SCHEDULE 14A

                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                Proxy Statement Pursuant to Section 14(a) of the
               Securities Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]

Check the appropriate box:

[X]  Preliminary Proxy Statement          [_]  Soliciting Material Under Rule
[_]  Confidential, For Use of the              14a-12
     Commission Only (as permitted
     by Rule 14a-6(e)(2))
[_]  Definitive Proxy Statement
[_]  Definitive Additional Materials




                          DNP Select Income Fund Inc.
--------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)



--------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)


Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.
[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1)   Title of each class of securities to which transaction applies:

________________________________________________________________________________
2)   Aggregate number of securities to which transaction applies:

________________________________________________________________________________

3)   Per unit price or other underlying value of transaction  computed  pursuant
     to Exchange  Act Rule 0-11 (set forth the amount on which the filing fee is
     calculated and state how it was determined):

________________________________________________________________________________
4)   Proposed maximum aggregate value of transaction:

________________________________________________________________________________
5)   Total fee paid:

________________________________________________________________________________
[_]  Fee paid previously with preliminary materials:

________________________________________________________________________________
[_]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2)  and identify the filing for which the  offsetting  fee was paid
     previously.  Identify the previous filing by registration statement number,
     or the form or schedule and the date of its filing.

     1)   Amount previously paid:

________________________________________________________________________________
     2)   Form, Schedule or Registration Statement No.:

________________________________________________________________________________
     3)   Filing Party:

________________________________________________________________________________
     4)   Date Filed:

________________________________________________________________________________


[GRAPHIC OMITTED]
                                   DNP SELECT
                                INCOME FUND INC.

          55 EAST MONROE STREET, CHICAGO, ILLINOIS 60603 (312) 368-5510

              NOTICE OF ANNUAL MEETING OF SHAREHOLDERS MAY 11, 2006

      The annual meeting of  shareholders of DNP Select Income Fund Inc. will be
held at The Palmer House Hilton, 17 East Monroe Street,  Chicago,  Illinois,  on
Thursday, May 11, 2006 at 1:00 p.m., Central Standard Time, to:

      1.   Elect two directors by the holders of the Fund's common stock and one
           director by the holders of the Fund's preferred stock;

      2.   Approve a proposal to amend and  restate the Fund's  charter to amend
           certain  provisions  governing Series A, B, C, D and E of  the Fund's
           Remarketed Preferred Stock; and

      3.   Transact such other business as may properly come before the meeting,
           or any adjournment or postponement thereof.

      Shareholders  of  record at the close of  business  on March 27,  2006 are
entitled to vote at the meeting.

                                                  For the Board of Directors,


                                                  /s/ T. Brooks Beittel
                                                  ------------------------------
                                                  T. Brooks Beittel
                                                  SECRETARY

March 27, 2006

               SHAREHOLDERS, WE NEED YOUR PROXY VOTE IMMEDIATELY.

      YOUR VOTE IS VITAL. THE MEETING OF SHAREHOLDERS  WILL HAVE TO BE ADJOURNED
WITHOUT  CONDUCTING ANY BUSINESS IF FEWER THAN A MAJORITY OF THE SHARES ELIGIBLE
TO VOTE ARE  REPRESENTED.  IN THAT EVENT, THE FUND WOULD ADJOURN THE MEETING AND
CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO OBTAIN A QUORUM. TO AVOID THE EXPENSE
OF AND THE POSSIBLE  DELAY  CREATED BY SUCH A  SOLICITATION,  PLEASE RETURN YOUR
PROXY CARD  IMMEDIATELY.  YOU AND ALL OTHER  SHAREHOLDERS WILL BENEFIT FROM YOUR
COOPERATION.



                                 PROXY STATEMENT

      The board of  directors  of DNP Select  Income Fund Inc.  (the  "Fund") is
soliciting  proxies  from the  shareholders  for use at the  annual  meeting  of
shareholders  to be held on May 11, 2006 and at any  adjournment or postponement
of that meeting.  A proxy may be revoked at any time before it is voted,  either
by voting in person at the meeting or by written  notice to the Fund or delivery
of a later-dated proxy.

      Shareholders  of the Fund of record at the close of  business on March 27,
2006 are entitled to notice of and to participate  in the meeting.  The Fund had
224,290,406  shares of common  stock and 5,000  shares of  remarketed  preferred
stock  outstanding on the record date. Each share of common stock outstanding on
the record date entitles the holder  thereof to one vote for each director being
elected by the common stock (with no  cumulative  voting  permitted)  and to one
vote on each other  matter.  Each share of preferred  stock  outstanding  on the
record date  entitles  the holder  thereof to one vote for each  director  being
elected by the preferred stock (with no cumulative  voting permitted) and to one
vote on each other matter  submitted for a vote of holders of preferred stock. A
plurality of votes cast at the meeting by the common  stock as to the  directors
representing the common stock is necessary to elect such directors.  A plurality
of  votes  cast  at  the  meeting  by the  preferred  stock  as to the  director
representing  the preferred  stock is necessary to elect such director.  On most
matters other than the election of directors, the affirmative vote of a majority
of either (a) all of the shares  outstanding and entitled to be voted thereon or
(b) just the  shares  voted  at the  meeting,  with  the  common  stock  and the
preferred stock voting together as a single class, is necessary for approval. An
affirmative vote by either a majority or two-thirds of the remarketed  preferred
stock (voting  separately as one class) or by a series thereof is also necessary
to approve certain matters adversely affecting the remarketed preferred stock or
the series. Abstentions are counted for purposes of determining whether a quorum
is present at the meeting  but not for  purposes  of  determining  the number of
votes cast with  respect to any voting  matter.  However,  abstentions  have the
effect of a "no"  vote if the vote  required  is a  majority  of all the  shares
outstanding  and  entitled to be voted.  Any broker  non-votes  on a  particular
matter are treated as abstentions with respect to that matter.

      This proxy statement is first being mailed on or about March 27, 2006. The
Fund will bear the cost of the annual meeting and this proxy solicitation.

                            1. ELECTION OF DIRECTORS

      The  board  of  directors  of the  Fund is  responsible  for  the  overall
management and operations of the Fund.  Directors are divided into three classes
and are elected to serve staggered three-year terms. At the meeting,  holders of
common stock are entitled to elect two directors and holders of preferred  stock
are  entitled  to elect one  director,  in each case to serve  until the  annual
meeting of shareholders in 2009 or until their respective successors are elected
and  qualified.  The persons named in the enclosed proxy intend to vote in favor
of the election of the persons named below (unless otherwise  instructed).  Each
of the nominees has consented to serve as a director of the Fund, if elected. In
case  any of the  nominees  should  become  unavailable  for  election  for  any
unforeseen  reason,  the persons  designated in the proxy will have the right to
vote for a substitute.


                                        1


      Set forth below are the names and certain  biographical  information about
the directors and officers of the Fund. Directors are divided into three classes
and are elected to serve staggered  three-year  terms.  All of the directors are
elected by the holders of the Fund's common stock,  except for Mr.  Genetski and
Ms. Lampton,  who are elected by the holders of the Fund's  preferred stock. All
of the directors of the Fund are  classified as  independent  directors  because
none of them are "interested  persons" of the Fund, as defined in the Investment
Company Act of 1940.  The term "Fund  Complex"  refers to the Fund and all other
investment companies advised by affiliates of Phoenix Investment Partners,  Ltd.
("PXP").

NOMINEES--INDEPENDENT DIRECTORS


                                                                                  NUMBER OF
                                     TERM OF                                      PORTFOLIOS IN     OTHER
                        POSITIONS  OFFICE AND                                     FUND COMPLEX   DIRECTORSHIPS
                          HELD      LENGTH OF        PRINCIPAL OCCUPATION(S)       OVERSEEN BY      HELD
NAME, ADDRESS AND AGE   WITH FUND  TIME SERVED         DURING PAST 5 YEARS          DIRECTOR    BY THE DIRECTOR
---------------------   ---------  -----------   -------------------------------  ------------  ---------------
                                                                                    
Nancy Lampton           Director    Nominee   Chairman and Chief Executive Officer,     3       Director,
c/o Duff & Phelps         and      for a term Hardscuffle Inc. (insurance holding               Constellation
Investment                Vice      expiring  company) since January 2000;                      Energy Group,
Management Co.          Chairman    in 2009;  Chairman and Chief Executive Officer,             Inc. (public
55 East Monroe Street               Director  American Life and Accident Insurance              utility holding
Suite 3600                            since   Company of Kentucky since 1971                    company);
Chicago, IL 60603                   October                                                     Advisory
Age 63                                1994                                                      Board Member, Thorium
                                                                                                Power, Inc.
                                                                                                (designer of
                                                                                                non-proliferative
                                                                                                fuel for nuclear
                                                                                                energy needs)

Christian H. Poindexter Director     Nominee  Retired Chairman and Chief Executive      1       Director,
c/o Duff & Phelps                  for a term Officer, Constellation Energy Group,              Mercantile
Investment                          expiring  Inc. (public utility holding company)             Bankshares
Management Co.                      in 2009;  (Executive Committee Chairman, July               Corporation
55 East Monroe Street               Director  2002-March 2003; Chairman of the                  (bank holding
Suite 3600                            since   Board, April 1999-July 2002; Chief                company);
Chicago, IL 60603                   May 2003  Executive Officer, April 1999-October             Director, The
Age: 67                                       2001; President, April 1999-October               Baltimore Life
                                              2000); Chairman, Baltimore Gas and                Insurance
                                              Electric Company, January 1993-July               Company;
                                              2002 (Chief Executive Officer, January            Member,
                                              1993-July 2000; President, March 1998-            Finance and
                                              October 2000; Director, 1988-2003)                Investment
                                                                                                Committee,
                                                                                                National
                                                                                                Executive
                                                                                                Board, Boy
                                                                                                Scouts of
                                                                                                America;
                                                                                                Chairman,
                                                                                                Investment
                                                                                                Committee,
                                                                                                U.S. Naval
                                                                                                Academy
                                                                                                Foundation



                                        2




                                                                                    NUMBER OF
                                     TERM OF                                      PORTFOLIOS IN     OTHER
                        POSITIONS  OFFICE AND                                     FUND COMPLEX DIRECTORSHIPS
                          HELD      LENGTH OF        PRINCIPAL OCCUPATION(S)       OVERSEEN BY      HELD
NAME, ADDRESS AND AGE   WITH FUND  TIME SERVED         DURING PAST 5 YEARS          DIRECTOR   BY THE DIRECTOR
---------------------   ---------  -----------   -------------------------------  ------------  -------------
                                                                                    
David J. Vitale         Director     Nominee  Chief Administrative Officer, Chicago     3       Director, UAL
c/o Duff & Phelps                  for a term Public Schools since April 2003; Private          Corporation
Investment                          expiring  investor November 2002-April 2003;                (airline holding
Management Co.                      in 2009;  President and Chief Executive Officer,            company), ISO
55 East Monroe Street               Director  Board of Trade of the City of Chicago,            New England
Suite 3600                            since   Inc. March 2001-November 2002;                    Inc. (not for
Chicago, IL 60603                  April 2000 Retired executive 1999-2001; Vice                 profit
Age 59                                        Chairman and Director, Bank One                   independent
                                              Corporation, 1998-1999; Vice Chairman             system operator
                                              and Director, First Chicago NBD                   of New
                                              Corporation, and President, The First             England's
                                              National Bank of Chicago, 1995-1998;              electricity
                                              Vice Chairman, First Chicago Corporation          supply), Ariel
                                              and The First National Bank of Chicago,           Capital
                                              1993-1998 (Director, 1992-1998;                   Management,
                                              Executive Vice President, 1986-1993)              LLC, Ark
                                                                                                Investment
                                                                                                Corp. and
                                                                                                Wheels,
                                                                                                Inc.
                                                                                                (automobile
                                                                                                fleet
                                                                                                management)

CONTINUING DIRECTORS--INDEPENDENT DIRECTORS

Francis E. Jeffries     Director      Term    Chairman of the Board of the Fund since  54
c/o Duff & Phelps         and        expires  May 2005 (Vice Chairman April 2004-
Investment              Chairman      2007;   May 2005); Chairman of the Board of
Management Co.           of the     Director  DTF Tax-Free Income Inc. ("DTF") since
55 East Monroe Street     Board      since    September 1991 and Duff & Phelps
Suite 3600                           January  Utility and Corporate Bond Trust Inc.
Chicago, IL 60603                     1987    ("DUC") since November 1992 (President
Age: 75                                       of DTF and DUC, January 2000-February
                                              2004); Chairman of the Board of PXP,
                                              November 1995-May 1997; Chairman
                                              and Chief Executive Officer, Duff &
                                              Phelps Corporation, June 1993-November
                                              1995 (President and Chief Executive
                                              Officer, January 1992-June 1993);
                                              Chairman of the Board, Duff & Phelps
                                              Investment Management Co. (the
                                              "Adviser") 1988-1993

Stewart E. Conner       Director      Term    Attorney, Wyatt Tarrant & Combs LLP       1
c/o Duff & Phelps                    expires  since 1966 (Chairman, Executive
Investment                            2007;   Committee 2000-2004, Managing
Management Co.                      Director  Partner 1988-2000)
55 East Monroe Street                 since
Suite 3600                            April
Chicago, IL 60603                     2004
Age: 64





                                        3




                                   NUMBER OF
                                     TERM OF                                      PORTFOLIOS IN     OTHER
                        POSITIONS  OFFICE AND                                     FUND COMPLEX DIRECTORSHIPS
                          HELD      LENGTH OF        PRINCIPAL OCCUPATION(S)       OVERSEEN BY      HELD
NAME, ADDRESS AND AGE   WITH FUND  TIME SERVED         DURING PAST 5 YEARS          DIRECTOR   BY THE DIRECTOR
---------------------   ---------  -----------   -------------------------------  ------------  -------------
                                                                                    
Connie K. Duckworth     Director      Term    Founder, Chairman and President, Arzu,    1       Director,
c/o Duff & Phelps                    expires  Inc. (nonprofit corporation created to            Smurfit-Stone
Investment                            2008;   assist Afghan women through sale of               Container
Management Co.                      Director  homemade rugs) since August 2003;                 Corporation
55 East Monroe Street                 since   Member, Eight Wings Enterprises LLC               (packaging
Suite 3600                            April   (investor in early-stage businesses) 2002-        manufacturer)
Chicago, IL 60603                     2002    2004; Advisory Director, Goldman,                 and Nuveen
Age 51                                        Sachs & Company, December 2000-                   Investments, Inc.;
                                              December 2001 (Managing Director,                 Trustee,
                                              December 1996-December 2000, Partner              Northwestern
                                              1990-1996, Chief Operating Officer of             Mutual Life
                                              Firmwide Diversity Committee 1990-1995)           Insurance
                                                                                                Company;
                                                                                                Director
                                                                                                and Vice
                                                                                                Chairman,
                                                                                                Evanston
                                                                                                Northwestern
                                                                                                Health
                                                                                                Care
                                                                                                Corporation;
                                                                                                Member,
                                                                                                Board of
                                                                                                Overseers,
                                                                                                Wharton
                                                                                                School of
                                                                                                the
                                                                                                University
                                                                                                of
                                                                                                Pennsylvania

Robert J. Genetski      Director      Term    President, Robert Genetski & Associates,  1       Director,
c/o Duff & Phelps                    expires  Inc. (economic and financial consulting           Midwest Banc
Investment                            2007;   firm) since 1991; Senior Managing                 Holdings, Inc.
Management Co.                      Director  Director, Chicago Capital, Inc. (financial
55 East Monroe Street                 since   services firm) 1995-2001; former Senior
Suite 3600                            April   Vice President and Chief Economist,
Chicago, IL 60603                     2001    Harris Trust & Savings Bank; author of
Age 63                                        several books; regular contributor to the
                                              Nikkei Financial Daily

Carl F. Pollard         Director      Term    Owner, Hermitage Farm L.L.C.              1       Chairman of the
c/o Duff & Phelps                    expires  (thoroughbred breeding) since January             Board and
Investment                            2008;   1995; Chairman, Columbia Healthcare               Director,
Management Co.                      Director  Corporation 1993-1994; Chairman and               Churchill Downs
55 East Monroe Street                 since   Chief Executive Officer, Galen Health             Incorporated
Suite 3600                            April   Care, Inc. March-August 1993; President
Chicago, IL 60603                     2002    and Chief Operating Officer, Humana Inc.
Age 67                                        1991-1993 (previously Senior Executive
                                              Vice President, Executive Vice President
                                              and Chief Financial Officer)


      Additional  information  about the Fund's  directors  is  contained in the
Statement of Additional  Information  ("SAI")  constituting Part B of the Fund's
Registration  Statement  on Form  N-2  filed  with  the  SEC.  The  most  recent
post-effective   amendment   to  that   Registration   Statement   is  available
electronically at the SEC's Internet web site, http://www.sec.gov. The Fund will
also furnish a copy of the SAI portion of the Registration

                                        4


Statement,  without  charge,  to any  shareholder who so requests by calling the
Administrator at (888) 878-7845 (toll-free).

OFFICERS OF THE FUND

      The officers of the Fund are elected at the annual meeting of the board of
directors of the Fund. The officers  receive no compensation  from the Fund, but
are also officers of the Fund's investment  adviser or the Fund's  administrator
and receive compensation in such capacities.




                        POSITION(S) HELD WITH FUND AND LENGTH OF
NAME, ADDRESS AND AGE                  TIME SERVED                       PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
---------------------   ----------------------------------------         -------------------------------------------
                                                                   
Nathan I. Partain          President and Chief Executive  Officer        President and Chief Investment Officer of the
Duff & Phelps              since February 2001; Chief Investment         Adviser since April 2005 (Executive Vice
Investment                 Officer since January 1998; Executive         President 1997-2005); President, Chief
Management Co.             Vice President, April 1998-February 2001;     Executive Officer and Chief Investment Officer
55 East Monroe Street      Senior Vice President January 1997-           of DTF and DUC since February 2004;
Suite 3600                 April 1998                                    Director of Utility Research, Duff & Phelps
Chicago, IL 60603                                                        Investment Research  Co., 1989-1996 (Director
Age: 49                                                                  of Equity Research, 1993-1996 and Director of
                                                                         Fixed Income Research, 1993); Director, Otter
                                                                         Tail Corporation (1993- present)

T. Brooks Beittel          Secretary and Senior Vice President since     Senior Vice President of the Adviser since 1993
Duff & Phelps              January 1995; Treasurer, January 1995-        (Vice President 1987-1993); Secretary of DUC
Investment                 September 2002                                and DTF since May 2005
Management Co.
55 East Monroe Street
Suite 3600
Chicago, IL 60603
Age: 55

Joseph C. Curry, Jr.       Treasurer since September 2002; Vice          Senior Vice President, J.J.B. Hilliard, W.L.
Hilliard Lyons Center      President since April 1988                    Lyons, Inc. since 1994 (Vice President
Louisville, KY 40202                                                     1982-1994); Vice President, Hilliard Lyons
Age: 61                                                                  Trust Company; President, Hilliard-Lyons
                                                                         Government Fund, Inc.; Vice President and
                                                                         Assistant Treasurer, Senbanc Fund

Joyce B. Riegel            Chief Compliance Officer since                Senior Vice President and Chief Compliance
Duff & Phelps              February 2004                                 Officer of the Adviser since 2004; Vice
Investment                                                               President and Compliance Officer of the
Management Co.                                                           Adviser 2002-2004, Chief Compliance
55 East Monroe Street                                                    Officer of DTF and DUC since 2003. Vice
Suite 3600                                                               President and Chief Compliance Officer, Stein
Chicago, IL 60603                                                        Roe Investment Counsel LLC 2001-2002, Vice
Age: 51                                                                  President and Compliance Officer, Stein Roe &
                                                                         Farnham Incorporated 1996-2000

Michael Schatt             Senior Vice President since April 1998        Senior Vice President of the Adviser since
Duff & Phelps              (Vice President, January 1997-April 1998)     January 1997; Managing Director of PXP
Investment                                                               1994-1996
Management Co.
55 East Monroe Street
Suite 3600
Chicago, IL 60603
Age: 58



                                        5





                        POSITION(S) HELD WITH FUND AND LENGTH OF
NAME, ADDRESS AND AGE                  TIME SERVED                     PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
---------------------    ---------------------------------------       -------------------------------------------
                                                                   
Dianna P. Wengler          Assistant Vice President since April 2004;    Vice President, J.J.B. Hilliard, W.L. Lyons, Inc.
Hilliard Lyons Center      Assistant Secretary since April 1988          since 1990; Vice President, Hilliard-Lyons
Louisville, KY 40202                                                     Government Fund, Inc.
Age: 45


      During  2005,  the board of directors  held six  meetings,  the  executive
committee  did not meet,  the audit  committee  met twice,  the  nominating  and
governance  committee  met twice and the  contracts  committee  met twice.  Each
director attended at least 75% in the aggregate of the meetings of the board and
of the committees on which he or she served.

      The following table provides  certain  information  relating to the equity
securities  beneficially  owned  by each  director  or  director  nominee  as of
December  31,  2005,  (i) in the  Fund and (ii) on an  aggregate  basis,  in any
registered  investment  companies  overseen or to be overseen by the director or
nominee within the same family of investment companies as the Fund.



                                                                                      AGGREGATE DOLLAR RANGE
                                                                                      OF EQUITY SECURITIES IN
                                                                                       ALL FUNDS OVERSEEN OR
                                                                                         TO BE OVERSEEN BY
                                                               DOLLAR RANGE OF        DIRECTOR OR NOMINEE IN
NAME OF                                                        EQUITY SECURITIES       FAMILY OF INVESTMENT
DIRECTOR OR NOMINEE                                               IN THE FUND                COMPANIES
-----------------------                                        -----------------    --------------------------
                                                                                   
INDEPENDENT DIRECTORS AND NOMINEES
Stewart E. Conner ..........................................   $10,001 - $50,000         $10,001 - $50,000
Connie K. Duckworth ........................................     Over $100,000             Over $100,000
Robert J. Genetski .........................................     Over $100,000             Over $100,000
Francis E. Jeffries ........................................     Over $100,000             Over $100,000
Nancy Lampton ..............................................     Over $100,000             Over $100,000
Christian H. Poindexter ....................................     Over $100,000             Over $100,000
Carl F. Pollard ............................................     Over $100,000             Over $100,000
David J. Vitale ............................................  $50,001 - $100,000        $50,001 - $100,000


      As of  December  31,  2005,  none of the  foregoing  directors,  or  their
immediate  family  members,  owned any  securities  of the Adviser or any person
(other than a registered investment company) directly or indirectly controlling,
controlled by or under common control with the Adviser.




                                       6


      The following table shows the  compensation  paid to the Fund's  directors
during 2005 for service on the board of  directors of the Fund and on the boards
of directors of other investment companies in the same Fund Complex as the Fund:

                             COMPENSATION TABLE (1)
                                                                TOTAL
                                    AGGREGATE               COMPENSATION
                                  COMPENSATION              FROM FUND AND
                                    FROM THE                FUND COMPLEX
NAME OF DIRECTOR                      FUND              PAID TO DIRECTORS (2)
-------------------             -----------------    --------------------------
INDEPENDENT DIRECTORS
Stewart E. Conner ...............   $42,000                  $ 42,000
Connie K. Duckworth .............    45,000                    45,000
Robert J. Genetski ..............    42,000                    42,000
Francis E. Jeffries (2) .........    78,393                   197,393
Nancy Lampton ...................    50,000                    76,901
Christian H. Poindexter .........    45,000                    45,000
Carl F. Pollard .................    47,000                    47,000
David J. Vitale .................    47,000                    70,901

--------

(1)  Each  director not  affiliated  with the Adviser  receives an annual fee of
     $25,000 (and an additional  $5,000 if the director  serves as chairman of a
     committee of the board of directors)  plus an attendance  fee of $2,000 for
     each  meeting of the board of  directors  and $1,500 for each  meeting of a
     committee of the board of directors attended in person or by telephone. The
     chairman  of the board  receives  an  additional  fee of $50,000  annually.
     Directors and officers  affiliated with the Adviser receive no compensation
     from the Fund for their  services as such. In addition to the amounts shown
     in the table above,  all  directors  and  officers  who are not  interested
     persons of the Fund,  the Adviser or the  Administrator  (as defined below)
     are reimbursed for the expenses  incurred by them in connection  with their
     attendance  at a meeting of the board of  directors  or a committee  of the
     board of  directors.  The Fund does not have a pension or  retirement  plan
     applicable to directors or officers of the Fund.

(2)  The Fund  Complex  includes  all funds that are  advised by the  Adviser or
     other affiliates of PXP. Mr. Jeffries serves as a director or trustee of 53
     other funds in the Fund  Complex,  and each of Ms.  Lampton and Mr.  Vitale
     serves as a director of two other funds in the Fund Complex.

      THE  BOARD  OF  DIRECTORS,  INCLUDING  ALL OF THE  INDEPENDENT  DIRECTORS,
UNANIMOUSLY  RECOMMENDS  A VOTE "FOR" THE  ELECTION  OF THE THREE  NOMINEES  FOR
DIRECTOR NAMED ABOVE.

  2. APPROVAL OF AMENDMENT AND RESTATEMENT OF THE FUND'S CHARTER TO AMEND
     CERTAIN PROVISIONS GOVERNING SERIES A, B, C, D AND E OF THE FUND'S
                           REMARKETED PREFERRED STOCK

      The board of directors  has  determined  that it is advisable to amend and
restate the Fund's charter in order to amend certain  provisions of the articles
supplementary  that  define  the terms of Series A, B, C, D and E of the  Fund's
remarketed  preferred  stock (the "RP  Articles  Supplementary")  and delete the
articles  supplementary  that  define  the  terms  of  Series  I of  the  Fund's
remarketed preferred stock (the "Series I Articles Supplementary").

                                       7


REASONS FOR THE PROPOSED AMENDMENTS

      Under the Fund's charter,  authority is expressly  granted to the board of
directors to authorize the issuance of one or more series of preferred stock and
to fix the preferences, conversion or other rights, voting powers, restrictions,
limitations  as to  dividends,  qualifications,  and  terms  and  conditions  of
redemptions,  of  such  series.  When  the  board  of  directors  of a  Maryland
corporation  exercises  its  authority  to issue one or more series of preferred
stock,  the board is required to file articles  supplementary  with the State of
Maryland,  setting  forth the  preferences  and  other  rights,  voting  powers,
restrictions,   limitations  as  to  dividends,  qualifications  and  terms  and
conditions of redemption of such series. Those articles supplementary thereafter
constitute part of the corporation's charter.

      On November 16, 1988,  the Fund filed the RP Articles  Supplementary  with
the State of Maryland, classifying 5,000 shares of the Fund's preferred stock to
constitute  Series A, B, C, D and E of  Remarketed  Preferred  Stock of the Fund
(the "RP").  The Fund issued the RP in order to use the proceeds to increase the
assets of the Fund available for investment  with the goal of increasing the net
investment income available for distribution to the holders of the Fund's common
stock,  consistent  with  the  Fund's  income-oriented  objectives.  The Fund is
generally able to take advantage of favorable  interest rate spreads between the
dividend rates that it pays on the RP and the interest rates that it receives on
investments purchased with the proceeds of the RP.

      Also  on  November  16,  1988,  the  Fund  filed  the  Series  I  Articles
Supplementary with the State of Maryland, classifying 5,000 shares of the Fund's
preferred stock to constitute Series I of Remarketed Preferred Stock of the Fund
(the  "Series I Stock").  The Series I Stock was  designed to be  available  for
issuance  by the  Fund in  exchange  for  the  RP,  if the  board  of  directors
determined  that the Series I Stock  would be  accorded  certain  favorable  tax
treatment.  Based on  discussions  with the IRS,  the Fund  determined  that the
Series I Stock would not be granted the desired tax treatment and,  accordingly,
the RP remained outstanding and no Series I Stock was ever issued.

      The RP Articles  Supplementary  have been amended several times since they
were  originally  filed,  most  recently in  connection  with an increase in the
maximum  dividend  rates  applicable  to the RP in 2003.  During  the past year,
moreover,  the  preparation  of articles  supplementary  for  several  series of
Auction  Preferred  Stock that the Fund is planning to issue has highlighted the
fact that since 1988, when the RP Articles  Supplementary  were filed and the RP
was  issued,  industry  practice  with  respect to the terms of  remarketed  and
auction preferred  securities has changed  considerably,  with the result that a
number  of the  provisions  in  the  RP  Articles  Supplementary  are no  longer
representative of current market practice.

      At a meeting of the board of  directors  held on February  24,  2006,  the
Fund's management  recommended certain changes to the RP Articles  Supplementary
designed to make them more similar to the  provisions  governing  remarketed and
auction  preferred  securities  issued in recent years,  and particularly to the
provisions included in the articles  supplementary for the planned new series of
the Fund's auction preferred stock.  Prior to and during the meeting,  the board
of directors  requested  such  information  as it deemed  necessary to determine
whether the changes  recommended  by management  are in the best interest of the
Fund and its shareholders. Based upon its review and evaluation of the materials
it received and in consideration of all factors it deemed relevant, the board of
directors  concluded that the proposed changes to the RP Articles  Supplementary
are in the best interest of the Fund and its shareholders.

                                       8


      The board of directors considered the fact that due to the detailed nature
of the  recommended  changes  to the RP  Articles  Supplementary,  a  technical,
line-by-line  enumeration of each change could be difficult for  shareholders to
understand  and evaluate.  The board of directors  therefore  concluded  that it
would be more  informative  for  shareholders to be able to review and vote upon
the  complete  text of the RP Articles  Supplementary  with all of the  proposed
changes  incorporated.  This is referred to under  Maryland law as an "amendment
and  restatement."  Because  the RP  Articles  Supplementary  became part of the
Fund's  charter  upon their  filing,  an  amendment  and  restatement  of the RP
Articles  Supplementary  can only be  accomplished  as part of an amendment  and
restatement of the Fund's entire  charter.  Accordingly,  on March __, 2006, the
board of directors  unanimously  adopted a resolution  setting forth Articles of
Amendment and  Restatement of the Fund's  charter,  declaring such amendment and
restatement to be advisable,  directing  that such amendment and  restatement be
submitted for consideration at the annual meeting of the Fund's shareholders and
recommending  that all shareholders  vote for the approval of such amendment and
restatement.

      The  complete  text of the Articles of Amendment  and  Restatement  is set
forth as  Exhibit A to this proxy  statement.  The  Articles  of  Amendment  and
Restatement  include  the Fund's  articles of  incorporation,  as they have been
amended to date, and will not effect any material changes to the Fund's charter,
other than to delete certain  historical  provisions that are no longer current.
The  Articles  of  Amendment  and   Restatement   omit  the  Series  I  Articles
Supplementary,  as they are no longer  needed for the reasons  described  above.
Finally, the Articles of Amendment and Restatement include the provisions of the
RP Articles  Supplementary as a new "Article  Fourteenth" of the Fund's charter,
with the following  changes  recommended  by the Fund's  management and board of
directors.

ELIMINATION OF THE MASTER PURCHASER'S LETTER

      The RP Articles Supplementary provide that each purchaser of shares of RP,
in a  remarketing  or  otherwise,  is  required  to sign  and  deliver  a master
purchaser's letter, containing an acknowledgment by the purchaser of the details
of the  remarketing  procedures.  This  requirement is reflective of a time when
remarketed preferred  securities were novel products and broker-dealers  desired
assurances that investors understood the remarketing procedures. However, as the
market  for  auction  and  remarketed  securities  has  developed,  auction  and
remarketing  procedures  have  ceased  to be  considered  a  novelty  for  which
broker-dealers desire specific assurances from investors.  The remarketing agent
for the RP has recently  informed the Fund that it is no longer either desirable
or practical to require a master purchaser's letter and has requested the Fund's
cooperation in eliminating the master purchaser's letter requirement. Currently,
few of the investment  products that are typically viewed as alternatives to the
RP require the collection of any kind of investor purchaser letter. Since the RP
still requires the  collection of a master  purchaser's  letter,  this creates a
risk  of  diminishing  investors'  interest  in the  RP  due  to the  additional
administrative burden of executing and delivering the master purchaser's letter.
In order to prevent the RP from being at a competitive  disadvantage relative to
similar  investment  products,  the Articles of Amendment and  Restatement  will
eliminate the master purchaser's letter requirement.

BASIC MAINTENANCE REPORTS AND ANNUAL ACCOUNTANT'S CONFIRMATION

      At all times  that the RP has been  outstanding,  the RP has  enjoyed  the
highest ratings from Moody's Investors Service,  Inc. ("Moody's") and Standard &
Poor's Ratings Services  ("S&P").  As a condition of maintaining  these ratings,
the RP  Articles  Supplementary  require the Fund to prepare  basic  maintenance
reports on the  fifteenth day and the last day of each month.  In addition,  the
terms of the Fund's  commercial paper ("CP") program require the Fund to prepare
basic maintenance  reports on the last business day of each week, so long as any
CP notes are outstanding. The basic maintenance reports calculate the discounted
value of the Fund's assets,  using discount

                                       9


factors supplied by Moody's and S&P, and verify that the discounted value of the
Fund's assets meets the basic  maintenance  tests  specified by Moody's and S&P.
The RP Articles  Supplementary also require the Fund's independent  accountants,
on a quarterly basis, to review the Fund's basic maintenance  report and issue a
written  confirmation  of its accuracy.  However,  as the market for auction and
remarketed  securities has developed,  the quarterly  accountant's  confirmation
requirement  has  generally  been  replaced  in  the  marketplace  by an  annual
accountant's  confirmation  requirement.  In order to align  the terms of the RP
both with the articles  supplementary  for the new series of the Fund's  auction
preferred stock and with current market practice,  the Articles of Amendment and
Restatement   will  replace  the   requirement   of  a  quarterly   accountant's
confirmation with an annual accountant's confirmation.  Requiring only an annual
accountant's  confirmation  will also result in a cost savings for the Fund.  In
addition,  the Articles of Amendment  and  Restatement  will change the required
schedule for preparing the basic maintenance reports from the fifteenth and last
day of each month to the last  business  day of each  week.  This will align the
basic maintenance  reporting schedule for the RP with the reporting schedule for
the CP and will  preserve the Fund's  eligibility  to continue  using  favorable
discount factors to calculate the discounted value of its assets, even if the CP
ceases to be outstanding.

FLEXIBILITY TO ADOPT MODIFICATIONS TO RATING AGENCY REQUIREMENTS

      A large portion of the RP Articles  Supplementary  currently consists of a
detailed  enumeration of the various categories of investments held by the Fund,
the discount  factors that Moody's and S&P have  assigned to each type of asset,
the basic  maintenance  tests that each rating  agency  requires the  discounted
value of the Fund's  assets to meet and specific  restrictions  that each rating
agency has imposed on the Fund's  investment  practices.  Over time,  the rating
agencies have modified their guidelines with respect to the foregoing provisions
and they are  expected  to continue  to make such  modifications  in the future.
However,  since the RP Articles  Supplementary  are part of the Fund's  charter,
they can only be amended by a shareholder vote. The cost of seeking  shareholder
approval  for  changes  to the RP  Articles  Supplementary  whenever  the rating
agencies  modify their  guidelines must be borne by the Fund, and ultimately the
shareholders.  To avoid  the costs  entailed  by  amending  the  Fund's  charter
whenever the rating agencies modify their guidelines, the articles supplementary
for the Fund's new series of auction preferred stock take a new approach,  which
is  permitted  by  Maryland  law:  rather than  making the  provisions  that are
dependent on rating agency guidelines part of the articles  supplementary,  such
provisions are set forth in separate documents, entitled "Moody's Guidelines" or
"Standard & Poor's  Guidelines,"  as applicable.  The "Moody's  Guidelines"  and
"Standard & Poor's  Guidelines"  may be amended  from time to time by the Fund's
board of directors,  with the  concurrence of the applicable  rating agency.  In
order to enable the Fund to benefit from this  approach with respect to both the
RP and the new series of auction  preferred stock, the Articles of Amendment and
Restatement  will remove all of the rating  agency-specific  provisions from the
Fund's  charter  and will  instead  refer  to the  provisions  contained  in the
separate  documents  entitled  "Moody's   Guidelines"  and  "Standard  &  Poor's
Guidelines."  In  addition to saving  costs for the Fund,  this will also ensure
that the same rating agency-specific provisions apply to both the RP and the new
series of auction  preferred  stock.  The "Moody's  Guidelines"  and "Standard &
Poor's Guidelines" are included as exhibits to the Fund's Registration Statement
on Form N-2 for the auction preferred stock (Registration No. 333-130590), which
is available electronically at the SEC's Internet web site, http://www.sec.gov.

ELIMINATION OF CERTIFICATE OF MINIMUM LIQUIDITY

      The RP  Articles  Supplementary  currently  require  the Fund to deliver a
certificate  of minimum  liquidity on the fifteenth day and the last day of each
month,  demonstrating  that the Fund has  liquid  assets  at least  equal to the
amount of cumulative  dividends  payable on the RP at the next dividend  payment
date.  The Fund  believes


                                       10


that  this  requirement  is  reflective  of a  time  when  remarketed  preferred
securities  were  novel  products,  and  that  as the  market  for  auction  and
remarketed securities has developed, the requirement to prepare a certificate of
minimum liquidity twice monthly is no longer  representative of the marketplace.
The articles  supplementary  for the new series of the Fund's auction  preferred
stock do not include such a requirement.  In connection  with the elimination of
the certificate of minimum liquidity  requirement,  it is important to note that
the Fund is not permitted to pay any dividend or other distribution with respect
to its common stock unless full cumulative  dividends on shares of its preferred
stock have been declared and paid or have been declared and sufficient funds for
the payment thereof  deposited with the paying agent for the preferred stock. In
light of this  priority  enjoyed  by the  Fund's  preferred  stock,  the  Fund's
management  does not believe  that a  certificate  of minimum  liquidity  should
continue to be required.  Accordingly, the Articles of Amendment and Restatement
will  eliminate the  requirement  that the Fund deliver a certificate of minimum
liquidity on the fifteenth day and the last day of each month.

ADJUSTMENT OF LANGUAGE TO INCLUDE OTHER PREFERRED STOCK OF THE FUND

      The original RP Articles  Supplementary  took  account of the  possibility
that the Fund might issue  additional  series of RP, but did not take account of
the fact that the Fund could issue series of preferred stock other than RP. As a
result,  provisions of the RP Articles  Supplementary that are intended to refer
to all of the Fund's outstanding  preferred stock currently refer only to "Other
RP." However,  the new series of the Fund's auction preferred stock will rank on
a parity with the RP with respect to payment of dividends  and the  distribution
of assets upon  liquidation,  and therefore  will need to be taken into account,
together with the RP, in any  provisions of the RP Articles  Supplementary  that
refer to all of the Fund's outstanding preferred stock. For example, the auction
preferred stock needs to be included along with the RP in calculating the Fund's
basic maintenance  coverage,  or else the basic maintenance coverage ratios will
be  overstated.  Accordingly,  the Articles of Amendment  and  Restatement  will
replace  references  to "Other  RP" with  more  inclusive  references  to "Other
Preferred Stock."

OTHER CHANGES

      The Articles of Amendment and  Restatement  also reflect a number of minor
changes  to the RP  Articles  Supplementary.  The name of the  Fund,  which  has
changed since the RP Articles Supplementary were filed in 1988, will be updated.
References to S&P will be updated to reflect the fact that S&P is now a division
of The  McGraw-Hill  Companies,  Inc.  References to the paying agent for the RP
will be updated to refer to The Bank of New York,  which  currently acts in that
capacity. References to the designation of substitute rating agencies that would
provide  ratings of the RP in the event  that  Moody's or S&P ever cease to rate
the RP will be updated to provide for the Fund's  board of  directors to adopt a
"Guidelines"  document  embodying the guidelines of any substitute rating agency
that is so designated. Finally, provisions relating to the potential exchange of
the RP for Series I Stock of the Fund will be deleted, as such provisions are no
longer applicable.

PROVISIONS OF THE RP THAT WILL NOT BE ALTERED BY THE ARTICLES OF AMENDMENT AND
RESTATEMENT

      It is important to note that the  following  provisions of the RP Articles
Supplementary will not be altered by the Articles of Amendment and Restatement:

      o priority of the RP over the Fund's common stock,

      o dividend rights of holders of the RP,

      o rights of holders of the RP to receive distributions of the Fund's
        assets in liquidation,

      o provisions governing redemption of the RP and

      o voting rights of the holders of RP.


                                       11


VOTE REQUIRED TO APPROVE THE ARTICLES OF AMENDMENT AND RESTATEMENT

      The Articles of Amendment and Restatement will require the approval of (i)
the holders of a majority of the Fund's  outstanding Common Shares and Preferred
Shares,  voting as a single  class,  and (ii) the holders of  two-thirds  of the
Fund's outstanding Preferred Shares, voting separately as a class.

WHEN THE ARTICLES OF AMENDMENT AND RESTATEMENT WOULD BECOME EFFECTIVE

      If approved by the Fund's  shareholders,  the  Articles of  Amendment  and
Restatement  would become  effective as of the date when they are filed with the
State  Department of Assessments  and Taxation of the State of Maryland or as of
such other date as set forth in the Articles of Amendment and  Restatement,  not
to exceed 30 days after the Articles of Amendment and Restatement are filed with
the Department.  It is expected that the Articles of Amendment and  Restatement,
if approved by the shareholders, would be filed as soon as practicable following
the date of the annual meeting. The exact timing of the filing,  however,  would
be determined  by the Fund,  and the Fund reserves the right to delay the filing
for up to six months  following  shareholder  approval.  In  addition,  the Fund
reserves the right,  notwithstanding  shareholder  approval and without  further
action by the shareholders,  to elect not to proceed with the charter amendments
if, at any time prior to the effective time, the board of directors, in its sole
discretion,  determines  that the amendments are no longer in the best interests
of the Fund or its shareholders.

      If, as  permitted  by the Fund's  charter and  Maryland  law, the board of
directors  authorizes  one or more  additional  series  of  preferred  stock and
articles  supplementary  are filed with respect to such series with the State of
Maryland and become  effective after the record date for this meeting but before
the filing and effectiveness of the Articles of Amendment and Restatement,  then
the terms of such  additional  series of stock will be  incorporated  into a new
"Article  Fifteenth" of the Articles of Amendment and  Restatement  so that upon
filing they will include all provisions of the Fund's charter as then in effect.

RECOMMENDATION OF THE BOARD OF DIRECTORS

      THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND AND RESTATE THE FUND'S  CHARTER AS SET FORTH IN THE  ARTICLES OF AMENDMENT
AND RESTATEMENT ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT.

                                 OTHER BUSINESS

      Management  is not aware of any other  matters  that will come  before the
meeting.  If any other business  should come before the meeting,  however,  your
proxy, if signed and returned,  will give discretionary authority to the persons
designated in it to vote according to their best judgment.

                                OTHER INFORMATION

      THE ADVISER  AND PHOENIX  INVESTMENT  PARTNERS.  Duff & Phelps  Investment
Management  Co.  serves as the Fund's  investment  adviser  under an  investment
advisory agreement (the "Advisory  Agreement") dated May 1, 1998. The Adviser is
a wholly-owned subsidiary of Phoenix Investment Partners,  which is an indirect,
wholly-owned  subsidiary  of The  Phoenix  Companies,  Inc.  The  address of the
Adviser is 55 East Monroe Street, Chicago, Illinois 60603.

                                       12


      The Adviser  (together  with its  predecessor)  has been in the investment
advisory  business  for more  than 70 years and as of  December  31,  2005,  had
approximately  $2.8 billion in client accounts under  discretionary  management,
excluding the Fund.

      Under  the  terms  of  the  Advisory  Agreement,   the  Adviser  furnishes
continuing  investment  supervision  to the  Fund  and is  responsible  for  the
management of the Fund's portfolio,  subject to the overall control of the board
of directors of the Fund.  Currently,  the Adviser has ten professionals  (i.e.,
research analysts and portfolio managers), along with support staff, assigned to
the  operation  of the  Fund.  Eight  of the  ten  professionals  have  the  CFA
(Chartered  Financial  Analyst)  designation and one is a CPA (Certified  Public
Accountant).  The Adviser furnishes, at its own expense, office space, equipment
and personnel to the Fund in connection  with the  performance of its investment
management  responsibilities,  and pays all  other  expenses  incurred  by it in
connection  with  managing  the  assets of the Fund not  payable  by the  Fund's
administrator pursuant to the administration  agreement.  The Advisory Agreement
also includes the conditions  under which the Fund may use any name derived from
or similar to "Duff & Phelps." For its services  the Adviser  receives  from the
Fund a quarterly  management fee, payable out of the Fund's assets, at an annual
rate of 0.60 of 1% of the  average  weekly  net  assets  of the  Fund up to $1.5
billion and 0.50 of 1% of average  weekly net assets in excess of $1.5  billion.
For  purposes  of  calculating  the  management  fee,  the Fund's net assets are
defined as the sum of (i) the  aggregate  net asset  value of the Fund's  common
stock, (ii) the aggregate  liquidation  preference of the Fund's preferred stock
and (iii) the  aggregate  proceeds of commercial  paper issued by the Fund.  The
management fee paid by the Fund to the Adviser for 2005 was $14,771,365.

      Except for the  expenses  borne by the Adviser and the  Administrator  (as
described below) pursuant to their respective agreements with the Fund, the Fund
pays all expenses  incurred in its  operations,  including,  among other things,
expenses for legal, accounting and auditing services,  taxes, interest, costs of
printing and distributing shareholder reports, proxy materials, prospectuses and
stock certificates, charges of custodians, registrars, transfer agents, dividend
disbursing  agents,  dividend  reinvestment plan agents and remarketing  agents,
Securities and Exchange  Commission  fees,  fees and expenses of  non-interested
directors,  insurance,  brokerage costs,  litigation and other  extraordinary or
non-recurring expenses.

      The Fund is also a party to a  service  agreement  dated  May 1, 1998 (the
"Service Agreement") with the Adviser and Phoenix Investment Partners. Under the
terms of the Service Agreement,  Phoenix Investment  Partners makes available to
the Adviser the services of its employees  and various  facilities to enable the
Adviser  to  perform  certain  of its  obligations  to the  Fund.  However,  the
obligation  of  performance  under the Advisory  Agreement is solely that of the
Adviser, for which Phoenix Investment Partners assumes no responsibility, except
as  described  in  the  preceding  sentence.   The  Adviser  reimburses  Phoenix
Investment  Partners  for  any  costs,  direct  or  indirect,  that  are  fairly
attributable  to the services  performed and the facilities  provided by Phoenix
Investment Partners under the Service Agreement.  The Fund does not pay any fees
pursuant to the Service Agreement.

      The Advisory  Agreement  and the Service  Agreement  both provide that the
Adviser  shall  not be  liable  to the  Fund or its  shareholders  for any  loss
suffered  as a  consequence  of any act or  omission  of the  Adviser or Phoenix
Investment  Partners,  as the case may be,  in  connection  with the  respective
agreements  except  by  reason of its  willful  misfeasance,  bad faith or gross
negligence in the  performance of its duties or by reason of reckless  disregard
of its obligations under the Advisory Agreement.


                                       13


      At the annual  meeting  held on April 29,  1998,  the Fund's  shareholders
approved the Advisory Agreement for a two-year term beginning on May 1, 1998 and
ending on April 30, 2000.  At a meeting  held on October 17, 1997,  the Board of
Directors of the Fund,  including all of the  directors who were not  interested
persons of the Fund or Phoenix Investment  Partners in attendance at the meeting
voting separately as a class, approved the Service Agreement for a two-year term
beginning  on May 1,  1998 and  ending  on April  30,  2000,  contingent  on the
above-referenced  approval of the Advisory  Agreement by the shareholders of the
Fund. Unless earlier  terminated as described below, the Advisory  Agreement and
the Service  Agreement may be continued from year to year, if approved  annually
(i) by a majority of the directors of the Fund who are not interested persons of
the Fund or the  Adviser,  in the case of the  Advisory  Agreement,  or  Phoenix
Investment  Partners,  in the case of the Service Agreement,  and (ii) by either
the  board  of  directors  of the  Fund  or the  holders  of a  majority  of the
outstanding  shares of the Fund as defined  in the 1940 Act.  A majority  of the
outstanding  shares of the Fund as defined  in the 1940 Act means the  following
vote of the common stock and the  preferred  stock  voting  together as a single
class: (i) 67% of the shares  represented at a meeting at which more than 50% of
the outstanding shares are represented; or (ii) more than 50% of the outstanding
shares.  At meetings held on January 26, 2000,  February 23, 2001,  February 22,
2002,  February 21, 2003,  February 20, 2004, February 18, 2005 and February 24,
2006, the Board of Directors of the Fund,  including all of the directors of the
Fund who were not interested persons of the Fund or the Adviser,  in the case of
the  Advisory  Agreement,  or Phoenix  Investment  Partners,  in the case of the
Service  Agreement,  in attendance at the meeting voting  separately as a class,
voted to  continue  the  Advisory  Agreement  and the Service  Agreement  for an
additional one-year term.  Accordingly,  the term of these agreements  currently
extends to April 30, 2007.

      The  Advisory  Agreement  may be  terminated  without  penalty on 60 days'
written notice by any party thereto or by a vote of the shareholders of the Fund
and would  terminate  automatically  if it were  assigned  by any party.  If the
Advisory  Agreement were terminated,  shareholder  approval would be required to
enter into a new  agreement.  The Service  Agreement may be  terminated  without
penalty on 60 days'  written  notice by any party  thereto  and would  terminate
automatically  if it were  assigned by any party unless a majority of the Fund's
board of directors, including a majority of the directors who are not interested
persons of the Fund or Phoenix Investment Partners, approves continuation of the
Service Agreement.

      THE ADMINISTRATOR.  J.J.B. Hilliard, W.L. Lyons, Inc. serves as the Fund's
administrator  (the  "Administrator")  under an  administration  agreement  (the
"Administration  Agreement") dated May 1, 1998. The Administrator (together with
its  predecessors)  has been engaged in the investment  business as a securities
broker-dealer and investment adviser since 1854. It also serves as administrator
and investment  adviser to Hilliard-Lyons  Government Fund, Inc., a money market
mutual fund, and as investment adviser to Senbanc Fund, an open-end mutual fund.
The  Administrator  is a wholly-owned  subsidiary of The PNC Financial  Services
Group, Inc. Its principal address is Hilliard Lyons Center, Louisville, Kentucky
40202.

      Under  the  terms  of  the  Administration  Agreement,  the  Administrator
provides all management and administrative  services required in connection with
the operation of the Fund not required to be provided by the Adviser pursuant to
the Advisory  Agreement,  as well as the necessary office facilities,  equipment
and  personnel to perform  such  services.  For its  services the  Administrator
receives  from the Fund a  quarterly  fee at  annual  rates of 0.25 of 1% of the
Fund's  average  weekly net assets up to $100 million,  0.20 of 1% of the Fund's
average  weekly net assets  from $100  million  to $1.0  billion,  0.10 of 1% of
average weekly net assets in excess of $1.0 billion. For purposes of calculating
the administrative  fee, the Fund's net assets are defined as the sum of (i) the
aggregate  net  asset  value of the  Fund's  common  stock,  (ii) the  aggregate
liquidation  preference  of the Fund's

                                       14


preferred stock and (iii) the aggregate  proceeds of commercial  paper issued by
the Fund. The total administrative fee paid by the Fund to the Administrator for
2005 was $3,704,273.

      The Administration  Agreement provides that the Administrator shall not be
liable to the Fund or its shareholders for any loss suffered as a consequence of
any act or omission of the Administrator in connection with the agreement except
by reason of its  willful  misfeasance,  bad  faith or gross  negligence  in the
performance of its duties or by reason of reckless  disregard of its obligations
under the agreement.

      At a meeting held on October 17, 1997, the board of directors of the Fund,
including all of the directors  who were not  interested  persons of the Fund or
the  Administrator  in attendance at the meeting  voting  separately as a class,
approved the  Administration  Agreement for a two-year term  beginning on May 1,
1998 and  ending on April 30,  2000,  contingent  on  approval  of the  Advisory
Agreement  by the  shareholders  of the Fund (which  approval was granted at the
annual meeting held on April 29, 1998).  Unless earlier  terminated as described
below,  the  Administration  Agreement  may be continued  from year to year,  if
approved  annually  (i) by a majority of the  directors  of the Fund who are not
interested persons of the Fund or the Administrator and (ii) by either the board
of directors of the Fund or the holders of a majority of the outstanding  shares
of the Fund as  defined in the 1940 Act.  The  Administration  Agreement  may be
terminated without penalty on 60 days' written notice by any party thereto or by
a vote of the  shareholders  of the Fund.  At meetings held on January 26, 2000,
February 23, 2001,  February  22,  2002,  February 21, 2003,  February 20, 2004,
February 18, 2005 and  February  24,  2006,  the Board of Directors of the Fund,
including  all of the directors of the Fund who were not  interested  persons of
the Fund or the  Administrator in attendance at the meeting voting separately as
a class,  voted to  continue  the  Administration  Agreement  for an  additional
one-year  term.  Accordingly,  the term of this agreement  currently  extends to
April 30, 2007.

      PORTFOLIO  TRANSACTIONS.  The Adviser has discretion to select brokers and
dealers to execute portfolio transactions initiated by the Adviser and to select
the  markets  in  which  such  transactions  are to be  executed.  In  executing
portfolio   transactions   and  selecting   brokers  or  dealers,   the  primary
responsibility  of the Adviser is to seek the best  combination of net price and
execution for the Fund. The Fund ordinarily  purchases securities in the primary
markets,  and in  assessing  the best net price and  execution  available to the
Fund, the Adviser considers all factors it deems relevant, including the breadth
of the  market  in the  security,  the  price  of the  security,  the  financial
condition   and   execution   capability   of  the  broker  or  dealer  and  the
reasonableness of the commission,  if any (for the specific transaction and on a
continuing basis).

      In selecting brokers or dealers to execute particular  transactions and in
evaluating the best net price and execution available, the Adviser is authorized
to consider  "brokerage  and research  services"  (as those terms are defined in
Section  28(e)  of the  Securities  Exchange  Act of  1934  (the  "1934  Act")),
statistical  quotations,  specifically the quotations necessary to determine the
Fund's net asset value,  and other  information  provided to the Fund and/or the
Adviser (or their affiliates).  The Adviser is also authorized to cause the Fund
to pay to a broker or dealer who provides such brokerage and research services a
commission  for  executing  a  portfolio  transaction  which is in excess of the
amount of commission  another  broker or dealer would have charged for effecting
that transaction.  The Adviser must determine in good faith,  however, that such
commission was reasonable in relation to the value of the brokerage and research
services provided, viewed in terms of that particular transaction or in terms of
all the accounts over which the Adviser  exercises  investment  discretion.  The
Adviser does not engage brokers whose commissions it believes to be unreasonable
in relation to services  provided.  It is possible  that certain of the services
received by the Adviser  attributable to a particular  transaction  will benefit
one or more other accounts for which  investment  discretion is exercised by the
Adviser.


                                       15


      The Advisory  Agreement requires the Adviser to provide fair and equitable
treatment  to the  Fund  in the  selection  of  portfolio  investments  and  the
allocation of investment  opportunities between the Fund and the Adviser's other
investment  management  clients,  but does not  obligate the Adviser to give the
Fund exclusive or  preferential  treatment.  It is likely that from time to time
the Adviser may make  similar  investment  decisions  for the Fund and its other
clients.  In some cases, the simultaneous  purchase or sale of the same security
by the Fund and another client of the Adviser could have a detrimental effect on
the price or volume of the security to be purchased or sold,  as far as the Fund
is concerned.  In other cases,  coordination with transactions for other clients
and the ability to participate in volume transactions could benefit the Fund.

      Although the Fund purchases  securities  for investment  income or capital
appreciation, or both, and not for short-term trading profits, it may dispose of
securities  without  regard to the time  they  have  been held when such  action
appears advisable to the Adviser.

      During 2005, the Fund paid brokerage  commissions  aggregating $799,719 in
connection with its portfolio transactions, not including the gross underwriting
spread on securities purchased in underwritten public offerings or the spread in
over-the-counter transactions with firms acting as principal.

      SHAREHOLDERS. The following table shows shares of common stock of the Fund
as to which each  director,  and all  directors  and  officers  of the Fund as a
group,  had or shared power over voting or disposition at December 31, 2005. The
directors  and  officers  of the Fund owned no shares of the  Fund's  remarketed
preferred  stock.  Shares are held with sole power over  voting and  disposition
except as noted.  The shares of common stock held by each of the persons  listed
below and by all directors and officers as a group  represented  less than 1% of
the outstanding common stock.

                                                                   SHARES OF
                                                                 COMMON STOCK
                                                               -----------------
Stewart E. Conner ...............................................      1,000
Connie K. Duckworth (1) .........................................     10,000
Robert J. Genetski ..............................................     10,000
Francis E. Jeffries (2) .........................................     37,775
Nancy Lampton (1)(2) ............................................     56,631
Christian H. Poindexter (1) .....................................     10,000
Carl F. Pollard .................................................     40,000
David J. Vitale .................................................      5,250
Directors and officers as a group (14 persons) (1)(2) ...........    198,078

-------

(1)   Ms. Duckworth, Ms. Lampton and Mr. Poindexter had shared power to vote
      and/or dispose of 10,000, 51,200 and 10,000, respectively, of the shares
      listed. The directors and officers had shared power to vote and/or dispose
      of 84,966, in the aggregate, of the shares listed as owned by the
      directors and officers as a group.

(2)   Mr. Jeffries, Ms. Lampton and Mr. Vitale disclaim beneficial ownership of
      9,205, 51,200 and 4,250, respectively, of the shares listed. The directors
      and officers disclaim beneficial ownership of 78,421 in the aggregate, of
      the shares listed as owned by the directors and officers as a group.

      At March 27, 2006, no person was known by the Fund to own  beneficially 5%
or more of the outstanding  shares of the Fund (as determined in accordance with
Rule 13d-3 under the 1934 Act).

                                       16


      SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.  Section 16(a) of
the 1934 Act requires the Fund's  officers  and  directors,  and persons who own
more than 10% of a registered  class of the Fund's  equity  securities,  to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission and the New York Stock Exchange. Officers, directors and greater than
10% shareholders are required by Securities and Exchange Commission  regulations
to furnish  the Fund with copies of all  Section  16(a)  forms they file.  Based
solely on a review of the copies of Section  16(a) forms  furnished to the Fund,
or written representations that no Forms 5 were required, the Fund believes that
during 2005 all Section  16(a) filing  requirements  applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except that
the  Adviser  was one day  late in  filing a Form 3 for  George  R.  Aylward,  a
director of the Adviser.

      REPORT OF THE AUDIT  COMMITTEE.  The audit  committee  is composed of four
directors and acts under a written  charter that was  originally  adopted by the
board of directors on April 25, 2000 and was most recently amended on August 25,
2005. A copy of the charter is attached as Exhibit B to this proxy statement.  A
copy  of  the   charter   is  also   available   on  the   Fund's   website   at
www.dnpselectincome.com and in print to any shareholder who requests it. Each of
the  members of the audit  committee  is  independent  as defined in the listing
standards of the New York Stock  Exchange.  In connection  with the audit of the
Fund's 2005 audited financial statements,  the audit committee: (1) reviewed and
discussed the Fund's 2005 audited  financial  statements  with  management,  (2)
discussed with the  independent  registered  public  accounting firm the matters
required  to  be  discussed  by   Statement  on  Auditing   Standards   No.  61,
Communication with Audit Committees,  as modified or supplemented,  (3) received
and  reviewed  the  written  disclosures  and the  letter  from the  independent
registered  public  accounting  firm required by  Independence  Standards  Board
Standard No. 1, Independence  Discussions with Audit Committees,  as modified or
supplemented,   and  (4)  discussed  with  the  independent   registered  public
accounting firm its independence from the Fund and its management.  Based on the
foregoing reviews and discussions,  the audit committee recommended to the board
of directors  that the Fund's  audited  financial  statements be included in the
Fund's Annual Report to Shareholders for filing with the Securities and Exchange
Commission.

                                         The Audit Committee
                                         Carl F. Pollard, Chairman
                                         Connie K. Duckworth
                                         Robert J. Genetski
                                         Christian H. Poindexter

      INDEPENDENT  REGISTERED PUBLIC ACCOUNTING FIRM. The 1940 Act requires that
the Fund's  independent  registered  public  accounting  firm be selected by the
vote, cast in person, of a majority of the members of the board of directors who
are not interested  persons of the Fund. In addition,  the listing  standards of
the New York Stock  Exchange  vest the audit  committee,  in its  capacity  as a
committee of the board of directors,  with  responsibility  for the appointment,
compensation,  retention  and  oversight  of the work of the Fund's  independent
registered public accounting firm. In accordance with the foregoing  provisions,
the firm of Ernst & Young LLP ("Ernst & Young"),  which has served as the Fund's
independent  public  accountants  since  June 12,  2002,  has been  selected  as
independent  registered  public accounting firm of the Fund to perform the audit
of the financial  books and records of the Fund for the year ending December 31,
2006. A representative of Ernst & Young is expected to be present at the meeting
of  shareholders  and will be available to respond to appropriate  questions and
have an opportunity to make a statement if the representative so desires.



                                       17


      AUDIT AND NON-AUDIT  FEES.  The  following  table sets forth the aggregate
audit and  non-audit  fees  billed  to the Fund for each of the last two  fiscal
years for professional services rendered by the Fund's principal accountant.

                                      FISCAL YEAR ENDED     FISCAL YEAR ENDED
                                      DECEMBER 31, 2005     DECEMBER 31, 2004
                                    --------------------  --------------------

Audit Fees (1) ......................      $71,600              $60,000
Audit-Related Fees (2)(6) ...........       24,400               23,000
Tax Fees (3)(6) .....................       73,700               74,000
All Other Fees (4)(6) ...............            0                    0
Aggregate Non-Audit Fees (5)(6) .....       98,100               97,000

--------

(1)   Audit Fees are fees billed for professional services rendered by the
      Fund's principal accountant for the audit of the Fund's annual financial
      statements and for services that are normally provided by the accountant
      in connection with statutory and regulatory filings or engagements.

(2)   Audit-Related Fees are fees billed for assurance and related services by
      the Fund's principal accountant that are reasonably related to the
      performance of the audit of the Fund's financial statements and are not
      reported under the caption "Audit Fees." In both years shown in the table,
      such services consisted of performance of quarterly agreed-upon procedures
      relating to the Fund's preferred stock and commercial paper.

(3)   Tax Fees are fees billed for professional services rendered by the Fund's
      principal accountant for tax compliance, tax advice and tax planning. In
      the year ended December 31, 2004, such services consisted of preparation
      of the Fund's annual federal and state income tax returns and excise tax
      returns (for a fee of $12,000) and one extraordinary item: consulting work
      regarding the tax treatment of contingent payment debt and trust preferred
      instruments (for a fee of $62,000). In the year ended December 31, 2005,
      such services consisted of preparation of the Fund's annual federal and
      state income tax returns and excise tax returns (for a fee of $12,700) and
      three extraordinary items: consultation regarding an application for an
      IRS private letter ruling (for a fee of $26,000) and consulting work
      regarding the tax treatment of contingent payment debt and trust preferred
      instruments (for a fee of $35,000).

(4)   All Other Fees are fees billed for products and services provided by the
      Fund's principal accountant, other than the services reported under the
      captions "Audit Fees," "Audit-Related Fees" and "Tax Fees."

(5)   Aggregate Non-Audit Fees are fees billed by the Fund's accountant for
      services rendered to the Fund, the Adviser and any entity controlling,
      controlled by or under common control with the Adviser that provides
      ongoing services to the Fund. During both years shown in the table, no
      portion of such fees related to services rendered by the Fund's accountant
      to the Adviser or to any entity controlling, controlled by or under common
      control with the Adviser that provides ongoing services to the Fund.

(6)   No portion of these fees was approved by the audit committee after the
      beginning of the engagement pursuant to the waiver of the pre-approval
      requirement for certain de minimis non-audit services described in Section
      10A of the 1934 Act and applicable regulations.


                                       18


      PRE-APPROVAL  OF AUDIT AND  NON-AUDIT  SERVICES.  Each  engagement  of the
Fund's  independent  registered  public  accounting  firm  to  render  audit  or
non-audit  services to the Fund is either (i)  pre-approved  by the Fund's audit
committee  or the chairman of the audit  committee,  to whom the  committee  has
delegated the authority to grant such  pre-approvals  between scheduled meetings
of the  committee,  or (ii) entered into pursuant to  pre-approval  policies and
procedures  established by the audit committee.  A copy of the audit committee's
pre-approval  policies  and  procedures  is  attached as Exhibit C to this proxy
statement.  The Fund's  audit  committee  is also  required to  pre-approve  its
accountant's  engagements for non-audit services rendered to the Adviser and any
entity controlling,  controlled by or under common control with the Adviser that
provides ongoing services to the Fund, if the engagement relates directly to the
operations  and financial  reporting of the Fund.  In deciding  whether to grant
pre-approval for such non-audit services, the audit committee or the chairman of
the audit committee, as the case may be, considers whether the provision of such
non-audit services is compatible with maintaining the independence of the Fund's
accountants.

      NOMINATION OF DIRECTORS. The nominating/corporate  governance committee is
composed of three directors and acts under a written charter that was adopted by
the board of  directors  on  February  21,  2003 and most  recently  amended  on
February 24,  2006. A copy of the charter is available on the Fund's  website at
www.dnpselectincome.com.   None  of  the  members  of  the  nominating/corporate
governance  committee are "interested persons" of the Fund as defined in section
2(a)(19)  of the 1940 Act.  In  identifying  potential  director  nominees,  the
nominating/corporate  governance committee considers  candidates  recommended by
one or more of the following sources:  the Fund's current directors,  the Fund's
officers,  the Fund's  shareholders  and any other  source the  committee  deems
appropriate.  The  committee  may, but is not required to,  retain a third-party
search firm at the Fund's expense to identify potential candidates. Shareholders
wishing to recommend candidates to the nominating/corporate governance committee
should  submit  such  recommendations  to the  Secretary  of the Fund,  who will
forward the  recommendations to the committee for  consideration.  In evaluating
potential director nominees, including nominees recommended by shareholders, the
nominating/corporate  governance  committee  considers such  qualifications  and
skills  as  it  deems   relevant  but  does  not  have  any   specific   minimum
qualifications  that must be met by a nominee.  The committee  considers,  among
other things:

      o  whether the candidate will qualify as a director who is not an
         "interested person" of the Fund;

      o  the  absence of any real or apparent  conflict  of interest  that would
         interfere with the candidate's  ability to act in the best interests of
         the Fund and its shareholders;

      o  the contribution  that the candidate can make to the board of directors
         by virtue of his or her  education,  business  experience and financial
         expertise;

      o  the interplay  of the candidate's skills and experience with the skills
         and experience of other board members;

      o  whether the  candidate  is  willing  to commit the time  necessary   to
         attend  meetings  and fulfill the  responsibilities  of a director; and

      o  the candidate's personality traits, including integrity,  independence,
         leadership, sound business judgment and the ability to work effectively
         with the other members of the board of directors.

      With respect to the renomination of incumbent  directors,  past service to
the board is also considered.


                                       19


      SHAREHOLDER  COMMUNICATIONS  WITH THE  BOARD OF  DIRECTORS.  The  board of
directors  has  adopted  the  following  procedures  for  shareholders  to  send
communications  to  the  board  of  directors.  Shareholders  may  mail  written
communications  to the full board,  to  committees  of the board or to specified
individual  directors  in care of the  Secretary  of the  Fund,  55 East  Monroe
Street,  Suite 3600,  Chicago,  Illinois 60603.  All shareholder  communications
received by the  Secretary  will be  forwarded  promptly to the full board,  the
relevant board committee or the specified individual  directors,  as applicable,
except  that the  Secretary  may, in good faith,  determine  that a  shareholder
communication should not be so forwarded if it does not reasonably relate to the
Fund or its operations,  management,  activities,  policies,  service providers,
board, officers,  shareholders or other matters relating to an investment in the
Fund or is  purely  ministerial  in  nature.  Each of the  Fund's  directors  is
encouraged  to attend the  annual  meeting  of  shareholders.  All of the Fund's
directors attended the May 23, 2005 annual meeting of shareholders.

      SHAREHOLDER  PROPOSALS.  Any  shareholder  proposal to be  considered  for
inclusion  in the Fund's proxy  statement  and form of proxy for the 2007 annual
meeting of shareholders should be received by the Secretary of the Fund no later
than  November  27,  2006.  Under  the  circumstances  described  in,  and  upon
compliance  with, Rule 14a-4(c) under the 1934 Act, the Fund may solicit proxies
in connection with the 2007 annual meeting which confer discretionary  authority
to vote on any shareholder proposals of which the Secretary of the Fund does not
receive notice by February 10, 2007.

      SOLICITATION OF PROXIES. Proxies will be solicited by mail. Proxies may be
solicited by Fund personnel  personally or by telephone,  telegraph or mail, but
such persons will not be specially compensated for such services.  The Fund will
inquire of any record holder known to be a broker, dealer, bank or other nominee
as to whether other persons are the  beneficial  owners of shares held of record
by such persons.  If so, the Fund will supply  additional copies of solicitation
materials for forwarding to beneficial  owners,  and will make reimbursement for
reasonable out-of-pocket costs. In addition, the Fund may hire a proxy solicitor
to assist the Fund in the  solicitation  of  proxies  at a fee of  approximately
$20,000, plus out-of-pocket expenses.

      ANNUAL AND  SEMI-ANNUAL  REPORTS.  The Fund will provide without charge to
any shareholder who so requests, a copy of the Fund's annual report for the year
ended  December  31, 2005 and the Fund's  semi-annual  report for the six months
ended June 30, 2005.  Requests for copies of such reports  should be directed to
the Administrator at (888) 878-7845 (toll-free). Copies of such reports are also
available by accessing the Fund's web site at www.dnpselectincome.com.

      GENERAL.  A list of  shareholders  entitled  to be present and vote at the
annual  meeting  will be  available  at the offices of the Fund,  55 East Monroe
Street,  Chicago,  Illinois  60603,  for  inspection by any  shareholder  during
regular business hours for ten days prior to the date of the meeting.

      Failure of a quorum to be present at the annual  meeting will  necessitate
adjournment and will give rise to additional expense.

      ALL  STOCKHOLDERS ARE REQUESTED TO SIGN, DATE AND MAIL PROXIES PROMPTLY IN
THE RETURN ENVELOPE PROVIDED.

March 27, 2006


                                       20


                                    EXHIBIT A

                           DNP SELECT INCOME FUND INC.

                  FORM OF ARTICLES OF AMENDMENT AND RESTATEMENT

      DNP SELECT INCOME FUND INC., a Maryland corporation,  having its principal
office  in  Baltimore   City,   Maryland   (which  is  hereinafter   called  the
"Corporation"), desires to amend and restate its charter as currently in effect,
and hereby  certifies to the State  Department  of  Assessments  and Taxation of
Maryland that:

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

      FIRST. NAME. The name of the corporation (the "Corporation") is DNP Select
Income Fund Inc.

      SECOND. PURPOSES. The purposes for which the Corporation is formed are:

      1.  To  engage  in the  business  of a  closed-end  management  investment
company.

      2. To invest and  reinvest in, to buy or  otherwise  acquire,  to hold for
investment or otherwise, and to sell or otherwise dispose of:

           a. Securities of all kinds, however evidenced, and rights or warrants
to  acquire   securities,   of  private  and  public  companies,   corporations,
associations, trusts and other enterprises and organizations;

           b. Obligations issued or guaranteed by national and state governments
and their instrumentalities and subdivisions;

           c. Deposits in banks,  savings banks, trust companies and savings and
loan associations;

           d. Assets and interests other than securities or deposits.

      3. To engage in any other  lawful act or activity  for which  corporations
may be  organized  under the  general  laws of the State of  Maryland  as now or
hereafter in force.

      THIRD. PRINCIPAL OFFICE AND RESIDENT AGENT. The post office address of the
principal  office  of the  Corporation  in the  State  of  Maryland  is c/o  The
Corporation Trust  Incorporated,  300 East Lombard Street,  Baltimore,  Maryland
21202. The name and post office address of the resident agent of the Corporation
in the State of Maryland is The Corporation Trust Incorporated, 300 East Lombard
Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation.

      FOURTH. CAPITAL STOCK.

      The total  number of shares of all classes of stock which the  Corporation
shall have authority to issue is 350,000,000  shares with an aggregate par value
of $350,000, divided into two classes, of 250,000,000 shares


                                       21


of common stock, $.001 par value per share ("common stock"),  and of 100,000,000
shares of preferred stock, $.001 par value per share ("preferred  stock").  Five
thousand  shares of preferred  stock have been further  designated  as shares of
Remarketed Preferred Stock, as set forth in Article Fourteenth.

      The preferences, conversion and other rights, voting powers, restrictions,
limitations  as to  dividends,  qualifications,  and  terms  and  conditions  of
redemption,  of the  common  stock  and the  preferred  stock  (other  than  the
Remarketed Preferred Stock, the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption  of which are set forth in Article  Fourteenth)  are as
follows:

           A.   COMMON STOCK

                1.  DIVIDENDS.  Subject  to law  and to the  preferences  of the
           preferred stock, the holders of the common stock shall be entitled to
           receive  dividends  at  such  time  and  in  such  amounts  as may be
           determined by the board of directors.

                2. VOTING.  Except as provided by law and in or pursuant to this
           Article  Fourth,  the holders of the common stock shall have one vote
           for each share on each matter submitted to a vote of the stockholders
           of the Corporation.

                3. LIQUIDATION. In the event of any liquidation,  dissolution or
           winding up of the  Corporation,  whether  voluntary  or  involuntary,
           after  payment  or  provision  for  payment  of the  debts  and other
           liabilities of the Corporation and the preferential  amounts to which
           the  holders  of  the   preferred   stock  shall  be  entitled   upon
           liquidation,  the  holders of the common  stock  shall be entitled to
           share in the remaining  assets of the Corporation  according to their
           respective interests.

           B.   PREFERRED STOCK

                1.  AUTHORITY OF THE BOARD OF DIRECTORS TO ISSUE IN SERIES.  The
           preferred  stock  may be  issued  from  time  to  time in one or more
           series.  All shares of any one  series of  preferred  stock  shall be
           identical except as to the respective dates of their issue, the dates
           from  which  dividends  on shares of the series  issued on  different
           dates shall cumulate,  dividend rates,  dividend periods and dividend
           payment dates. Subject to the charter, authority is expressly granted
           to the  board of  directors  to  authorize  the  issue of one or more
           series of preferred  stock,  and to fix by resolution or  resolutions
           providing  for  the  issue  of  each  such  series  the  preferences,
           conversion or other rights, voting powers, restrictions,  limitations
           as  to  dividends,   qualifications,  and  terms  and  conditions  of
           redemptions,  of such  series,  to the full  extent now or  hereafter
           permitted by law, including but not limited to the following:

                     a.  The  number  of  shares  of  such  series,   which  may
                subsequently be increased  (except as otherwise  provided by the
                resolution or  resolutions  of the board of directors  providing
                for the issue of such series) or decreased (to a number not less
                than the number of shares then  outstanding)  by  resolution  or
                resolutions  of the  board  of  directors,  and the  distinctive
                designation of the series;


                                       22


                     b. The  rates or  amounts,  the  periods,  and the times of
                payment, of dividends on shares of such series;

                     c. The voting powers, if any, of the holders of such series
                in  addition  to the voting  powers  provided by law and in this
                Article Fourth;

                     d. The terms and conditions,  if any, upon which the shares
                of such series shall be  convertible  into or  exchangeable  for
                shares  of any  other  series,  class or  classes,  or any other
                securities,  to the full extent now or  hereafter  permitted  by
                law;

                     e. The time or times during  which,  the price or prices at
                which, and the terms and conditions on which, the shares of such
                series may be redeemed by the Corporation;

                     f.  The  terms of any  sinking  fund to be  applied  to the
                purchase or redemption,  or both, of shares of such series,  and
                the terms and amount of any sinking fund payments and the manner
                of their application; and

                     g. The amount  which the  holders of each  series  shall be
                entitled to receive in the event of any voluntary or involuntary
                liquidation, dissolution or winding up of the Corporation.

      Except as stated above in this part 1, all shares of preferred stock shall
      be identical.  All shares of preferred stock,  regardless of series, shall
      be of equal  rank,  and there  shall be no priority of one series over any
      other  series in any payment of  dividends  nor upon any  distribution  of
      assets.

           2. DIVIDENDS.  The holders of preferred stock of each series shall be
      entitled  to  receive,  when and as  declared  by the board of  directors,
      cumulative cash dividends at the rates or amounts, for the periods, and at
      the times,  determined as, or in the manner,  specified for such series by
      the board of directors as authorized in the preceding part 1.

           No  dividends  shall be paid or  declared or set apart for payment on
      any share of preferred  stock of any series for any dividend period unless
      at or prior to such  time  all  dividends  accumulated  on all  shares  of
      preferred stock then outstanding shall have been declared through the most
      recently ended dividend period of the respective  shares,  and terminating
      on the same and any earlier  date shall have been paid or declared and set
      apart for payment.

           3. VOTING. At any meeting of stockholders of the Corporation at which
      directors are to be elected, the holders of preferred stock of all series,
      voting  separately  as a single  class,  shall be  entitled  to elect  two
      members of the board of directors, and the holders of common stock, voting
      separately  as a single  class,  shall be entitled to elect the balance of
      the members of the board of directors.

           If at any time dividends on any  outstanding  preferred  stock of any
      series  shall be unpaid in an amount  equal to two full years'  dividends,
      the  number  of  directors  constituting  the  board  of  directors  shall
      automatically  be increased by the smallest number that, when added to the
      number  of  directors  then  constituting  the board of  directors,  shall
      constitute  a  majority  of  such  increased  number,  including  the  two
      directors  elected  by the  holders of  preferred  stock  pursuant  to the
      preceding paragraph;  and at a special


                                       23


      meeting  of  stockholders  which  shall  be  called  and  held  as soon as
      practicable,  and at all subsequent  meetings at which directors are to be
      elected,  the holders of preferred stock of all series,  voting separately
      as a single  class,  shall be  entitled  to elect the  smallest  number of
      additional  directors of the Corporation who will constitute a majority of
      the total number of directors of the  Corporation so increased.  The terms
      of office of the persons who are  directors  at the time of that  election
      shall continue.  If the Corporation  thereafter  shall pay, or declare and
      set apart for payment,  in full all dividends  payable on all  outstanding
      shares of preferred stock of all series for all past dividend periods, the
      voting rights stated in the preceding  sentence shall cease, and the terms
      of office of all of the  directors  elected by the  holders  of  preferred
      stock (but not of the  directors  elected by the holders of common  stock)
      shall terminate automatically.  A special meeting of stockholders shall be
      called and held as soon  thereafter as practicable for the election of two
      directors  by the  holders of the  preferred  stock,  as  provided  in the
      preceding  paragraph;  and at such meeting, and at all subsequent meetings
      of  stockholders  at which  directors  are to be  elected,  the holders of
      shares of  preferred  stock and of common  stock  shall  have the right to
      elect the  members of the board of  directors  as stated in the  preceding
      paragraph,  subject to the  revesting  of the rights of the holders of the
      preferred stock as provided in the first sentence of this paragraph in the
      event of any  subsequent  arrearage  in the  payment  of two  full  years'
      dividends on the shares of preferred stock of any series.

           Any vacancy in the office of any  director  elected by the holders of
      shares of preferred  stock may be filled by the  remaining  directors  (or
      director)  so elected  or, if not so filled,  by the  holders of shares of
      preferred stock of all series, voting separately as a single class, at any
      meeting of stockholders for the election of directors held  thereafter.  A
      director  elected by the holders of preferred stock or of common stock may
      be removed with or without cause,  but only by action taken by the holders
      of at least 75% of the  shares  of  preferred  stock or of  common  stock,
      respectively,   then  entitled  to  vote  in  an  election  to  fill  that
      directorship.

           Except to the extent  stated  otherwise in this Article  Fourth,  the
      provisions of Article Sixth shall apply to this Article Fourth.

           4.  LIQUIDATION.  In the  event of any  liquidation,  dissolution  or
      winding up of the  Corporation,  whether  voluntary  or  involuntary,  the
      holders of  preferred  stock of each  series  shall be entitled to receive
      only such amount or amounts,  including  accumulated and unpaid dividends,
      as  shall  have  been  fixed  by  the  charter  or by  the  resolution  or
      resolutions  of the  board of  directors  providing  for the issue of such
      series.  If, upon any such  liquidation,  dissolution or winding up of the
      Corporation,   whether  voluntary  or  involuntary,   the  assets  of  the
      Corporation   available  for   distribution   among  the  holders  of  all
      outstanding shares of preferred stock of all series should be insufficient
      to permit the payment in full to such holders of the amounts to which they
      are entitled,  then such available  assets shall be distributed  among the
      holders of shares of preferred  stock ratably in any such  distribution of
      assets  according to the  respective  amounts that would be payable on all
      such shares if all amounts thereon were paid in full. A  consolidation  or
      merger of the Corporation with or into one or more other corporations or a
      sale, lease or exchange of all or  substantially  all of the assets of the
      Corporation  shall  not  be  deemed  to  be  a  voluntary  or  involuntary
      liquidation, dissolution or winding up, within the meaning of this Article
      Fourth.

      C.   ALL STOCK

           1. SALE OF SHARES.  The board of directors may authorize the sale and
      issuance  from time to time of shares of stock,  whether now or  hereafter
      authorized, for such consideration as the board of directors considers


                                       24


      advisable, but not less than par value, subject to such limitations as may
      be set forth in the charter of the  Corporation,  the bylaws,  the General
      Laws of the State of Maryland,  the  Investment  Company Act of 1940,  and
      other applicable laws.

           2.  FRACTIONAL  SHARES.  Except as may be provided  otherwise  by the
      board of  directors in  authorizing  the issuance of a series of preferred
      stock,  stock may be issued in fractions of whole shares,  to which attach
      pro rata all of the rights of whole shares,  including the right of voting
      and of  receipt  of  dividends,  except  that  there  shall be no right of
      receipt of a certificate representing any fraction of a whole share.

           3. NO  PREEMPTIVE  RIGHTS.  No holder  of shares of the  Corporation,
      whether  now or  hereafter  authorized,  shall be  entitled as of right to
      acquire from the Corporation any shares of the Corporation, whether now or
      hereafter authorized.

      FIFTH.  BYLAWS.  The board of directors is authorized to adopt,  alter and
repeal  the  bylaws of the  Corporation,  except to the  extent  that the bylaws
provide otherwise.

      SIXTH. BOARD OF DIRECTORS.

      1. The total  number of directors  constituting  the board of directors of
the Corporation shall be three,  which number may be increased from time to time
in  accordance  with the  bylaws of the  Corporation  but shall not be less than
three.  No  decrease  in the  number  of  directors  shall  have the  effect  of
shortening the term of any director then in office.

      2. Beginning with the first annual meeting of shareholders  held after the
initial public  offering of the shares of the  Corporation  ("the initial annual
meeting"),  the board of directors shall be divided into three classes: class I,
class II, and class III. The terms of office of the classes of directors elected
at the initial annual  meeting shall expire at the times of the annual  meetings
of the stockholders as follows--class I in 1988, class II in 1989, and class III
in 1990--or thereafter in each case when their respective successors are elected
and qualified.  At each  subsequent  annual  election,  the directors  chosen to
succeed those whose terms are expiring  shall be identified as being of the same
class as the  directors  whom  they  succeed,  and shall be  elected  for a term
expiring at the time of the third succeeding annual meeting of stockholders,  or
thereafter  in each  case when  their  respective  successors  are  elected  and
qualified. The number of directorships shall be apportioned among the classes so
as to maintain the classes as nearly equal in number as possible.

      3. Any  vacancy  occurring  in the board of  directors  may be filled by a
majority  of the  directors  in office.  A new  directorship  resulting  from an
increase in the number of directors shall be construed not to be a vacancy.  Any
director  elected to fill a vacancy shall be in the same class and have the same
remaining term as that of the predecessor.

      4. A director may be removed with or without cause,  but only by action of
the  shareholders  taken by the  holders  of at  least  75% of the  shares  then
entitled to vote in an election of directors.

      5. A majority of the total number of  directors  fixed in the bylaws shall
be required to constitute a quorum at meetings of the board of directors.


                                       25


      SEVENTH. MAJORITY VOTES OF STOCKHOLDERS.  Notwithstanding any provision of
the laws of the State of Maryland  requiring approval by the stockholders of any
action by the  affirmative  vote of a greater  proportion than a majority of the
votes  entitled  to be cast on the  matter,  any  such  action  may be  taken or
authorized upon the concurrence of a majority of the number of votes entitled to
be cast thereon.

      EIGHTH.  INDEMNIFICATION.  Each person who is or was a director or officer
of the  Corporation,  and each person who serves or served at the request of the
Corporation as a director or officer of another enterprise, shall be indemnified
by the Corporation in accordance with, and to the fullest extent  authorized by,
the Maryland  General  Corporation Law as it may be in effect from time to time,
provided  that this  section  shall not protect  any  director or officer of the
Corporation  against any liability to the Corporation or to its  shareholders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless  disregard of the duties involved in the conduct of
his office;  and provided further that this Article Eighth shall not apply as to
any action,  suit or proceeding brought by or on behalf of a director or officer
without prior approval of the board of directors.

      NINTH.  LIABILITY OF DIRECTORS AND OFFICERS. The directors and officers of
the  Corporation  shall  not  be  liable  to  the  Corporation  or to any of its
stockholders or creditors because of any action taken by them in good faith, and
in taking any such action the directors and officers shall be fully protected in
relying in good faith upon the books of account of the Corporation or statements
or reports  prepared by any of its  officials or employees or by others who they
believe in good faith are qualified to make such statements or reports; provided
that this sentence shall not protect any director or officer of the  Corporation
against any  liability to the  Corporation  or to its  stockholders  to which he
would otherwise be subject by reason of willful  misfeasance,  bad faith,  gross
negligence  or reckless  disregard of the duties  involved in the conduct of his
office.

      TENTH.  MERGER,  SALE OF ASSETS,  LIQUIDATION.  Notwithstanding  any other
provisions of the charter of the Corporation, a favorable vote of the holders of
at least 75% of the shares of the  Corporation  then entitled to be voted on the
matter  shall be  required  to  approve,  adopt  or  authorize  (i) a merger  or
consolidation of the Corporation with any other corporation,  (ii) a sale of all
or substantially all of the assets of the Corporation (other than in the regular
course of its investment  activities),  or (iii) a liquidation or dissolution of
the  Corporation,  unless such action has previously  been approved,  adopted or
authorized  by the  affirmative  vote  of  two-thirds  of the  total  number  of
directors fixed in accordance with the bylaws.

      ELEVENTH.  CONVERSION  TO  OPEN-END  COMPANY.  Notwithstanding  any  other
provisions  of the charter of the  Corporation,  at any time prior to January 1,
1992,  a  favorable  vote of the  holders  of at least 75% of the  shares of the
Corporation  entitled  to be voted on the matter  shall be  required to approve,
adopt or authorize an amendment to the charter of the Corporation that makes the
common  stock a redeemable  security (as that term is defined in the  Investment
Company Act of 1940),  unless such action has previously been approved,  adopted
or  authorized  by the  affirmative  vote of  two-thirds  of the total number of
directors fixed in accordance with the bylaws.

      TWELFTH.  AMENDMENT  OF CHARTER.  The  Corporation  reserves  the right to
amend,  alter,  change or repeal any provision  contained in its charter, in the
manner now or hereafter prescribed by statute, and any rights conferred upon the
stockholders are granted subject to this reservation.  Notwithstanding any other
provisions of the charter of the  Corporation  or the bylaws of the  Corporation
(and  notwithstanding  the fact that a lesser percentage may be specified by law
or the charter or bylaws of the Corporation), the amendment or repeal of Article
Sixth, Seventh,

                                       26


Eighth,  Ninth,  Tenth,  Eleventh or Twelfth of the  charter of the  Corporation
shall require the affirmative  vote of the holders of at least 75% of the shares
then entitled to be voted on the matter.

      THIRTEENTH.  LIMITATION OF LIABILITY.  To the fullest extent  permitted by
Maryland statutory or decisional law, as amended or interpreted,  no director or
officer of the Corporation  shall be personally  liable to the Corporation or to
its  stockholders  for money  damages;  provided,  however,  that  this  Article
Thirteenth shall not protect any director or officer of the Corporation  against
any liability to the Corporation or to its stockholders to which he or she would
otherwise  be  subject  by reason  of  willful  misfeasance,  bad  faith,  gross
negligence,  or reckless  disregard of the duties involved in the conduct of his
or her office.  No amendment of the charter of the  Corporation or repeal of any
of its  provisions  shall limit or eliminate the benefits  provided to directors
and officers  under this  provision in connection  with any act or omission that
occurred prior to such amendment or repeal.

      FOURTEENTH. REMARKETED PREFERRED STOCK. The number of shares, preferences,
conversion  and other rights,  voting  powers,  restrictions,  limitations as to
dividends,  qualifications,  and  terms and  conditions  of  redemption,  of the
Remarketed  Preferred Stock,  Series A; Remarketed  Preferred  Stock,  Series B;
Remarketed  Preferred Stock, Series C; Remarketed Preferred Stock, Series D; and
Remarketed  Preferred  Stock,  Series  E  are  as  set  forth  in  this  Article
Fourteenth:

                                   DESIGNATION

      SERIES A: A series of 1,000 shares of preferred stock, par value $.001 per
share,  liquidation  preference  $100,000 per share plus  accumulated but unpaid
dividends,  if any, thereon  (whether or not earned or declared),  is designated
"Remarketed  Preferred  Stock,  Series  A." Each share of  Remarketed  Preferred
Stock,  Series A shall be  issued  on a date to be  determined  by the  Board of
Directors of the Corporation or a duly  authorized  committee  thereof;  have an
Initial  Dividend Payment Date (as herein defined) to be determined by the Board
of Directors of the  Corporation  or a duly  authorized  committee  thereof;  be
redeemed  (unless  such share  shall have been  otherwise  redeemed  pursuant to
paragraph 4 of Part I of this Article  Fourteenth) by the  Corporation on a date
to be  determined  by  the  Board  of  Directors  of the  Corporation  or a duly
authorized  committee  thereof at a redemption  price of $100,000 per share plus
accumulated  but unpaid  dividends to the date fixed for redemption  (whether or
not  earned or  declared);  and have such  other  preferences,  limitations  and
relative  voting rights,  in addition to those required by applicable law or set
forth in the Charter  applicable to preferred stock of the  Corporation,  as are
set  forth  in Part I and Part II of this  Article  Fourteenth.  The  Remarketed
Preferred Stock,  Series A shall constitute a separate series of preferred stock
of the Corporation,  and each share of Remarked Preferred Stock,  Series A shall
be  identical  except  as  provided  in  paragraph  4 of Part I of this  Article
Fourteenth.

      SERIES B: A series of 1,000 shares of preferred stock, par value $.001 per
share,  liquidation  preference  $100,000 per share plus  accumulated but unpaid
dividends,  if any, thereon  (whether or not earned or declared),  is designated
"Remarketed  Preferred  Stock,  Series  B." Each share of  Remarketed  Preferred
Stock,  Series B shall be  issued  on a date to be  determined  by the  Board of
Directors of the Corporation or a duly  authorized  committee  thereof;  have an
Initial  Dividend Payment Date (as herein defined) to be determined by the Board
of Directors of the  Corporation  or a duly  authorized  committee  thereof;  be
redeemed  (unless  such share  shall have been  otherwise  redeemed  pursuant to
paragraph 4 of Part I of this Article  Fourteenth) by the  Corporation on a date
to be  determined  by  the  Board  of  Directors  of the  Corporation  or a duly
authorized  committee  thereof at a redemption  price of $100,000 per share plus
accumulated but unpaid dividends to the date fixed for redemption

                                       27


(whether  or  not  earned  or  declared);   and  have  such  other  preferences,
limitations  and  relative  voting  rights,  in  addition  to those  required by
applicable law or set forth in the Charter  applicable to preferred stock of the
Corporation,  as are set forth in Part I and Part II of this Article Fourteenth.
The Remarketed  Preferred Stock,  Series B shall constitute a separate series of
preferred  stock of the  Corporation,  and each  share of  Remarketed  Preferred
Stock,  Series B shall be identical  except as provided in paragraph 4 of Part I
of this Article Fourteenth.

      SERIES C: A series of 1,000 shares of preferred  stock, par value of $.001
per share, liquidation preference $100,000 per share plus accumulated but unpaid
dividends,  if any, thereon  (whether or not earned or declared),  is designated
"Remarketed  Preferred  Stock,  Series  C." Each share of  Remarketed  Preferred
Stock,  Series C shall be  issued  on a date to be  determined  by the  Board of
Directors of the Corporation or a duly  authorized  committee  thereof;  have an
Initial  Dividend Payment Date (as herein defined) to be determined by the Board
of Directors of the  Corporation  or a duly  authorized  committee  thereof;  be
redeemed  (unless  such share  shall have been  otherwise  redeemed  pursuant to
paragraph 4 of Part I of this Article  Fourteenth) by the  Corporation on a date
to be  determined  by  the  Board  of  Directors  of the  Corporation  or a duly
authorized  committee  thereof at a redemption  price of $100,000 per share plus
accumulated  but unpaid  dividends to the date fixed for redemption  (whether or
not  earned or  declared);  and have such  other  preferences,  limitations  and
relative  voting rights,  in addition to those required by applicable law or set
forth in the Charter  applicable to preferred stock of the  Corporation,  as are
set  forth  in Part I and Part II of this  Article  Fourteenth.  The  Remarketed
Preferred Stock,  Series C shall constitute a separate series of preferred stock
of the Corporation, and each share of Remarketed Preferred Stock, Series C shall
be  identical  except  as  provided  in  paragraph  4 of Part I of this  Article
Fourteenth.

      SERIES D: A series of 1,000 shares of preferred stock, par value $.001 per
share,  liquidation  preference  $100,000 per share plus  accumulated but unpaid
dividends,  if any, thereon  (whether or not earned or declared),  is designated
"Remarketed  Preferred  Stock,  Series  D." Each share of  Remarketed  Preferred
Stock,  Series D shall be  issued  on a date to be  determined  by the  Board of
Directors of the Corporation or a duly  authorized  committee  thereof;  have an
Initial  Dividend Payment Date (as herein defined) to be determined by the Board
of Directors of the  Corporation  or a duly  authorized  committee  thereof;  be
redeemed  (unless  such share  shall have been  otherwise  redeemed  pursuant to
paragraph 4 of Part I of this Article  Fourteenth) by the  Corporation on a date
to be  determined  by  the  Board  of  Directors  of the  Corporation  or a duly
authorized  committee  thereof at a redemption  price of $100,000 per share plus
accumulated  but unpaid  dividends to the date fixed for redemption  (whether or
not  earned or  declared);  and have such  other  preferences,  limitations  and
relative  voting rights,  in addition to those required by applicable law or set
forth in the Charter  applicable to preferred stock of the  Corporation,  as are
set  forth  in Part I and Part II of this  Article  Fourteenth.  The  Remarketed
Preferred Stock,  Series D shall constitute a separate series of preferred stock
of the Corporation, and each share of Remarketed Preferred Stock, Series D shall
be  identical  except  as  provided  in  paragraph  4 of Part I of this  Article
Fourteenth.

      SERIES E: A series of 1,000 shares of preferred stock, par value $.001 per
share,  liquidation  preference  $100,000 per share plus  accumulated but unpaid
dividends,  if any, thereon  (whether or not earned or declared),  is designated
"Remarketed  Preferred  Stock,  Series  E." Each share of  Remarketed  Preferred
Stock,  Series E shall be  issued  on a date to be  determined  by the  Board of
Directors of the Corporation or a duly  authorized  committee  thereof;  have an
Initial  Dividend Payment Date (as herein defined) to be determined by the Board
of Directors of the  Corporation  or a duly  authorized  committee  thereof;  be
redeemed (unless such share shall have been

                                       28


otherwise redeemed pursuant to paragraph 4 of Part I of this Article Fourteenth)
by the  Corporation  on a date to be determined by the Board of Directors of the
Corporation  of a duly  authorized  committee  thereof at a redemption  price of
$100,000 per share plus  accumulated but unpaid  dividends to the date fixed for
redemption (whether or not earned or declared); and have such other preferences,
limitations  and  relative  voting  rights,  in  addition  to those  required by
applicable law or set forth in the Charter  applicable to preferred stock of the
Corporation,  as are set forth in Part I and Part II of this Article Fourteenth.
The Remarketed  Preferred Stock,  Series E shall constitute a separate series of
preferred  stock of the  Corporation,  and each  share of  Remarketed  Preferred
Stock,  Series E shall be identical  except as provided in paragraph 4 of Part I
of this Article Fourteenth.

                                     PART I.
                                     -------

      1.  DEFINITIONS.  Unless the context or use indicates another or different
meaning or intent,  the following  terms shall have the  following  meanings for
purposes of this Article Fourteenth, whether used in the singular or plural:

           "`AA' Composite  Commercial  Paper Rate," on any date,  means (i) the
Interest  Equivalent  of the rate on  commercial  paper placed for the number of
days specified in the succeeding  sentence on behalf of issuers whose  corporate
bonds are  rated  "AA" by S&P and "Aa" by  Moody's,  or the  equivalent  of such
rating by another nationally recognized statistical rating organization, as such
rate is made  available  by the Federal  Reserve  Bank of New York on a discount
basis or otherwise for the Business Day immediately preceding such date, or (ii)
if the Federal  Reserve  Bank of New York does not make  available  such a rate,
then  the  arithmetic  average  of the  Interest  Equivalent  of such  rates  on
commercial paper placed on behalf of such issuers, as quoted on a discount basis
or otherwise by the Commercial  Paper Dealers to the  Remarketing  Agent for the
close of  business on the  Business  Day  immediately  preceding  such date.  In
respect of any Dividend Period  (determined  without regard to any adjustment in
the remarketing  schedule in respect of non-Business  Days, as provided herein),
the "AA" Composite Commercial Paper Rate shall be the Interest Equivalent of the
60-day rate.  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 Dealers or, if
none of the  Commercial  Paper  Dealers  quotes such a rate,  by any  Substitute
Commercial  Paper Dealer or Dealers  selected by the Corporation to provide such
rate or rates not being supplied by any Commercial Paper Dealer.

           "Accountant's  Confirmation"  has the meaning set forth in  paragraph
8(a) (iii) of this Part I.

           "Agent Member" means a designated member of the Securities Depository
that will maintain  records for a Beneficial Owner of shares of RP and that will
be authorized and instructed to disclose  information to the  Remarketing  Agent
and the Paying Agent with respect to such Beneficial Owner.

           "Annual  Valuation  Date" means,  for so long as any shares of RP are
outstanding,  December 31 of each year, or, if such day is not a Valuation Date,
the next preceding Valuation Date.

           "Applicable  Dividend  Rate"  means,  with  respect  to  the  Initial
Dividend Period, the rate of cash dividend per annum established by the Board of
Directors  and,  for each  subsequent  Dividend  Period,  means the rate of cash
dividend  per annum that (i) except for a Dividend  Period  commencing  during a
Non-Payment  Period, will


                                       29


be  equal  to the  lower  of the  rate of  cash  dividend  per  annum  that  the
Remarketing Agent advises results on the Dividend Reset Date preceding the first
day of such Dividend Period from  implementation  of the remarketing  procedures
set  forth in Part II  hereof  and the  Maximum  Dividend  Rate or (ii) for each
Dividend Period  commencing  during a Non-Payment  Period,  will be equal to the
Non-Payment Period Rate.

           "Applicable  Percentage"  has the meaning  set forth  under  "Maximum
Dividend Rate" below.

           "Authorized  Newspaper"  means a newspaper of general  circulation in
the English  language  generally  published on Business  Days in The City of New
York.

           "Beneficial  Owner"  means a person that is listed as the  beneficial
owner of one or more  shares of RP in the  records of the Paying  Agent or, with
respect to any share not registered in the name of the Securities  Depository on
the stock transfer books of the Corporation, the person in whose name such share
is so registered.

           "Board of Directors" means the Board of Directors of the Corporation.

           "Business Day" means a day on which the New York Stock Exchange, Inc.
is open for trading, and is not a day on which banks in The City of New York are
authorized or obligated by law to close.

           "Charter" means the charter of the Corporation.

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

           "Commercial  Paper  Dealers" means Merrill  Lynch,  Pierce,  Fenner &
Smith Incorporated  ("MLPF&S") and such other Commercial Paper Dealer or Dealers
as the  Corporation  may from time to time appoint,  or, in lieu of any thereof,
their respective affiliates or successors.

           "Common Stock" means the common stock,  par value $.001 per share, of
the Corporation.

           "Corporation"   means  DNP  Select   Income  Fund  Inc.,  a  Maryland
corporation and the issuer of the shares of RP.

           "Date of Original Issue" means,  with respect to any share of RP, the
date on which the Corporation originally issues such share.

           "Discount Factor" means a Moody's Discount Factor (if Moody's is then
rating  the RP),  an S&P  Discount  Factor  (if S&P is then  rating the RP) or a
Substitute  Rating Agency Discount Factor (if a Substitute Rating Agency is then
rating the RP), as the case may be.

           "Discounted Value," with respect to any asset held by the Corporation
as of any date, means the Moody's  Discounted Value of such asset (if Moody's is
then  rating  the RP),  the S&P  Discounted  Value of such asset (if S&P is then
rating the RP) or a Substitute  Rating Agency Discounted Value of such asset (if
a Substitute Rating Agency is then rating the RP), as the case may be.


                                       30


           "Dividend  Payment  Date"  means  the day  after  the last day of the
applicable  Dividend  Period;  provided  that,  if any such date  shall not be a
Business  Day,  the  Dividend  Payment  Date  shall  be the  Business  Day  next
succeeding such day.

           "Dividend Period" means, with respect to any share of RP, the Initial
Dividend  Period for such share and  thereafter a period which shall commence on
each (but not the final)  Dividend  Payment Date for such share  (which,  except
during a Non-Payment  Period,  shall be a Settlement Date for such share).  Each
such subsequent Dividend Period for such share will comprise, beginning with and
including the day upon which it commences,  49  consecutive  days (or such other
number of  consecutive  days as are  specified  by the Board of Directors in the
event of a change in law  altering  the  Minimum  Holding  Period,  as  provided
herein).  Notwithstanding  the  foregoing,  any  adjustment  of the  remarketing
schedule by the  Remarketing  Agent which includes an adjustment of a Settlement
Date shall lengthen or shorten the related  Dividend Period by causing it to end
on and include the day before the Settlement Date as so adjusted.

           "Dividend Reset Date" means any date on which the  Remarketing  Agent
(i)  determines the Applicable  Dividend Rate for the ensuing  Dividend  Period,
(ii)  notifies  holders,  purchasers  and  tendering  holders of shares of RP by
telephone,  telex or  otherwise  of the  results  of the  Remarketing  and (iii)
announces such Applicable Dividend Rate.

           "Dividends-Received   Deduction"  means  the  deduction   allowed  to
corporate holders of certain preferred stock with respect to dividends  received
on such stock by Section 243(a)(1) of the Code, or any successor thereto.

           "Eligible  Asset" means a Moody's  Eligible Asset (if Moody's is then
rating  the RP),  an S&P  Eligible  Asset  (if S&P is then  rating  the RP) or a
Substitute  Rating Agency Eligible Asset (if a Substitute  Rating Agency is then
rating the RP), as the case may be.

           "Holder"  means,  with respect to any share of RP, unless the context
otherwise requires, the person whose name appears on the stock transfer books of
the Corporation as the registered holder of such share.

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

           "Initial Dividend Period" means, with respect to any share of RP, the
period  commencing on and including the Date of Original Issue of such share and
ending on the day prior to the Initial Dividend Payment Date.

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

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


                                       31


           "Investment  Company Act Preferred  Stock Asset Coverage" means asset
coverage, as defined in section 18(h) of the Investment Company Act, of at least
200% of the aggregate  liquidation  preference  with respect to all  outstanding
senior securities of the Corporation which are stock,  including all outstanding
shares of Preferred  Stock (or such other asset  coverage as may be specified in
or under the  Investment  Company Act as the minimum  asset  coverage for senior
securities which are stock of a closed-end  investment company as a condition of
paying dividends on its common stock).

           "Investment  Company Act Cure  Date," with  respect to the failure by
the  Corporation  to maintain the Investment  Company Act Preferred  Stock Asset
Coverage  (as required by paragraph 7 of this Part I) as of the last day of each
month, means the last Business Day of the following such month.

           "Market  Value"  means the Moody's  Market  Value (if Moody's is then
rating  the  RP),  the S&P  Market  Value  (if S&P is then  rating  the RP) or a
Substitute  Rating  Agency  Market Value (if a Substitute  Rating Agency is then
rating the RP), as the case may be.

           "Maximum Dividend Rate" for any Dividend Period at any Dividend Reset
Date shall apply to a cash  dividend,  and be the  Applicable  Percentage of the
applicable "AA" Composite Commercial Paper Rate. The Applicable Percentage shall
vary with the lower of the credit rating or ratings assigned to the shares of RP
by Moody's  and S&P (or if  Moody's  or S&P or both  shall not make such  rating
available,  the  equivalent  of either or both of such  ratings by a  Substitute
Rating Agency or two Substitute  Rating  Agencies or, in the event that only one
such rating  shall be  available,  such rating) on each  Dividend  Reset Date as
follows:

                 CREDIT RATINGS APPLICABLE
       ----------------------------------------------
              MOODY'S                     S&P                   PERCENTAGE
       --------------------      --------------------         --------------
          "aa3" or higher            AA- or higher                  150%
           "a3" to "a1"                A- to A+                     175%
         "baa3" to "baa1"            BBB- to BBB+                   200%
           Below "baa3"               Below BBB-                    225%

           Notwithstanding the foregoing,  the Board of Directors shall have the
authority from time to time to change the Applicable  Percentage associated with
any of the  above  credit  rating  categories  to a level  below or equal to the
percentage  set forth in the table above,  provided  that the Board of Directors
determines and the Rating  Agencies  advise the Corporation in writing that such
change  will not  adversely  affect  their  then-current  ratings on the RP. The
Remarketing  Agent  shall round each  applicable  Maximum  Dividend  Rate to the
nearest  one-thousandth  (0.001) of one percent per annum,  with any such number
ending in five ten-thousandths  (0.0005) of one percent being rounded upwards to
the nearest  one-thousandth  (0.001) of one percent. The Remarketing Agent shall
not round the applicable "AA" Composite  Commercial  Paper Rate as part of their
calculation of any Maximum Dividend Rate.

           "Minimum  Holding Period" means 46 days or such other minimum holding
period required for corporate taxpayers to be entitled to the Dividends-Received
Deduction as provided in Section 246(c) of the Code or any successor thereto.

           "Moody's"  means Moody's  Investors  Service,  Inc.; and includes any
successor thereto.


                                       32


           "Moody's  Discounted  Value,"  with  respect to any asset held by the
Corporation as of any date,  means,  except as may be otherwise  provided in the
definition  of  "Discounted  Value"  set forth in the  Moody's  Guidelines,  the
quotient of the Moody's  Market  Value of such asset  divided by the  applicable
Moody's Discount Factor; provided,  however, that any asset as to which there is
no Moody's Discount Factor shall have a Moody's Discounted Value of zero.

           "Moody's  Discount  Factors" means the discount  factors set forth in
the Moody's  Guidelines for use in calculating the Moody's  Discounted  Value of
the Corporation's assets in connection with Moody's rating of the RP.

           "Moody's  Eligible  Assets" means assets of the Corporation set forth
in the Moody's  Guidelines  as  "Eligible  Assets" for  purposes of  determining
maintenance  of  the  Moody's  Preferred  Stock  Basic  Maintenance   Amount  in
connection with Moody's rating of the RP.

           "Moody's  Guidelines"  means that certain document  entitled "Moody's
Preferred Stock Guidelines" and adopted by the Board of Directors as of the date
hereof; provided,  however, that any of the provisions of said document may from
time to time be amended,  altered or repealed by the Board of  Directors  in its
sole discretion, without any vote or consent of shareholders of the Corporation,
based on a determination by the Board of Directors that such action is necessary
or appropriate in connection  with obtaining or maintaining  the rating assigned
by Moody's to the RP or revising the  Corporation's  investment  restrictions or
policies consistent with guidelines adopted by Moody's,  and any such amendment,
alteration  or repeal  will not be deemed to affect the  preferences,  rights or
powers of the RP or the Holders  thereof,  provided  that the Board of Directors
receives written  confirmation from Moody's that any such amendment,  alteration
or repeal would not adversely  affect the rating then assigned by Moody's to the
RP.

           "Moody's Market Value," with respect to any asset of the Corporation,
means the amount set forth in the Moody's  Guidelines  as the "Market  Value" of
such asset.

           "Moody's  Preferred Stock Basic Maintenance  Amount" means the amount
set forth in the Moody's  Guidelines as the "Preferred  Stock Basic  Maintenance
Amount."

           "Non-Payment  Period" means any period beginning on and including the
day on which the Corporation shall fail to (i) declare, prior to 12:00 noon, New
York City time, on the second  Business Day preceding any Dividend  Payment Date
for  any  shares  of RP,  for  payment  on  such  Dividend  Payment  Date to the
Beneficial  Owners of such shares of RP as of 12:00 noon, New York City time, on
the Business Day preceding  such Dividend  Payment Date,  the full amount of any
dividend  on such  shares of RP payable on such  Dividend  Payment  Date or (ii)
deposit, irrevocably in trust, in same-day funds, with the Paying Agent by 12:00
noon,  New York City time,  (A) on any Dividend  Payment Date the full amount of
any declared  cash  dividend  (whether or not earned)  payable on such  Dividend
Payment Date or (B) on any redemption  date for any shares of RP, the redemption
price of such  shares of  $100,000  per share  plus the full  amount of any cash
dividends thereon (whether or not earned or declared)  accumulated but unpaid to
such redemption date after a Notice of Redemption with respect to such shares of
RP has been given pursuant to paragraph 4(e) of Part I hereof, and ending on and
including  the Business  Day on which,  by 12:00 noon,  New York City time,  all
unpaid cash dividends and unpaid  redemption prices shall have been so deposited
or shall have  otherwise  been made  available to Beneficial  Owners in same-day
funds;  provided that a Non-Payment  Period shall not end during the first seven
days thereof unless


                                       33


the  Corporation  shall have given at least  three days'  written  notice to the
Paying Agent, the Remarketing Agent and the Securities Depository and thereafter
shall not end unless the  Corporation  shall have given at least  fourteen days'
written  notice to the Paying  Agent,  the  Remarketing  Agent,  the  Securities
Depository and all Beneficial Owners.

           "Non-Payment  Period Rate" means,  initially,  225% of the applicable
"AA" Composite Commercial Paper Rate, provided that the Board of Directors shall
have the  authority  to adjust,  modify,  alter or change  from time to time the
initial  Non-Payment  Period Rate if the Board of Directors  determines  and the
Rating  Agencies  advise  the  Corporation  in  writing  that  such  adjustment,
modification,  alteration or change will not adversely affect their then-current
ratings on the RP.

           "Notice  of  Redemption"   means  any  notice  with  respect  to  the
redemption of shares of RP pursuant to paragraph 4 of this Part I.

           "Other Preferred Stock" means Preferred Stock other than the RP.

           "Other RP" means remarketed  preferred stock of the  Corporation,  if
any, other than the RP. For the avoidance of doubt, "Other RP" shall not include
any shares of Preferred Stock issued  pursuant to a registration  statement that
was filed with the Securities and Exchange Commission on or after June 13, 1989.

           "Paying  Agent" means The Bank of New York, or any successor  company
or entity,  which has entered into a Paying Agent Agreement with the Corporation
to  act  for  the  Corporation,  among  other  things,  as the  transfer  agent,
registrar,  dividend and redemption price disbursing agent, settlement agent and
agent  for  certain  notifications  in  connection  with  the  shares  of  RP in
accordance with such agreement.

           "Paying  Agent  Agreement"  means an  agreement  to be  entered  into
between the Corporation and the Paying Agent.

           "Preferred  Stock" means the  preferred  stock,  par  value $.001 per
share, of the Corporation, and includes the RP and Other Preferred Stock.

           "Preferred  Stock  Basic   Maintenance   Amount"  means  the  Moody's
Preferred Stock Basic Maintenance Amount (if Moody's is then rating the RP), the
S&P Preferred Stock Basic Maintenance Amount (if S&P is then rating the RP) or a
Substitute Rating Agency Basic Maintenance Amount (if a Substitute Rating Agency
is then rating the RP), as the case may be.

           "Preferred  Stock Basic  Maintenance  Cure Date," with respect to the
failure by the  Corporation  to satisfy any  Preferred  Stock Basic  Maintenance
Amount (as required by paragraph 8 of this Part I) as of a given Valuation Date,
means the eighth Business Day following such Valuation Date.

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


                                       34


           "Rating  Agencies"  means  S&P  and  Moody's  for so  long as S&P and
Moody's  issue  ratings for the RP,  and, at such time as S&P and/or  Moody's no
longer  issues a rating for the RP, the  Substitute  Rating Agency or Substitute
Rating Agencies, as the case may be.

           "Remarketing"  means  each  periodic  operation  of the  process  for
remarketing shares of RP as described in Part II hereof.

           "Remarketing  Agent"  means  MLPF&S and any  additional  or successor
companies or entities which have entered into an agreement with the  Corporation
to carry out the  remarketing  procedures  for the  purpose of  determining  the
Applicable Dividend Rates.

           "Right" has the meaning set forth in paragraph 3(k) of this Part I.

           "RP"  means  either the  Remarketed  Preferred  Stock,  Series A; the
Remarketed  Preferred Stock, Series B; the Remarketed Preferred Stock, Series C;
the Remarketed  Preferred  Stock,  Series D; or the Remarketed  Preferred Stock,
Series E.

           "S&P"  means  Standard  &  Poor's,  a  division  of  The  McGraw-Hill
Companies, Inc. and includes any successor thereto.

           "S&P  Discounted  Value,"  with  respect  to any  asset  held  by the
Corporation as of any date,  means,  except as may be otherwise  provided in the
definition of "Discounted  Value" set forth in the S&P Guidelines,  the quotient
of the S&P Market  Value of such asset  divided by the  applicable  S&P Discount
Factor;  provided,  however, that any asset as to which there is no S&P Discount
Factor shall have an S&P Discounted Value of zero.

           "S&P Discount  Factors"  means the discount  factors set forth in the
S&P  Guidelines  for  use  in  calculating  the  S&P  Discounted  Value  of  the
Corporation's assets in connection with S&P's rating of the RP.

           "S&P Eligible  Assets" means assets of the  Corporation  set forth in
the S&P Guidelines as "Eligible Assets" for purposes of determining  maintenance
of the S&P Preferred  Stock Basic  Maintenance  Amount in connection  with S&P's
rating of the RP.

           "S&P  Guidelines"  means that certain document  entitled  "Standard &
Poor's  Preferred Stock  Guidelines" and adopted by the Board of Directors as of
the date hereof; provided,  however, that any of the provisions of said document
may from time to time be amended,  altered or repealed by the Board of Directors
in its sole  discretion,  without  any vote or  consent of  shareholders  of the
Corporation, based on a determination by the Board of Directors that such action
is necessary or  appropriate in connection  with  obtaining or  maintaining  the
rating  assigned  by  S&P to the RP or  revising  the  Corporation's  investment
restrictions or policies consistent with guidelines adopted by S&P, and any such
amendment,  alteration  or repeal will not be deemed to affect the  preferences,
rights or powers of the RP or the Holders  thereof,  provided  that the Board of
Directors  receives  written  confirmation  from S&P  that  any such  amendment,
alteration or repeal would not adversely  affect the rating then assigned by S&P
to the RP.


                                       35


           "S&P Market  Value,"  with  respect to any asset of the  Corporation,
means the amount set forth in the S&P  Guidelines as the "Market  Value" of such
asset.

           "S&P Preferred Stock Basic  Maintenance  Amount" means the amount set
forth in the S&P Guidelines as the "Preferred Stock Basic Maintenance Amount."

           "Securities   Depository"  means  The  Depository  Trust  Company,  a
securities depository,  or any successor company or other entity selected by the
Corporation  for the shares of RP that agrees to follow the procedures  required
to be followed by such  securities  depository in connection  with the shares of
RP.

           "Service" means the Internal Revenue Service.

           "Settlement  Date" means any date on which (i) a new Dividend  Period
begins, and (ii) shares of RP which have been tendered and sold in a Remarketing
are delivered through the Securities Depository.

           "Substitute   Commercial   Paper  Dealers"   means  such   Substitute
Commercial  Paper  Dealer or  Dealers as the  Corporation  may from time to time
appoint or, in lieu of any thereof, their respective affiliates or successors.

           "Substitute  Rating Agency" and "Substitute  Rating  Agencies" mean a
nationally   recognized   statistical  rating  organization  or  two  nationally
recognized  statistical  rating  organizations,  respectively,  selected  by the
Corporation  to  act  as the  substitute  rating  agency  or  substitute  rating
agencies,  as the case may be, to determine the credit  ratings of the shares of
RP.

           "Substitute  Rating  Agency  Discounted  Value,"  with respect to any
Substitute  Rating Agency and any asset held by the  Corporation as of any date,
means,  except as may be otherwise  provided in the  definition  of  "Discounted
Value" set forth in the Substitute Rating Agency  Guidelines  applicable to such
Substitute  Rating Agency,  the quotient of the Substitute  Rating Agency Market
Value of such asset  applicable to such Substitute  Rating Agency divided by the
Substitute  Rating Agency Discount Factor  applicable to such Substitute  Rating
Agency and such asset; provided, however, that any asset as to which there is no
Substitute  Rating Agency Discount Factor  applicable to such Substitute  Rating
Agency and such asset shall have a Substitute  Rating Agency Discounted Value of
zero.

           "Substitute  Rating  Agency  Discount  Factors"  means  the  discount
factors set forth in the  Substitute  Rating Agency  Guidelines  applicable to a
Substitute  Rating Agency for use in calculating  the  Substitute  Rating Agency
Discounted Value of the Corporation's  assets in connection with such Substitute
Rating Agency's rating of the RP.

           "Substitute  Rating  Agency  Eligible  Assets,"  with  respect to any
Substitute  Rating  Agency,  means  assets of the  Corporation  set forth in the
Substitute Rating Agency Guidelines  applicable to such Substitute Rating Agency
as "Eligible  Assets" for purposes of determining  maintenance of the Substitute
Rating Agency Preferred Stock Basic  Maintenance  Amount in connection with such
Substitute Rating Agency's rating of the RP.

           "Substitute  Rating Agency  Guidelines" means any document adopted by
the Board of Directors,  in connection with the selection of a Substitute Rating
Agency,  setting forth the guidelines  supplied by such Substitute Rating Agency
in connection with its assignment of a rating to the RP; provided, however, that
any of the provisions


                                       36


of said  document  may from time to time be amended,  altered or repealed by the
Board of  Directors  in its sole  discretion,  without  any vote or  consent  of
shareholders  of the  Corporation,  based  on a  determination  by the  Board of
Directors  that such action is  necessary  or  appropriate  in  connection  with
obtaining or maintaining the rating assigned by such Substitute Rating Agency to
the  RP or  revising  the  Corporation's  investment  restrictions  or  policies
consistent with guidelines  adopted by such  Substitute  Rating Agency,  and any
such  amendment,  alteration  or  repeal  will  not  be  deemed  to  affect  the
preferences,  rights or powers of the RP or the Holders  thereof,  provided that
the Board of Directors receives written confirmation from such Substitute Rating
Agency that any such amendment,  alteration or repeal would not adversely affect
the rating then assigned by such Substitute Rating Agency to the RP.

           "Substitute   Rating  Agency  Market  Value,"  with  respect  to  any
Substitute  Rating Agency and any asset of the Fund,  means the amount set forth
as the "Market Value" of such asset in the Substitute  Rating Agency  Guidelines
applicable to such Substitute Rating Agency.

           "Substitute Rating Agency Preferred Stock Basic Maintenance  Amount,"
with respect to any Substitute Rating Agency,  means the amount set forth as the
"Preferred  Stock Basic  Maintenance  Amount" in the  Substitute  Rating  Agency
Guidelines applicable to such Substitute Rating Agency.

           "Tender  and  Dividend  Reset"  means the  process  pursuant to which
shares of RP may be tendered or deemed  tendered  in a  Remarketing  or held and
become subject to the new Applicable Dividend Rate determined by the Remarketing
Agency in such Remarketing.

           "Tender Date" means any date on which (i) each holder of shares of RP
must provide to the Remarketing Agent irrevocable telephonic notice of intent to
tender  shares  of RP in a  Remarketing,  and  (ii)  such  Remarketing  formally
commences.

           "Valuation  Date" means the last  Business Day of each week,  or such
other  date as the  Corporation  and the  Rating  Agencies  may  agree  upon for
purposes of determining the Preferred Stock Basic Maintenance Amount.

           "Voting  Period" has the meaning set forth in paragraph  6(b) of this
Part I.

      2.  FRACTIONAL  SHARES.  No  fractional  shares  of RP shall be  issued or
recognized by the Corporation.

      3. DIVIDENDS. (a) The Holders as of 12:00 noon, New York City time, on the
Business Day preceding the applicable  Dividend Payment Dates, shall be entitled
to receive,  when,  as and if declared by the Board of  Directors,  out of funds
legally available therefor,  cumulative dividends each consisting of (i) cash at
the Applicable  Dividend Rate and (ii) a Right to receive cash determined as set
forth in  paragraph  3(k) below and payable as set forth  therein.  The Board of
Directors shall designate,  in accordance with the applicable  provisions of the
Code, the cash dividends on the shares of RP so declared and paid or payable and
on the shares of Other RP declared and payable for any fiscal year as qualifying
for the Dividends-Received Deduction in an amount equal to the lesser of (i) the
amount of the Corporation's  income for such fiscal year which qualifies for the
Dividends-Received Deduction, or (ii) the amount of such cash dividends.


                                       37


           (b)  Dividends  on shares of RP shall  accumulate  from their Date of
Original  Issue and will be  payable,  when,  as and if declared by the Board of
Directors, on each Dividend Payment Date.

           (c) Each declared dividend, including each Right, shall be payable on
the applicable  Dividend Payment Date to the Holder or Holders of such shares of
RP as set forth in  paragraph  3(a).  Dividends  on any share in arrears for any
past  Dividend  Payment  Date  may be  declared  and paid at any  time,  without
reference to any regular Dividend Payment Date, to the Holder of such share on a
date not exceeding five Business Days preceding the payment date thereof, as may
be fixed by the Board of Directors. Any dividend payment made on any share of RP
shall first be credited  against the earliest  dividends  accumulated but unpaid
(whether or not earned) with respect to such share.

           (d) Neither  Holders nor  Beneficial  Owners of shares of RP shall be
entitled to any dividends on the shares of RP, whether payable in cash, property
or stock, in excess of full cumulative  dividends  (including  Rights)  thereon.
Except as provided in paragraph 3(h) or 3(k) of this Part I, neither Holders nor
Beneficial  Owners of shares of RP shall be entitled to any  interest,  or other
additional amount, on any dividend payment (including Rights) on any share of RP
which may be in arrears.

           (e) Except as otherwise provided herein, the Applicable Dividend Rate
on each share of RP for each Dividend Period with respect to such share shall be
equal to the rate per annum that results from  implementation of the remarketing
procedures described in Part II hereof.

           (f) The  amount  of cash  dividends  for  shares  of RP  payable  (if
declared) on each Dividend  Payment Date shall be computed by the Corporation by
multiplying  the  Applicable  Dividend  Rate  in  effect  with  respect  to cash
dividends  payable on such share on such Dividend Payment Date by a fraction the
numerator of which shall be the number of days such share was  outstanding  from
and including its Date of Original Issue or the preceding  Dividend Payment Date
on which a cash dividend was paid, as the case may be, to and including the last
day of such Dividend Period, and the denominator of which shall be 360, and then
multiplying the percentage so obtained by $100,000.

           (g) No later than by 12:00 noon, New York City time, on each Dividend
Payment Date,  the  Corporation  shall deposit in same-day funds with the Paying
Agent the full amount of any  dividend  declared  and  payable on such  Dividend
Payment Date on any share of RP. For the purposes of the  foregoing,  payment in
New York Clearing House  (next-day)  funds at any time on any Business Day shall
be considered  equivalent to payment in same-day  funds on the next Business Day
at the same time,  and any payment made after 12:00 noon, New York City time, on
any  Business Day shall be  considered  to have been made instead in the form of
funds before 12:00 noon, New York City time, on the next Business Day.

           (h) The Applicable  Dividend Rate for each Dividend Period commencing
during a Non-Payment Period shall be equal to the Non-Payment Period Rate.

           (i) Except  during a Non-Payment  Period,  by 1:00 p.m. on the Tender
Date at the end of the  Initial  Dividend  Period and by 1:00 p.m. on the Tender
Date at the end of each subsequent  Dividend  Period,  the Beneficial Owner of a
share of RP may elect to tender  such  share or to hold such  share for the next
Dividend  Period.  If the Beneficial Owner of such share of PR fails to elect to
tender or hold such share by 1:00 p.m.  on such  Tender  Date,  such  Beneficial
Owner  shall  continue  to hold  such  share  at the  Applicable  Dividend  Rate
determined in


                                       38


such  Remarketing  for the next Dividend  Period;  provided that, if there is no
Remarketing  Agent, the Remarketing  Agent does not conduct a Remarketing or the
Remarketing  Agent is unable to  remarket in such  Remarketing  all shares of RP
tendered  to it at a price of $100,000  per share,  then such  Beneficial  Owner
shall hold such share for the next Dividend  Period and the Applicable  Dividend
Rate therefor shall be the Maximum Dividend Rate.

           (j) In the  event of a change in law  altering  the  Minimum  Holding
Period,  the Board of  Directors  may  increase or  decrease  the period of time
between  Dividend  Payment Dates so as to adjust uniformly the number of days in
any Dividend Period  commencing after the date of such change in law to equal or
exceed the then current  Minimum  Holding  Period;  provided that, the number of
days for any  Dividend  Period as so  adjusted  shall not exceed 98 and shall be
evenly  divisible by seven (except as required from time to time by  adjustments
in the remarketing schedule as provided herein). Upon any such adjustment by the
Board of Directors,  the Corporation  shall notify the Remarketing Agent and the
Paying  Agent,  and the  Paying  Agent  shall  in  turn  notify  the  Securities
Depository, of such adjustment;  provided that, during a Non-Payment Period, the
Corporation also shall notify the Beneficial  Owners of shares of RP directly of
such adjustment.

           (k)  Each  dividend  shall  consist  of (i)  cash  at the  Applicable
Dividend  Rate and (ii) a right  (a  "Right")  to  receive  cash (as  determined
below).  Each Right shall thereafter be independent of the share or shares of RP
on which the dividend was paid. The  Corporation  shall cause to be maintained a
record of each Right received by the respective  Holders.  The Corporation shall
not be required to recognize any transfer of a Right.  If all or any part of the
cash  dividends  on the shares of RP during any fiscal year does not qualify for
the Dividends-Received Deduction ("Nonqualifying Distributions") because (i) the
Corporation  does  not  have  income  for  such  fiscal  year  eligible  for the
Dividends-Received  Deduction at least equal to the dividends paid on the RP and
the Other RP for such year, or (ii) the Corporation does not properly  designate
dividends on the RP as being eligible for the Dividends-Received  Deduction, the
applicable  Rights  shall  entitle  the holders  thereof  ("Right  Holders")  to
additional cash (as set forth below),  and the Corporation will, within 270 days
after the end of such fiscal year,  provide  notice thereof to the Paying Agent.
The  Paying  Agent will mail a copy of such  notice to each Right  Holder at the
address set forth for such Right  Holder in the  records of the Paying  Agent as
promptly as practicable  after its receipt of such notice from the  Corporation.
The  Corporation  will  within 30 days after such  notice is given to the Paying
Agent pay to the Paying Agent (who will then distribute to Right  Holders),  out
of funds legally  available  therefor,  cash in  satisfaction  of the applicable
Rights  in  an  amount  specified  below  with  respect  to  all   Nonqualifying
Distributions made during such fiscal year.

           Cash  payable  pursuant to a Right shall be paid to the Right  Holder
thereof in an amount which, when taken together with the aggregate Nonqualifying
Distributions paid to such Right Holder during any fiscal year, would cause such
Right Holder's net yield in dollars (after Federal income tax consequences) from
the aggregate of both the  Nonqualifying  Distributions  and the cash receivable
pursuant  to such Right to be equal to the net yield in dollars  (after  Federal
income tax consequences)  which would have been received by such Right Holder if
the amount of the aggregate Nonqualifying Distributions would have qualified for
the  Dividends-Received  Deduction in the hands of such Right Holder.  Such cash
receivable on such Right shall be calculated without  consideration  being given
to the time value of money and using the applicable  maximum marginal  corporate
Federal tax rate in effect at the time such Right was declared.

           The  Corporation  may estimate  the amount  payable in respect of any
Right and pay all or any portion of such  estimated  amount  prior to the end of
the fiscal year in which such Right was declared.

                                       39


      If,  for any  fiscal  year,  all  cash  dividends  paid at the  Applicable
Dividend   Rate  on  the   shares   of  RP  are   eligible   in  full   for  the
Dividends-Received  Deduction,  then the  amount  payable  to  holders of Rights
applicable to that year shall be zero.

      4.  REDEMPTION.  Shares of RP shall be  redeemable by the  Corporation  as
provided below:

(a)   To the extent permitted under the Investment Company Act and Maryland law,
      the  Corporation at its option,  upon giving a Notice of  Redemption,  may
      redeem shares of RP, in whole or in part, on the next succeeding scheduled
      Dividend  Payment Date,  out of funds  legally  available  therefor,  at a
      redemption  price equal to $100,000 per share plus an amount equal to cash
      dividends  thereon  (whether or not earned or  declared)  accumulated  but
      unpaid to the date fixed for redemption.

           (b) The  Corporation  shall redeem,  out of funds  legally  available
therefor,  at a  redemption  price of $100,000 per share plus an amount equal to
cash  dividends  thereon  (whether or not earned or  declared)  accumulated  but
unpaid to the date of redemption, shares of RP to the extent permitted under the
Investment  Company  Act and  Maryland  law,  on a date  fixed  by the  Board of
Directors,  if the Corporation  fails to maintain  either  Preferred Stock Basic
Maintenance  Amount or the Investment Company Act Preferred Stock Asset Coverage
and such failure is not cured on or before the Preferred Stock Basic Maintenance
Cure Date or the  Investment  Company Act Cure Date  (herein  referred to as the
"Cure Date"),  as the case may be. The number of shares to be redeemed  shall be
equal to the lesser of (i) the minimum  number of shares of RP the redemption of
which, if deemed to have occurred  immediately  prior to the opening of business
on the Cure Date,  together with all shares of other  Preferred Stock subject to
redemption  or  retirement,  would  result in the  satisfaction  of the relevant
Preferred Stock Basic Maintenance Amount or the Investment Company Act Preferred
Stock Asset  Coverage,  as the case may be, on such Cure Date (provided that, if
there is no such  minimum  number of shares the  redemption  of which would have
such result, all shares of RP then outstanding shall be redeemed),  and (ii) the
maximum  number of shares of RP that can be redeemed out of funds expected to be
legally available therefor on such redemption date. In determining the number of
shares of RP  required  to be redeemed in  accordance  with the  foregoing,  the
Corporation shall allocate the amount required to achieve the relevant Preferred
Stock Basic  Maintenance  Amount or the Investment  Company Act Preferred  Stock
Asset  Coverage,  as the  case  may be,  pro  rata  among  the RP and the  Other
Preferred Stock. The Corporation  shall effect such redemption not later than 41
days after such Cure Date,  except that if the  Corporation  does not have funds
legally  available for the redemption of all of the required number of shares of
RP which are subject to mandatory  redemption  or the  Corporation  otherwise is
unable to effect such  redemption on or prior to such Cure Date, the Corporation
shall  redeem  those  shares of RP which it was unable to redeem on the earliest
practicable date on which it is able to effect such redemption.

           (c) Subject to  paragraph  4(d) of this Part I, if fewer than all the
outstanding  shares of RP are to be redeemed  pursuant to this  paragraph 4, the
number of shares of RP so to be redeemed  shall be a whole  number of shares and
shall be determined by the Board of Directors,  and the Corporation shall give a
Notice of  Redemption  as  provided  in  paragraph  4(e) of this Part I.  Unless
certificates  representing  shares  of RP are  held by  Holders  other  than the
Securities Depository or its nominee, the Securities Depository, upon receipt of
such  notice,  shall  determine by lot the number of shares of RP to be redeemed
from the account of each Agent Member (which may include an Agent Member holding
shares for its own  account,  including  the  Remarketing  Agent) and notify the
Paying  Agent of such  determination.  The Paying  Agent,  upon  receipt of such
notice, shall in turn determine by lot the number of shares of RP to be redeemed
from the  accounts  of the  Beneficial  Owners of the  shares of RP whose  Agent
Members have been selected by the Securities  Depository and give notice of such
determination


                                       40


to the  Remarketing  Agent.  In doing so, the Paying  Agent may  determine  that
shares of RP shall be  redeemed  from the  accounts of some  Beneficial  Owners,
which may include the  Remarketing  Agent,  without  shares of RP being redeemed
from the accounts of other Beneficial Owners.

           (d)  Notwithstanding  paragraph 4(c) of this Part I, if  certificates
representing  shares  of RP are  held  by  Holders  other  than  the  Securities
Depository or its nominee,  then the number of shares of RP to be redeemed shall
be determined  by the Board of Directors and the shares to be redeemed  shall be
selected by the Corporation by lot.

           (e) Any Notice of Redemption shall be given by the Corporation to the
Paying  Agent,  the  Securities  Depository  (and  any  other  Holder)  and  the
Remarketing  Agent,  by telephone,  not later than 3:00 p.m., New York City time
(and later  confirmed  in  writing)  on (A) in the case of  optional  redemption
pursuant to paragraph 4(a) of this Part I (i) the Settlement Date in the case of
a partial  redemption of the shares of RP, (ii) the Tender Date in the case of a
redemption  in whole of the shares of RP or (iii) during a  Non-Payment  Period,
the later of the  Dividend  Payment Date and the seventh day, in each case prior
to the earliest date upon which any such  redemption  shall occur and (B) in the
case of mandatory  redemption  pursuant to paragraph 4(b) of this Part I, on the
fifth  Business  Day  prior to the  redemption  date.  In the case of a  partial
redemption of the shares of PR, the Paying Agent shall use reasonable efforts to
provide  telephonic  notice to each Beneficial  Owner of shares of RP called for
redemption not later than the close of business on the Business Day on which the
Paying Agent  determines  the shares to be  redeemed,  as described in paragraph
4(c) if this Part I (or, during a Non-Payment  Period,  not later than the close
of business  on the  Business  Day  immediately  following  the day on which the
Paying Agent receives a Notice of Redemption from the Corporation).  In the case
of a  redemption  in whole of the  shares  of RP,  the  Paying  Agent  shall use
reasonable  efforts to provide  telephonic  notice to each Beneficial  Owner not
later than the close of business on the Business Day  immediately  following the
day on which it receives a Notice of  Redemption  from the  Corporation.  In any
case  described in clause (i) or (iii) of the first  sentence of this  paragraph
4(e),  such telephonic  notice shall be confirmed  promptly in writing not later
than the close of business on the third  Business Day preceding  the  redemption
date by notice sent by the Paying Agent to each Beneficial Owner of shares of RP
called for redemption, the Remarketing Agent and the Securities Depository.

           (f) Every  Notice of  Redemption  and other  redemption  notice shall
state:  (i) the redemption date; (ii) the number of shares of RP to be redeemed;
(iii) the  redemption  price;  (iv)  that  dividends  on the  shares of RP to be
redeemed  shall cease to  accumulate  as of such  redemption  date;  and (v) the
provision pursuant to which such shares are being redeemed. In addition,  notice
of redemption given to a Beneficial Owner shall state the CUSIP number,  if any,
of the shares of RP to be redeemed and the manner in which the Beneficial Owners
of such  shares may obtain  payment of the  redemption  price.  No defect in the
Notice of Redemption or other  redemption  notice or in the  transmittal  or the
mailing thereof shall affect the validity of the redemption proceedings,  except
as required by applicable law. The Paying Agent shall use its reasonable efforts
to cause the  publication  of a  redemption  notice in an  Authorized  Newspaper
within two Business Days of the date of the Notice of Redemption, but failure so
to publish such  notification  shall not affect the validity or effectiveness of
any such  redemption  proceedings.  Shares of RP the Beneficial  Owners of which
shall  have been given  Notice of  Redemption  shall not be subject to  transfer
outside a Remarketing.

           (g)  On  any  redemption   date,  the   Corporation   shall  deposit,
irrevocably in trust, in same-day  funds,  with the Paying Agent, by 12:00 noon,
New York City time, the price to be paid on such  redemption  date of any shares
of RP plus an amount equal to cash dividends  thereon  accumulated but unpaid to
such redemption


                                       41


date  (whether or not earned or  declared).  For the purposes of the  foregoing,
payment in New York Clearing House  (next-day) funds at any time on any Business
Day shall be  considered  equivalent  to payment in  same-day  funds on the next
Business Day at the same time,  and any payment made after 12:00 noon,  New York
City time,  on any Business Day shall be considered to have been made instead in
the same  form of funds  before  12:00  noon,  New York City  time,  on the next
Business Day.

           (h) In connection with any redemption, upon the giving of a Notice of
Redemption and the deposit of the funds  necessary for such  redemption with the
Paying Agent in accordance  with this  paragraph 4, all rights of the Holders of
shares of RP so called for  redemption  shall  cease and  terminate,  except the
right of the Holders thereof to receive the redemption price thereof,  inclusive
of an  amount  equal to cash  dividends  (whether  or not  earned  or  declared)
accumulated  but unpaid to the redemption date but without any interest or other
additional amount (except as provided in paragraph 3(h) or 3(k) of this Part I),
and such  shares  shall no longer be deemed  outstanding  for any  purpose.  The
Corporation  shall be entitled to receive from the Paying Agent,  promptly after
the date fixed for  redemption,  any cash  deposited  with the  Paying  Agent as
aforesaid  in excess  of the sum of (i) the  aggregate  redemption  price of the
shares of RP called for  redemption  on such date and (ii) all other  amounts to
which Holders of shares of RP called for redemption  may be entitled.  Any funds
so deposited with the Paying Agent which are unclaimed at the end of ninety days
from such redemption  date shall,  to the extent  permitted by law, be repaid to
the  Corporation,  after  which  time the  Holders of shares of RP so called for
redemption  shall look only to the  Corporation  for  payment of the  redemption
price and all other amounts to which they may be entitled. The Corporation shall
be entitled to receive,  from time to time after the date fixed for  redemption,
any interest on the funds so deposited.

           (i) To the extent that any  redemption for which Notice of Redemption
has been given is not made by reason of the absence of legally  available  funds
therefor,  such  redemption  shall be made as soon as  practicable to the extent
such funds become  available.  Failure to redeem shares of RP shall be deemed to
exist at any time  after  the  date  specified  for  redemption  in a Notice  of
Redemption when the Corporation shall have failed, for any reason whatsoever, to
deposit  funds with the Paying Agent  pursuant to paragraph  4(g) of this Part I
with respect to any shares for which such Notice of  Redemption  has been given.
Notwithstanding  the fact that the Corporation shall not have redeemed shares of
RP for which a Notice of  Redemption  has been given,  dividends may be declared
and paid on shares of RP and shall include those shares of RP for which a Notice
of Redemption has been given.

           (j) Notwithstanding the foregoing, (i) no share of RP may be redeemed
pursuant to paragraph  4(a) of this Part I unless the full amount of accumulated
but unpaid cash  dividends to the date fixed for  redemption for each such share
of RP called for redemption  shall have been  declared,  and (ii) no share of RP
may be redeemed unless all outstanding shares of RP are simultaneously redeemed,
nor may any shares of RP be purchased or otherwise  acquired by the  Corporation
except in  accordance  with a purchase  offer made on  substantially  equivalent
terms by the Corporation for all outstanding  shares of RP, unless, in each such
instance,  cash  dividends  on all  outstanding  shares of RP through the end of
their most  recently  ended  Dividend  Period (or, if such  transaction  is on a
Dividend  Payment Date,  through the Dividend  Period ending on the day prior to
such  Dividend  Payment  Date) shall have been paid or declared  and  sufficient
funds for the payment thereof deposited with the Payment Agent.

           (k)  Except  as  set  forth  in  this  paragraph  4 with  respect  to
redemptions and subject to paragraph 4(j) hereof, nothing contained herein shall
limit any legal right of the Corporation or any affiliate to purchase or


                                       42


otherwise acquire any share of RP at any price. Any shares of RP which have been
redeemed,  purchased or otherwise  acquired by the  Corporation or any affiliate
thereof may be resold.  In lieu of redeeming  shares called for redemption,  the
Corporation  shall have the right to arrange  for other  purchasers  to purchase
from  Beneficial  Owners  all  shares  of RP to be  redeemed  pursuant  to  this
paragraph 4 by their paying to such Beneficial  Owners on or before the close of
business on the redemption  date an amount equal to not less than the redemption
price  payable by the  Corporation  on the  redemption  of such shares,  and the
obligation of the  Corporation to pay such  redemption  price shall be satisfied
and discharged to the extent such payment is so made by such purchasers.

           (l) Notwithstanding any of the foregoing provisions of this paragraph
4, the Remarketing  Agent may, in its sole discretion  modify the procedures set
forth above with respect to notification of redemption,  provided that, any such
modification  does not adversely affect any Holder or Beneficial Owner of shares
of RP.

      5. LIQUIDATION.  (a) Upon a liquidation,  dissolution or winding up of the
affairs of the Corporation,  whether voluntary or involuntary, the Holders shall
be  entitled,  whether  from  capital  or  surplus,  before  any  assets  of the
Corporation  shall be distributed  among or paid over to holders of Common Stock
or any other class or series of stock of the Corporation  junior to the RP as to
liquidation payments, to be paid the amount of $100,000 per share of RP, plus an
amount equal to all accumulated  but unpaid  dividends  thereon  (whether or not
earned or declared) to and including the date of final  distribution.  After any
such payment, the Holders shall not be entitled to any further  participation in
any distribution of assets of the Corporation.

           (b) If, upon any such  liquidation,  dissolution or winding up of the
Corporation,  the assets of the  Corporation  shall be insufficient to make such
full payments to the Holders and the holders of any  Preferred  Stock ranking as
to  liquidation,  dissolution  or winding up on a parity  with the RP, then such
assets shall be distributed among the Holders and such parity holders ratably in
accordance with the respective  amounts which would be payable on such shares of
RP and any other such Preferred Stock if all amounts thereon where paid in full.

           (c) Neither the  consolidation nor the merger of the Corporation with
or into any corporation or corporations nor a reorganization  of the Corporation
alone nor the sale or transfer by the Corporation of all or substantially all of
its  assets  shall  be  deemed  to  be  a  dissolution  or  liquidation  of  the
Corporation.

      6.  VOTING  RIGHTS.  (a)  GENERAL.  Each  Holder  of shares of RP shall be
entitled to one vote for each share held on each matter  submitted  to a vote of
stockholders  of the  Corporation  and,  except  as  otherwise  provided  in the
Investment  Company Act, the Charter or the Bylaws or as  described  below,  the
holders  of shares of  Preferred  Stock,  including  RP, and of shares of Common
Stock  shall vote  together as one class.  Prior to the  issuance of any RP, the
Board  of  Directors  by  resolution  shall  designate  two  existing  directors
representing  holders of Preferred  Stock.  At the first meeting of stockholders
for which the  record  date is a date on which  shares  of  Preferred  Stock are
outstanding,  the holders of  Preferred  Stock  entitled to vote at such meeting
shall have the right as a class,  to the  exclusion of the holders of the common
stock,  to elect  two  directors  of the  Corporation  who  shall  serve for the
unexpired terms of the directors originally designated by the Board of Directors
as directors  representing  holders of  Preferred  Stock;  except that,  if such
meeting is an annual  meeting of  stockholders  at which the term of one of such
designated  directors expires, the director so elected to succeed the designated
director  shall  be  elected  for a term  expiring  at  the  time  of the  third
succeeding  annual meeting of stockholders,  or thereafter when his successor is
elected and qualified. Thereafter, the holders of Preferred Stock shall have the
right as a class,  to the exclusion of the holders of the common stock, to elect
directors to succeed either of the directors representing


                                       43


the  Preferred  Stock  whose  terms are  expiring or whose seats on the Board of
Directors  are  vacant.  Subject to  paragraph  6(b)  hereof,  the  holders of a
majority of the shares of Common Stock shall elect the balance of the directors.

           (b) RIGHT TO ELECT MAJORITY OF BOARD OF DIRECTORS.  During any period
in which any one or more of the  conditions  described  below  shall exist (such
period being referred to herein as a "Voting  Period"),  the number of directors
constituting  the Board of  Directors  shall be  automatically  increased by the
smallest  number that,  when added to the number of directors then  constituting
the Board of Directors,  shall  (together with the two directors  elected by the
holders of Preferred Stock, including RP, pursuant to paragraph 6(a)) constitute
a majority of such increased number,  and the holders of a majority of Preferred
Stock,  including  RP,  shall  be  entitled,  voting  as  a  single  class  on a
one-vote-per-share  basis  (to  the  exclusion  of  the  holders  of  all  other
securities  and  classes  of  capital  stock of the  Corporation),  to elect the
smallest number of additional directors of the Corporation that shall constitute
a majority of the total number of directors of the  Corporation so increased.  A
Voting Period shall commence if at the close of business on any Dividend Payment
Date accumulated  dividends  (whether or not earned or declared,  and whether or
not funds are then legally  available in an amount  sufficient  therefor) on the
outstanding  shares of RP 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 Paying Agent for the payment of such  accumulated  dividends.
Upon the  termination  of a Voting Period,  the voting rights  described in this
paragraph 6(b) shall cease,  subject always,  however,  to the revesting of such
voting rights in the holders of Preferred Stock,  including RP, upon the further
occurrence of any of the events described in this paragraph 6(b).

           (c)  VOTING PROCEDURES.

                (i) As soon as practicable after the accrual of any right of the
holders of Preferred Stock, including RP, to elect a majority of directors,  the
Corporation  shall notify the Paying Agent and Paying Agent shall call a special
meeting of the holders of Preferred Stock, including RP, and shall mail a notice
of such  special  meeting to such holders not less than 10 nor more than 20 days
after the date of mailing of such notice.  If the Corporation fails to send such
notice to the Paying  Agent or if the Paying  Agent does not call such a special
meeting,  it may be called by any holder of Preferred  Stock,  including  RP, on
like notice.  The record date for  determining  the holders of Preferred  Stock,
including RP, entitled to notice of and to vote at such special meeting shall be
the close of business on the fifth  Business Day preceding the day on which such
notice is mailed.  At any such special meeting and at each meeting held during a
Voting Period, the holders of Preferred Stock,  including RP, voting together as
a class (to the exclusion of the holders of all other  securities and classes of
capital  stock of the  Corporation),  shall be  entitled  to elect the number of
directors prescribed in paragraph 6(b) above on a  one-vote-per-share  basis. At
any such meeting or adjournment  thereof in the absence of a quorum,  a majority
of the holders of Preferred Stock,  including RP, present in person or by proxy,
shall  have the power to  adjourn  the  meeting  without  notice,  other than an
announcement at the meeting, until a quorum is present; provided,  however, that
no such  meeting may be adjourned to a date more than 120 days from the original
record date without notice.

                (ii) For  purposes of  determining  any rights of the Holders to
vote on any matter, whether such right is created by this Article Fourteenth, by
statute or  otherwise,  no Holder  shall be  entitled to vote and no share of RP
shall be deemed to be "outstanding" for the purpose of voting or determining the
number of shares  required to constitute a quorum,  if, prior to or concurrently
with the time of  determination  of shares  entitled  to vote or  shares  deemed
outstanding for quorum  purposes,  as the case may be,  sufficient funds for the
redemption


                                       44


of such  shares  have been  deposited  in trust with the  Paying  Agent for that
purpose and the requisite Notice of Redemption with respect to such shares shall
have been given as provided  in  paragraph 4 of this Part I. No share of RP held
by the  Corporation  or any affiliate of the  Corporation  shall have any voting
rights or be deemed to be outstanding for voting purposes.

                (iii) The terms of office of all  persons who are  directors  of
the Corporation at the time of a special meeting of holders of Preferred  Stock,
including RP, to elect directors shall continue, notwithstanding the election at
such meeting by such  holders of the number of directors  that they are entitled
to  elect,  and the  persons  so  elected  by such  holders,  together  with the
incumbent directors elected by the holders of the Common Stock, shall constitute
the duly elected directors of the Corporation.

                (iv)  Simultaneously with the expiration of a Voting Period, the
terms of office of the additional  directors elected by the holders of Preferred
Stock,  including RP, shall  terminate,  the incumbent  directors who shall have
been elected by the holders of the Common Stock (or by the Board of Directors at
a time which was not during a Voting Period) and the two incumbent directors the
holders of Preferred  Stock,  including RP, have the right to elect in any event
shall  constitute the directors of the Corporation and the voting rights of such
holders to elect additional directors shall cease.

                (v) The  directors  elected by the holders of  Preferred  Stock,
including RP, shall (subject to the provisions of any applicable law) be subject
to  removal  only by the vote of the  holders  of a  majority  of the  shares of
Preferred  Stock,  including  RP,  outstanding.  Any  vacancy  on the  Board  of
Directors occurring by reason of such removal or otherwise may be filled only by
vote of the  holders  of at least a  majority  of  shares  of  Preferred  Stock,
including RP,  outstanding,  and if not so filled such vacancy shall (subject to
the provisions of any  applicable  law) be filled by a majority of the remaining
directors  (or the remaining  director)  who were elected by such  holders.  Any
other  vacancy on the Board of Directors  during a Voting Period shall be filled
by a vote of the holder or holders of Common Stock.

           (d) RIGHT TO VOTE ON CERTAIN OTHER MATTERS.  So long as any shares of
RP are  outstanding,  the Corporation  shall not, subject to the requirements of
the Investment  Company Act and Maryland law,  without the  affirmative  vote or
consent of the holders of at least  two-thirds  of the votes of the shares of RP
outstanding at the time, given in person or by proxy,  either in writing or at a
meeting  (voting  separately as one class):  (a) authorize,  create or issue, or
increase  the  authorized  or  issued  amount,  of any  class or series of stock
ranking prior to the RP with respect to payment of dividends or the distribution
of assets on  liquidation,  or (b) amend,  alter or repeal the provisions of the
Charter including this Article Fourteenth,  whether by merger,  consolidation or
otherwise,  so as to  materially  and  adversely  affect any right,  preference,
privileges or voting power of such shares of RP or the Holders thereof; provided
that,  any  increase  in the amount of the  authorized  RP or the  creation  and
issuance of other  series of Preferred  Stock,  or any increase in the amount of
authorized shares of such series or of any other series of remarketed  preferred
stock,  in each case  ranking on a parity  with or junior to the RP, will not be
deemed to materially and adversely affect such rights,  preferences,  privileges
or voting powers unless such issuance would cause the Corporation not to satisfy
the Investment  Company Act Preferred  Stock Asset Coverage or either  Preferred
Stock Basic Maintenance Amount. Unless a higher percentage is provided for under
the  Charter,  the  affirmative  vote  of  the  holders  of a  majority  of  the
outstanding  shares of Preferred Stock including RP, voting together as a single
class,  will  be  required  to  approve  any  plan of  reorganization  adversely
affecting such shares or any action  requiring a vote of security  holders under
Section  13(a) of the  Investment  Company Act.  For purposes of the  foregoing,
"majority of the outstanding Preferred Stock" shall mean (i) 67% or more


                                       45


of the shares of Preferred  Stock  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.  The class vote of holders of shares of
Preferred Stock,  including RP, described above will in each case be in addition
to a separate  vote of the  requisite  percentage  of shares of Common Stock and
shares of Preferred  Stock,  including RP,  necessary to authorize the action in
question.

           The foregoing  voting  provisions  shall not apply if, at or prior to
the time  when the act with  respect  to which  such  vote  would  otherwise  be
required  shall be  effected,  all  outstanding  shares  of RP shall  have  been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.

           (e) EXCLUSIVE REMEDY.  Unless otherwise  required by law, the Holders
of shares  of RP shall not have any  relative  rights  or  preferences  or other
special rights other than those  specifically  set forth herein.  The Holders of
shares of RP shall have no preemptive  rights. In the event that the Corporation
fails to pay any  dividends  on the  shares of RP, the  exclusive  remedy of the
Holders shall be the right to vote for directors  pursuant to the  provisions of
this  paragraph  6. In no event shall the Holders of shares of RP have any right
to sue for, or bring a proceeding with respect to, such dividends or redemptions
or damages for the failure to receive the same.

           (f)  VOTING  BY  SERIES.  In  addition  to any vote of the  requisite
percentage  of shares of Common Stock and shares of Preferred  Stock,  including
RP,  otherwise  necessary to authorize any proposed  action under the Charter or
the Investment  Company Act, on any matter on which the Preferred  Stock has the
right to vote as a class,  the  approval  of the  holders of a  majority  of the
outstanding shares of any series of Preferred Stock, including any series of RP,
voting  separately  as a series,  shall be necessary  to approve  such  proposed
action if such  series  would be  affected  by the  proposed  action in a manner
materially different from any other series.

      7. INVESTMENT COMPANY ACT PREFERRED STOCK ASSET COVERAGE.  The Corporation
shall maintain,  as of the last Business Day of each month in which any share of
RP is outstanding, the Investment Company Act Preferred Stock Asset Coverage.

      8. PREFERRED STOCK BASIC MAINTENANCE COVERAGE.

           (a) The Fund shall  maintain,  on each Valuation Date, (i) if Moody's
is then rating the RP,  Moody's  Eligible  Assets  having an  aggregate  Moody's
Discounted Value at least equal to the Moody's Preferred Stock Basic Maintenance
Amount,  (ii) if S&P is then  rating  the RP,  S&P  Eligible  Assets  having  an
aggregate S&P Discounted  Value at least equal to the S&P Preferred  Stock Basic
Maintenance  Amount and (iii) if any Substitute Rating Agency is then rating the
RP,  Substitute  Rating Agency  Eligible  Assets having an aggregate  Substitute
Rating Agency  Discounted Value at least equal to the Substituted  Rating Agency
Preferred Stock Basic  Maintenance  Amount, in each case applicable to each such
Substitute Rating Agency.

           (b) On or before 5:00 p.m., New York City time, on the third Business
Day after each Valuation Date, the Corporation shall complete and deliver to the
Remarketing  Agent and the Paying  Agent a  Preferred  Stock  Basic  Maintenance
Report, which will be deemed to have been delivered to the Remarketing Agent and
the Paying Agent if the Remarketing Agent and the Paying Agent receive a copy or
telecopy,  telex or other electronic  transcription  thereof and on the same day
the Corporation mails to the Remarketing Agent and the Paying Agent for delivery
on the next Business Day the full Preferred Stock Basic  Maintenance  Report.  A
failure by the Corporation to deliver a Preferred Stock Basic Maintenance Report
under this paragraph 8(b) without the prior


                                       46


consent  of the  Remarketing  Agent and the Paying  Agent  shall be deemed to be
delivery of a Preferred Stock Basic Maintenance Report indicating the Discounted
Value for all assets of the  Corporation is less than the Preferred  Stock Basic
Maintenance Amount, as of the relevant Valuation Date.

           (c)  Within  ten  Business  Days  after the date of  delivery  to the
Remarketing  Agent and the Paying Agent of a Preferred  Stock Basic  Maintenance
Report in accordance  with paragraph  8(b) above relating to a Annual  Valuation
Date,  the  Independent  Accountant  will confirm in writing to the  Remarketing
Agent and the Paying  Agent (i) the  mathematical  accuracy of the  calculations
reflected in such Report, (ii) that, in such Report, the Corporation  determined
in accordance with this Article  Fourteenth the assets of the Corporation  which
constitute  Eligible Assets at such Annual  Valuation Date,  (iii) that, in such
Report,  the Corporation  determined in accordance with this Article  Fourteenth
whether the Corporation had, at such Annual  Valuation Date,  Eligible Assets of
an  aggregate  Discounted  Value at least  equal to the  Preferred  Stock  Basic
Maintenance Amount, (iv) with respect to the S&P rating on portfolio  securities
of the  Corporation,  issuer  name,  issue size and coupon  rate  listed in such
Report,  that information has been traced and agrees with the information listed
by  Bloomberg,  L.P.  or an  alternative  reputable  source  (in the event  such
information does not agree or such information is not listed by Bloomberg,  L.P.
or an alternative  reputable source, the Independent  Accountant will inquire of
S&P what such  information  is, and  provide a listing  in their  letter of such
differences,  if any),  (v) with  respect to the  Moody's  ratings on  portfolio
securities of the Corporation, issuer name, issue size and coupon rate listed in
such Report,  that  information  has been traced and agrees with the information
listed by Bloomberg,  L.P. or an alternative reputable source (in the event such
information does not agree or such information is not listed by Bloomberg,  L.P.
or an alternative  reputable source, the Independent  Accountant will inquire of
Moody's what such  information is, and provide a listing in their letter of such
differences,  if any),  (vi) with  respect  to any  Substitute  Rating  Agency's
ratings on portfolio securities of the Corporation,  issuer name, issue size and
coupon rate listed in such Report,  that  information has been traced and agrees
with the  information  listed by  Bloomberg,  L.P. or an  alternative  reputable
source (in the event such  information does not agree or such information is not
listed by Bloomberg,  L.P. or an alternative  reputable source,  the Independent
Accountant will inquire of such Substitute  Rating Agency what such  information
is, and provide a listing in their letter of such differences, if any) and (vii)
with respect to the bid or mean price (or such  alternative  permissible  factor
used  in  calculating  the  Market  Value)  provided  by  the  custodian  of the
Corporation's  assets to the Corporation  for purposes of valuing  securities in
the  Corporation's  portfolio,  the Independent  Accountant has traced the price
used  in  such  Report  to the bid or mean  price  listed  in the  Corporation's
accounting records as of such date and verified that such information agrees (in
the event such  information  does not agree,  the  Independent  Accountant  will
provide a listing  in its  letter of such  differences)  (such  confirmation  is
herein called the "Accountant's Confirmation"). If any Accountant's Confirmation
delivered  pursuant to this  paragraph  8(c) shows that an error was made in the
Preferred Stock Basic  Maintenance  Report for a Annual Valuation Date, or shows
that a lower aggregate Discounted Value for the aggregate of all Eligible Assets
of the Corporation 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  Corporation,  and the Corporation  shall
accordingly  amend  the  Preferred  Stock  Basic   Maintenance   Report  to  the
Remarketing Agent and Paying Agent promptly following receipt by the Remarketing
Agent and the Paying Agent of such Accountant's Confirmation.

      9. RESTRICTIONS ON CERTAIN  DISTRIBUTIONS.  For so long as any share of RP
is outstanding,  the Corporation shall not declare, pay or set apart for payment
any dividend or other  distribution  (other than a dividend or distribution paid
in shares of, or  options,  warrants  or rights to  subscribe  for or  purchase,
Common


                                       47


Stock or other stock, if any, ranking junior to the shares of RP as to dividends
or upon  liquidation)  in respect of the Common  Stock or any other stock of the
Corporation  ranking  junior  to or on a  parity  with  the  shares  of RP as to
dividends  or upon  liquidation,  or call for  redemption,  redeem,  purchase or
otherwise  acquire for consideration any shares of the Common Stock or any other
such  junior  stock  (except by  conversion  into or  exchange  for stock of the
Corporation  ranking  junior  to  the  shares  of RP as to  dividends  and  upon
liquidation)  or any other  such  parity  stock  (except by  conversion  into or
exchange for stock of the Corporation  ranking junior to or on a parity with the
shares of RP as to dividends and upon liquidation), unless (A) immediately after
such  transaction,   the  Preferred  Stock  Basic  Maintenance  Amount  and  the
Investment  Company Act Preferred  Stock Asset Coverage  would be achieved,  (B)
full  cumulative  dividends on shares of RP and shares of Other  Preferred Stock
due on or prior to the date of the  transaction  have been  declared and paid or
shall have been declared and sufficient funds for the payment thereof  deposited
with the Paying Agent, (C) any Right required to be paid under paragraph 3(k) of
this Part I on or before the date of such  declaration  or payment has been paid
and (D) the Corporation has redeemed the full number of shares of RP required to
be redeemed by any provision for mandatory redemption contained herein.

      10. NOTICE. All notices or communications,  unless otherwise  specified in
the Bylaws of the Corporation or this Article Fourteenth,  shall be sufficiently
given if in  writing  and  delivered  in person or mailed by  first-class  mail,
postage  prepaid.  Notice  shall  be  deemed  given on the  earlier  of the date
received or the date seven days after which such notice is mailed.

      11. CERTAIN RATING AGENCY REQUIREMENTS AND RESTRICTIONS.

           (a) For so long as any shares of RP are  outstanding  and  Moody's is
then rating the RP, the Fund will  perform  all actions  required by the Moody's
Guidelines and will not engage in any  transactions  proscribed by  restrictions
set forth in the Moody's Guidelines, unless it has received written confirmation
from Moody's that such noncompliance  would not adversely affect the rating then
assigned by Moody's to the RP.

           (b) For so long as any shares of RP are  outstanding  and S&P is then
rating the RP, the Fund will perform all actions  required by the S&P Guidelines
and will not engage in any transactions  proscribed by restrictions set forth in
the S&P Guidelines,  unless it has received written  confirmation  from S&P that
such noncompliance would not adversely affect the rating then assigned by S&P to
the RP.

           (c)  For  so  long  as  any  shares  of RP are  outstanding  and  any
Substitute  Rating  Agency is then  rating  the RP,  the Fund will  perform  all
actions required by the Substituted  Rating Agency  Guidelines  relating to such
Substitute  Rating Agency and will not engage in any transactions  proscribed by
restrictions set forth in the Substituted  Rating Agency Guidelines  relating to
such Substitute Rating Agency,  unless it has received written confirmation from
such  Substituted  Rating  Agency that such  noncompliance  would not  adversely
affect the rating then assigned by such Substituted Rating Agency to the RP.

                                       48


                                    PART II.

                             REMARKETING PROCEDURES

      1.  REMARKETING  SCHEDULE.  Each  Remarketing  shall  take  place  over  a
three-day period  consisting of the Tender Date, the Dividend Reset Date and the
Settlement  Date. Such dates or the method of  establishing  such dates shall be
determined by the Board of Directors from time to time.

      2. PROCEDURE FOR TENDERING.  (a) Each share of RP is subject to Tender and
Dividend Reset only at the end of each Dividend  Period and may be tendered in a
Remarketing only on the Tender Date immediately  prior to the end of the current
Dividend  Period.  By 12:00 noon,  New York City time, on each such Tender Date,
the  Remarketing  Agent  shall,  after  canvassing  the market  and  considering
prevailing  market  conditions  at  the  time  for  shares  of  RP  and  similar
securities,  provide  Beneficial  Owners  non-binding  indications of Applicable
Dividend Rates for the next Dividend Period. The actual Applicable Dividend Rate
for such  Dividend  Period may be  greater  than or less than the rate per annum
indicated in such  non-binding  indications (but not greater than the applicable
Maximum  Dividend  Rate). By 1:00 p.m., New York City time, on such Tender Date,
each Beneficial  Owner of shares of RP must notify the Remarketing  Agent of its
desire, on a share-by-share  basis, either to tender such share of RP at a price
of  $100,000  per share or to  continue  to hold  such  share of RP for the next
Dividend  Period.  Any notice given to the  Remarketing  Agent to tender or hold
shares for a particular  Dividend  Period shall be irrevocable  and shall not be
conditioned upon the level at which the Applicable Dividend Rate is established.
Any such notice may not be waived by the Remarketing Agent, except that prior to
4:00 p.m., New York City time, on the Dividend Reset Date, the Remarketing Agent
may, in its sole  discretion  (i) at the request of a Beneficial  Owner that has
tendered one or more shares to the Remarketing  Agent,  contingently  waive such
Beneficial  Owner's tender and thereby enable such Beneficial  Owner to continue
to hold the share or shares  for the next  Dividend  Period as agreed to by such
Beneficial  Owner  and  the  Remarketing  Agent  at such  time,  so long as such
tendering  Beneficial Owner has indicated to the Remarketing Agent that it would
accept the new Applicable Dividend Rate for such Dividend Period, such waiver to
be contingent upon the Remarketing  Agent's ability to remarket all shares of RP
tendered in such Remarketing, and (ii) at the request of a Beneficial Owner that
has  elected  to hold one or more of its  shares of RP,  waive  such  Beneficial
Owner's election with respect thereto.

           (b) The right of each  Beneficial  Owner to tender  shares of RP in a
Remarketing  therefor  shall be limited to the extent  that (i) the  Remarketing
Agent conducts a Remarketing pursuant to the terms of the Remarketing Agreement,
(ii)  shares  tendered  have  not been  called  for  redemption  and  (iii)  the
Remarketing  Agent is able to find a purchaser or purchasers for tendered shares
of RP at an Applicable Dividend Rate for the next Dividend Period that is not in
excess of the Maximum Dividend Rate.

      3. DETERMINATION OF APPLICABLE  DIVIDEND RATES. (a) Between 1:00 p.m., New
York City time,  on each Tender Date and 4:00 p.m.,  New York City time,  on the
succeeding  Dividend  Reset Date,  the  Remarketing  Agent shall  determine  the
Applicable  Dividend Rate to the nearest  one-thousandth  (0.001) of one percent
per annum for the next Dividend  Period.  The Applicable  Dividend Rate for such
Dividend  Period,  except as otherwise  required  herein,  shall be the rate per
annum which the Remarketing  Agent determines,  in its sole judgment,  to be the
lowest rate,  giving effect to such allocation,  that will enable it to remarket
on behalf of the Beneficial  Owners thereof all shares of RP tendered to it at a
price of $100,000 per share.


                                       49


           (b) If no Applicable  Dividend Rate shall have been  established on a
Dividend Reset Date in a Remarketing for the next Dividend Period for any reason
(other than because there is no Remarketing  Agent or the  Remarketing  Agent is
not required to conduct a Remarketing  pursuant to the terms of the  Remarketing
Agreement),  then the Remarketing Agent,  except during a Non-Payment Period, in
its sole  discretion,  shall,  after taking into account  market  conditions  as
reflected  in the  prevailing  yields of fixed and  variable  rate  taxable  and
tax-exempt  debt  securities  and the  prevailing  dividend  yields of fixed and
variable rate preferred stock, if necessary,  determine the Applicable  Dividend
Rate that  would be the  initial  dividend  rate  fixed in an  offering  on such
Dividend Reset Date, assuming in each case a comparable dividend period,  issuer
and security.  If there is no Remarketing  because there is no Remarketing Agent
or the  Remarketing  Agent is not required to conduct a Remarketing  pursuant to
the  Remarketing  Agreement,  then,  except  during a  Non-Payment  Period,  the
Applicable  Dividend  Rate for each  subsequent  Dividend  Period  for  which no
Remarketing takes place because of the foregoing shall be the applicable Maximum
Dividend Rate.

           (c) In determining  such  Applicable  Dividend Rate, the  Remarketing
Agent shall,  after taking into account  market  conditions  as reflected in the
prevailing  yields  of fixed and  variable  rate  taxable  and  tax-exempt  debt
securities  and the  prevailing  dividend  yields  of fixed  and  variable  rate
preferred stock, in providing non-binding indications of the Applicable Dividend
Rate to Beneficial Owners and potential purchasers of shares of RP, (i) consider
the number of shares of RP  tendered  and the  number of shares of RP  potential
purchasers  are willing to purchase  and (ii)  contact by telephone or otherwise
current  and  potential  Beneficial  Owners of shares  of RP and  ascertain  the
dividend rates at which they would be willing to hold shares of RP.

           (d) The Applicable  Dividend Rate shall be determined as aforesaid by
the Remarketing  Agent in its sole discretion  (except as otherwise  provided in
this Article Fourteenth with respect to Applicable  Dividend Rates that shall be
the Non-Payment  Period Rate and Maximum  Dividend Rate) and shall be conclusive
and binding on Holders and Beneficial Owners.

           (f) Except during a Non-Payment  Period, the Applicable Dividend Rate
for any Dividend Period shall not be more than the applicable  Maximum  Dividend
Rate.

      4. ALLOCATION OF SHARES; FAILURE TO REMARKET AT $100,000 PER SHARE. (a) If
the Remarketing Agent is unable to remarket by 4:00 p.m., New York City time, on
any  Dividend  Reset  Date  all  shares  of RP  tendered  to it in  the  related
Remarketing  at a price of  $100,000  per share (i) each  Beneficial  Owner that
tendered shares of RP for sale shall sell a number of shares of RP on a pro rata
basis,  to the extent  practicable,  or by lot, as determined by the Remarketing
Agent in its sole discretion based on the number of orders to purchase shares of
RP in such  Remarketing;  and (ii)  the  Applicable  Dividend  Rate for the next
Dividend Period shall be the Maximum Dividend Rate.

           (b) If the allocation  procedures described above would result in the
sale of a fraction of a share of RP, the  Remarketing  Agent shall,  in its sole
discretion,  round up or down the number of shares of RP sold by each Beneficial
Owner on such Dividend Reset Date so that each share sold by a Beneficial  Owner
shall be a whole  share of RP and the total  number of shares  sold  equals  the
total number of shares bought on such Dividend Reset Date.

      5. NOTIFICATION OF RESULTS;  SETTLEMENT. (a) By telephone at approximately
4:30 p.m., New York City time, on each Dividend Reset Date the Remarketing Agent
shall advise each Beneficial Owner of tendered shares and


                                       50


each purchaser thereof (or the Agent Member thereof) (i) of the number of shares
such  Beneficial  Owner or  purchaser  is to sell or  purchase  and (ii) to give
instructions to its Agent Member to deliver such shares against payment therefor
or to pay the purchase price against  delivery as  appropriate.  The Remarketing
Agent will also advise each Beneficial Owner or purchaser that is to continue to
hold, or to purchase,  shares for the Dividend Periods beginning on the Business
Day following such Dividend Reset Date of the Applicable  Dividend Rate for such
Dividend Period.

           (b) In accordance with the Securities Depository's normal procedures,
on the Settlement  Date, the  transactions  described above with respect to each
share  of RP  shall  be  executed  through  the  Securities  Depository,  if the
Securities  Depository  or its  nominee  holds  or is to hold  the  certificates
relating to the shares to be purchased, and the accounts of the respective Agent
Members of the  Securities  Depository  shall be debited and credited and shares
delivered by book entry as necessary to effect the purchases and sales of shares
of RP.  Purchasers  of shares of RP shall make  payment  to the Paying  Agent in
same-day funds against  delivery to other purchasers or their nominees of one or
more certificates representing shares of RP, or, if the Securities Depository or
its nominee  holds or is to hold the  certificates  relating to the shares to be
purchased,  through  their  Agent  Members in same-day  funds to the  Securities
Depository  against delivery through their Agent Members by book entry of shares
of RP or as otherwise  required by the  Securities  Depository.  The  Securities
Depository shall make payment in accordance with its normal procedures.

           (c) If any  Beneficial  Owner  selling  shares of RP in a Remarketing
fails to deliver such shares,  the Agent Member of such selling Beneficial Owner
and of any  other  person  that  was to  have  purchased  shares  of RP in  such
Remarketing  may deliver to any such other person a number of whole shares of RP
that is less than the number of shares that  otherwise  was to be  purchased  by
such person.  In such event, the number of shares of RP to be so delivered shall
be determined by such Agent Member.  Delivery of such lesser number of shares of
RP shall constitute good delivery.

           (d) The  Remarketing  Agent,  the  Paying  Agent  and the  Securities
Depository  each will use its reasonable  commercial  efforts to meet the timing
requirements  set forth in paragraphs  (a) and (b) above;  provided that, in the
event that there is a delay in the  occurrence  of any  delivery  or other event
connected with a Remarketing,  the Remarketing  Agent,  the Paying Agent and the
Securities  Depository  each  will  use its  reasonable  commercial  efforts  to
accommodate such delay in furtherance of the Remarketing.

           (e) Notwithstanding any of the foregoing provisions of this paragraph
5, the  Remarketing  Agent may, in its sole  discretion,  modify the  settlement
procedures  set forth  above  with  respect  to  settlement,  provided  any such
modification  does not adversely affect the Beneficial  Owners or the Holders of
RP or the Corporation.

      6. PURCHASE OF SHARES OF RP BY REMARKETING  AGENT.  The Remarketing  Agent
may purchase for its own account shares of RP in a Remarketing, provided that it
purchases  all  tendered  (or  deemed  tendered)  shares  of RP not sold in such
Remarketing  to  other   purchasers  and  that  the  Applicable   Dividend  Rate
established in such  Remarketing is no higher than the Applicable  Dividend Rate
that would have been established if the Remarketing Agent had not purchased such
shares. Except as provided in the previous sentence, the Remarketing Agent shall
not be obligated to purchase any shares of RP that would otherwise remain unsold
in a Remarketing.  If the  Remarketing  Agent owns any shares of RP subject to a
Remarketing  immediately  prior to a Remarketing and if all other shares subject
to such Remarketing and tendered for sale by other  Beneficial  Owners of shares
of RP have been sold in such  Remarketing,  then the Remarketing  Agent may sell
such number of its shares in such


                                       51


Remarketing  as there  are  outstanding  orders to  purchase  that have not been
filled by such shares tendered for sale by other Beneficial Owners.  Neither the
Corporation,  the Paying Agent nor the  Remarketing  Agent shall be obligated in
any case to  provide  funds to make  payment  to a  Beneficial  Owner  upon such
Beneficial Owner's tender of its shares of RP in a Remarketing.

      7.  APPLICABLE  DIVIDEND  RATE DURING A NON-PAYMENT  PERIOD.  So long as a
Non-Payment Period shall continue,  paragraphs 1, 2, 3, 4, 5, and 6 of this Part
II shall not be applicable to any of the shares of RP and the shares of RP shall
not be subject to Tender and Dividend Reset.

      8.  TRANSFERS.  In the case of any transfer of any shares of RP other than
pursuant to a  Remarketing,  the  transferor  shall  ensure that an Agent Member
advises  the  Remarketing  Agent of such  transfer.  The Agent  Member  shall be
authorized and instructed to disclose to the Remarketing Agent and/or the Paying
Agent such information  with respect to the transferee as the Remarketing  Agent
or Paying Agent shall request.

      9. MISCELLANEOUS.  To the extent permitted by applicable law, the Board of
Directors of the  Corporation  may interpret or adjust the provisions  hereof to
resolve any  inconsistency  or  ambiguity,  remedy any formal defect or make any
other  change or  modification  which  does not  adversely  affect the rights of
Holders  or  Beneficial  Owners  of shares  of RP and if such  inconsistency  or
ambiguity reflects an incorrect provision hereof then the Board of Directors may
authorize  the  filing  of  a  Certificate  of  Amendment  or a  Certificate  of
Correction, as the case may be.

      10.  SECURITIES  DEPOSITORY;  STOCK  CERTIFICATES.   (a)  If  there  is  a
Securities  Depository,  one  certificate  for all of the  shares of RP shall be
issued to the Securities Depository and registered in the name of the Securities
Depository or its nominee.  Such  certificate  shall bear a legend to the effect
that such  certificate  is issued  subject to the  provisions  contained in this
Article  Fourteenth.  Unless  the  Corporation  shall  have  elected,  during  a
Non-Payment  Period, to waive this requirement,  the Corporation will also issue
stop-transfer  instructions  to the Paying Agent for the shares of RP. Except as
provided in paragraph (b) below,  the Securities  Depository or its nominee will
be the Holder, and no Beneficial Owner shall receive  certificates  representing
its ownership interest in such shares.

           (b) If the  Applicable  Dividend Rate  applicable to all shares of RP
shall be the Non-Payment Period Rate or there is no Securities  Depository,  the
Corporation may at its option issue one or more new certificates with respect to
such shares  (without the legend referred to in paragraph 10(a) of this Part II)
registered in the names of the  Beneficial  Owners or their nominees and rescind
the  stop-transfer  instruction  referred to in paragraph  10(a) of this Part II
with respect to such shares.

      SECOND: The amendment to and restatement of the charter of the Corporation
as hereinabove set forth have been duly advised by the board of directors of the
Corporation  and approved by the  stockholders of the Corporation as required by
law.

      THIRD:  The foregoing  amendment to and  restatement of the charter of the
Corporation do not increase the authorized stock of the Corporation.

      FOURTH:  The current address of the principal office of the Corporation is
as set forth in Article Third of the foregoing  amendment to and  restatement of
the charter of the Corporation.


                                       52


      FIFTH:  The name and address of the  Corporation's  current resident agent
are as set forth in Article Third of the foregoing  amendment to and restatement
of the charter of the Corporation.

      SIXTH:  The number of directors of the  Corporation is currently eight and
the names of those directors currently in office are as follows:

                Stewart E. Conner
                Connie K. Duckworth
                Robert J. Genetski
                Francis E. Jeffries
                Nancy Lampton
                Christian H. Poindexter
                Carl F. Pollard
                David J. Vitale

      SEVENTH:  The foregoing  amendment to the Charter of the Corporation shall
become  effective  upon  acceptance  for  record  by  the  State  Department  of
Assessments and Taxation of Maryland.


                                       53


                                    EXHIBIT B

                           DNP SELECT INCOME FUND INC.

                             AUDIT COMMITTEE CHARTER
                   AS AMENDED AND RESTATED ON AUGUST 25, 2005

PURPOSE

[ ]   The Audit  Committee  has been  established  by the Board of  Directors to
      assist the Board's  oversight of (1) the integrity of the Fund's financial
      statements,   (2)  the  Fund's   compliance   with  legal  and  regulatory
      requirements, (3) the qualifications,  independence and performance of the
      Fund's   independent   registered  public  accounting  firm  and  (4)  the
      performance by the Fund's service  providers of their respective  internal
      audit  functions to the extent such functions  relate to the operations of
      the Fund.

[ ]   The  Audit  Committee,  in its  capacity  as a  committee  of the Board of
      Directors,   shall   be   directly   responsible   for  the   appointment,
      compensation,  retention  and  oversight  of the  work of any  independent
      registered  public accounting firm engaged for the purpose of preparing or
      issuing  an audit  report  or  performing  other  audit,  review or attest
      services for the Fund.

[ ]   The Audit  Committee  shall  cause to be  prepared  and shall  approve any
      reports  required by the rules of the Securities  and Exchange  Commission
      ("SEC") to be included in the Fund's annual proxy statement.

[ ]   The function of the Audit  Committee is  oversight;  it is not the duty of
      the  Committee to plan or conduct  audits or to determine  that the Fund's
      financial  statements and disclosures are complete and accurate and are in
      accordance with generally  accepted  accounting  principles and applicable
      rules and regulations.  These are the  responsibilities  of management and
      the independent registered public accounting firm.

COMPOSITION

[ ]   The Audit Committee shall consist of at least three directors, including a
      chairman,  appointed by the Board of Directors upon the  recommendation of
      the Nominating/Corporate Governance Committee. Audit Committee members may
      be removed and replaced by the Board at any time.

[ ]   Each member of the Audit  Committee  shall  satisfy the  independence  and
      financial  literacy  requirements of the applicable  rules of the New York
      Stock Exchange ("NYSE") and Section 10A of the Securities  Exchange Act of
      1934,  as  amended  (the  "Exchange  Act"),  and  the  rules   promulgated
      thereunder.

[ ]   At least one member of the Audit  Committee shall be a person who has been
      determined  by the Board of Directors to satisfy the  definition of "audit
      committee  financial  expert" set forth in  Instruction  2(b) to Item 3 of
      Form N-CSR promulgated by the SEC.

[ ]   Members of the Audit Committee shall receive no compensation from the Fund
      other than (i)  reimbursement  of expenses and (ii) fixed fees established
      by the Board with respect to service on the Board and  committees  thereof
      and attendance at Board and committee meetings.


                                       54


[ ]   Because of the Audit Committee's demanding role and responsibilities,  and
      the time commitment attendant to Committee membership,  no Audit Committee
      member may simultaneously serve on the audit committees of more than three
      public  companies  unless  the  Board of  Directors  determines  that such
      simultaneous  service  will not impair the ability of such member to serve
      effectively on the Audit Committee of the Fund.

[ ]   Except as expressly   provided in this  Charter,  the  Bylaws of the Fund,
      the Corporate Governance  Guidelines of the Fund, the rules of the NYSE or
      any applicable law or regulation,  the Audit Committee shall establish its
      own rules of procedure.

RESPONSIBILITIES AND POWERS

[ ]   To  carry  out its purposes,  the Audit Committee shall have the following
      responsibilities and powers:

GENERAL

[ ]   Meet at  least  twice a year,  or more  frequently  as  circumstances  may
      require.

[ ]   Review and reassess  the  adequacy of this  Charter at least  annually and
      recommend any proposed changes to the Board of Directors for approval.

[ ]    Review  annually the Audit  Committee's  own  performance  and report the
      results of such review to the Board of Directors.

[ ]   Meet  regularly with  representatives  of the Fund's  investment  adviser,
      administrator  and  independent   registered  public  accounting  firm  in
      separate  executive sessions to review and discuss any issues arising from
      the  administrator's  and independent  registered public accounting firm's
      perspective  relating to the accounting,  financial reporting and internal
      audit functions  performed by the Fund and, where  applicable,  by service
      providers on behalf of the Fund.

[ ]   Review with the Fund's investment  adviser,  administrator and independent
      registered  public  accounting firm the adequacy and  effectiveness of the
      accounting   and   financial   controls  of  the  Fund,   and  elicit  any
      recommendations for the improvement of such internal control procedures or
      particular  areas where new or more detailed  controls or  procedures  are
      desirable or necessary.

[ ]   Discuss  with  management  the  guidelines  and  policies  that govern the
      process  by  which  management  assesses  and  manages  the  Fund's  major
      financial risk exposures.

[ ]   Establish  general  policies  governing the release (to  analysts,  rating
      agencies or the general  public) of financial  information  regarding  the
      Fund.

[ ]   To the extent the Committee deems  necessary or  appropriate,  request any
      officer  of the Fund,  or any  employee  or  representative  of the Fund's
      administrator,   investment   adviser,   outside  counsel  or  independent
      registered  public  accounting  firm to attend  any  meeting  of the Audit
      Committee  or to  meet  with  any  members  of,  or  consultants  to,  the
      Committee.

[ ]   Review with the Fund's outside  counsel any legal matters that the counsel
      believes may have a material impact on the Fund's accounting and financial
      reporting policies or practices.


                                       55


[ ]   To the extent the Committee  deems  necessary or  appropriate to carry out
      its duties, engage independent counsel and other advisers.

[ ]   To the extent the Committee  deems  necessary or  appropriate,  conduct or
      authorize  investigations  into  any  matters  within  the  scope  of  the
      Committee's responsibilities.

[ ]   Approve the  establishment of procedures for the receipt,  retention,  and
      treatment  of  complaints  received  by  the  Fund  regarding  accounting,
      internal accounting  controls,  or auditing matters, and the confidential,
      anonymous   submission  by  employees  of  the  Fund's   administrator  or
      investment  adviser  of  concerns  regarding  questionable  accounting  or
      auditing matters.

[ ]   Perform  such  other  oversight  functions  as  are  assigned  by  law  or
      regulation,  NYSE  rule,  the Fund's  Charter  or Bylaws,  or the Board of
      Directors.

[ ]   Determine the appropriate funding, to be provided by the Fund, for payment
      of (i) compensation to any independent  registered  public accounting firm
      engaged  for the  purpose  of  preparing  or  issuing  an audit  report or
      performing  other  audit,  review or attest  services  for the Fund,  (ii)
      compensation to any independent  counsel or other advisers retained by the
      Committee and (iii) ordinary administrative expenses of the Committee that
      are necessary or appropriate in carrying out its duties.

INDEPENDENT AUDIT

[ ]   In its  capacity as a  committee  of the Board of  Directors,  be directly
      responsible for the appointment,  compensation, retention and oversight of
      the work of any  independent  registered  public  accounting  firm engaged
      (including   resolution  of  disagreements   between  management  and  the
      accounting  firm  regarding  financial   reporting)  for  the  purpose  of
      preparing or issuing an audit report or performing other audit,  review or
      attest  services  for the Fund,  I.E.,  each such  independent  registered
      public accounting firm shall report directly to the Audit Committee.

[ ]   Pre-approve the scope, fees and terms of all audit and non-audit  services
      provided by the Fund's  independent  registered public accounting firm, as
      required  by the  provisions  of Section 10A of the  Exchange  Act and the
      rules promulgated thereunder.

[ ]   To the extent the Committee deems  necessary or  appropriate,  delegate to
      one or more  designated  members of the Audit  Committee  the authority to
      grant  pre-approvals  of audit and non-audit  services,  PROVIDED that the
      decisions  of any  member(s) to whom  authority  is so delegated  shall be
      presented to the full Audit Committee at each of its scheduled meetings

[ ]   Review  the  experience  and  qualifications  of the lead  partner  of the
      independent registered public accounting firm's audit engagement team.

[ ]   Assure that the lead  partner and  concurring  partner of the  independent
      registered  public  accounting firm's audit engagement team are rotated at
      least every five years as required by Section 10A of the Exchange Act.


                                       56


[ ]   Obtain  and  review  a  report  from  the  independent  registered  public
      accounting  firm at least  annually  regarding (1) the  accounting  firm's
      internal quality-control procedures, (2) any material issues raised by the
      most recent quality-control review, or peer review, of the firm, or by any
      inquiry or  investigation  by  governmental  or  professional  authorities
      within the preceding five years respecting one or more independent  audits
      carried out by the firm,  (3) any steps taken to deal with any such issues
      and  (4) all  relationships  between  the  independent  registered  public
      accounting firm and the Fund.

[ ]   As  frequently  as  deemed  necessary,  evaluate  the  qualifications  and
      performance  of  the  independent   registered   public  accounting  firm,
      including  considering  whether the accounting firm's quality controls are
      adequate,  and taking into  account the  opinions  of  management  and the
      Fund's administrator.

[ ]   At least annually, evaluate the independence of the independent registered
      public  accounting  firm,  including  whether the  provision  of non-audit
      services  is   compatible   with   maintaining   the   accounting   firm's
      independence.

[ ]   Discuss  with  the  independent  registered  public  accounting  firm  any
      communications between the Fund's audit engagement team and the accounting
      firm's national office respecting  auditing or accounting issues presented
      by the engagement.

[ ]   Discuss with management and the independent  registered  public accounting
      firm  any  accounting  adjustments  that  were  noted or  proposed  by the
      accounting firm but were passed (as immaterial or otherwise).

[ ]   Review the reports of the independent  registered  public  accounting firm
      mandated by Section 10A of the Exchange Act and obtain from the accounting
      firm  assurance  that no illegal  acts (as  defined in Section  10A of the
      Exchange Act) have been detected or have  otherwise  come to the attention
      of such accounting firm in the course of the audit.

[ ]   Establish  policies  regarding the hiring of employees or former employees
      of the Fund's independent  registered public accounting firm by the Fund's
      investment adviser or administrator.

FINANCIAL STATEMENT REVIEW

[ ]   Review and discuss with the Fund's  management and independent  registered
      public  accounting  firm the Fund's annual audited  financial  statements,
      including  the matters  required to be discussed  pursuant to Statement of
      Auditing   Standards  No.  61,  and  the  Fund's   semi-annual   financial
      statements.

[ ]   Review  and discuss  with  the Board  of  Directors,  management  and  the
      independent  registered public  accounting firm, as applicable,  (1) major
      issues   regarding   accounting   principles   and   financial   statement
      presentations,  including any significant  changes in the Fund's selection
      or  application  of  accounting  principles,  and  major  issues as to the
      adequacy  of the Fund's  internal  controls  and any  special  audit steps
      adopted in light of material control  deficiencies;  (2) analyses prepared
      by management  and/or the independent  registered  public  accounting firm
      setting forth significant financial reporting issues and judgments made in
      connection  with the  preparation of the financial  statements,  including
      analyses  of the  effects of  alternative  GAAP  methods on the  financial
      statements;   (3)  any  material   written   communications   between  the
      independent  registered  public  accounting firm and the Fund, such as any
      "management" or "internal control" letter or schedule


                                       57


      of unadjusted differences, and the Fund's response to such communications;
      (4) any problems, difficulties or differences encountered in the course of
      the  audit  work,   including  any   disagreements   with   management  or
      restrictions on the scope of the independent  registered public accounting
      firm's  activities or on access to requested  information and management's
      response  thereto;  and  (5)  the  effect  of  regulatory  and  accounting
      initiatives on the financial statements of the Fund.

[ ]   Review and discuss with the independent  registered public accounting firm
      the form of opinion the  accounting  firm proposes to render to the Fund's
      Board and shareholders on the Fund's financial statements.

[ ]   Make  recommendations to the Board of Directors regarding inclusion of the
      Fund's  audited  financial  statements  in the  Fund's  annual  report  to
      shareholders.

[ ]   Review  disclosures  made by the Fund's  principal  executive  officer and
      principal financial officer regarding  compliance with their certification
      obligations as required under the Sarbanes-Oxley Act of 2002 and the rules
      promulgated  thereunder,  including  the Fund's  disclosure  controls  and
      procedures and internal  controls for financial  reporting and evaluations
      thereof.

INVESTMENT COMPANY-SPECIFIC FUNCTIONS

[ ]   Assist the Board of  Directors  in  fulfilling  its good faith  obligation
      under Section  2(a)(41) of the Investment  Company Act of 1940, as amended
      (the "Investment  Company Act"), to determine the fair value of securities
      in the  Fund's  portfolio  for which  market  quotations  are not  readily
      available  by  reviewing,  in  consultation  with the  Fund's  independent
      registered  public  accounting  firm,  fair  value  pricing  methodologies
      developed by the Fund's  management and recommending the same for adoption
      by the Board of Directors.

[ ]   Ensure that the  agreed-upon  procedures  for the  production of quarterly
      basic  maintenance  reports on the Fund's  remarketed  preferred stock and
      commercial paper are carried out.

[ ]   Ensure that any necessary tax  qualification  tests relating to the Fund's
      regulated investment company status are performed.

REPORTING RESPONSIBILITIES

[ ]   Keep  regular  minutes of  Committee  meetings  and report the same to the
      Board of Directors when required.

[ ]   Report  to the  Board of  Directors  on the  Committee's  activities  on a
      regular basis and make such  recommendations for action by the Board as it
      may deem appropriate.

[ ]   Cause to be prepared and approve any reports  required by the rules of the
      SEC to be included in the Fund's annual proxy statement.



                                       58


                                    EXHIBIT C

                           DNP SELECT INCOME FUND INC.

                                 AUDIT COMMITTEE

                AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
                        (AS ADOPTED ON FEBRUARY 23, 2006)

I.  STATEMENT OF PRINCIPLES

      Under the  Sarbanes-Oxley  Act of 2002 (the "Act"), the Audit Committee of
the Board of Directors is  responsible  for the  appointment,  compensation  and
oversight   of  the  work  of  the   independent   auditor.   As  part  of  this
responsibility,  the Audit  Committee is required to  pre-approve  the audit and
non-audit services performed by the independent  auditor in order to assure that
they do not impair the auditor's  independence from the Fund. To implement these
provisions of the Act, the  Securities and Exchange  Commission  (the "SEC") has
issued rules  specifying the types of services that an  independent  auditor may
not provide to its audit client, as well as the Audit Committee's administration
of the engagement of the independent auditor.  Accordingly,  the Audit Committee
has adopted,  and the Board of Directors has  ratified,  the Audit and Non-Audit
Services  Pre-Approval  Policy (this "Policy"),  which sets forth the procedures
and the conditions  pursuant to which  services  proposed to be performed by the
independent auditor may be pre-approved.

      The SEC's  rules  establish  two  different  approaches  to  pre-approving
services, which the SEC considers to be equally valid. Proposed services either:
may be pre-approved without  consideration of specific  case-by-case services by
the  Audit  Committee   ("general   pre-approval");   or  require  the  specific
pre-approval  of  the  Audit  Committee  ("specific  pre-approval").  The  Audit
Committee  believes that the  combination of these two approaches in this Policy
will result in an effective  and  efficient  procedure to  pre-approve  services
performed by the independent auditor. As set forth in this Policy, unless a type
of  service  has  received  general  pre-approval,   it  will  require  specific
pre-approval  by the Audit  Committee if it is to be provided by the independent
auditor.  Any proposed services  exceeding  pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.

      For both types of pre-approval,  the Audit Committee will consider whether
such services are consistent with the SEC's rules on auditor  independence.  The
Audit  Committee  will also  consider  whether the  independent  auditor is best
positioned to provide the most effective and efficient service, for reasons such
as its  familiarity  with  the  Fund's  business,  people,  culture,  accounting
systems,  risk profile and other factors,  and whether the service might enhance
the Fund's ability to manage or control risk or improve audit quality.  All such
factors will be considered as a whole,  and no one factor should  necessarily be
determinative.

      Under the SEC's rules,  the Audit  Committee  must  pre-approve  non-audit
services provided not only to the Fund but also to the Fund's investment adviser
and other  affiliated  entities that provide ongoing services to the Fund if the
independent  accountant's  services to those  affiliated  entities have a direct
impact on the Fund's operations or financial reporting.


                                       59


      The Audit Committee is also mindful of the  relationship  between fees for
audit and  non-audit  services  in  deciding  whether  to  pre-approve  any such
services and may determine,  for each fiscal year, the appropriate ratio between
the total amount of fees for audit,  audit-related  and tax services  (including
any  audit-related  or tax  service  fees for  affiliates  that are  subject  to
pre-approval)  and the total  amount of fees for certain  permissible  non-audit
services  classified as "all other"  services  (including  any such services for
affiliates that are subject to pre-approval).

      The appendices to this Policy describe the audit,  audit-related,  tax and
"all other" services that have the general  pre-approval of the Audit Committee.
The term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee  considers a different  period and states  otherwise.
The Audit  Committee will annually  review and pre-approve the services that may
be provided by the independent  auditor without obtaining specific  pre-approval
from the Audit  Committee.  The Audit Committee will add or subtract to the list
of  general  pre-approved  services  from  time to  time,  based  on  subsequent
determinations.

      The  purpose of this  Policy is to set forth the  procedures  by which the
Audit Committee  intends to fulfill its  responsibilities.  It does not delegate
the Audit Committee's  responsibilities to pre-approve services performed by the
independent auditor to management.

      The  independent  auditor  has  reviewed  this  Policy and  believes  that
implementation   of  this  Policy  will  not  adversely   affect  the  auditor's
independence.

II.  DELEGATION

      As  provided  in the Act and the  SEC's  rules,  the Audit  Committee  may
delegate either type of pre-approval authority to one or more of its members who
are not  "interested  persons"  under the  Investment  Company Act of 1940.  The
member to whom such  authority  is  delegated  must  report,  for  informational
purposes only,  any  pre-approval  decisions to the Audit  Committee at its next
scheduled  meeting.  In  accordance  with the  foregoing  provisions,  the Audit
Committee has delegated pre-approval to its Chairman, Carl F.
Pollard, and to any successor Chairman who is not an "interested person."

III.  AUDIT SERVICES

      The annual audit services engagement terms and fees will be subject to the
specific pre-approval of the Audit Committee.  Audit services include the annual
financial  statement audit and other procedures  required to be performed by the
independent  auditor  to be  able to form an  opinion  on the  Fund's  financial
statements.  These other procedures include  information  systems and procedural
reviews and testing  performed in order to understand  and place reliance on the
systems of internal control, and consultations  relating to the audit. The Audit
Committee will monitor the audit services  engagement as necessary,  but no less
than on a semiannual basis, and will also approve, if necessary,  any changes in
terms, conditions and fees resulting from changes in audit scope, Fund structure
or other items.

      In addition to the annual audit services  engagement approved by the Audit
Committee,  the Audit  Committee may grant general  pre-approval  to other audit
services,  which are those services that only the independent auditor reasonably
can  provide.  Other audit  services may include  statutory  audits and services
associated  with SEC  registration  statements  (on Forms N-1A,  N-2,  N-3, N-4,
etc.),  periodic  reports  and  other  documents  filed  with  the SEC or  other
documents issued in connection with securities offerings.


                                       60



      The Audit Committee has pre-approved the audit services in Appendix A. All
other audit services not listed in Appendix A must be specifically  pre-approved
by the Audit Committee.

IV.  AUDIT-RELATED SERVICES

      Audit-related  services  are  assurance  and  related  services  that  are
reasonably  related  to the  performance  of the audit or  review of the  Fund's
financial  statements  or that are  traditionally  performed by the  independent
auditor.   Because  the  Audit   Committee   believes   that  the  provision  of
audit-related  services does not impair the  independence  of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general  pre-approval to audit-related  services.  Audit-related  services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure  matters not classified as "audit services";  assistance
with  understanding  and  implementing  new accounting  and financial  reporting
guidance from rulemaking  authorities;  agreed-upon or expanded audit procedures
related to accounting  and/or billing  records  required to respond to or comply
with financial,  accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under form N-SAR.

      The  Audit  Committee  has  pre-approved  the  audit-related  services  in
Appendix B. All other  audit-related  services  not listed in Appendix B must be
specifically pre-approved by the Audit Committee.

V.  TAX SERVICES

      The Audit Committee believes that the independent  auditor can provide tax
services to the Fund such as tax compliance, tax planning and tax advice without
impairing  the  auditor's  independence,   and  the  SEC  has  stated  that  the
independent  auditor may  provide  such  services.  Hence,  the Audit  Committee
believes  it may grant  general  pre-approval  to those tax  services  that have
historically been provided by the auditor, that the Audit Committee has reviewed
and believes  would not impair the  independence  of the  auditor,  and that are
consistent  with the SEC's rules on auditor  independence.  The Audit  Committee
will not permit the retention of the  independent  auditor in connection  with a
transaction  initially recommended by the independent auditor, the sole business
purpose of which may be tax  avoidance and the tax treatment of which may not be
supported  in the  Internal  Revenue  Code and  related  regulations.  The Audit
Committee  will  consult  with the Fund's  Administrator  or outside  counsel to
determine that the tax planning and reporting positions are consistent with this
Policy.

      Pursuant to the preceding paragraph,  the Audit Committee has pre-approved
the tax  services in Appendix C. All tax  services  involving  large and complex
transactions  not listed in Appendix C must be specifically  pre-approved by the
Audit  Committee,  including:  tax  services  proposed  to be  provided  by  the
independent  auditor to any executive officer or director of the Fund, in his or
her individual capacity, where such services are paid for by the Fund.

VI.  ALL OTHER SERVICES

      The Audit  Committee  believes,  based on the SEC's rules  prohibiting the
independent auditor from providing specific non-audit services, that other types
of non-audit services are permitted.  Accordingly,  the Audit Committee believes
it may  grant  general  pre-approval  to those  permissible  non-audit  services
classified  as all other  services  that it believes  are routine and  recurring
services,  would not impair the  independence  of the auditor and are consistent
with the SEC's rules on auditor independence.


                                       61



      The Audit Committee has  pre-approved the "all other" services in Appendix
D.   Permissible  "all  other"  services  not  listed  in  Appendix  D  must  be
specifically pre-approved by the Audit Committee.

      A list of the SEC's  prohibited  non-audit  services  is  attached to this
Policy as Appendix E. The SEC's rules and relevant  guidance should be consulted
to determine the precise  definitions of these services and the applicability of
exceptions to certain of the prohibitions.

VII.  PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS

      Pre-approval  fee  levels  or  budgeted  amounts  for all  services  to be
provided by the  independent  auditor will be established  annually by the Audit
Committee. (Note that separate amounts may be specified for services to the Fund
and for services to other affiliated entities that are subject to pre-approval.)
Any proposed  services  exceeding these levels or amounts will require  specific
pre-approval  by the Audit  Committee.  The Audit  Committee  is  mindful of the
overall  relationship  of fees for audit and non-audit  services in  determining
whether to  pre-approve  any such  services.  For each  fiscal  year,  the Audit
Committee may determine the  appropriate  ratio between the total amount of fees
for  audit,   audit-related  and  tax  services  for  the  Fund  (including  any
audit-related   or  tax  services  fees  for  affiliates  that  are  subject  to
pre-approval),  and the total  amount of fees for  services  classified  as "all
other" services  (including any such services for affiliates that are subject to
pre-approval).

VIII.  PROCEDURES

      All  requests  or  applications   for  services  to  be  provided  by  the
independent auditor that do not require specific approval by the Audit Committee
will be  submitted  to the  Fund's  Administrator  and must  include a  detailed
description  of the services to be rendered.  The  Administrator  will determine
whether  such  services  are  included  within  the list of  services  that have
received the general  pre-approval of the Audit  Committee.  The Audit Committee
will be  informed  on a  timely  basis  of any  such  services  rendered  by the
independent auditor.

      Requests  or  applications  to  provide  services  that  require  specific
approval by the Audit Committee will be submitted to the Audit Committee by both
the independent auditor and the Fund's  Administrator,  and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.

      The Audit Committee has designated the Fund's Administrator to monitor the
performance of all services provided by the independent auditor and to determine
whether such services are in compliance with this Policy. The Administrator will
report  to the  Audit  Committee  on a  periodic  basis  on the  results  of its
monitoring. Both the Administrator and any member of management will immediately
report to the  Chairman  of the Audit  Committee  any breach of this Policy that
comes to their attention.

IX.  ADDITIONAL REQUIREMENTS

      The Audit  Committee  has  determined  to take  additional  measures on an
annual basis to meet its  responsibility  to oversee the work of the independent
auditor  and to  assure  the  auditor's  independence  from  the  Fund,  such as
reviewing a formal written  statement from the independent  auditor  delineating
all relationships  between the independent auditor and the Fund, consistent with
Independence Standards Board Standard No. 1, and discussing with the independent
auditor its methods and procedures for ensuring independence.


                                       62


APPENDIX A

PRE-APPROVED AUDIT SERVICES FOR FISCAL YEAR 2006

Dated: February 23, 2006


------------------------------------------------------------------------------------------------------------------------------------
  Service                                                                             Range of Fees(1)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 The Fund        Affiliates(2)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                               
  1. Services required under generally accepted auditing standards to               (3)               N/A
     perform the audit of the annual financial statements of the Fund,
     including performance of tax qualification tests relating to the Fund's
     regulated investment company status and issuance of an internal
     control letter for the Fund's Form N-SAR
------------------------------------------------------------------------------------------------------------------------------------
  2. Reading of the Fund's semi-annual financial statements                         (4)               N/A
------------------------------------------------------------------------------------------------------------------------------------
  3. Services associated with SEC registration statements, periodic reports        $35,000 to         N/A
     and other documents filed with the SEC or other documents                      $45,000
     issued in connection with securities offerings (e.g., comfort                    (5)
     letters, consents), and assistance in responding to SEC comment letters
------------------------------------------------------------------------------------------------------------------------------------
  4. Consultations by the Fund's management as to the accounting or                 (4)               N/A
     disclosure treatment of transactions or events and/or the actual or
     potential impact of final or proposed rules, standards or interpretations
     by the SEC, FASB, or other regulatory or standard setting bodies (Note:
     Under SEC rules, some consultations may be "audit-related" services
     rather than "audit" services)
------------------------------------------------------------------------------------------------------------------------------------

----------
(1)  In addition to the fees shown in the table, the Audit Committee has
     pre-approved the reimbursement of the reasonable out-of-pocket expenses
     incurred by the independent accountant in providing the pre-approved
     services.

(2)  These affiliates include the Fund's investment adviser (excluding
     sub-advisers) and any entity controlling, controlled by or under common
     control with the adviser that provides ongoing services to the Fund. The
     Fund's Audit Committee must pre-approve non-audit services provided not
     only to the Fund but also to the adviser and such other affiliated
     entities, where such entities provide ongoing services to the Fund AND the
     independent accountant's services to such entities have a direct impact on
     the Fund's operations or financial reporting.

(3)  The fee for this pre-approved service is not shown in the table because the
     2006 engagement letter has not yet been finalized. The comparable fee for
     this service for the year ended December 31, 2005 was $55,500. The Audit
     Committee has delegated to the Chairman of the Committee the authority to
     agree the fees in connection with the finalization and signing of the 2006
     engagement letter, at which time such agreed fees will become part of this
     Pre-Approval Policy.

(4)  FEES FOR SERVICES DESIGNATED WITH A (4) SHALL EITHER BE INCLUDED IN THE FEE
     APPROVED FOR ITEM 1 OF THIS APPENDIX A OR MAY BE SEPARATELY CHARGED,
     PROVIDED THAT THE AGGREGATE SEPARATE CHARGES FOR ALL SERVICES DESIGNATED
     WITH A (4) IN APPENDICES A AND B MAY NOT EXCEED 10% OF THE FEE APPROVED FOR
     ITEM 1 OF THIS APPENDIX A.

(5)  This project commenced during fiscal year 2005, and the fee range shown is
     for the entire project, I.E., services performed in both fiscal year 2005
     and fiscal year 2006.

                                       63


APPENDIX B

PRE-APPROVED AUDIT-RELATED SERVICES FOR FISCAL YEAR 2006

Dated: February 23, 2006


------------------------------------------------------------------------------------------------------------------------------------
  Service                                                                             Range of Fees(1)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 The Fund        Affiliates(2)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                               
  1. Issuance of quarterly agreed-upon procedures letters relating to the           (3)               N/A
     Fund's commercial paper and remarketed preferred stock
------------------------------------------------------------------------------------------------------------------------------------
  2. Agreed-upon or expanded audit procedures related to accounting                 (4)               N/A
     records required to respond to or comply with financial, accounting or
     regulatory reporting matters
------------------------------------------------------------------------------------------------------------------------------------
  3. Consultations by the Fund's management as to the accounting or                 (4)               N/A
     disclosure treatment of transactions or events and/or the actual or
     potential impact of final or proposed rules, standards or interpretations
     by the SEC, FASB, or other regulatory or standard-setting bodies
     (Note: Under SEC rules, some consultations may be "audit" services
     rather than "audit-related" services)
------------------------------------------------------------------------------------------------------------------------------------
  4. General assistance with implementation of the requirements of                  (4)               N/A
     SEC rules or listing standards promulgated pursuant to the
     Sarbanes-Oxley Act
------------------------------------------------------------------------------------------------------------------------------------

------

(1)  In addition to the fees shown in the table, the Audit Committee has
     pre-approved the reimbursement of the reasonable out-of-pocket expenses
     incurred by the independent accountant in providing the pre-approved
     services.

(2)  These affiliates include the Fund's investment adviser (excluding
     sub-advisers) and any entity controlling, controlled by or under common
     control with the adviser that provides ongoing services to the Fund. The
     Fund's Audit Committee must pre-approve non-audit services provided not
     only to the Fund but also to the adviser and such other affiliated
     entities, where such entities provide ongoing services to the Fund AND the
     independent accountant's services to such entities have a direct impact on
     the Fund's operations or financial reporting.

(3)  The fee for this pre-approved service is not shown in the table because the
     2006 engagement letter has not yet been finalized. The comparable fee for
     this service for the year ended December 31, 2005 was $24,400. The Audit
     Committee has delegated to the Chairman of the Committee the authority to
     agree the fees in connection with the finalization and signing of the 2006
     engagement letter, at which time such agreed fees will become part of this
     Pre-Approval Policy.

(4)  Fees for services designated with a (4) shall either be included in the fee
     approved for item 1 of Appendix A or may be separately charged, provided
     that the aggregate separate charges for all services designated with a (4)
     in Appendices A and B may not exceed 10% of the fee approved for item 1 of
     Appendix A.


                                       64


APPENDIX C

PRE-APPROVED TAX SERVICES FOR FISCAL YEAR 2006

Dated: February 23, 2006


------------------------------------------------------------------------------------------------------------------------------------
  Service                                                                             Range of Fees(1)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 The Fund        Affiliates(2)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                               
  1. Preparation of federal and state tax returns, including excise tax             (3)               N/A
     returns, and review of required distributions to avoid excise tax
------------------------------------------------------------------------------------------------------------------------------------
  2. Consultations with the Fund's management as to the tax treatment               (4)               N/A
     of transactions or events
------------------------------------------------------------------------------------------------------------------------------------
  3. Tax advice and assistance regarding statutory, regulatory or                   (4)               N/A
     administrative developments
------------------------------------------------------------------------------------------------------------------------------------
  4. Consulting work regarding  contingent  payment debt instruments              $35,000 to          N/A
     and trust preferred instruments                                              $50,000
                                                                                     (5)
------------------------------------------------------------------------------------------------------------------------------------
  5. Assistance with valuation of contingent  payment debt instruments            $8,000 to           N/A
     and trust preferred instruments                                               $12,000
                                                                                    (6)
------------------------------------------------------------------------------------------------------------------------------------
  6. Assistance with a request to the IRS for an extension of time to             $5,000              N/A
     mail Form 1099-DIV to the Fund's shareholders
------------------------------------------------------------------------------------------------------------------------------------

--------

(1)  In addition to the fees shown in the table, the Audit Committee has
     pre-approved the reimbursement of the reasonable out-of-pocket expenses
     incurred by the independent accountant in providing the pre-approved
     services.

(2)  These affiliates include the Fund's investment adviser (excluding
     sub-advisers) and any entity controlling, controlled by or under common
     control with the adviser that provides ongoing services to the Fund. The
     Fund's Audit Committee must pre-approve non-audit services provided not
     only to the Fund but also to the adviser and such other affiliated
     entities, where such entities provide ongoing services to the Fund AND the
     independent accountant's services to such entities have a direct impact on
     the Fund's operations or financial reporting.

(3)  The fee for this pre-approved service is not shown in the table because the
     2006 engagement letter has not yet been finalized. The comparable fee for
     this service for the year ended December 31, 2005 was $12,700. The Audit
     Committee has delegated to the Chairman of the Committee the authority to
     agree the fees in connection with the finalization and signing of the 2006
     engagement letter, at which time such agreed fees will become part of this
     Pre-Approval Policy.

(4)  Fees for services designated with a (4) shall either be included in the fee
     approved for item 1 of this Appendix C or may be separately charged,
     provided that the aggregate separate charges for all services designated
     with a (4) in this Appendix C may not exceed 10% of the fee approved for
     item 1 of this Appendix C.


                                       65


(5)  Actual amount will be computed based on estimated cost of $300 to $400 per
     security valued, increased by $100 to $200 per extra lot of each security.

(6)  Actual amount will be computed based on each valuation run, which will cost
     approximately $1,200 to $1,500, increased by $400 to $500 per security
     valued, and increased by $50 to $100 per lot of each security.


                                       66


APPENDIX D

PRE-APPROVED "ALL OTHER" SERVICES FOR FISCAL YEAR 2006

Dated: February 23, 2006


------------------------------------------------------------------------------------------------------------------------------------
  Service                                                                             Range of Fees(1)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 The Fund        Affiliates(2)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                               
  None
------------------------------------------------------------------------------------------------------------------------------------

-------
(1)  In addition to the fees shown in the table, the Audit Committee has
     pre-approved the reimbursement of the reasonable out-of-pocket expenses
     incurred by the independent accountant in providing the pre-approved
     services.

(2)  These affiliates include the Fund's investment adviser (excluding
     sub-advisers) and any entity controlling, controlled by or under common
     control with the adviser that provides ongoing services to the Fund. The
     Fund's Audit Committee must pre-approve non-audit services provided not
     only to the Fund but also to the adviser and such other affiliated
     entities, where such entities provide ongoing services to the Fund AND the
     independent accountant's services to such entities have a direct impact on
     the Fund's operations or financial reporting.

                                       67


APPENDIX E

PROHIBITED NON-AUDIT SERVICES

      [ ] Bookkeeping or other services related to the accounting records or
          financial statements of the audit client

      [ ] Financial information systems design and implementation

      [ ] Appraisal or valuation services, fairness opinions or
          contribution-in-kind reports

      [ ] Actuarial services

      [ ] Internal audit outsourcing services

      [ ] Management functions

      [ ] Human resources

      [ ] Broker-dealer, investment adviser or investment banking services

      [ ] Legal services

      [ ] Expert services unrelated to the audit


                                       68


                           DNP SELECT INCOME FUND INC.

             PROXY SOLICITED BY MANAGEMENT FROM COMMON SHAREHOLDERS
                     FOR MEETING TO BE HELD ON MAY 11, 2006

     Connie K. Duckworth, Robert J. Genetski and Carl F. Pollard or any of them,
each with full power of substitution, are authorized to vote all shares of
common stock of DNP Select Income Fund Inc. owned by the undersigned at the
meeting of shareholders to be held May 11, 2006, and at any adjournment of the
meeting. They shall vote in accordance with the instructions set forth on the
reverse side hereof.

     If no specific instructions are provided, this proxy will be voted "FOR"
proposals 1 and 2 and in the discretion of the proxies upon such other business
as may properly come before the meeting.


                                     (Continued and to be signed on other side.)



                                          DNP SELECT INCOME FUND INC.
                                          P.O. BOX 11435
                                          NEW YORK, NY 10203-0435






       Please Vote, Date, and
_____  Sign and Return Promptly     _____  Votes must be indicated
       in the Enclosed Envelope            (x) in Black or Blue ink

Your Board of Directors unanimously recommends a vote "FOR" each of the
following proposals.

1. Election of directors:

FOR ALL____           WITHHOLD ____              *EXCEPTIONS ____
                      FOR ALL

Nominees:  Christian H. Poindexter and David J. Vitale

(INSTRUCTIONS: To withhold authority to vote for any nominee, mark the
"Exceptions" box and write the name of that nominee in the space provided
below.)


*Exceptions ___________________________________________________________________

2.  Approval of amendment and restatement of the Fund's charter to amend certain
    provisions governing Series A, B, C, D and E of the Fund's remarketed
    preferred stock.

FOR____           AGAINST ____      ABSTAIN____

     To change your address, please mark this box. ____

                                         IMPORTANT: Please sign exactly as your
                                         name or names appear on the shareholder
                                         records of the Fund. If you sign as
                                         agent or in any other representative
                                         capacity, please state the capacity in
                                         which you sign. Where there is more
                                         than one owner, each should sign.

                                         Date: _________________________________


                                         ---------------------------------------
                                                   Share Owner sign here

                                         ---------------------------------------
                                                    Co-Owner sign here








                           DNP SELECT INCOME FUND INC.

           PROXY SOLICITED BY MANAGEMENT FROM PREFERRED SHAREHOLDERS
                    FOR MEETING TO BE HELD ON MAY 11, 2006

     Connie K. Duckworth, Robert J. Genetski and Carl F. Pollard or any of them,
each with full power of substitution, are authorized to vote all shares of
preferred stock of DNP Select Income Fund Inc. owned by the undersigned at the
meeting of shareholders to be held May 11, 2006, and at any adjournment of the
meeting. They shall vote in accordance with the instructions set forth below.

   Your Board of Directors unanimously recommends a vote "FOR" the following
proposal.

1.  Election of director: Nancy Lampton

    FOR______  WITHHOLD______

2.  Approval of amendment and restatement of the Fund's charter to amend certain
    provisions governing Series A, B, C, D and E of the Fund's remarketed
    preferred stock.

    FOR______  WITHHOLD______  ABSTAIN______

   If no specific instructions are provided, this proxy will be voted "FOR"
proposals 1 and 2 and in the discretion of the proxies upon such other business
as may properly come before the meeting.

                                    (Continued and to be signed on other side.)






   Dated , 2006 (please fill in, sign and date this proxy and mail it in the
envelope provided.)

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

                                             ----------------------------------
                                                        (Signature(s) of
                                                         Shareholder(s))

                                                  IMPORTANT: Please sign exactly
                                                  as your name or names appear
                                                  on the shareholder records of
                                                  the Fund. If you sign as agent
                                                  or in any other representative
                                                  capacity, please state the
                                                  capacity in which you sign.
                                                  Where there is more than one
                                                  owner, each should sign.