Trust has notified the Auction Agent of its intent
         to allocate to shares of such series in such Rate Period any net
         capital gains or other income taxable for Federal income tax purposes
         ("Taxable Income"), the Applicable Rate for shares of such series for
         such Rate Period will be (i) if the Taxable Yield Rate (as defined
         below) is greater than the Benchmark Rate, then the Benchmark Rate, or
         (ii) if the Taxable Yield Rate is less than or equal to the Benchmark
         Rate, then the rate equal to the sum of (x) the lesser of the Kenny
         Index (if such Rate Period consists of fewer than 183 Rate Period Days)
         or the product of the Benchmark Rate multiplied by the factor set forth
         in the preceding clause (B) and (y) the product of the maximum marginal
         regular Federal individual income tax rate applicable to ordinary
         income or the maximum marginal regular Federal corporate income tax
         applicable to ordinary income, whichever is greater, multiplied by the
         Taxable Yield Rate. For purposes of the foregoing, "Taxable Yield Rate"
         means the rate determined by (a) dividing the amount of Taxable Income
         available for distribution per such share of Municipal Preferred by the
         number of days in the Dividend Period in respect of which such Taxable
         Income is contemplated to be distributed, (b) multiplying the amount
         determined in (a) above by 365 (in the case of a Dividend Period of 7
         Rate Period Days) or 360 (in the case of any other Dividend Period),
         and (c) dividing the amount determined in (b) above by $25,000.

4.       Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
         and Allocation of Shares. Existing Holders shall continue to hold the
         shares of Municipal Preferred that are subject to Submitted Hold
         Orders, and, based on the determinations made pursuant to subparagraph
         (a) of paragraph 3 of Part II of this Section 12.1, the Submitted Bids
         and Submitted Sell Orders shall be 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 Municipal
         Preferred have been made, all Submitted Sell Orders with respect to
         shares of such series shall be accepted and, subject to the provisions
         of subparagraphs (d) and (e) of this paragraph 4, 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:

(i)      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 shares of Municipal Preferred subject to such Submitted Bids;

(ii)     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 shares of Municipal Preferred subject to such
         Submitted Bids;

(iii)    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;

(iv) each Existing Holders' 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 share of
Municipal  Preferred  subject  to such  Submitted  Bid,  unless  the  number  of
Outstanding  shares of Municipal  Preferred  subject to all such  Submitted Bids
shall be greater  than the number of shares of Municipal  Preferred  ("remaining
shares") in the excess of the Available  Municipal Preferred of such series over
the number of shares of Municipal  Preferred subject to Submitted Bids described
in  clauses  (ii) and  (iii) of this  subparagraph  (a),  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  shares of  Municipal
Preferred  subject to such  Submitted  Bid,  but only in an amount  equal to the
number of shares of Municipal  Preferred of such series  obtained by multiplying
the number of remaining  shares by a fraction,  the  numerator of which shall be
the number of  Outstanding  shares of Municipal  Preferred held by such Existing
Holder subject to such  Submitted Bid and the  denominator of which shall be the
aggregate number of Outstanding  shares of Municipal  Preferred  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

(v) each Potential Holder's Submitted Bid for shares of such series specifying a
rate that is equal to the  Winning  Bid Rate of 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
Municipal  Preferred  of such  series  over the  number of  shares of  Municipal
Preferred  subject to Submitted  Bids  described in clauses (ii) through (iv) of
this subparagraph (a) by a fraction,  the numerator of which shall be the number
of Outstanding shares of Municipal  Preferred subject to such Submitted Bids and
the denominator of which shall be the aggregate number of Outstanding  shares of
Municipal  Preferred  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 Municipal
         Preferred 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 subparagraph (d) of this paragraph 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:

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

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

(iii) Each Existing Holder's  Submitted Bid for shares of such series specifying
any rate that is higher than the Maximum  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  (ii) of this  subparagraph  (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 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 Municipal Preferred 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 (iv) or (v) of
         subparagraph (a) or clause (iii) of subparagraph (b) of this paragraph
         4, 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 Municipal Preferred 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 shares of Municipal
         Preferred 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 shares
         of Municipal Preferred.

(e)      If, as a result of the procedures described in clause (v) of paragraph
         (a) of this paragraph 4, any Potential Holder would be entitled or
         required to purchase less than a whole share of series of Municipal
         Preferred on any Auction Date, the Auction Agent shall, in such manner
         as it shall determine in its sole discretion, allocate shares of
         Municipal Preferred of such series for purchase among Potential Holders
         so that only whole shares of Municipal Preferred 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 shares of Municipal Preferred of such
         series on such Auction Date.

(f)      Based on the results of each Auction for shares of a series of
         Municipal Preferred, 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, shares of Municipal
         Preferred of such series. Notwithstanding any provision of the Auction
         Procedures or the Settlement Procedures to the contrary, in the event
         an Existing Holder or Beneficial Owner of shares of a series of
         Municipal Preferred 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 shares of Municipal Preferred that have been made
         in respect of Potential Holders' or Potential Beneficial Owners'
         Submitted Bids for shares of such series that have been accepted in
         whole or in part shall constitute good delivery to such Potential
         Holders and Potential Beneficial Owners.

(g)      Neither the Trust 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 Benefit Owner, a Potential
         Beneficial Owner or its respective Agent Member to deliver shares of
         Municipal Preferred of any series or to pay for shares of Municipal
         Preferred of any series sold or purchased pursuant to the Auction
         Procedures or otherwise.

5.       Notification of Allocations. Whenever the Trust intends to include any
         net capital gain or other income taxable for Federal income tax
         purposes in any dividend on shares of Municipal Preferred, the Trust
         shall, in the case of a Minimum Rate Period or a Special Rate Period of
         28 Rate Period Days or fewer, and may, in the case of any other Special
         Rate Period, notify the Auction Agent of the amount to be so included
         not later than the Dividend Payment Date next preceding the Auction
         Date on which the Applicable Rate for such dividend is to be
         established. Whenever the Auction Agent receives such notice from the
         Trust, it will be required in turn to notify each Broker-Dealer, who,
         on or prior to such Auction Date, in accordance with its Broker-Dealer
         Agreement, will be required to notify its Beneficial Owners and
         Potential Beneficial Owners of shares of Municipal Preferred believed
         by it to be interested in submitting an Order in the Auction to be held
         on such Auction Date.

6.       Auction Agent. For so long as any shares of Municipal Preferred 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 shares of
         Municipal Preferred 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
         shares of a series of Municipal Preferred 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 shares of a series of Municipal Preferred and 9:30 a.m. on
         the Auction Date for such Auction to ascertain the number of shares of
         a 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.

7.       Transfer of Shares of Municipal Preferred. Unless otherwise permitted
         by the Trust, a Beneficial Owner or an Existing Holder may sell,
         transfer or otherwise dispose of shares of Municipal Preferred 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 Part II of
         this Section 12.1 or to a Broker-Dealer; provided, however, that (a) a
         sale, transfer or other disposition of shares of Municipal Preferred
         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 paragraph 7 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.

8.       Global Certificate. Prior to the commencement of a Voting Period, (i)
         all of the shares of a series of Municipal Preferred 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 Municipal Preferred
         shall be made on the books of the Trust to any Person other than the
         Securities Depository or its nominee.

Article 13.
                                   Amendments

         Except as otherwise expressly stated herein, these By-Laws may be
amended or replaced, in whole or in part, by a majority of the Trustees then in
office at any meeting of the Trustees, or by one or more writings signed by such
a majority.






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