-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 GNe/k22jEYyWG7r2v3bpKaLbrWZyRDPLnLnvpTisAxNYmWe7PYuQuv63zzkIP2VA
 Y3tKwTT1DA8uy8QPwM5ajg==

<SEC-DOCUMENT>0000912938-08-000039.txt : 20080129
<SEC-HEADER>0000912938-08-000039.hdr.sgml : 20080129
<ACCEPTANCE-DATETIME>20080129102442
ACCESSION NUMBER:		0000912938-08-000039
CONFORMED SUBMISSION TYPE:	NSAR-B
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20071130
FILED AS OF DATE:		20080129
DATE AS OF CHANGE:		20080129
EFFECTIVENESS DATE:		20080129

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MFS HIGH INCOME MUNICIPAL TRUST
		CENTRAL INDEX KEY:			0000845606
		IRS NUMBER:				043039022
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		NSAR-B
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05754
		FILM NUMBER:		08556298

	BUSINESS ADDRESS:	
		STREET 1:		500 BOYLSTON ST
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02116
		BUSINESS PHONE:		6179545000

	MAIL ADDRESS:	
		STREET 1:		500 BOYLSTON STREET
		STREET 2:		20TH FL LEGAL DEPT
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02116

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	COLONIAL HIGH INCOME MUNICIPAL TRUST
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>NSAR-B
<SEQUENCE>1
<FILENAME>answer.fil
<TEXT>
<PAGE>      PAGE  1
000 B000000 11/30/2007
000 C000000 0000845606
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 6.1
000 J000000 A
001 A000000 MFS High Income Municipal Trust
001 B000000 811-5754
001 C000000 6179545000
002 A000000 500 Bolyston St
002 B000000 Boston
002 C000000 MA
002 D010000 02116
002 D020000 3741
003  000000 Y
004  000000 N
005  000000 N
006  000000 N
007 A000000 N
007 B000000  0
007 C010100  0
008 A000001 MASSACHUSETTS FINANCIAL SERVICES COMPANY
008 B000001 A
008 C000001 801-17352
008 D010001 BOSTON
008 D020001 MA
008 D030001 02116
010 A000001 MASSACHUSETTS FINANCIAL SERVICES
010 B000001 801-17352
010 C010001 BOSTON
010 C020001 MA
010 C030001 02116
012 A000001 MFS SERVICE CENTER, INC.
012 B000001 84-1316
012 C010001 BOSTON
012 C020001 MA
012 C030001 02116
012 A000002 COMPUTERSHARE TRUST COMPANY, N.A.
012 B000002 85-1134
012 C010002 PROVIDENCE
012 C020002 RI
012 C030002 02940
013 A000001 ERNST & YOUNG LLP
013 B010001 BOSTON
013 B020001 MA
013 B030001 02116
015 A000001 STATE STREET BANK AND TRUST COMPANY
015 B000001 C
<PAGE>      PAGE  2
015 C010001 BOSTON
015 C020001 MA
015 C030001 02110
015 E010001 X
015 A000002 THE BANK OF NEW YORK
015 B000002 C
015 C010002 NEW YORK
015 C020002 NY
015 C030002 10286
015 E010002 X
018  000000 Y
019 A000000 N
019 B000000    0
021  000000        0
022 A000001 CITIGROUP, INC.
022 B000001 13-3187336
022 C000001     53049
022 D000001     45531
022 A000002 JPMORGAN CHASE & CO.
022 B000002 13-3224017
022 C000002     32495
022 D000002     31004
022 A000003 UBS AG
022 B000003 13-2638166
022 C000003     15009
022 D000003     16146
022 A000004 MORGAN STANLEY
022 B000004 13-2655998
022 C000004      9463
022 D000004     16646
022 A000005 BANK OF NEW YORK CO., INC.
022 B000005 13-3878175
022 C000005      7996
022 D000005     10661
022 A000006 PIPER JAFFRAY & CO.
022 B000006 00-0000000
022 C000006      4950
022 D000006      8243
022 A000007 REGIONS FINANCIAL CORP.
022 B000007 00-0000000
022 C000007      9475
022 D000007      3295
022 A000008 BEAR STEARNS COS., INC.
022 B000008 13-3299429
022 C000008      4284
022 D000008      5647
022 A000009 FIRST ALBANY COS.
022 B000009 14-1391446
022 C000009      2305
022 D000009      4791
022 A000010 LEHMAN BROTHERS HOLDINGS, INC.
<PAGE>      PAGE  3
022 B000010 13-2518466
022 C000010      1893
022 D000010      3949
023 C000000     177515
023 D000000     180621
024  000000 N
026 A000000 N
026 B000000 Y
026 C000000 N
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027  000000 N
028 A010000         0
028 A020000         0
028 A030000         0
028 A040000         0
028 B010000         0
028 B020000         0
028 B030000         0
028 B040000         0
028 C010000         0
028 C020000         0
028 C030000         0
028 C040000         0
028 D010000         0
028 D020000         0
028 D030000         0
028 D040000         0
028 E010000         0
028 E020000         0
028 E030000         0
028 E040000         0
028 F010000         0
028 F020000         0
028 F030000         0
028 F040000         0
028 G010000         0
028 G020000         0
028 G030000         0
028 G040000         0
028 H000000         0
030 A000000      0
030 B000000  0.00
030 C000000  0.00
031 A000000      0
031 B000000      0
032  000000      0
<PAGE>      PAGE  4
033  000000      0
035  000000      0
036 B000000      0
038  000000      0
042 A000000   0
042 B000000   0
042 C000000   0
042 D000000   0
042 E000000   0
042 F000000   0
042 G000000   0
042 H000000   0
043  000000      0
044  000000      0
045  000000 Y
046  000000 N
047  000000 Y
048  000000  0.750
048 A010000        0
048 A020000 0.000
048 B010000        0
048 B020000 0.000
048 C010000        0
048 C020000 0.000
048 D010000        0
048 D020000 0.000
048 E010000        0
048 E020000 0.000
048 F010000        0
048 F020000 0.000
048 G010000        0
048 G020000 0.000
048 H010000        0
048 H020000 0.000
048 I010000        0
048 I020000 0.000
048 J010000        0
048 J020000 0.000
048 K010000        0
048 K020000 0.000
049  000000 N
050  000000 N
051  000000 N
052  000000 N
053 A000000 Y
053 B000000 Y
053 C000000 N
054 A000000 Y
054 B000000 N
054 C000000 N
054 D000000 N
<PAGE>      PAGE  5
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 N
054 O000000 N
055 A000000 N
055 B000000 N
056  000000 Y
057  000000 N
058 A000000 N
059  000000 Y
060 A000000 Y
060 B000000 Y
061  000000        0
062 A000000 Y
062 B000000   0.0
062 C000000   0.0
062 D000000   0.0
062 E000000   7.0
062 F000000   0.0
062 G000000   0.0
062 H000000   0.0
062 I000000   0.0
062 J000000   0.0
062 K000000   0.0
062 L000000   0.0
062 M000000   0.0
062 N000000   0.0
062 O000000 152.4
062 P000000   0.0
062 Q000000   0.0
062 R000000   0.0
063 A000000   0
063 B000000 20.7
064 A000000 Y
064 B000000 N
066 A000000 N
067  000000 N
068 A000000 N
068 B000000 N
069  000000 N
070 A010000 Y
070 A020000 N
070 B010000 Y
070 B020000 N
<PAGE>      PAGE  6
070 C010000 Y
070 C020000 N
070 D010000 Y
070 D020000 N
070 E010000 Y
070 E020000 N
070 F010000 Y
070 F020000 N
070 G010000 Y
070 G020000 Y
070 H010000 Y
070 H020000 N
070 I010000 Y
070 I020000 N
070 J010000 Y
070 J020000 Y
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 N
070 M010000 Y
070 M020000 N
070 N010000 Y
070 N020000 N
070 O010000 N
070 O020000 N
070 P010000 Y
070 P020000 N
070 Q010000 N
070 Q020000 N
070 R010000 Y
070 R020000 N
071 A000000    100143
071 B000000    142835
071 C000000    316106
071 D000000   32
072 A000000 12
072 B000000    19677
072 C000000        0
072 D000000        0
072 E000000        0
072 F000000     2423
072 G000000       25
072 H000000        0
072 I000000       48
072 J000000       86
072 K000000        0
072 L000000       49
072 M000000       25
072 N000000        0
072 O000000        0
<PAGE>      PAGE  7
072 P000000        0
072 Q000000        0
072 R000000       65
072 S000000       33
072 T000000        0
072 U000000        0
072 V000000        0
072 W000000      404
072 X000000     3158
072 Y000000        2
072 Z000000    16521
072AA000000        0
072BB000000     9897
072CC010000        0
072CC020000    13261
072DD010000    11563
072DD020000        0
072EE000000        0
073 A010000   0.3700
073 A020000   0.0000
073 B000000   0.0000
073 C000000   0.0000
074 A000000       96
074 B000000    13185
074 C000000        0
074 D000000   286119
074 E000000        0
074 F000000        0
074 G000000        0
074 H000000        0
074 I000000        0
074 J000000     4417
074 K000000        0
074 L000000     4795
074 M000000       35
074 N000000   308647
074 O000000      676
074 P000000       49
074 Q000000        0
074 R010000        0
074 R020000        0
074 R030000        0
074 R040000   120182
074 S000000        0
074 T000000   187740
074 U010000    31268
074 U020000        0
074 V010000     6.00
074 V020000     0.00
074 W000000   0.0000
074 X000000     1267
<PAGE>      PAGE  8
074 Y000000        0
075 A000000        0
075 B000000   202934
076  000000     5.57
077 A000000 Y
077 B000000 Y
077 C000000 Y
077 H000000 Y
077 K000000 Y
077 O000000 Y
077 Q010000 Y
078  000000 N
080 A000000 AIG/CHUBB
080 B000000 C.N.A
080 C000000   130000
081 A000000 Y
081 B000000 147
082 A000000 N
082 B000000        0
083 A000000 N
083 B000000        0
084 A000000 N
084 B000000        0
085 A000000 Y
085 B000000 N
086 A010000      0
086 A020000      0
086 B010000      0
086 B020000      0
086 C010000      0
086 C020000      0
086 D010000      0
086 D020000      0
086 E010000      0
086 E020000      0
086 F010000      0
086 F020000      0
087 A010000 MFS High Income Municipal Trust
087 A020000 59318D104
087 A030000 CXE
SIGNATURE   ELLEN MOYNIHAN
TITLE       ASSISTANT TREASURER

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.E UNDR CONTR
<SEQUENCE>2
<FILENAME>e77q1.txt
<TEXT>
                                                                SUB ITEM 77Q1(e)

                                                   INVESTMENT ADVISORY AGREEMENT

         INVESTMENT  ADVISORY  AGREEMENT,  dated  this 29th day of June,  2007
  by and  between  MFS HIGH
INCOME MUNICIPAL TRUST, a  StateMassachusetts  business trust (the "Trust"),
 and MASSACHUSETTS  FINANCIAL
SERVICES COMPANY, a StateplaceDelaware corporation (the "Adviser").

                                                                     WITNESSETH:

         WHEREAS,  the Trust is engaged in  business  as an  investment  company
registered under the Investment Company Act of 1940; and

         WHEREAS,  the  Adviser is willing to provide  services  to the Trust
on the terms and  conditions
hereinafter set forth;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties  hereto as herein set forth,  the parties  covenant  and agree as
follows:

         Article  1.  Duties  of  the  Adviser.  (a)  The  Adviser  shall
         --------------------------------------
 provide  the  Trust  with  such
investment  advice and  supervision as the latter may from time to time
consider  necessary for the proper
supervision  of its assets.  The Adviser  shall act as  investment  adviser
 to the Trust and as such shall
furnish continuously an investment program and shall determine from time to time
what securities or other instruments  shall be purchased,  sold or exchanged and
what portion of the assets of the Trust shall be held uninvested, subject always
to the restrictions of the Trust's  Declaration of Trust, dated January 9, 1989,
and By-Laws, each as amended from time to time (respectively,  the "Declaration"
and the "By-Laws"),  to the provisions of the Investment Company Act of 1940 and
the Rules,  Regulations  and orders  thereunder and to the Trust's  then-current
Prospectus and Statement of Additional Information.

The Adviser also shall exercise  voting  rights,  rights to consent to corporate
actions and any other rights pertaining to the Trust's  portfolio  securities in
accordance  with the  Adviser's  policies  and  procedures  as  presented to the
Trustees  of the  Trust  from time to time.  Should  the  Trustees  at any time,
however, make any definite  determination as to the investment policy and notify
the Adviser thereof in writing, the Adviser shall be bound by such determination
for the period,

 if any,  specified  in such
notice or until similarly notified that such determination shall be revoked.

         (b) The Adviser  shall take,  on behalf of the Trust,  all actions
 which it deems  necessary  to
implement  the  investment   policies  determined  as  provided  above,  and  in
particular to place all orders for the purchase or sale of portfolio  securities
or other instruments for the Trust's account with brokers or dealers selected by
it, and to that end, the Adviser is authorized as the agent of the Trust to give
instructions to the Custodian of the Trust as to the deliveries of securities or
other  instruments  and  payments  of cash  for the  account  of the  Trust.  In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Trust the

best overall price and execution  available from  responsible  brokerage  firms,
taking  account  of  all  factors  it  deems  relevant,   including  by  way  of
illustration:  price; the size of the transaction;  the nature of the market for
the  security;  the  amount of the  commission;  the  timing  and  impact of the
transaction  taking  into  account  market  prices and trends;  the  reputation,
experience  and financial  stability of the broker or dealer  involved;  and the
quality of services

 rendered by the broker or dealer
in other transactions.  In fulfilling this requirement, the Adviser shall not be
deemed to have acted  unlawfully or to have  breached any duty,  created by this
Agreement or otherwise, solely by reason of its having caused the Trust to pay a
broker or dealer an amount of commission for effecting a securities  transaction
in excess of the  amount  of  commission  another  broker or dealer  would  have
charged for effecting that transaction,  if the Adviser determined in good faith
that such amount of  commission  was  reasonable in relation to the value of the
brokerage and research

 services  provided by such broker or
dealer,  viewed in terms of either that particular  transaction or the
 Adviser's overall  responsibilities
with  respect  to the  Trust  and to other  clients  of the  Adviser
  as to which  the  Adviser  exercises
investment discretion.

         (c) Subject to the general  supervision  and control of the Trustees of
the Trust and under the terms and  conditions set forth in this  Agreement,  the
Trust  acknowledges and agrees that it is contemplated  that Adviser may, at its
own  expense,   select  and  contract  with  one  or  more  investment  advisers
(Sub-Advisers) to manage the investment  operations and composition of the Trust
and render investment advice for the Trust,  including the purchase,  retention,
and disposition of the investments,  securities and cash contained in the Trust,
subject always

 to the  restrictions  of the  Trusts
Declaration  and the By-Laws,  to the  provisions  of the  Investment
=====================================
 Company Act of 1940 and the Rules,
                         ==========
Regulations and orders thereunder and to the Trust's then-current Prospectus and
Statement  of  Additional  Information;  provided,  that  any  contract  with an
Sub-Adviser (a Sub-Advisory  Agreement) shall be in compliance with and approved
as required by the Investment Company Act of 1940 and the Rules, Regulations and
orders  thereunder  or in  accordance  with  exemptive  relief  granted  by  the
Securities and Exchange  Commission  (SEC) under the  Investment  Company Act of
1940.

(d) Subject  always to the  direction and control of the Trustee s of the Trust,
Adviser  will  have  (i)  overall  supervisory  responsibility  for the  general
management and investment of the Trusts assets;  (ii) full  discretion to select
new or additional  Sub-Advisers  for the Trust;  (iii) full  discretion to enter
into and materially modify existing  Sub-Advisory  Agreements with Sub-Advisers;
(iv) full  discretion  to terminate  and replace any  Sub-Adviser;  and (v) full
investment  discretion to make all determinations with respect to the investment
of the Trusts assets not then managed by an Sub-Adviser.

In connection  with Advisers  responsibilities  herein,  Adviser will assess the
Trusts investment focus and will seek to implement decisions with respect to the
allocation  and  reallocation  of the Trusts assets among one or more current or
additional  Sub-Advisers  from time to time,  as Adviser deems  appropriate,  to
implement  the Trusts  investment  policies  determined  as provided  above.  In
addition,  Adviser (in conjunction with the Trusts  Independent Chief Compliance
Officer)  will  oversee  (or, in the event that the  Adviser  does not require a
Sub-Advisor to assume responsibility therefore under the Sub-Advisory Agreement,
shall be responsible  for)  compliance of each  Sub-Adviser  with the investment
objectives,  policies and  restrictions  of the Trust (or portions of the Trust)
under the management of such Sub-Adviser,  and review and report to the Trustees
of the Trust on the performance of each  Sub-Adviser.  Adviser will furnish,  or
cause the appropriate  Sub-Adviser(s) to furnish,  to the Trust such statistical
information,  with respect to the investments that the Trust (or portions of the
Trust) may hold or contemplate purchasing,  as the Trust may reasonably request.
Further,  Adviser (in conjunction with the Trust's  Independent Chief Compliance
Officer) will oversee compliance of each Sub-Adviser with the compliance program
of  the  Trust  (or  portions  of  the  Trust)  under  the  management  of  such
Sub-Adviser,  as well  as the  compliance  program  of the  Sub-Adviser  as such
program relates to the  Sub-Adviser's  management of the Trust. On Adviser's own
initiative,  Adviser will apprise,  or cause the appropriate  Sub-Adviser(s)  to
apprise, the Trust of important developments  materially affecting the Trust (or
any portion of the Trust that they advise) and will furnish the Trust, from time
to time, with such information as may be appropriate for this purpose.  Further,
Adviser agrees to furnish,  or cause the appropriate  Sub-Adviser(s) to furnish,
to the Trustees of the Trust such  periodic and special  reports as the Trustees
of the Trust may reasonably  request.  In addition,  Adviser agrees to cause the
appropriate Sub-Adviser(s) to furnish to third-party data reporting services all
currently  available  standardized  performance  information and other customary
data as may be appropriate.

         (e)  Subject to the  provisions  of Article 6, the  Adviser  shall
============
not be liable for any error of
judgment or mistake of law by any  Sub-adviser or for any loss arising out of
                                   ===
 any  investment  made by any
Sub-adviser  or for any act or omission in the execution  and  management of the
Trust by any Sub-adviser.

         Article  2.  Allocation  of  Charges  and  Expenses.  (a) The
         ----------------------------------------------------
Adviser  shall  furnish at its own
expense investment advisory and administrative  services,  office space,
equipment and clerical personnel
necessary for servicing the  investments of the Trust and  maintaining  its
 organization,  and investment
advisory  facilities and executive and  supervisory  personnel for managing
the  investments and effecting
the  portfolio  transactions  of the Trust.  The  Adviser  shall  arrange,
 if  desired by the Trust,  for
directors,  officers and  employees  of the Adviser to serve as Trustees,
 officers or agents of the Trust
if duly  elected or  appointed  to such  positions  and  subject to their
 individual  consent  and to any
limitations imposed by law.

(b)      It is understood  that the Trust will pay all of its own expenses
incurred in its operations and
  the offering of the Trusts shares,  unless specifically  provided
otherwise in this Agreement or except
  to the extent  that the Adviser  agrees in a written  instrument  executed
 by the Adviser  (specifically
  referring  to this  Article  2(b)) to assume or  otherwise  pay for
specified  expenses  of the  Trust,
  including, without limitation:  compensation of Trustees "not affiliated"
with the Adviser; governmental
  fees;  interest charges;  taxes;  membership dues in the Investment
Company Institute  allocable to the
  Trust;  fees and  expenses  of  independent  auditors,  of legal  counsel,
 and of any  transfer  agent,
  registrar or dividend  disbursing agent of the Trust;  expenses of
repurchasing and redeeming shares and
  servicing  shareholder  accounts;  expenses  of  preparing,  printing  and
 mailing  stock  certificates,
  shareholder  reports,  notices,  proxy  statements and reports to governmental
  officers and  commissions;  brokerage and other  expenses  connected  with the
  execution, recording

 and  settlement of portfolio
  security  transactions;  insurance premiums;  fees and expenses of the
custodian for all services to the
  Trust,  including  safekeeping  of funds and  securities  and  maintaining
 required books and accounts;
  expenses of calculating the net asset value of shares of the Trust;
 organizational  and start up costs;
  such non-recurring or extraordinary  expenses as may arise,  including
those relating to actions,  suits
  or  proceedings  to which  the  Trust is a party  or  otherwise  may
 have an  exposure,  and the  legal
  obligation  which the Trust may have to  indemnify  the  Trust's  Trustees
 and  officers  with  respect
  thereto;  and expenses  relating to the issuance,  registration and
qualification of shares of the Trust
  and the  preparation,  printing and mailing of prospectuses for such
purposes (except to the extent that
  any  Distribution  Agreement to which the Trust is a party provides that
another party is to pay some or
  all of such expenses).

         (c) The payment or  assumption  by the  Adviser of any  expenses of the
Trust that the Adviser is not obligated by this Agreement or otherwise to pay or
assume shall no

 obligate the Adviser to pay or
assume the same or any similar expenses of the Trust on any subsequent
 occasion.

         Article 3. Compensation of the Adviser. For the services to be rendered
and the  facilities  provided,  the Trust shall pay to the Adviser an investment
advisory  fee  computed  and paid  monthly  as set forth in  Appendix A attached
hereto. If the Adviser shall serve for

 less than the whole of any period
specified in this Article 3, the compensation paid to the Adviser will be
 prorated.

         Article 4.  Additional  Services.  Should the Trust have  occasion
         ---------------------------------
 to request the Adviser or its
affiliates to perform  administrative or other additional  services not herein
 contemplated or to request
the Adviser or its affiliates to arrange for the services of others, the Adviser
or its  affiliates  will  act for the  Trust  upon  request  to the  best of its
ability,  with  compensation  for the services to be agreed upon with respect to
each such occasion as it arises. No such agreement for additional services shall
expand,  reduce  or  otherwise  alter the  obligations  of the  Adviser,  or the
compensation that the Adviser is due, under this Agreement.

         Article 5.  Covenants of the Adviser.  The Adviser  agrees that it will
not  deal  with  itself,  or with  the  Trustees  of the  Trust  or the  Trust's
distributor, if any, as principals in making purchases or sales of securities or
other  property  for the  account  of the  Trust,  except  as  permitted  by the
Investment  Company  Act of 1940 and any  rules,  regulations  or  orders of the
Securities  and Exchange  Commission  thereunder,  will not take a long or short
position in the

 shares  of the  Trust  except as
permitted by the  applicable  law, and will comply with all other  provisions
 of the  Declaration  and the
By-Laws and the then-current  Prospectus and Statement of Additional
  Information of the Trust relative to
the Adviser and its directors and officers.

         Article 6.  Limitation  of Liability of the Adviser.  The Adviser shall
not be  liable  for any  error of  judgment  or  mistake  of law or for any loss
arising out of any  investment  or for any act or omission in the  execution and
management of the Trust, except for willful

 misfeasance,  bad faith, gross
negligence  or reckless  disregard  of its duties and  obligations  hereunder.
  As used in this Article 6,
the term  "Adviser"  shall  include  directors,  officers  and  employees
 of the  Adviser as well as that
corporation itself.

         Article 7.  Activities  of the  Adviser.  (a) The Trust  acknowledges
         ----------------------------------------
 that the  services  of the
Adviser to the Trust are not  exclusive,  the  Adviser  being free to render
 investment  advisory  and/or
other  services  to others.  The Trust  further  acknowledges  that it is
  possible  that,  based on their
investment  objectives  and policies,  certain funds or accounts  managed by the
Adviser or its  affiliates may at times take  investment  positions or engage in
investment  techniques  which are  contrary  to  positions  taken or  techniques
engaged in on behalf of the Trust.  Notwithstanding  the foregoing,  the Adviser
will at all times endeavor to treat all of its clients in

 fair and equitable manner.

         (b) The Trust  acknowledges  that  whenever  the Trust and one
 or more  other  funds or  accounts
advised by the Adviser have available  monies for  investment,  investments
 suitable and  appropriate for
each shall be  allocated  in a manner  believed  by the  Adviser  to be fair and
 equitable to each entity.

Similarly,  opportunities to sell securities or other  investments shall be
allocated in a manner believed
by the Adviser to be fair and  equitable to each entity.  The Trust
  acknowledges  that in some  instances
this may adversely affect the size of the position that may be acquired or
 disposed of for the Trust.

         (c) It is understood  that the  Trustees,  officers and  shareholders
  of the Trust are or may be
or become interested in the Adviser, as directors,  officers,  employees, or
 otherwise and that directors,
officers and employees of the Adviser are or may become similarly  interested in
the Trust,  and that the Adviser may be or become  interested  in the Trust as a
shareholder or otherwise.

         Article  8.  MFS  Name.  The  Trust   acknowledges  that  the  names
         -----------------------
  "Massachusetts   Financial
Services," "MFS" or any derivatives thereof or logos associated with those names
(collectively, the "MFS Marks") are the valuable property of the Adviser and its
affiliates.

  The Adviser  grants the Trust a

non-exclusive  and  non-transferable  right  and  sub-license  to use  the
 MFS  Marks  only so long as the
Adviser serves as investment  adviser to the Trust. The Trust agrees that if the
Adviser for any reason no longer serves as investment  adviser to the Trust, and
the Adviser

 so  requests,  that the Trust
promptly  shall cease to use the MFS Marks and promptly shall amend its
 registration  statement to delete
any  references  to the MFS  Marks.  Likewise,  the Trust  agrees  that if
 the  Adviser  for any reason no
longer serves as investment  adviser to the Trust,  and the Adviser so requests,
the Trust promptly shall cease to use the MFS Marks and promptly shall amend its
Declaration  of Trust to  delete  any  references  to the MFS  Marks.  The Trust
acknowledges that the Adviser may permit other

 clients to use the MFS Marks in
their  names or other  material.  For  purposes of this  Article,  the Trust
 shall be deemed to have taken
the  required  action  promptly  if such  action is taken  within 90 days of the
Adviser no longer  serving as the investment  adviser to the Trust,  or from the
date of the Advisers request, as the case may be.

         Article 9.  Duration,  Termination  and Amendment of this  Agreement.

 (a) This  Agreement  shall

become  effective  with  respect  to the  Trust  on the  date  first  written
 above  if  approved  by the
shareholders  of the  Trust,  on the  Effective  Date for the Trust,  as set
 forth in  Appendix A attached
hereto.  Thereafter,  this  Agreement  will remain in effect with respect to
 the Trust for a period of two
years from the Trust's  Effective Date as set forth in Appendix A, on which date
it will terminate for the Trust unless its continuance is "specifically approved
at least

 annually"  (i) by the vote of a
majority of the Trustees of the Trust who are not  "interested  persons"
of the Trust or of the Adviser at
a meeting  specifically  called  for the  purpose  of voting  on such
 approval,  and (ii) by the Board of
Trustees  of the Trust,  or by "vote of a  majority  of the  outstanding  voting
securities" of the applicable Trust.

         (b)  This  Agreement  may be  terminated  as to the  Trust  at any time
without the payment of any penalty by the  Trustees or by "vote of a majority of
the outstanding  voting  securities" of the applicable Trust, or by the Adviser,
in each case on not more than sixty

 days' nor less than  thirty
days' written notice to the other party.  This  Agreement  shall  automatically
  terminate in the event of
its "assignment".

         (c) This  Agreement  may be  amended  with  respect  to the Trust
 only if such  amendment  is in
writing  signed by or on behalf of the Trust and the  Adviser  and is
 approved  by "vote of a majority of
the outstanding  voting securities" of the applicable Trust (if such shareholder
approval is required by the Investment Company Act of 1940).

         Article 10.  Scope of Trust's Obligations.  A copy of the Trusts
         ------------------------------------------
Declaration of Trust is on file with the Secretary of
State of The Commonwealth of Massachusetts.  The Adviser acknowledges that
 the obligations of or arising
out of  this  Agreement  are  not  binding  upon  any of the  Trust's  Trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust.  If this Agreement is executed by the
Trust, the Adviser further acknowledges that th

 assets and liabilities of
the Trust are separate and distinct and that the  obligations  of or arising out
of this  Agreement  concerning  the Trust are binding  solely upon the assets or
property of the Trust and not upon the assets or property of any other Trust.

         Article  11.  Definitions  and  Interpretations.   The  terms
         ------------------------------------------------
 "specifically  approved  at  least
annually," "vote of a majority of the outstanding voting securities,"
 "assignment,"  "affiliated person,"
and "interested person," when used in this Agreement,  shall have the respective
meanings  specified,  and shall be construed in a manner  consistent  with,  the
Investment

 Company Act of 1940 and the rules and
regulations promulgated  thereunder.  Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or  provision  of the  Investment  Company  Act of 1940,  the  Investment
Advisers Act of 1940, the Securities Act of 1933, or the Securities Exchange Act
of 1934  (collectively,  the  "Federal  Securities  Acts")  shall be resolved by
reference  to such  term or  provision  of the  Federal  Securities  Acts and to
interpretations

 thereof,  if any, by United
States  federal  courts or, in the absence of any  controlling  decisions of any
such court,  by rules or regulations of the Securities and Exchange  Commission.
Where the effect of a requirement  of the Federal  Securities  Acts reflected in
any  provision  of this  Agreement  is  revised  by rule  or  regulation  of the
Securities  and  Exchange  Commission,   such  provisions  shall  be  deemed  to
incorporate the effect of such rule or regulation.

         Article 12.  Record Keeping.  The Adviser will maintain records in
         ----------------------------
 a form acceptable to the Trust and in compliance with
the rules and regulations of the Securities and Exchange Commission, including
 but not limited to
records required to be maintained by Section 31(a) of the Investment Company
 Act of 1940 and the rules
thereunder, which at all times will be the property of the Trust and will be
 available for inspection
and use by the Trust.

         Article  13.   Miscellaneous.   (a)  This  Agreement   contains  the
         -----------------------------
 entire   understanding  and
agreement of the parties with respect to the subject matter hereof.

         (b) Headings in this Agreement are for ease of reference only and shall
not constitute a part of the Agreement.

         (c)  Should  any  portion of this  Agreement  for any  reason be
 held void in law or equity,  the
remainder of the Agreement  shall be construed to the extent  possible as
 if such voided portion had never
been contained herein.

         (d)  This  Agreement  shall  be  governed  by  the  laws  of  the
Commonwealth  of
Massachusetts,  without giving effect to the choice of laws provisions
 thereof, except that questions
of interpretation shall be resolved in accordance with the provisions of
Article 11 above.

         IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement
 to be executed and delivered
in their names and on their behalf by the undersigned  officers  thereunto
 duly authorized,  all as of the
day and year first above  written.  The  undersigned  officer of the Trust
 has executed this Agreement not
individually,  but as an officer  under the  Declaration  and the  obligations
  of this  Agreement are not
binding  upon  any of the  Trustees,  officers  or  shareholders  of the  Trust,
individually, but bind only the trust estate.

 MFS HIGH INCOME MUNICIPAL TRUST


 By: MARK N. POLEBAUM______
     ----------------
 Name:     Mark N. Polebaum
  Title:    Secretary

    MASSACHUSETTS FINANCIAL
SERVICES COMPANY


 By:_ROBERT J. MANNING_
     -----------------
 Name:  Robert J. Manning
  itle:  Chief Executive Officer

                                                                      Appendix A

                                                     Compensation to the Adviser

The  investment  advisory  fee payable by the Trust  shall be computed  and paid
monthly in an amount equal to the sum of 0.75% of the Trust's  average daily net
assets  including  assets  applicable to the auction  preferred  shares (average
daily net assets being computed for this

 purpose  without  deducting  any
liability  for money  borrowed  for  investment  in  accordance  with the Trusts
investment objective and policies).
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77H CHNG CNTRL
<SEQUENCE>3
<FILENAME>h77.txt
<TEXT>
                                                     ITEM 77H

As of November 30, 2007,  the following  person or entity now owns more that 25%
 of a funds voting security.

- ---------------------------- ------------------------- ----------------------
PERSON/ENTITY                         FUND                    PERCENTAGE
- ---------------------------- ------------------------- ----------------------
- ---------------------------- ------------------------- ----------------------
Cede & placeCo.                       CXE                       92.58%
- --------------------------- -------------------------- ----------------------



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77Q1 OTHR EXHB
<SEQUENCE>4
<FILENAME>a77q1.txt
<TEXT>
<PAGE>


                                SUB ITEM 77Q1(a)

                      COLONIAL HIGH INCOME MUNICIPAL TRUST

                           CERTIFICATION OF AMENDMENT
                           TO THE DECLARATION OF TRUST

Pursuant to Article IX, Section 7 of the Amended and Restated Declaration of
Trust dated January 9, 1989, as amended (the "Declaration"), of Colonial High
Income Municipal Trust (the "Trust"), the Trustees of the Trust hereby amend
Article I, Section 1 of the Declaration to read in its entirety as follows:

     "Section 1. This Trust shall be known as "MFS High Income Municipal Trust,"
     and the Trustees shall conduct the business of the Trust under that name or
     any other name as they may from time to time determine."

Pursuant to Article IX, Section 7 of the Declaration, this instrument shall be
effective upon the filing of this instrument with the Secretary of State of The
Commonwealth of Massachusetts.

<PAGE>


     IN WITNESS WHEREOF, a majority of the Trustees of the Trust have executed
this amendment, in one or more counterparts, all constituting a single
instrument, as an instrument under seal in The Commonwealth of Massachusetts, as
of June 29, 2007 and further certify, as provided by the provisions of Article
IX, Section 7 of the Declaration, that this amendment was duly adopted by the
undersigned in accordance with Section 7 of the Declaration.


/s/ ROBERT J. BUTLER
- ---------------------------
Robert E. Butler
804 W. Park Avenue
State College PA 16803


/s/ LAWRENCE H. COHN
- ---------------------------
Lawrence H. Cohn
45 Singletree Road
Chestnut Hill MA 02467


/s/ DAVID H. GUNNING
- ---------------------------
David H. Gunning
2571 N. Park Blvd.
Cleveland Heights OH 44106


/s/ WILLIAM R. GUTOW
- ---------------------------
William R. Gutow
3 Rue Dulac
Dallas TX 75230


/s/ MICHAEL HEGARTY
- ---------------------------
Michael Hegarty
177 Old Briarcliff Road
Briarcliff Manor NY 10510


/s/ J. ATWOOD IVES
- ---------------------------
J. Atwood Ives
17 West Cedar Street
Boston MA 02108


/s/ ROBERT J. MANNING
- ---------------------------
Robert J. Manning
13 Rockyledge Road
Swampscott MA 01907


/s/ LAWRENCE T. PERERA
- ---------------------------
Lawrence T. Perera
18 Marlborough Street
Boston MA 02116


/s/ ROBERT C. POZEN
- ---------------------------
Robert C. Pozen
9 Arlington Street
Boston MA 02116


/s/ J. DALE SHERRATT
- ---------------------------
J. Dale Sherratt
86 Farm Road
Sherborn MA 01770


/s/ LAURIE J. THOMSEN
- ---------------------------
Laurie J. Thomsen
235 Nashawtuc Road
Concord MA 01742


/s/ ROBERT W. UEK
- ---------------------------
Robert W. Uek
536 Tierra Mar Lane
Naples FL 34108

<PAGE>


                                SUB ITEM 77Q1(a)

                         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
                                               As Amended - 2/7/07 - Article 2.1
                                         As Amended 6/29/07 - Article 4 and Name

                          AMENDED AND RESTATED BY-LAWS
                                       OF
                         MFS 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 MFS 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 July 31 in each year, on a date and at a
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

<PAGE>


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.

<PAGE>


     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 and a secretary who shall be elected by the Trustees. In
addition, there shall be an Independent Chief Compliance Officer, who shall be
elected or appointed by a majority of the Trustees, including a majority of the
Trustees who are not interested persons of the Trust as defined under the
Investment Company Act of 1940 (the "1940 Act") (the "Independent Trustees"),
and otherwise in accordance with rule 38a-1 (or any successor rule) thereunder,
as such rule may be amended from time to time ("Rule 38a-1"). The Trustees from
time to time may in their discretion elect or appoint such other officers, if
any, as the business of the Trust may require 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. The Independent Chief
Compliance Officer shall perform the duties and have the responsibilities of the
chief compliance officer of the Trust in accordance with Rule 38a-1, and shall
perform such

<PAGE>


other duties and have such other responsibilities as from time to time may be
assigned to him by the Trustees. The Independent Chief Compliance Officer shall
report directly to the Trustees or a Committee of the Trustees in carrying out
his functions.

     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. The Independent Chief Compliance Officer shall be
elected pursuant to Section 4.1 of these By-Laws. 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, the secretary and the
Independent Chief Compliance Officer 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, provided that any removal of
the Independent Chief Compliance Officer shall also require the vote or consent
of a majority of the Independent Trustees and otherwise be in accordance with
the provisions of Rule 38a-1. 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.

<PAGE>


     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 or consent of a
majority of the Trustees then in office provided that any removal of the
Independent Chief Compliance Officer shall also require the vote or consent of a
majority of the Independent Trustees and otherwise be in accordance with Rule
38a-1. 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. A vacancy in the office of the Independent Chief Compliance
Officer shall be filled in accordance with Section 4.1 of these By-Laws.

                                   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

<PAGE>


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

<PAGE>


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 a class of 2,400 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 One Series of Municipal Auction Rate Cumulative
Preferred Shares

     There is one series of Municipal Auction Rate Cumulative Preferred Shares.

<PAGE>


                                     PART I
                                   DESIGNATION

     SERIES M: 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 M" and is referred
to below as "Series M Municipal Preferred." Each share of Series M 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 Tuesday, August 31, 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 M 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

<PAGE>


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.

<PAGE>


     "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

<PAGE>


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 March
16, 1989 of the Trust, as amended by Amendment No. 1 dated July 30, 1999 to the
Agreement and Declaration of Trust of the Trust, both 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.

     "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

<PAGE>


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.

<PAGE>


     "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

<PAGE>


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

<PAGE>


     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:

<TABLE>
<CAPTION>
                                                     Rating Category
                      ----------------------------------------------------------------------------
Exposure Period       Aaa*   Aa*    A*     Baa*   Other**   (V)MIG-1***   SP-1+****   Unrated*****
- -------------------   ----   ----   ----   ----   -------   -----------   ---------   ------------
<S>                   <C>    <C>    <C>    <C>      <C>         <C>          <C>          <C>
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
</TABLE>

*    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.

     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

<PAGE>


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

<PAGE>


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 Massachusetts Financial Services Company, 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.

     "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

<PAGE>


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:

<PAGE>


     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 Municipal Auction Rate Cumulative
Preferred Shares, without par value, liquidation preference $25,000 per share,
of the Trust.

     "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

<PAGE>


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.

<PAGE>


     "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.

<PAGE>


     "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.

<PAGE>


     "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
                        -------------------------------------------------
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

<PAGE>


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.

**   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

<PAGE>


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 or 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

<PAGE>


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.

<PAGE>


     "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

<PAGE>


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.

<PAGE>


     "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 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
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
Tuesday, August 31, 1999 and each Tuesday thereafter with respect to shares of
Series M Municipal Preferred; provided, however, that

          (i) (A) if the Tuesday on which dividends would otherwise be payable
     on shares of Series M Municipal Preferred is not a Business Day, then such
     dividends shall be payable on shares of such series on the first Business
     Day that falls after such Tuesday; 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

<PAGE>


     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

<PAGE>


          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

<PAGE>


          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

<PAGE>


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 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 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 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-

<PAGE>


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 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.

     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 Tuesday that is a Business Day, 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 on the
first Monday that is followed by a Tuesday that is a Business Day preceding what
would otherwise be such last day, in the case of Series M Municipal Preferred.

<PAGE>


     (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

<PAGE>


          (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

<PAGE>


     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 elected 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.

<PAGE>


          (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 $60,000,000) 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

<PAGE>


     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.

          (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

<PAGE>


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:

     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

     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

<PAGE>


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, and (ii) S&P and Moody's, if and when requested for
any Valuation Date, on or before the third Business Day after such request.

<PAGE>


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 the 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 (and in such randomly
selected 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

<PAGE>


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

<PAGE>


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

<PAGE>


assigned by such rating agency to 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

<PAGE>


          (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;

<PAGE>


     (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

<PAGE>


     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 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 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,

<PAGE>


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

<PAGE>


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

<PAGE>


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 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 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

<PAGE>


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

<PAGE>


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.

                                     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

<PAGE>


     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

<PAGE>


               (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;

<PAGE>


          (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

<PAGE>


          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:

<PAGE>


          (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) 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

<PAGE>


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.

<PAGE>


     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

<PAGE>


     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.

<PAGE>


     (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

<PAGE>


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

<PAGE>


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.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77B ACCT LTTR
<SEQUENCE>5
<FILENAME>b77.txt
<TEXT>
 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
MFS High Income Municipal Trust

In planning and  performing  our audit of the  financial  statements of MFS High
Income  Municipal  Trust (the Fund) as of and for the year  ended  November  30,
2007,

 in  accordance  with the standards of
the Public Company Accounting Oversight Board (United States), we considered the
Fund's  internal  control over  financial  reporting,  including  controls  over
safeguarding securities,

 as a basis for  designing our auditing
procedures  for the  purpose  of  expressing  our  opinion  on the  financial
 statements  and to  comply  with the
requirements  of Form N-SAR,  but not for the purpose of expressing an opinion
 on the  effectiveness  of the Funds
internal control over financial reporting. Accordingly, we express no such
 opinion.

The  management of the Fund is  responsible  for  establishing  and  maintaining
effective  internal  control  over  financial  reporting.   In  fulfilling  this
responsibility, estimates and judgments by management are required to assess the
expected  benefits and related costs of controls.  A companys  internal  control
over financial  reporting is a process designed to provide reasonable  assurance
regarding  the  reliability  of  financial  reporting  and  the  preparation  of
financial statements for external purposes in accordance

 with  generally  accepted  accounting
principles.  A company's internal control over financial  reporting includes
those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable  detail,  accurately
 and fairly reflect the  transactions
and dispositions of the assets of the company;  (2) provide reasonable
 assurance that transactions are recorded as
necessary  to permit  preparation  of  financial  statements  in  accordance
  with  generally  accepted  accounting
principles,  and  that  receipts  and  expenditures  of  the  company  are
 being  made  only  in  accordance  with
authorizations  of  management  and  directors  of the  company;  and (3)
 provide  reasonable  assurance  regarding
prevention or timely detection of unauthorized  acquisition,  use or disposition
of a  company's  assets  that  could  have a  material  effect on the  financial
statements.

Because  of its  inherent  limitations,  internal  control  over  financial
 reporting  may not  prevent  or detect
misstatements.  Also,  projections  of any  evaluation of  effectiveness
 to future periods are subject to the risk
that controls may become  inadequate  because of changes in conditions,
 or that the degree of compliance  with the
policies or procedures may deteriorate.


A deficiency in internal control over financial reporting exists when the design
or operation of a control does not allow management or employees,  in the normal
course of performing thei

  assigned  functions,  to prevent or
detect misstatements on a timely basis. A material weakness is a deficiency,
 or a combination of deficiencies,  in
internal  control  over  financial  reporting,  such that there is a  reasonable
possibility  that a  material  misstatement  of the  companys  annual or interim
financial statements will not be prevented or detected on a timely basis.

Our  consideration  of the Fund's internal control over financial  reporting
 was for the limited purpose  described
in the first  paragraph and would not necessarily  disclose all  deficiencies in
internal control that might be material  weaknesses under standards  established
by the Public Company Accounting  Oversight Board (United States).  However,  we
noted no deficiencies

 in the  Funds  internal  control  over
financial  reporting and its  operation,  including  controls over  safeguarding
securities,  that we consider to be a material  weakness as defined  above as of
November 30, 2007.

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

                                                               Ernst & Young LLP

Boston, Massachusetts
January 16, 2008
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77C VOTES
<SEQUENCE>6
<FILENAME>c77.txt
<TEXT>
                                                 ITEM 77C

MFS High Income  Municipal  Trust held a special meeting of shareholders on June
22, 2007. Shareholders represented in person or by proxy voted as follows:

Proposal 1To vote on a proposed new investment  advisory  agreement for the Fund
between the Fund and MFS.

- ------------------ --------------- ------------- ------------------ -----------
                     For            Against         Abstain       Non Votes
- ------------------ -------------- -------------- ------------ --------------
- ------------------ --------------- -------------- ------------ --------------
Shares              16,580,909.331  644,143.1815   760,967.029      4,963,413
- ------------------- --------------- -------------- ------------- --------------
- ------------------- --------------- ------------- -------------- --------------
% of Shares Voted       72.24          2.81             3.32          21.63
- ------------------- ------------ -------------- ------------------ -----------
- ------------------- ------------ -------------- ------------------ ------------
% of Outstanding   53.06               2.06               2.44          15.89
- -------------------------- ------------- ------------------ --------------

Proposal  3A: To elect  trustees to the Board of Trustees of the Fund to replace
all of the current trustees of the Fund, contingent upon shareholder approval of
(1) above by the holders of common shares and preferred shares voting together.

- ------------------------------------- -------------------- --------------------
Trustee                               For                  Withheld/Abstain

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
Robert E. Butler

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.29                 4.71
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        69.99                 3.46
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
CityplaceLawrence H. Cohn

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.32                 4.68
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        70.01                 3.44
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
David H. Gunning

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.28                 4.72
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        69.98                 3.47
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
William R. Gutow

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.36                 4.64
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        70.04                 3.41
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
Michael Hegarty

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.28                 4.72
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        69.99                 3.46
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
Robert J. Manning

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.35                 4.65
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        70.04                 3.41
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
CityplaceLawrence T. Perera

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.25                 4.75
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        69.96                 3.49
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
Robert C. Pozen

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.31                 4.69
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        70.01                 3.44
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
J. Dale Sherratt

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.27                 4.73
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        69.98                 3.47
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
Robert W. Uek

- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Shares Voted                              95.34                 4.66
- ------------------------------------- -------------------- --------------------
- ------------------------------------- -------------------- --------------------
     % of Outstanding Shares                        70.03                 3.42
- ------------------------------------- -------------------- --------------------

Proposal  3B: To elect  trustees to the Board of Trustees of the Fund to replace
all of the current trustees of the Fund, contingent upon shareholder approval of
(1) above by the holders of preferred shares voting separately.

- ------------------------------------- --------- ------------- ----------------
Trustee                               For       Abstain       $ of Outstanding
                                                                    Shares Voted

- ------------------------------------- --------- ------------- ----------------
- ------------------------------------- --------- ------------- -----------------
PersonNameJ. Atwood Ives                 4,168            74            88.38
- ------------------------------------- --------- ------------- ---------------
- ------------------------------------- --------- ------------- ----------------
Laurie J. Thomsen                        4,168            74            88.38
- ------------------------------------- --------- ------------- -----------------

Proposal 4A:      To elect trustees to the Board of Trustees of the Fund so
 that those current trustees
whose  terms  will  expire  this year will  continue  to hold  office  until the
trustees  elected  pursuant to (3) above,  take office or until the end of those
current  trustees'  stated terms,  whichever is earlier by the holders of common
shares and preferred shares voting together.

- ------------------------------------- --------------------- -----------------
Trustee                               For                   Withheld/Abstain

- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
William E. Mayer

- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- -------------------
     % of Shares Voted                               94.81              5.19
- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
     % of Outstanding Shares                         69.64             3.81
- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
Charles R. Nelson                                              1,064,170.3660
- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
     % of Shares Voted                               95.36               4.64
- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
     % of Outstanding Shares                         70.04               3.41
- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
Thomas C. Theobald

- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
     % of Shares Voted                               95.27               4.73
- ------------------------------------- --------------------- ------------------
- ------------------------------------- --------------------- ------------------
     % of Outstanding Shares                         69.98                3.47
- ------------------------------------- --------------------- ------------------




Proposal  4B: To elect  trustees  to the Board of  Trustees  of the Fund so that
those current  trustees  whose terms will expire this year will continue to hold
office until the trustees  elected  pursuant to (3) above,  take office or until
the end of those current trustees stated

 terms, whichever is earlier by
the holders of preferred shares voting separately.

- ------------------------------------ ---------- ------------ --------------
Trustee                                  For        Abstain      % of
                                                                     Outstanding
                                                                    Shares Voted

- ------------------------------------ ---------- ------------ ---------------
- ------------------------------------ ---------- ------------ ---------------
Douglas A. Hacker                            4,168           74       88.38
- ---------------------------------------- ---------- ------------ ---------
- ---------------------------------------- ---------- ------------ ---------
Thomas E. Stitzel                            4,168           74       88.38
- ---------------------------------------- ---------- ------------ ---------



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77O RULE 10F-3
<SEQUENCE>7
<FILENAME>o77.txt
<TEXT>
<Page>

QUESTION 70P 1                        YES
QUESTION 70P 2                        YES

<Table>
<Caption>
TRUST                                  FUND NAME
<S>                                    <C>
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
COLONIAL HIGH INCOME MUNICIPAL TRUST   Colonial High Income Municipal Trust
<Caption>
                                                                                                 NOTE/
                                                                                                 BOND/    PURCHASE
TRUST                                  ISSUER/ SECURITY DESCRIPTION                              EQUITY     DATE      SELLING BROKER
<S>                                    <C>                                                       <C>      <C>         <C>
COLONIAL HIGH INCOME MUNICIPAL TRUST   NJ Tobacco Settlement Zero Coupon  6/1/2041               Bond    1/24/2007   Bear Stearns
COLONIAL HIGH INCOME MUNICIPAL TRUST   NJ Tobacco Settlement Zero Coupon  6/1/2041               Bond    1/24/2007   Citigroup
COLONIAL HIGH INCOME MUNICIPAL TRUST   NJ Tobacco Settlement Zero Coupon  6/1/2041               Bond    1/24/2007   Merrill Lynch
COLONIAL HIGH INCOME MUNICIPAL TRUST   NJ Tobacco Settlement Zero Coupon  6/1/2041               Bond    1/24/2007   JP Morgan
COLONIAL HIGH INCOME MUNICIPAL TRUST   NJ Tobacco Settlement Zero Coupon  6/1/2041               Bond    1/24/2007   KeyBanc
COLONIAL HIGH INCOME MUNICIPAL TRUST   NJ Tobacco Settlement Zero Coupon  6/1/2041               Bond    1/24/2007   Painewebber
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   Bear Stearns
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   Goldman Sachs
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   Citigroup
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   JP Morgan
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   Merrill Lynch
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   Prager Sealy
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   EJ De La Rosa
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   Lehman
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   MR Beal
COLONIAL HIGH INCOME MUNICIPAL TRUST   CA Golden State Tobacco Sec Corp 5.75% 6/1/2047           Bond     3/8/2007   First Albany
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   ABN Amro
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   JP Morgan
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Citigroup
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Deutsche Bank
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Goldman Sachs
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Lehman Brothers
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Merrill Lynch
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Morgan Stanley
COLONIAL HIGH INCOME MUNICIPAL TRUST   St Johns Baptist Parish Marathon Oil Corp 5.125% 6/1/2037 Bond    6/19/2007   Wachovia Bank
<Caption>
                                          FACE VALUE
                                          BOND / # OF
                                             SHARES     SHARE PRICE   AMOUNT PAID
TRUST                                      PURCHASED       / PAR        BY FUND      FYE
<S>                                        <C>             <C>          <C>         <C>
COLONIAL HIGH INCOME MUNICIPAL TRUST       2,750,000       14.0390      386,073     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST       1,000,000       14.0390      140,390     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         500,000       14.0390       70,195     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         250,000       14.0390       35,098     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         250,000       14.0390       35,098     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         250,000       14.0390       35,098     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         287,500      104.3870      300,113     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         287,500      104.3870      300,113     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         115,000      104.3870      120,045     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         115,000      104.3870      120,045     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          57,500      104.3870       60,023     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          57,500      104.3870       60,023     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          57,500      104.3870       60,023     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          57,500      104.3870       60,023     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          57,500      104.3870       60,023     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          57,500      104.3870       60,023     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          25,625      100.0000       25,625     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         102,500      100.0000      102,500     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          25,625      100.0000       25,625     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          25,625      100.0000       25,625     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         102,500      100.0000      102,500     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          25,625      100.0000       25,625     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          25,625      100.0000       25,625     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST         666,250      100.0000      666,250     11/30
COLONIAL HIGH INCOME MUNICIPAL TRUST          25,625      100.0000       25,625     11/30
</Table>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.77K CHNG ACCNT
<SEQUENCE>8
<FILENAME>k77.txt
<TEXT>
July 27, 2007

Securities and Exchange Commission 100 F Street, N.E.

Washington, DC 20549

Commissioners:

We have read the statements made by MFS High Income Municipal Trust (the "Fund",
formerly known as Colonial High Income Municipal  Trust) (copy attached),  which
we  understand  will be  filed  with the  Securities  and  Exchange  Commission,
pursuant to Item 77K of Form N-SAR,  as part of the Fund's Form N-SAR report for
the period ended May 31, 2007. We agree with the statements  concerning our Firm
in such Form N-SAR.

Very truly yours,




PricewaterhouseCoopers LLP

On June 29, 2007,  PricewaterhouseCoopers  LLP (PwC) resigned as the independent
registered  public  accounting  firm for the Trust.  During the two most  recent
fiscal years,  PwCs audit reports  contained no adverse opinion or disclaimer of
opinion;  nor were its reports  qualified or modified as to  uncertainty,  audit
scope, or accounting principles.  Further, in connection with its audits for the
two  most  recent  fiscal  years  and  through  June  29,  2007,  there  were no
disagreements  between the Trust and PwC on any matter of accounting  principles
or practices,  financial  statement  disclosure or auditing  scope or procedure,
which, if not resolved to the  satisfaction of PwC, would have caused it to make
reference  to the  subject  matter  of the  disagreement  in its  report  on the
financial statements for such years.  Effective June 29, 2007, Ernst & Young LLP
was appointed by the audit committee of the Board of Trustees as the independent
registered  public  accounting  firm of the  Trust  for the  fiscal  year  ended
November 30, 2007.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
