MILLENIUM TAX FREE FUND INC, N-1A, 1998-01-16

MILLENIUM TAX FREE FUND INC
N-1A, 1998-01-16

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 X

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X

MILLENIUM TAX-FREE INCOME FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
45 ESSEX STREET, MILLBURN, NEW JERSEY 07041
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
973-379-0300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

JOHN C. SABO
C/O RICKEL SECURITIES, INC.
45 ESSEX STREET
MILLBURN, NEW JERSEY 07041
(NAME AND ADDRESS OF AGENT FOR SERVICE)
AS SOON AS PRACTICABLE FOLLOWING EFFECTIVENESS OF THIS REGISTRATION STATEMENT

(APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING)

Title of Securities Being Registered..............Class A, B, and C Common Stock

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

<PAGE>

FORM N-1A
MILLENIUM TAX-FREE INCOME FUND, INC.-
CLASS A , CLASS B AND CLASS C SHARES

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 AND
UNDER THE INVESTMENT COMPANY ACT OF 1940.

CROSS REFERENCE SHEET

N-1A
ITEM
NO. PROSPECTUS CAPTION OR PLACEMENT

1 Front Cover
2 Summary (includes expense table)
3 (Not Applicable)
4 Summary; Investment Objective and Policies
5 Special Considerations; Adviser and Distributor; Distribution Plans;
Purchase of Shares; Summary
5A (Not Applicable)
6 Summary; Shareholder Inquiries; Dividends and Distributions; Federal
Income Taxes; Fund Shares
7 Purchase of Shares; Determining the Price of Shares
8 Redemption of Shares
9 (Not Applicable)

PART B CAPTION OR PLACEMENT

10 Cover Page
11 Table of Contents
12 (Not Applicable)
13 Fundamental Investment Restrictions; Municipal Obligations; Temporary
Investments; Portfolio Transactions
14 Directors and Officers; Directors Compensation Schedule.
15 (Not Applicable)
16 Investment Advisory Services; Custodian; Auditors; Determining the
Price of Shares; Distribution of Fund Shares
17 Portfolio Transactions
18 *
19 Determining the Price of Shares; Reduction of Class A Sales Charge
20 *
21 *
22 Performance Data
23 (Not Applicable)
* INCLUDED IN PROSPECTUS

<PAGE>

PROSPECTUS __________, 1998
CLASS A, CLASS B AND CLASS C

MILLENIUM TAX-FREE INCOME FUND, INC.

C/O RICKEL SECURITIES, INC.
45 ESSEX STREET
MILLBURN, NEW JERSEY 07041
973-379-0300

Minimum Investment Plans Available
Initial Purchase $5,000 Automatic Investment Plan
Subsequent Investment $250 Automatic Withdrawals Plan

Millenium Tax-Free Income Fund, Inc. (the "Fund") seeks to
provide current income free from federal income tax by investing in debt
obligations issued by state and local governments or their agencies or
instrumentalities ("municipal obligations"). See "Investment Objectives and
Policies."

The Fund offers three classes of shares, Class A, B and C,
each having different expense levels and sales charges. These alternatives
permit you to choose the method of purchasing shares that is most beneficial to
you, depending on the amount of the purchase, the length of time you expect to
hold the shares and other circumstances.

This Prospectus concisely sets forth information about the
Class A, Class B and Class C shares for the Fund that prospective investors
should know before investing. It should be read carefully and retained for
future reference. A Statement of Additional Information dated ______, 1998, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. A copy of this Statement and other information about the
Fund may be obtained without charge by writing to or calling the Fund at the
above address or telephone number.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS

Summary.....................................................................

Special Considerations......................................................

Investment Objectives and Policies..........................................

Adviser and Distributor.....................................................

Distribution Plans..........................................................

Purchase of Shares..........................................................

Telephone Privilege.........................................................

Redemption of Shares........................................................

Determining the Price of Shares.............................................

Dividends and Distributions.................................................

Federal Income Taxes........................................................

Fund Shares.................................................................

Performance Data............................................................

Shareholder Inquiries.......................................................

Appendix -- Quality Ratings of Debt Securities..............................

Terms and Conditions for a Statement of Intention (Class A Shares Only).....

Expedited Redemption Privilege..............................................

<PAGE>

SUMMARY

FUND EXPENSES. The following table is intended to assist you
in understanding the various costs and expenses that an investor in the Class A,
Class B and Class C shares of the Fund will bear directly or indirectly. You can
refer to "Adviser and Distributor" and "Purchase of Shares" for more information
on transaction and operating expenses of the Fund.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C
- -------------------------------- ------- ------- -------
<S> <C> <C> <C>
Maximum sales load imposed on purchases 4.75% None None
Maximum sales load imposed on reinvested
dividends None None None
Deferred sales load (a declining percentage

of the lesser of the net asset value of the
shares redeemed or the total cost of such
shares)

Redeemed during first year. 0.75%* 5.00% 1.00%
Redeemed during second year None 4.00% None
Redeemed during third year None 3.00% None
Redeemed during fourth year None 2.00% None
Redeemed during fifth year None 1.00% None
Redeemed after fifth year None None None
Exchange Fee None None None
</TABLE>

* On certain Class A Shares purchased without a sales load and redeemed during
the first year after purchase, there is a 0.75% deferred sales charge.

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE
NET ASSETS)

Management fees 0.65% 0.65% 0.65%
12b-1 fees* 0.25% 1.00% 1.00%
Other expenses** 0.50% 0.49% 0.49%
----- ----- -----

Total Fund operating expenses 1.40% 2.14% 2.14%

* The Effect of a Rule 12b-1 plan is that long-term shareholders may pay more
than the maximum front-end sales charge permitted under applicable rules of the
National Association of Securities Dealers, Inc.
- -------------

<PAGE>

** Because the Fund has no historical financial data, "Other expenses", as shown
in this table and as used in the Example which immediately follows this table,
are based on estimated amounts for the fiscal year ending December 31, 1998.
Actual Fund expenses may be greater than or less than these amounts.

Example:

You would pay the following expenses on a $5,000 investment,
assuming a 5% annual return and (except as noted below) redemption at the end of
each time period:

1 YEAR 3 YEARS
------ -------
Class A $305 $415

Class B $360 $640

Class B (assuming no redemption at
end of period) $110 $220

Class C $160 $270

Class C (assuming no redemption at
end of period) $110 $220

THE 5% RATE USED IN THE EXAMPLE IS ONLY FOR ILLUSTRATION AND
IS NOT INTENDED TO BE INDICATIVE OF THE FUTURE PERFORMANCE OF THE FUND, WHICH
MAY BE MORE OR LESS THAN THE ASSUMED RATE. FUTURE EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

FINANCIAL HIGHLIGHTS. As a newly formed company, the Fund does
not have historical financial data.

THE FUND. Millenium Tax-Free Income Fund, Inc. is an open-end,
diversified management investment company incorporated in Maryland in 1998 and
is registered under the Investment Company Act of 1940.

The Fund offers three classes of shares, Class A, B and C.
Class A shares may be purchased at a price equal to their net asset value per
share plus a front-end sales charge imposed at the time of purchase. Purchases
of $1 million or more of Class A shares may be purchased at net asset value, but
are subject to a 0.75% contingent deferred sales charge ("CDSC") on redemptions
made within one year of purchase. Class B shares may be purchased at net asset
value, with no front-end sales charge, but are subject to a CDSC on most
redemptions made within five years of purchase. Class C shares may also be
purchased at net asset value but are subject to a CDSC of 1% on redemptions made
within one year after purchase. These alternatives permit an investor to choose
the method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Each class of shares pays a

<PAGE>

Rule 12b-1 distribution fee at an annual rate not to exceed (i) for Class A
shares, 0.25% of the Fund's aggregate average daily net assets attributable to
the Class A shares and (ii) for Class B and C shares, 1.00% of the Fund's
aggregate average daily net assets attributable to such class. The purpose and
function of the deferred sales charge and distribution services fee with respect
to the Class B and Class C shares is the same as those of the front-end sales
charge and distribution services fee with respect to the Class A shares.

Each share of the Fund represents an identical interest in the
investment portfolio of the Fund. However, shares differ by class in important
respects. For example, Class B shares incur higher distribution services fees
and bear certain other expenses and will thus have a higher expense ratio and
pay correspondingly lower dividends than Class A shares. Class B shares will
automatically convert to Class A shares five years after the end of the calendar
month in which the shareholder's order to purchase was accepted, in the
circumstances and subject to the qualifications described in this Prospectus.
Class C shares, like Class B shares, will also have a higher expense ratio and
pay correspondingly lower dividends than Class A shares, as a result of higher
distribution services fees and certain other expenses. Unlike Class B shares,
Class C shares do not have a conversion feature and therefore will always be
subject to higher distribution fees and other expenses than Class A shares. The
per share net asset value of the Class B and Class C shares generally will be
lower than the per share net asset value of the Class A shares, reflecting the
daily expense accruals of additional distribution fees and certain other
expenses applicable to Class B and Class C shares. The Board of Directors may
offer additional classes of shares in the future and may at any time discontinue
the offering of any class of shares. See "Purchase of Shares-Alternative
Purchase Arrangements".

INVESTMENT OBJECTIVE. The Fund's investment objective is to
provide current income free from federal income tax by investing in municipal
obligations. The Fund seeks to invest between 50% and 60% of its net assets in
municipal fixed income securities rated Aaa by Moody's Investor Service, Inc.
("Moody's") or AAA by Standard & Poor's Corporation ("S&P"), and between 10% and
20% of its net assets in lower-rated investment grade securities (i.e., with
ratings of Aa to Baa by Moody's and AA to BBB by S&P). The Fund may invest up to
50% of its net assets in bonds below investment grade. Such securities are
speculative and subject to greater market fluctuations and risk of loss of
income and principal than higher rated bonds. There is no assurance that the
investment objective of the Fund will be achieved. See "Investment Objectives
and Policies".

INVESTMENT ADVISER AND DISTRIBUTOR. Millenium Advisers, Inc.,
(the "Adviser") is the investment adviser for the Fund. Rickel Securities, Inc.
(the "Distributor") serves as the principal underwriter for the Fund. For more
information, see "Adviser and Distributor".

PURCHASES, EXCHANGES AND REDEMPTIONS. Initial and subsequent
minimum investments in the Class A, B and C shares may be made in amounts equal
to $5,000 and $250, respectively. Accounts with a market value of less than $250
caused by shareholder redemptions are redeemable by the Fund. See "Purchase of
Shares" and "Redemption of Shares".

SHAREHOLDER SERVICES. Questions regarding the Fund or your
account may be directed to Millenium Advisers, Inc.
at 1-973-379-0300 or to your sales representative. Written inquiries may be
directed to [ADMINISTRATOR]. During drastic market conditions, the Distributor
may experience difficulty accepting telephone redemptions or exchanges.

<PAGE>

SPECIAL CONSIDERATIONS

The Fund has only recently been formed, and has no history of
operations. The Fund's investment adviser has also recently been formed, and has
no prior experience in advising a mutual fund. There can be no assurance that
the Fund will achieve its investment objectives. In addition, the Fund may
invest up to 50% of its net assets in high yield, high risk obligations. See
"High Yield, High Risk Debt Securities" below.

INVESTMENT OBJECTIVE AND POLICIES

GENERAL. The Fund's investment objective is to provide current
income free from federal income tax by investing in municipal obligations. In
seeking to achieve this investment objective, the Fund will normally have at
least 80% of its net assets invested in municipal obligations. 50% to 60% of its
net assets will normally be invested in municipal fixed income securities rated
Aaa by Moody's or AAA by S&P, and between 10% and 20% of its net assets will
normally be invested in lower-rated investment grade securities (i.e., with
ratings of Aa to Baa by Moody's and AA to BBB by S&P). The Fund may invest up to
50% of its net assets in high yield, high risk obligations. See "High Yield,
High Risk Debt Securities" below. The average maturity of the Fund's portfolio
will vary; however, it is anticipated that a significant portion of the
portfolio will be invested in long-term obligations of 20 years or more since
such securities generally produce higher yields than shorter-term obligations. A
more complete description of bond ratings is contained in the Appendix. The Fund
may invest in shares of investment companies primarily investing in short-term
municipal obligations, but will not do so if it would cause more than 10% of its
total assets to be invested in such shares. Such other investment companies
usually have their own management costs or fees and the Fund's Adviser earns its
regular fee on such assets.

If you are subject to the Federal alternative minimum tax, you
should note that the Fund may invest up to 20% of its total assets in municipal
obligations issued to finance private activities. The interest from these
investments is a tax preference item for purposes of the alternative minimum
tax.

MUNICIPAL OBLIGATIONS. Municipal obligations are bonds or
notes issued by a state or local governmental entity to obtain funds for various
public purposes or facilities such as airports, bridges, highways, housing,
hospitals, schools, streets, water and sewer systems, mass transit and utility
and power facilities. They are also used to refund outstanding obligations or
for general operating expenses. In addition, they may be used for the
construction or purchase of privately operated facilities deemed to be of public
purpose and benefit.

The two general classifications of municipal bonds are
"general obligation" bonds and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest. They are usually paid from general revenues
of the issuing governmental entity. Revenue bonds are usually payable only out
of a specific revenue source rather than from general revenues and ordinarily
are not backed by the faith, credit or general taxing power of the issuing
governmental entity.

<PAGE>

The Fund may invest in municipal bonds and certificates of
participation that constitute involvement in lease obligations or installment
purchase contract obligations (hereafter collectively called "lease
obligations") of municipal authorities or entities. Although lease obligations
do not constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation is ordinarily backed
by the municipality's covenant to budget for, appropriate and make the payments
due under the lease obligation. However, certain lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease obligations are secured by the leased property, the
disposition of the property in the event of foreclosure might prove difficult.
The Fund will seek to minimize these risks by not investing more than 10% of its
investment assets in lease obligations that contain "non-appropriation" clauses.

Yields on municipal obligations are dependent on many factors,
including interest rate conditions, general conditions of the municipal bond
market, size of a particular offering, maturity of the obligation and rating of
the issue, if any. The value of outstanding obligations will vary as a result of
changing evaluations of the ability of their issuers (or other revenue source)
to meet the interest and principal payments, which can also result in rating
changes. Such values will also change in response to changes in the interest
rates payable on new issues. As discussed below, portfolio values will also
change in response to changes in the level of interest rates.

Municipal obligations, like other marketable obligations,
fluctuate in price. Payments of interest and principal are dependent upon the
ability of the issuers (or other revenue source) to meet their obligations.
Payments on general obligation bonds are dependent on the tax base of the
issuing governmental entity. Payments on revenue bonds, unless guaranteed by a
taxing authority, are dependent upon the revenues from a specific project or
facility or payments from a private company which operates the facility.

The principal and interest on revenue bonds for private
facilities are typically paid out of rents or other specified payments made to
the issuing governmental entity by the company using or operating the
facilities. The most common type of these obligations are industrial revenue
bonds and pollution control revenue bonds. Industrial revenue bonds are issued
by governmental entities to provide financing aid to communities to locate
privately operated industrial plants or community facilities such as hospitals,
hotels, business or residential complexes, convention halls or sport complexes.
Pollution control revenue bonds are issued to provide funding for air, water and
solids pollution control systems for privately operated industrial or commercial
facilities. Sometimes, the funds for payment of such obligations come solely
from revenue generated by operation of the facility. Absent a guarantee by the
issuing governmental entity, revenue bonds for private facilities do not
represent a pledge of credit, general revenues or taxing powers of the issuing
governmental entity and the private company operating the facility is the sole
source of payment of the obligation. This type of revenue bond frequently
provides a higher rate of return than other municipal obligations but may entail
greater risk than an obligation which is guaranteed by a governmental unit with
taxing power. Federal income tax laws place substantial limitations on
industrial revenue bonds, and particularly those "specified private activity
bonds" issued after August 7, 1986. See "Federal Income

<PAGE>

Taxes." However, the Fund's management does not believe that these limitations
will impair the Fund's ability to purchase or sell bonds in accordance with the
Fund's objectives and policies.

Subject to the restrictions described below, the Fund's
portfolio may be invested in new issue bonds and in bonds whose interest
payments are from revenues of similar projects (such as utilities or hospitals)
or whose issuers share the same geographic location. As a result, the Fund's
portfolio may be more susceptible to similar economic, political or regulatory
developments than would a portfolio of bonds with a greater variety of issuers.
This may result in greater market fluctuations in the Fund's share price. The
Fund may purchase up to 50% of the outstanding debt obligations of an issuer.
Some of the securities which the Fund may hold may not have an established
market and such lack of liquidity could cause the Fund difficulty at times in
selling these securities at favorable prices.

The market value of fixed income securities will generally be
affected by changes in the level of interest rates. Increases in interest rates
tend to reduce the market value of fixed income investments and declines in
interest rates tend to increase their value. Moreover, debt issues with longer
maturities, which tend to produce higher yields, are subject to potentially
greater capital appreciation or depreciation than securities with shorter
maturities. Fluctuations in the market value of the Fund's portfolio securities
subsequent to their acquisition will not affect cash income from such securities
but will be reflected in the Fund's net asset value. In addition, the future
earning power of an obligor and its ability to service debt may affect the
market price of higher yielding debt. The average maturity and the mix of
investments of the Fund will vary as the Adviser seeks to provide a high level
of income considering the available alternatives in the market. Since interest
rates vary with changes in economic, market, political and other conditions,
there can be no assurance that historic interest rates are indicative of rates
which may prevail in the future. Since the values of securities in the Fund
fluctuate depending upon market factors, the credit of the obligor and inversely
with current interest rate levels, the net asset value of its shares will
fluctuate. Consequently, there can be no assurance that the Fund's objectives
can be achieved or that its shareholders will be protected from the risk of loss
inherent in security ownership. The Adviser attempts to adjust investments as
considered advisable in view of prevailing or anticipated market conditions as
perceived by the Adviser. Portfolio securities may be purchased or sold in
anticipation of a rise or a decline in interest rates or a change in credit
quality.

There are market and investment risks with any security and
the value of an investment in the Fund will fluctuate over time. Investments in
lower rated or non-rated securities, while generally providing greater income
and opportunity for gain than investments in higher rated securities, entail
greater risk of loss of income and principal. See "High Yield, High Risk Debt
Securities" below for a discussion of various risk factors related to high
yield, high risk fixed income securities.

HIGH YIELD, HIGH RISK DEBT SECURITIES. As discussed above, the
Fund may invest up to 50% of its net assets in low rated or unrated securities
offering high current income. Such securities will ordinarily be in the lower
rating categories of recognized rating agencies, including securities rated BB
or lower by S&P or Ba or lower by Moody's or, if unrated, deemed by the Adviser
to be of an equivalent rating. These lower-rated securities are considered
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the

<PAGE>

obligation and generally will involve more credit risk than securities in the
higher rating categories. Securities rated BB or lower by S&P or Ba or lower by
Moody's are below investment grade. A description of the bond ratings of these
two services is contained in the Appendix.

With respect to that portion of its portfolio which will be
invested in lower-rated securities, the Fund seeks to achieve a high yield while
reducing relative risk through (a) diversification, (b) credit analysis of the
obligors by the Adviser, and (c) monitoring and seeking to anticipate changes
and trends in the economy and financial markets that might affect the prices of
portfolio securities. The Adviser, while seeking to maximize current yield, will
monitor current developments with respect to portfolio securities, potential
investments and broad trends in the economy. In some circumstances, defensive
strategies may be implemented to preserve or enhance capital at the sacrifice of
current yield. There is, however, no assurance that the Fund's objectives will
be achieved or that the Fund's approach to risk management will protect the
shareholders against loss.

The market values of high yield, high risk municipal
securities tend to reflect individual developments of the guaranteeing entity
underlying the issue to a greater extent than do higher rated securities, which
react to a greater extent to fluctuations in the general level of interest
rates. Such securities also tend to be more sensitive to economic and industry
conditions than are higher rated securities. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis regarding individual
lower rated bonds or the high yield market, may depress the prices for such
securities. Factors such as the aforementioned may adversely impact the market
value of high yield, high risk securities and could adversely impact the Fund's
net asset value.

An economic downturn or significant increase in interest rates
is likely to have a negative affect on the high yield, high risk bond market and
consequently on the value of these bonds. In an economic downturn, issuers may
not have sufficient revenues to meet their principal and interest payment
obligations.

The risk of loss due to default is significantly greater for
the holders of high yield, high risk bonds. The costs associated with recovering
principal and interest once a security has defaulted may impact the return to
holders of the security. If the Fund experiences unexpectedly large net
redemptions, it may be forced to sell such bonds without regard to the
investment merits of such sales. This could decrease the Fund's rate of return.

The Fund may have difficulty disposing of certain high yield,
high risk bonds because there may be a thin trading market for such bonds.
Because not all dealers maintain markets in all high yield, high risk bonds, the
Fund anticipates that such bonds could be sold only to a limited number of
dealers or institutional investors. The lack of a liquid secondary market may
have an adverse impact on market price and the Fund's ability to dispose of
particular issues and may also make it more difficult for the Fund to obtain
accurate market quotations or valuations for purposes of valuing the Fund's
assets. The Fund has a policy of utilizing a professional pricing service which
has experience in pricing such securities which are difficult to price so as to
obtain prices reflecting the market as accurately as possible. To the extent
that the Fund purchases illiquid or restricted bonds, it may incur special
securities registration responsibilities, liabilities and costs, and liquidity
and valuation difficulties relating to such bonds.

<PAGE>

Bonds may be subject to redemption or call provisions. If an
issuer exercises these provisions when interest rates are declining, the Fund
would be likely to replace the bond with a lower yielding bond, resulting in a
decreased return. Zero coupon and pay-in-kind bonds involve special
considerations. The market prices of these securities are generally more
volatile than the market prices of securities that pay interest periodically and
are likely to respond to changes in interest rates to a greater degree than do
securities paying interest currently that have similar maturities and credit
quality. There is the additional risk that, unlike bonds which pay interest in
cash throughout the period to maturity, the Fund will realize no cash until the
cash payment date unless a portion of such securities are sold. If the issuer
defaults, the Fund may obtain no return at all on its investment. Zero coupon
bonds generate interest income before receipt of actual cash payments. In order
to distribute such income, the Fund may have to sell portfolio securities under
disadvantageous circumstances.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in
restricted securities, i.e., securities which, if sold, would cause the Fund to
be deemed an "underwriter" under the Securities Act of 1933 (the "1933 Act") or
which are subject to contractual restrictions on resale. The Fund's policy is to
not purchase or hold illiquid securities (which may include restricted
securities) if more than 15% of the Fund's net assets would then be illiquid. If
at any time more than 15% of the Fund's net assets are illiquid, steps will be
taken as soon as practicable to reduce the percentage of illiquid assets to 15%
or less.

The restricted securities which the Fund may purchase include
securities which have not been registered under the 1933 Act but are eligible
for purchase and sale pursuant to Rule 144A ("Rule 144A Securities"). This Rule
permits certain qualified institutional buyers to trade in privately placed
securities even though such securities are not registered under the 1933 Act. If
and when the Fund is able to qualify as such under the Rule, the Adviser, under
criteria established by the Fund's Board of Directors, will consider whether
Rule 144A Securities being purchased or held by the Fund are illiquid and thus
subject to the Fund's policy that it will not make an investment causing more
than 15% of its net assets to be invested in illiquid securities. In making this
determination, the Adviser will consider the frequency of trades and quotes, the
number of dealers and potential purchasers, dealer undertakings to make a
market, and the nature of the security and the market place trades (for example,
the time needed to dispose of the security, the method of soliciting offers and
the mechanics of transfer). The liquidity of Rule 144A Securities will also be
monitored by the Adviser and if, as a result of changed conditions, it is
determined that a Rule 144A Security is no longer liquid, the Fund's holding of
illiquid securities will be reviewed to determine what, if any, action is
required in light of the policy limiting investments in such securities.
Investing in Rule 144A Securities could have the effect of increasing the amount
of the Fund's investments in illiquid securities if qualified institutional
buyers are unwilling to purchase such securities.

PORTFOLIO TRANSACTIONS. The Adviser is responsible for the
placement of portfolio transactions, subject to the supervision of the Board of
Directors. The Fund may trade to some degree in securities for the short-term
and may sell securities to buy others with greater income or profit potential or
when it has realized a profit and the proceeds can be more advantageously
utilized. The Fund may also sell a security when the Adviser believes such
security will no longer continue to provide a relatively high current yield or
involves undue risk, or when the Adviser deems

<PAGE>

it advisable to take a more defensive position or return to a more aggressive
stance. Because of the Fund's policies, the Fund's portfolio turnover rate will
vary. A higher portfolio turnover rate could require the payment of larger
amounts in brokerage commissions. However, it is anticipated that most
securities transactions will be principal transactions, in which no brokerage
commissions are incurred. Research services and placement of orders by
securities firms for shares of the Fund may be taken into account as a factor
in placing portfolio transactions. The Fund estimates that its portfolio
turnover rate will generally not exceed 50%.

"WHEN ISSUED" SECURITIES. Municipal obligations may at times
be purchased or sold on a delayed delivery basis or on a when-issued basis.
These transactions arise when securities are purchased or sold by the Fund with
payment and delivery taking place in the future. No payment is made until
delivery is made which may be up to 60 days after purchase. If delivery of the
obligation does not take place, no purchase will result and the transaction will
be terminated. Such transactions are considered to involve more risk than
immediate cash transactions. As a matter of non-fundamental policy, any
investment on a when issued or delayed delivery basis will not be made if such
investment would cause more than 5% of the value of the Fund's total assets to
be invested in this type of investment.

BORROWING. The Fund may borrow money from banks for temporary
or emergency purposes in an amount not exceeding 10% of the value of its total
assets (excluding the amount borrowed) and may pledge an amount not exceeding
15% of its total assets (excluding the amount borrowed) to secure such
borrowing.

FUNDAMENTAL AND NON-FUNDAMENTAL POLICIES. The Fund has adopted
certain investment restrictions which are described in the Statement of
Additional Information. These restrictions and the Fund's investment objectives
may not be changed unless authorized by a vote of the shareholders. All other
investment policies are non-fundamental and may be changed without shareholder
approval.

ADVISER AND DISTRIBUTOR

Millenium Advisers, Inc. (the "Adviser") whose principal
office is at 45 Essex Street, Millburn, New Jersey 07041, serves as the
investment adviser of the Fund. The Adviser has been recently formed for the
specific purpose of serving as the investment adviser of the Fund, and has not
previously served as an investment adviser. Subject to the direction and
supervision of the Board of Directors, the Adviser manages the business
operations of the Fund. Rickel Securities, Inc. ("the Distributor"), the parent
corporation of the Adviser, is a registered broker-dealer specializing in
municipal securities which serves as the distributor or principal underwriter of
the Fund's shares. John C. Sabo is the Chairman, Chief Executive Officer and
majority stockholder of the Distributor.

The Fund pays the Adviser a fee at the annual rate of 0.65% on
the first $250 million of average net assets, 0.60% on the next $250 million of
average net assets and 0.55% on average net assets over $500 million. This fee
is higher than that of most municipal bond funds. The Fund also reimburses the
Adviser for its costs of providing certain accounting and financial reporting,
shareholder services and compliance with state securities laws.

<PAGE>

ADMINISTRATOR. [DISCUSSION TO COME].

The Fund's expenses are accrued daily and are deducted from
its total income before dividends are paid. These expenses include, but are not
limited to: fees paid to the Adviser and the Administrator; taxes; legal fees;
custodian and auditing fees; reimbursement of the costs incurred by the
Administrator in providing pricing and accounting services to the Fund; and
printing and other miscellaneous expenses paid by the Fund.

PORTFOLIO MANAGEMENT. John C. Sabo will be the primary
portfolio manager of the Fund. He has been the Chairman, Chief Executive Officer
and majority stockholder of the Distributor since its formation in August, 1997,
and has been President of the Adviser since its formation in December, 1997.
Until August, 1997, he served as President (1995-1997) and Executive Vice
President of Rickel & Associates, Inc., a registered broker-dealer specializing
in municipal securities.

The Distributor is reimbursed by the Fund for some of its
distribution expenses through Distribution Plans which have been adopted with
respect to Class A, Class B and Class C shares and approved by the Fund's Board
of Directors in accordance with Rule 12b-1 under the Investment Company Act of
1940. See "Distribution Plans" below for more detail.

DISTRIBUTION PLANS

The Fund bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A, Class B and Class C
shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. Rule
12b-1 regulates the manner in which a mutual fund may assume costs of
distributing and promoting the sale of its shares.

Payments under the Class A Distribution Plan are limited to an
annual rate of 0.25% of the average daily net asset value of the Class A shares.
Such payments are made to reimburse the Distributor for the fees it pays to its
salespersons and other firms for selling Fund shares, servicing shareholders and
maintaining shareholder accounts. Where a commission is paid for purchases of $1
million or more of Class A shares and as long as the limits of the distribution
plan have not been reached, such payment is also made from 12b-1 distribution
fees received from the Fund. Normally, such fees are at the annual rate of 0.25%
of the average net asset value of the accounts serviced and maintained on the
books of the Fund. Payments under the Class A Distribution Plan may also be used
to reimburse the Distributor for other distribution costs (excluding overhead)
not covered in any year by any portion of the sales charges the Distributor
retains. See "Purchase of Shares."

Payments under the Class B Distribution Plan are limited to an
annual rate of 1% of the average daily net asset value of the Class B shares. In
accordance with current applicable rules, such payments are also limited to
6.25% of gross sales of Class B shares plus interest at 1% over the prime rate
on any unpaid amounts. The Distributor pays broker/dealers up to 4% in
commissions on new sales of Class B shares. Up to an annual rate of 0.75% of the
average daily net assets is used to reimburse the Distributor for these
commission payments. Most or all of such commissions are reallowed to
salespersons and to firms responsible for such sales. No commissions are paid by
the

<PAGE>

Fund with respect to sales by the Distributor to officers, directors and
full-time employees of the Fund, the Distributor or the Adviser. Up to 0.25% of
average net assets is used to reimburse the Distributor for the payment of
service and maintenance fees to its salespersons and other firms for shareholder
servicing and maintenance of shareholder accounts.

If, due to the foregoing payment limitations, the Fund is
unable to pay the Distributor the 4% commission on new sales of Class B shares,
the Distributor intends, but is not obligated, to accept new orders for shares
and pay commissions in excess of the payments it receives from the Fund. The
Distributor intends to seek full payment from the Fund of any excess amounts
with interest at 1% over the prime rate at such future date when and to the
extent such payments on new sales would not be in excess of the limitations. The
Fund is not obligated to make such payments; the amount (if any), timing and
condition of any such payments are solely within the discretion of the directors
of the Fund who are not interested persons of the Distributor or the Fund and
have no direct or indirect financial interest in the Class B Distribution Plan
(the "Independent Directors"). If the Class B Distribution Plan is terminated,
the Distributor will ask the Independent Directors to take whatever action they
deem appropriate with regard to the payment of any excess amounts.

Payments under the Class C Distribution Plan are also limited
to an annual rate of 1% of the average daily net asset value of the Class C
shares, and are subject to the same 6.25% and 1% limitations applicable to the
Class B Distribution Plan. The entire amount of payments may be used to
reimburse the Distributor for the payments of an initial commission and service
and maintenance fees to its salespersons and other firms for selling new Class C
shares, shareholder servicing and maintenance of shareholder accounts.

In addition, to the extent that any investment advisory fees
paid by the Fund may be deemed to be indirectly financing any activity which is
primarily intended to result in the sale of Fund shares within the meaning of
Rule 12b-1, the Plans authorize the payment of such fees.

Each of the Distribution Plans may be terminated at any time
by vote of the Independent Directors or by vote of a majority of the outstanding
voting shares of the respective class. Payments pursuant to a Distribution Plan
are included in the operating expenses of the class.

As described above, dealers or others may receive different
levels of compensation depending on which class of shares they sell. The
Distributor may make expense reimbursements for special training of a dealer's
registered representatives, advertising or equipment, or to defray the expenses
of dealer meetings. Any such amounts may be paid by the Distributor from the
fees it receives under the Class A, Class B and Class C Distribution Plans.

In addition, the Distributor may, from time to time, pay
additional cash compensation or other promotional incentives to authorized
dealers or agents that sell shares of the Fund. In some instances such cash
compensation or other incentives may be offered only to certain dealers or
agents who employ registered representatives who have sold or may sell
significant amounts of shares of the Fund during a specified period of time.

Shares of the Fund may also be sold through banks or
bank-affiliated dealers. Any determination that such banks or bank-affiliated
dealers are prohibited from selling shares of the

<PAGE>

Fund under the Glass-Steagall Act would have no material adverse effects on the
Fund. State securities laws may require such firms to be licensed as securities
dealers in order to sell shares of the Fund.

PURCHASE OF SHARES

GENERAL. You can purchase Class A, Class B or Class C shares
of the Fund from any dealer or other person having a sales agreement with the
Distributor.

There are three ways to make an initial investment in the
Fund. One way is to fill out the Application Form included in this Prospectus
and mail it to [THE ADMINISTRATOR] at the address on the Form. The dealer must
also sign the Form. Your dealer or sales representative will help you fill out
the Form. You should enclose a check (minimum $5,000) payable as indicated on
the Form. All purchases made by check should be in U.S. dollars and made payable
to The Millenium Tax-Free Income Fund, Inc., or in the case of a retirement
account, the custodian or trustee. Third party checks will not be accepted. When
purchases are made by check, redemptions will not be allowed until the
investment being redeemed has been in the account for 15 calendar days.

Another way to make an initial investment is to have your
dealer order and pay for the shares. In this case, you must pay your dealer. The
dealer can order the shares from the Distributor by telephone or wire. You can
also use this method for additional investments of at least $1,000.

The third way to purchase shares is by wire. Shares may be
purchased at any time by wiring federal funds directly to [ADMINISTRATOR]. Prior
to an initial investment by wire, the shareholder should telephone Rickel
Securities, Inc. at 973-379-0300 to advise them of the investment and class of
shares and to obtain an account number and instructions. A completed Plan
Adoption Agreement or Application Form should be mailed to [ADMINISTRATOR] after
the initial wire purchase. To assure proper credit, the wire instructions should
be made as follows:

[ADMINISTRATOR
Attn.: Mutual Fund Services
MILLENIUM TAX-FREE INCOME FUND, INC.
Shareholder Name,
Shareholder Account Number,
Federal Routing Number___________,
DDA Number __________

After your initial investment, you can make additional
investments of at least $250. Simply mail a check payable to "The Millenium
Tax-Free Income Fund, Inc." to [ADMINISTRATOR]. The check should be accompanied
by a form which [ADMINISTRATOR] will provide after each purchase. If you do not
have a form, you should tell [ADMINISTRATOR] that you want to invest the check
in shares of the Fund. If you know your account number, you should also give it
to [ADMINISTRATOR].

The Fund does not issue certificates for Class A, Class B or
Class C shares. Instead, shares purchased are automatically credited to an
account maintained for you on the books of the

<PAGE>

Fund by [ADMINISTRATOR]. You receive a statement showing the details of the
transaction and any other transactions you had during the current year each time
you add to or withdraw from your account.

ALTERNATIVE PURCHASE ARRANGEMENTS. The Fund offers three
classes of shares. With certain exceptions described below, Class A shares are
sold with a front-end sales charge at the time of purchase and are not subject
to a sales charge when they are redeemed. Class B shares are sold without a
sales charge at the time of purchase, but are subject to a deferred sales charge
if they are redeemed within five years after purchase. Class B shares will
automatically convert to Class A shares at the end of five years after the end
of the calendar month in which the shareholder's order to purchase was accepted.
Class C shares are purchased at their net asset value per share without the
imposition of a front-end sales charge but are subject to a 1% deferred sales
charge if redeemed within one year after purchase and do not have a conversion
feature.

Depending on the amount of the purchase and the anticipated
length of time of investment, investors may choose to purchase one class of
shares rather than another. Investors who would rather pay the entire cost of
distribution at the time of investment, rather than spreading such cost over
time, might consider Class A shares. Other investors might consider Class B or
Class C shares, in which case 100% of the purchase price is invested
immediately. Class C shares may be more appropriate for the short-term investor.
The Fund will not accept any purchase of Class C shares when Class A shares may
be purchased at net asset value. See also "Distribution Plans" for more
information.

CLASS A SHARES. Class A shares are sold at their net asset
value plus a sales charge. The amounts of the sales charges are shown in the
following table.

CUSTOMARY
CHARGE AS CONCESSION TO
SALES CHARGE APPROXIMATE YOUR DEALER AS
AS PERCENTAGE PERCENTAGE PERCENTAGE
OF OFFERING OF AMOUNT OF OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- ------------------ ----- -------- -----
$99,999 or less 4 3/4% 5.0% 4%
$100,000 to $249,999 3 1/2% 3.6% 3%
$250,000 to $499,999 2 1/2% 2.6% 2%
$500,000 to $749,999 2% 2.0% 1 3/4%
$750,000 to $999,999 1% 1.0% 3/4 of 1%
$1,000,000 or more 0% 0.0% 0%

* On purchase of $1 million or more, the investor pays no front-end sales charge
but a contingent deferred sales charge of 0.75% may be imposed if shares are
redeemed within the first year after purchase. The Distributor may pay the
financial service firm a commission during the first year after purchase at an
annual rate

<PAGE>

as follows:

PURCHASE AMOUNT COMMISSION
- --------------- ----------
First $3,000,000 .75%
Next $2,000,000 .50%
Over $5,000,000 .25%

Where a commission is paid for purchases of $1 million or more, such payment
will be made from 12b-1 distribution fees received from the Fund and, in cases
where the limits of the distribution plan in any year have been reached, from
the Distributor's own resources.

There are a number of ways to reduce the sales charge on the
purchase of Class A shares, as set forth below.

(i) Family Purchases: Purchases made by an individual, such
individual's spouse and children under 21 are combined and treated as a purchase
of a single person.

(ii) Group Purchases: The purchases of an organized group,
whether or not incorporated, are combined and treated as the purchase of a
single person. The organization must have been organized for a purpose other
than to purchase shares of mutual funds.

(iii) Purchases under a Statement of Intention: By executing
the "Statement of Intention" included in the Application Form at the back of the
Prospectus, purchases of Class A shares of $100,000 or more made over a 13-month
period may be made at the applicable price for the aggregate shares actually
purchased during the period. Please see "Terms and Conditions" at back of this
prospectus.

(iv) Rights of Accumulation: If you notify your dealer or the
Distributor, you may include the Class A shares you already own (valued at
maximum offering price) in calculating the price applicable to your current
purchase.

(v) Sales at Net Asset Value: The sales charge will not apply
to: (1) Class A shares purchased through the automatic reinvestment of dividends
and distributions (see "Dividends and Distributions"); (2) Class A shares
purchased by directors, officers and employees of any fund for which the Adviser
acts as investment adviser or officers and employees of the Adviser or
Distributor, including former directors and officers and any spouse, child,
parent, grandparent, brother or sister ("immediate family members") of all of
the foregoing, and any employee benefit or payroll deduction plan established by
or for such persons; (3) Class A shares purchased by any registered
representatives, principals and employees (and any immediate family member) of
securities dealers having a sales agreement with the Distributor; (4) initial
purchases of Class A shares totaling at least $250,000 but less than $5,000,000,
made at any one time by banks, trust companies and other financial institutions
on behalf of one or more clients for which such institution acts in a fiduciary
capacity; (5) Class A shares purchased by any single account covering a minimum
of 250 participants (this 250 participant minimum may be waived for certain fee
based mutual fund marketplace programs) and representing a defined benefit plan,
defined contribution plan, cash or deferred plan

<PAGE>

qualified under 401(a) or 401(k) of the Internal Revenue Code or a plan
established under section 403(b), 457 or 501(c)(9) of such Code or "rabbi
trusts"; (6) Class A shares purchased by persons participating in a "wrap
account" or similar fee-based program sponsored and maintained by a registered
broker-dealer approved by the Fund's Distributor or by investment advisers of
financial planners who place trades for their own accounts or the accounts of
their clients and who charge a management, consulting or other fee for their
services; and clients of such investment advisers or financial planners who
place trades for their own accounts if the accounts are linked to the master
account of such adviser or financial planner on the books of the broker or
agent; and (7) Class A shares amounting to less than $5,000,000 purchased by
any state, county, city, department, authority or similar agency. The Fund may
also issue Class A shares at net asset value incident to a merger with or
acquisition of assets of an investment company.

CLASS B SHARES. Class B shares are offered at net asset value,
without a front-end sales charge. The Fund imposes a deferred sales charge of 5%
on shares redeemed during the first year after purchase, 4% on shares redeemed
during the second year after purchase, 3% on shares redeemed during the third
year after purchase, 2% on shares redeemed during the fourth year after
purchase, and 1% on shares redeemed during the fifth year after purchase. Class
B shares will be subject to a maximum Rule 12b-1 fee at the annual rate of 1% of
the class's average daily net asset value.

Class B shares that have been outstanding for five years will
automatically convert to Class A shares without imposition of a front-end sales
charge or exchange fee. The Class B shares so converted will no longer be
subject to the higher expenses borne by Class B shares. Because the net asset
value per share of the Class A shares may be higher or lower than that of the
Class B shares at the time of conversion, although the dollar value will be the
same, a shareholder may receive more or less Class A shares than the number of
Class B shares converted. The Fund intends to seek a private Internal Revenue
Service ruling that such a conversion will not constitute a taxable event under
the federal income tax law. In the event that this is not or ceases to be the
case, the Board of Directors will consider what action, if any, is appropriate
and in the best interests of the Class B shareholders.

CLASS C SHARES. Class C Shares are offered at net asset value
without a sales charge at the time of purchase. Class C shares redeemed within
one year of purchase will be subject to a 1% charge upon redemption. Class C
shares do not have a conversion feature. The Fund will not accept any purchases
of Class C shares when Class A shares may be purchased at net asset value. The
Distributor will pay a commission to the firm responsible for the sale of Class
C shares. No other fees will be paid by the Distributor during the one-year
period following purchase. The Distributor will be reimbursed for the commission
paid from 12b-1 fees paid by the Fund during the one-year period. If Class C
shares are redeemed within the one-year period after purchase, the 1% redemption
charge will be paid to the Distributor. After Class C shares have been
outstanding for more than one year, the Distributor will make quarterly payments
to the firm responsible for the sale of the shares in amounts equal to 0.75% of
the annual average daily net asset value of such shares for sales fees and 0.25%
of the annual average daily net asset value of such shares for service and
maintenance fees.

<PAGE>

deferred sales charge is imposed when you redeem amounts derived from (a)
increases in the value of shares above the net cost of such shares or (b)
certain shares with respect to which the Fund did not pay a commission on
issuance, including shares acquired through reinvestment of dividend income and
capital gains distributions. Upon request for redemption, shares not subject to
the contingent deferred sales charge will be redeemed first. Thereafter, shares
held the longest will be the first to be redeemed.

The contingent deferred sales charge (CDSC) on Class A, B and
C Shares that are subject to CDSC will be waived if the redemption relates to
the following; (a) in the event of the total disability (as evidenced by a
determination by the federal Social Security Administration) of the shareholder
(including registered joint owner) occurring after the purchase of the shares
being redeemed; (b) in the event of the death of the shareholder (including a
registered joint owner); (c) for redemptions made pursuant to an automatic
withdrawal plan in an amount, on an annual basis, up to 12% of the value of the
account at the time the shareholder elects to participate in the automatic
withdrawal plan; (d) for redemptions from a qualified retirement plan or IRA
that constitute a tax-free return of contributions to avoid tax penalty; (e) on
redemptions of shares sold to directors, officers and employees of any fund for
which the Adviser acts as investment adviser or officers and employees of the
Adviser or Distributor including former directors and officers and immediate
family members of all of the foregoing, and any employee benefit or payroll
deduction plan established by or for such persons; and (f) on redemptions
pursuant to the right of the Fund to liquidate a shareholder's account if the
aggregate net asset value of the shares held in such account falls below an
established minimum amount.

AUTOMATIC INVESTMENT PLAN. Shareholders may arrange for
automatic monthly investing whereby [ADMINISTRATOR] will be authorized to
initiate a debit to the shareholder's bank account of a specific amount (minimum
$250) each month which will be used to purchase Fund shares. For institutions
that are members of the Automated Clearing House system (ACH), such purchases
can be processed electronically on any day of the month between the 3rd and 28th
day of each month. After each automatic investment, the shareholder will receive
a transaction confirmation and the debit should be reflected on the
shareholder's next bank statement. The plan may be terminated at any time by the
shareholder. If you desire to utilize this plan, you may use the appropriate
designation on the Application Form.

TELEPHONE PRIVILEGE

Unless you have provided in your application that the
telephone privilege is not to be available, the telephone privilege is
automatically available under certain circumstances for exchanging shares and
for redeeming shares. By exercising the telephone privilege to sell or exchange
shares, you agree that the Fund shall not be liable for following telephone
instructions reasonably believed to be genuine. Reasonable procedures will be
employed to confirm that such instructions are genuine and if not employed, the
Fund may be liable for unauthorized instructions. Such procedures will include a
request for personal identification (account or social security number) and tape
recording of the instructions. You should be aware that during unusual market
conditions we

<PAGE>

may have difficulty in accepting telephone requests in which case you should
contact us by mail. See "Redemption of Shares -- Expedited Redemption
Privilege".

REDEMPTION OF SHARES

GENERAL. You can redeem, or sell back to the Fund, all or part
of your shares at any time. You can do this by sending a written request to
[ADMINISTRATOR] indicating how many of your shares or what dollar amount you
want to redeem. If more than one person owns the shares to be redeemed, all of
them must sign the request. The signatures on the request must correspond to the
account from which the shares are being redeemed.

Sometimes [ADMINISTRATOR] needs more documents to verify
authority to make a redemption. This usually happens when the owner is a
corporation, partnership or fiduciary (such as a trustee or the executor of an
estate) or if the person making the request is not the registered owner of the
shares. If shares to be redeemed are represented by a certificate, the
certificate, signed by the owner or owners, must be sent to [ADMINISTRATOR] with
the request.

For the protection of all shareholders, the Fund also requires
that signatures appearing on a redemption request where the proceeds would be
more than $50,000 must be guaranteed by a bank, credit union, savings
association, securities exchange, broker, dealer or other guarantor institution.
A signature guarantee is also required in the event that any modification to the
investor's application is made after the account is established, including the
selection of the Expedited Redemption Privilege. In some situations such as
where corporations, trust or estates are involved, additional documents may be
necessary to effect the redemption. The transfer agent may reject a request from
any of the foregoing eligible guarantors, if such guarantor does not satisfy the
transfer agent's written standards or procedures or if such guarantor is not a
member or participant of a signature guarantee program. A signature guarantee on
redemption requests where the proceeds would be $50,000 or less is not required,
provided that such proceeds are being sent to the address of record and, in
order to ensure authenticity of an address change, such address of record has
not been changed within the last 30 days. All notifications of address changes
must be in writing.

Redemption proceeds are normally paid to you within seven days
after [ADMINISTRATOR] receives your proper redemption request. Payment for
redemptions can be suspended under certain emergency conditions determined by
the Securities and Exchange Commission or if the New York Stock Exchange is
closed for other than customary or holiday closings. If any of the shares
redeemed were just bought by you, payment to you may be delayed until your
purchase check has cleared (which usually takes up to 15 days from the purchase
date). You can avoid any such redemption delay by paying for your shares with a
certified or cashier's check or by bank wire or federal funds.

Redemptions are ordinarily paid to you in cash. However, the
Fund's Board of Directors is authorized to decide that conditions exist making
cash payments undesirable. If the Board should decide to make payment in other
than cash, redemptions could be paid in securities, valued at the value used in
computing the Fund's net asset value. There would be brokerage costs incurred by
the shareholder in selling such redemption proceeds. We must, however, redeem
shares

<PAGE>

solely in cash up to the lesser of $250,000 or 1% of the Fund's net asset
value, whichever is smaller, during any 90-day period for any one shareholder.

EXPEDITED REDEMPTION PRIVILEGE. Investors with accounts other
than prototype retirement plans and IRAs may designate on the Expedited
Redemption Privilege Form (included in this prospectus) an account with any
commercial bank and have the cash proceeds from the redemption sent, by either
wire or electronically through the Automated Clearing House system (ACH), to a
pre-designated bank account. [ADMINISTRATOR] will accept instructions to redeem
shares and make payment to a pre-designated commercial bank account by (a)
written request signed by the registered shareholder, (b) telephone request by
any Qualified Dealer to Rickel Securities, Inc. (973-379-0300), and (c) by
facsimile request by the shareholder to [ADMINISTRATOR]. At the time of
redemption, the shareholder must request that federal funds be wired or
transferred by ACH to the bank account designated on the application. The
redemption proceeds under this procedure may not be directed to a savings bank,
savings and loan or credit union account except by arrangement with its
correspondent bank or unless such institution is a member of the Federal Reserve
System. The Distributor, in its discretion, may limit the amount that may be
redeemed by a shareholder in any single day under the Expedited Redemption
Privilege to $25,000. There is a $5 charge by [ADMINISTRATOR] for wire service,
and receiving banks may also charge for this service. Payment by ACH will
usually arrive at your bank two banking days after your call. Payments by wire
is usually credited to your bank account on the next business day after your
call. The Expedited Redemption Privilege may be terminated, modified or
suspended by the Fund at any time. See "Telephone Privilege".

The name of the registered shareholder and corresponding Fund
account number must be supplied. The Expedited Redemption Privilege Form
provides for the appropriate information concerning the commercial bank and
account number. Changes in ownership, account number (including the identity of
your bank) or authorized signatories of the pre-designated account may be made
by written notice to [ADMINISTRATOR] with your signature and those of new owners
or signers on the account guaranteed by a commercial bank or trust company.
Additional documentation may be required to change the designated account where
shares are held by a corporation, partnership, executor, administrator, trustee
or guardian.

BY TELEPHONE. You can redeem shares by telephone and receive a
check by mail, but please keep in mind:

The check can only be issued for up to $25,000;
The check can only be issued to the registered owner (who must
be an individual);
The check can only be sent to the address of record; and your
current address of record must have been on file for 30 days.

AUTOMATIC WITHDRAWALS PLAN. Under the Automatic Withdrawals
Plan, you can indicate to [ADMINISTRATOR] how many dollars you would like to
receive each month or each quarter. Your account must have a value of at least
$10,000 to start a plan. Shares are redeemed so that you will receive the
payment you have requested approximately on the 25th day of the month.
Withdrawals involve redemption of shares and may produce gain or loss for income
tax purposes. If you utilize this program using Class B or Class C shares, any
applicable contingent deferred sales

<PAGE>

charges will be imposed on such shares redeemed. Purchase of additional shares
concurrent with withdrawals may be disadvantageous to you because of tax and
sales load consequences. If the amount you withdraw exceeds the dividends on
your shares, your account will suffer depletion. Your Automatic Withdrawals Plan
may be terminated by you at any time without charge or penalty. The Fund
reserves the right to terminate or modify the Automatic Withdrawals Plan at any
time. Call or write the Fund if you want further information on the Automatic
Withdrawals Plan.

INVOLUNTARY REDEMPTIONS. To relieve the Fund of the cost of
maintaining uneconomical accounts, the Fund may effect the redemption of shares
at net asset value in any account if the account, due to shareholder
redemptions, has a value of less than $250. At least 60 days prior to such
involuntary redemption, the Fund will mail a notice to the shareholder so that
an additional purchase may be effected to avoid such redemption.

SUBSEQUENT REPURCHASES. After some of or all your shares are
redeemed or repurchased, you may decide to put back all or part of your proceeds
into the same Class of the Fund's shares. Any such shares will be issued without
sales charge at the net asset value next determined after you have returned the
amount of your proceeds. In addition, any CDSC assessed on Class B or Class C
shares will be returned to the account. Class B or Class C shares will be deemed
to have been purchased on the original purchase date for purposes of calculating
the CDSC and conversion period. This can be done by sending the Fund or the
Distributor a letter, together with a check for the reinstatement amount. The
letter must be received, together with the payment, within 30 days after the
redemption or repurchase. You can only use this privilege once.

DETERMINING THE PRICE OF SHARES.

The net asset value per share of each class is determined
daily by dividing the total value of investments and other assets, less any
liabilities, by the number of total outstanding shares. Fixed income securities
may be valued on the basis of prices provided by a pricing service when such
prices are believed to reflect the fair market value of such securities.
(Pricing services generally take into account institutional size trading in
similar groups of securities). Securities not priced in this manner will be
priced at the last published sales price if traded on that day and, if not
traded, at the mean between the most recent quoted bid and asked prices provided
by investment dealers. The pricing service and valuation procedures are reviewed
and subject to approval by the Board of Directors. Short-term securities
maturing in 60 days or less will be valued at amortized cost (unless the Board
of Directors determines that amortized cost would not represent a fair value).
If there is a material difference in the market value and amortized cost value
of short-term securities, market value will be used. Assets for which there are
no quotations available will be valued at a fair value as determined by or at
the direction of the Board of Directors.

The net asset value per share is determined as of the earlier
of the close of the exchange or 4:00 p.m. Eastern Time on each day the New York
Stock Exchange is open. The price per share for purchases or redemptions made
directly through [ADMINISTRATOR] normally is such value next computed after
[ADMINISTRATOR] receives the purchase order or redemption request. If the
purchase order or redemption request is placed with your dealer, then the
applicable price is normally computed as of 4:00 p.m. Eastern Time on the day
the dealer receives the order, provided that the dealer receives the order
before 4:00 p.m. Eastern Time. Otherwise, the applicable price is the next

<PAGE>

determined net asset value. It is the responsibility of your dealer to promptly
forward purchase and redemption orders to the Distributor. Note that in the case
of redemptions and repurchases of shares owned by corporations, trusts or
estates, [ADMINISTRATOR] may require additional documents to effect the
redemption and the applicable price will be determined as of the close of the
next computation following the receipt of the required documentation or
outstanding certificates. See "Redemption of Shares."

DIVIDENDS AND DISTRIBUTIONS.

Income dividends are declared and distributed monthly and
distributions of net realized capital gains, if any, will normally be paid
annually. To provide stable distributions for its shareholders, the Fund at
times may continue to pay distributions based on expectations of future
investment results even though, as a result of temporary market conditions or
other factors, the Fund may have failed to achieve projected investment results
for a given period. In such cases, the Fund's distributions may include a return
of capital to shareholders. Shareholders who reinvest their distributions are
largely unaffected by such returns of capital. In the case of shareholders who
do not reinvest, a return of capital is equivalent to a partial redemption of
the shareholder's investment. Because Class B and Class C shares incur higher
distribution services fees and bear certain other expenses, such shares will
have a higher expense ratio and will pay correspondingly lower dividends than
Class A shares.

You will receive quarterly confirmation statements for
dividends declared and shares purchased through reinvestment of dividends.
Dividends declared in December to shareholders of record in December, and paid
by the end of January of the subsequent year will be treated as received by the
shareholder in the earlier year. You will receive confirmations after each
purchase other than through dividend reinvestment, and after each redemption.
Information concerning distributions will be mailed to shareholders annually.
Distributions will be classified in terms of non-taxable return of capital,
federal tax-exempt income and taxable income. Since some states may not tax
their residents on the portion of the Fund's distributions representing income
from governmental entities in such states, information about state sources of
tax-exempt distributions will also be reported annually.

Shareholders have the option to receive all dividends and
distributions in cash, to have all dividends and distributions reinvested, or to
have income dividends and short-term capital gain distributions paid in cash and
long-term capital gain distributions reinvested. Reinvestment of all dividends
and distributions is automatic for accounts utilizing the Automatic Withdrawal
Plan. The reinvestment of dividends and distributions is made at net asset value
(without any initial or contingent deferred sales charge) on the dividend
payment date. Upon receipt of the second dividend check which has been returned
as undeliverable, undelivered dividends will be invested in additional shares at
the current net asset value and the account designated as a dividend
reinvestment account.

FEDERAL INCOME TAXES

This section is not intended to be a full discussion of all
the aspects of the federal income tax law and its effects on the Fund and its
shareholders. Shareholders may be subject to state and local taxes on
distributions. Each investor should consult his or her own tax adviser regarding
the effects of federal, state and local tax laws on an investment in the Fund.

<PAGE>

The Fund intends to qualify as a regulated investment company
under the Internal Revenue Code (the "Code") and, if so qualified, will not be
liable for federal income tax to the extent its earnings are distributed. If,
for any calendar year, the required distribution of the Fund exceeds the amount
distributed, an excise tax equal to 4% of the excess will be imposed on the
Fund. The Fund intends to make distributions during each calendar year
sufficient to prevent imposition of the excise tax.

Dividends paid to shareholders from interest earned by the
Fund from municipal obligations and from exempt interest dividends received by
the Fund from investment companies investing in tax-exempt securities are not
includible in a shareholder's gross income for federal income tax purposes,
although a portion of such dividends may be subject to the alternative minimum
tax as discussed below. Distributions of net interest income derived from other
sources, if any, and of net short-term capital gains realized by the Fund will
be taxable to shareholders as ordinary income. Net long-term capital gain
distributions, if any, will be taxable to shareholders as long-term capital gain
regardless of how long the shares of the Fund have been held. Distributions will
be treated the same for tax purposes whether received in cash or in additional
shares of the Fund.

Interest paid on "specified private activity bonds" issued
after August 7, 1986, as defined in the Code, although exempt from federal
income tax, will constitute a tax preference item for purposes of both the
individual and the corporate alternative minimum tax. If the Fund were to own
any such bonds, it is expected that a portion of the exempt income distributed
by the Fund would be treated as a preference item for shareholders based upon
the proportionate share of the interest from the specified private activity
bonds received by the Fund. In the case of a corporate shareholder, the
alternative minimum tax base may also include a portion of all the other
tax-exempt income. Corporate shareholders are advised to consult their own tax
advisers with respect to the corporate alternative minimum tax.

A gain or loss for tax purposes may be realized on the
redemption of shares. If a shareholder realizes a loss on the sale of any shares
held for six months or less and during such period the shareholder received any
exempt-interest dividends, then such loss is disallowed to the extent of the
amount of the exempt-interest dividends. If a shareholder realizes a loss on the
sale of any shares held for six months or less and during such period the
shareholder received any capital gains dividends, then such loss (to the extent
it is allowed) is treated as a long-term capital loss to the extent of such
capital gain dividends. Interest on indebtedness incurred by shareholders to
purchase or carry shares of the Fund will not be deductible for federal income
tax purposes. Dividends declared in the last calendar month to shareholders of
record in such month and paid by the end of the following January are treated as
received by the shareholder in the year in which they are declared.

The Fund may not be an appropriate investment vehicle for
entities which are "substantial users" (or "related persons" thereto) of
facilities financed by "industrial development bonds" as such terms are defined
in the Internal Revenue Code. Such entities (or persons) should consult their
own tax advisers before investing.

<PAGE>

FUND SHARES

Shares issued by the Fund are currently divided into three
classes: Class A, Class B and Class C shares. The Board of Directors may offer
additional classes in the future and may at any time discontinue the offering of
any class of shares. Each share, when issued and paid for in accordance with the
terms of the offering, is fully paid and non-assessable. Shares have no
preemptive or subscription rights and are freely transferable. Each share of the
Fund represents an interest in the assets of the Fund and has identical voting,
dividend, liquidation and other rights and the same terms and conditions as any
other shares except that (i) each dollar of net asset value per share is
entitled to one vote irrespective of the class or subclass thereof, (ii) the
expenses related to a particular class, such as those related to the
distribution of each class and the transfer agency expenses of each class, are
borne solely by each such class and (iii) each class of shares votes separately
with respect to provisions of the Rule 12b-1 Distribution Plan which pertains to
a particular class and other matters for which separate class voting is
appropriate under applicable law. Each fractional share has the same rights, in
proportion, as a full share. Shares do not have cumulative voting rights;
therefore, the holders of more than 50% of the voting power of the Fund can
elect all of the directors of the Fund. Due to the differing expenses of the
classes, dividends of Class B and Class C shares are likely to be lower than for
Class A shares.

In accordance with Maryland law and the Fund's By-laws, the
Fund does not hold regular annual shareholder meetings. Shareholder meetings are
held when they are required under the Investment Company Act of 1940 or when
otherwise called for special purposes. Special shareholder meetings may be
called upon the written request of shareholders holding at least 10% of the
outstanding shares of the Fund.

PERFORMANCE DATA

From time to time, the Fund may advertise information
regarding its performance. Such information may consist of "yield," "total
return," "taxable equivalent yield," "distribution rate," "annualized current
distribution rate" and "tax equivalent distribution rate." Each of these
performance figures will be based upon historical results and will not be
intended to indicate future performance, and, except for "distribution rate,"
"annualized current distribution rate" and "tax equivalent distribution rate" is
standardized in accordance with regulations of the Securities and Exchange
Commission ("SEC"). All such performance will be calculated separately for each
class of shares.

"Yield" is computed by dividing the net investment income per
share (as defined in applicable SEC regulations) during a specified 30-day
period by the maximum offering price per share on the last day of such period.
Yield is an annualized figure, in that it assumes that the same level of net
investment income is generated over a one-year period. The yield formula
annualizes net investment income by providing for semi-annual compounding.

"Taxable Equivalent Yield". The yield necessary from a taxable
investment, which on an after-tax basis is equal to the yield of a tax free
investment, based on the maximum federal income tax bracket for a given period.

"Distribution rate" is determined by dividing the income
dividends per share for a stated period by the net asset value per share on the
last day of such period. "Tax equivalent distribution

<PAGE>

rate" is computed by dividing the portion of the Fund's distribution rate
(determined as described above) which is tax-exempt, by one minus the stated
federal income tax rate, and adding to the resulting amount that portion, if
any, of the distribution rate which is not tax-exempt. All distribution rates
published are measures of the level of income dividends distributed during a
specified period. Thus, such rates differ from yield (which measures income
actually earned by the Fund) and total return (which measures actual income,
plus realized and unrealized gains or losses of the Fund's investments).
Consequently, distribution rates alone should not be considered complete
measures of performance.

"Average annual total return" refers to the Fund's average
annual compounded rate of return over a stated period that would equate an
initial amount invested at the beginning of the period to the ending redeemable
value of the investment. In the event the Fund advertises its total return, the
stated periods will generally be one year, five years and ten years, but the
Fund may also advertise total return for longer or shorter periods, including
the life of the Fund. The computation of total return assumes reinvestment of
all dividends and distributions, and deduction of all charges and expenses.

The Fund may also quote average annual total return and total
return on net asset value. Such data will be calculated substantially as
described above except that sales charges will not be deducted.

The Fund may quote information from publications such as The
Wall Street Journal, Money Magazine, Forbes, Barron's, Newsweek, Chicago
Tribune, The New York Times, U.S. News and World Report, USA Today, Fortune,
Investors Business Daily, Financial World, Smart Money, No-Load Fund Investor
and Kiplinger's and may cite information from Morningstar, Value Line or the
Investment Company Institute. The Fund may compare its performance to the
performance of mutual fund indexes as reported by Lipper Analytical Services,
Inc. ("Lipper") or CDA Investment Technologies, Inc., two widely recognized
independent mutual fund reporting services.

Please remember that performance information is based upon
historical results and is not necessarily indicative of future performance.

The Fund's Annual Reports will contain additional performance
information and will be made available upon request and without charge.

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to Rickel Securities,
Inc., by writing to [ADMINISTRATOR] or by calling 973-379-0300.

<PAGE>

APPENDIX
QUALITY RATINGS OF DEBT SECURITIES

MOODY'S MUNICIPAL AND CORPORATE BOND RATINGS

Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
unlikely to impair the fundamentally strong position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long term risks appear somewhat larger
than Aaa securities.

A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade-obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa -- Bonds which are rated Baa are considered as medium
grade obligations, i.e. they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any longer period of time may be
small.

Caa -- Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

<PAGE>

C -- Bonds which are rated C are the lowest rated class of
bonds and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

STANDARD & POOR'S CORPORATE BOND RATINGS

AAA -- Debt rated `AAA' has the highest rating assigned by
Standard and Poor's. Capacity to pay interest and repay principal is extremely
strong.

AA -- Debt rated `AA' has a very strong capacity to pay
interest and repay principal and differs from the highest rated issues only in
small degree.

A -- Debt rated `A' has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.

BBB -- Debt rated `BBB' is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.

BB -- Debt rated `BB' has less near-term vulnerability to
default than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic conditions
which could lead to inadequate capacity to meet timely interest and principal
payments. The `BB' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied `BBB' rating.

B -- Debt rated `B' has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The `B' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied `BB' or `BB' rating.

CCC -- Debt rated `CCC' has a currently identifiable
vulnerability to default, and is dependent upon favorable business, financial,
and economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic conditions,
it is not likely to have the capacity to pay interest and repay principal. The
`CCC' rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied `B' or `B' rating.

CC -- The rating `CC' is typically applied to debt
subordinated to senior debt that is assigned an actual or implied `CCC' rating.

C -- The rating `C' is typically applied to debt subordinated
to senior debt which is assigned an actual or implied `CCC' debt rating. The `C'
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.

<PAGE>

CI -- The rating 'CI' is reserved for income bonds on which no
interest is being paid.

D -- Debt rated 'D' is in payment default. The 'D' rating
category is used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The `D'
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.

MOODY'S MUNICIPAL NOTE RATINGS

MIG 1 -- The best quality, with strong protection provided by
established cash flows, superior liquidity support or demonstrated broad-based
access to the market for refinancing.

MIG 2 -- High quality, with margins of protection ample
although not so large as in the preceding group.

MIG 3 -- Favorable quality, with all security elements
accounted for but lacking the undeniable strength of the preceding grades.
Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.

STANDARD & POOR'S MUNICIPAL NOTE RATINGS

SP-1 -- Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are given a (+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

SP-3 -- Speculative capacity to pay principal and interest.

MOODY'S COMMERCIAL PAPER RATINGS

Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime-1 (superior capacity), Prime-2
(strong capacity) and Prime-3 (acceptable capacity). In assigning ratings to an
issuer which represents that its commercial paper obligations are supported by
the credit of another entity or entities, Moody's evaluates the financial
strength of the indicated affiliated corporations, commercial banks, insurance
companies, foreign governments or other entities, but only as one factor in the
total rating assessment.

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

The S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into four categories, ranging from 'A' for the
highest quality to `D' for the lowest. Issues assigned an 'A' rating

<PAGE>

are regarded as having the greatest capacity for timely payment. Within the 'A'
category, the numbers 1, 2 and 3 indicate relative degrees of safety. The
addition of a plus sign to the category A-1 denotes that the issue is determined
to possess overwhelming safety characteristics.

TERMS AND CONDITIONS FOR A STATEMENT OF INTENTION (CLASS A SHARES ONLY)

TERMS OF ESCROW:

1. Out of my initial purchase (or subsequent purchases if necessary) 5%
of the dollar amount specified in this Statement will be held in escrow by
[ADMINISTRATOR] in the form of shares (computed to the nearest full share at the
public offering price applicable to the initial purchase hereunder) registered
in my name. For example, if the minimum amount specified under this statement is
$100,000 and the public offering price applicable to transactions of $100,000 is
$10 a share, 500 shares (with a value of $5,000) would be held in escrow.

2. If my total purchases are at least equal to the intended purchases,
the shares in escrow will be delivered to me or to my order.

3. If my total purchases are less than the intended purchases, I will
remit to Rickel Securities, Inc. the difference in the dollar amount of sales
charge actually paid by me and the sales charge which I would have paid if the
total purchase had been made at a single time. If remittance is not made within
20 days after written request by Rickel Securities, Inc., or my dealer,
[ADMINISTRATOR] will redeem an appropriate number of the escrowed shares in
order to realize such difference.

4. I hereby irrevocably constitute and appoint [ADMINISTRATOR] my
attorney to surrender for redemption any or all escrowed shares with full power
of substitution in the premises.

5. Shares remaining after the redemption referred to in Paragraph
No. 3 will be credited to my account.

6. The duties of [ADMINISTRATOR] are only such as are herein provided
being purely ministerial in nature, and it shall incur no liability whatever
except for willful misconduct or gross negligence so long as it has acted in
good faith. It shall be under no responsibility other than faithfully to follow
the instructions herein. It may consult with legal counsel and shall be fully
protected in any action taken in good faith in accordance with advice from such
counsel. It shall not be required to defend any legal proceedings which may be
instituted against it in respect of the subject matter of this Agreement unless
requested to do so and indemnified to its satisfaction against the cost and
expense of such defense.

7. If my total purchases are more than the intended purchases and such
total is sufficient to qualify for an additional quantity discount, a
retroactive price adjustment shall be made for all purchases made under such
Statement to reflect the quantity discount applicable to the aggregate amount of
such purchases during the thirteen-month period.

<PAGE>

EXPEDITED REDEMPTION PRIVILEGE

|_| If you wish the Expedited Redemption Privilege please check the box to
the left and complete the following information.

I (we) hereby authorize [ADMINISTRATOR], Millenium Advisers,
Inc., Rickel Securities, Inc., and/or Millenium Tax-Free Income Fund, Inc. to
act upon instructions received by telephone or telegraph, believed by them to be
genuine, and to redeem shares in my (our) account in the Fund and to wire the
proceeds of such redemption to the predesignated bank listed below. I (we)
hereby agree that neither [ADMINISTRATOR], nor Millenium Advisers, Inc., Rickel
Securities, Inc., and/or Millenium Tax-Free Income Fund, Inc nor any of their
officers or employees, will be liable for any loss, liability, cost or expense
for acting upon such instructions.

- --------------------------------- --------------------------------
Signature of Shareholder Signature of Co-Shareholder

- --------------------------------- --------------------------------
Name of Commercial Bank (Title of Account at Bank)

- --------------------------------- --------------------------------
(Street) (Account Number at Bank)

- --------------------------------- --------------------------------
(City) (State) (Zip) (ABA/Transit Routing Number)

<PAGE>
ACCOUNT APPLICATION

Mail to : Millenium Tax-Free Income Fund, Inc. c/o Rickel Securities, Inc.,
45 Essex Street, Millburn, New Jersey 07041

Use this application for all accounts. For assistance call 973-379-0300.

1. ACCOUNT REGISTRATION [ ] Individual Account
Please check only one box [ ] Joint Tenant
[ ] Tenants in Common
[ ] Uniform Transfers to Minors Act (UM) or
Uniform Gifts to Minors Act (UGMA) - use
the name of the adult custodian on the
shareholder line and the name of the
child on the co-shareholder line.
Use the child's Social Security Number.
[ ] Trust Account - please indicate the
name(s) of the trustee(s) authorized to
act on behalf of the trust on the
shareholder line and the name of the trust
and date of the trust on the co-shareholder
line.
[ ] Retirement Plan - please indicate the
name(s) of the trustee(s) on the
shareholder line and the name of the
retirement plan on the co-shareholder
line.
[ ] I am a Dealer Firm registered representative
or employee entitled to NAV purchases of
Class A Shares.
[ ] Other form of ownership (please specify
-------------------------------------------)
PLEASE PRINT CLEARLY. Name of shareholder _______________________________
Social Security number or taxpayer
ID number (required by law) _______________________
Name of co-shareholder (if any) ___________________
Address ___________________________________________
City _______________ State __________ Zip _________
Telephone Number __________________________________
Citizenship _______________________________________

<PAGE>

2. FUND SELECTION
See fund description below

[ ] Check enclosed for $___________ (Minimum
$5,000 payable to "Millenium Tax-Free
Income Fund, Inc.").

[ ] My investment dealer, named below, ordered
my initial purchase of shares, under wire
order # ______________.

Please consider the following account options on the reverse side:

* Dividend and Capital Gain Instructions * Rights of Accumulation
* Statement of Intention * Telephone Privileges
* Automatic Investment Plan * Electronic Wire Privileges

* Payments to Others
* Automatic Withdrawals

3. DEALER INFORMATION

<TABLE>
<CAPTION>
<S> <C>
When opening your account ______________________________________________________
through a dealer, have them Dealer name (as it appears on Selling Group Agreement)
complete this section. ______________________________________________________

Address of home office

------------------------------------------------------
City State Zip

------------------------------------------------------
Authorized signature of dealer

------------------------------------------------------
Address of office servicing account

------------------------------------------------------
City State Zip

------------------------------------------------------
Registered representative's name and no. appearing on
firm's registration

------------------------------------------------------
Registered representative's telephone number
</TABLE>

4. YOUR SIGNATURE

All registered shareholders must sign.

I am of legal age and have read the current prospectus and this application. I
agree to the terms thereof including any amendments thereto. I hold harmless and
indemnity Millenium Tax-Free Income Fund, Inc., Rickel Securities, Inc. and each
of their respective partners, affiliates, directors, officers, employees and
agents from any losses, expenses, costs or liability (including attorney fees)
which I many incur in connection with my instructions in this application and
any other instructions given in writing, by telephone or electronically and
reasonably believed to be genuine. UNDER THE PENALTY OF PERJURY, I CERTIFY THAT
(1) THE SOCIAL SECURITY NUMBER OR TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS

34
<PAGE>

FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT TO
BACKUP WITHHOLDING EITHER BECAUSE I HAVE NOT BEEN NOTIFIED BY THE INTERNAL
REVENUE SERVICE (IRS) THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST AND DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT I
AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. THE IRS DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED
TO AVOID BACKUP WITHHOLDING. If I am affiliated with, or work for, a NASD member
firm, I will attach information concerning my employment.

-----------------------------------------------------------
Signature of shareholder Date

-----------------------------------------------------------
Signature of co-shareholder (if any) Date

For more information and prospectus(es) call 973-379-0300

<PAGE>

ACCOUNT OPTIONS

<TABLE>
<CAPTION>
<S> <C> <C>
5. DIVIDEND AND CAPITAL ALL DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS WILL BE
GAIN INSTRUCTIONS REINVESTED INTO THE FUND UNLESS OTHERWISE
INDICATED HERE:

DIVIDENDS:

[ ] Pay in cash. (May not select if using Automatic
Withdrawal Plan.)

CAPITAL GAIN DISTRIBUTIONS:

[ ] Pay in cash.

6. STATEMENT OF
INTENTION I understand that through accumulated investments I
can reduce my sales charges of the Class A Shares. I
intend to invest over a 13-month period beginning
(date) ___________________ in shares of the Fund for
an aggregate amount of at least:

[ ] $100,000 [ ] $250,000 [ ] $500,000
[ ] $750,000 [ ] $1,000,000

7. RIGHTS OF [ ] I own Class A shares in more than one account, which
ACCUMULATION may entitle me to a reduced sales charge.
Please link my account numbers to qualify
(Attach an additional sheet if necessary):

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

8. TELEPHONE AUTOMATICALLY APPLIES UNLESS BOX IS CHECKED. I
PRIVILEGE elect the telephone privileges as described
in the prospectus. (Calls msy be recorded or
monitored for verification and quality assurance
purposes.)

[ ] No, I do not want telephone privileges.
</TABLE>
36

<PAGE>

<TABLE>
<CAPTION>
<C> <S>
9. ELECTRONIC WIRE [ ] I authorize the Fund to wire redemption proceeds when
PRIVILEGE requested by either Automated Clearing House (ACH) or
Please attach a Voided by Wire (a fee is charged) as specified by my redemption
Check or Encoded Deposit Slip instructions.
--------------------------------------------------------
Name and Address of Depository Institution
--------------------------------------------------------
Account Number with Depository Institution

Type of account: [ ] Checking [ ] Savings

10. AUTOMATIC WITHDRAWAL [ ] I want to withdraw from the Fund
PLAN account number (if known) ___________________
This plan requires a $10,000 [ ] $__________ (exact dollars-$25 minimum) OR
minimum balance and the [ ] ___________ % (per year-calculated each withdrawal) OR
reinvestment of dividends. [ ] ___________ (number of withdrawals until the account is
closed)
I want to receive checks: [ ] Monthly [ ] Quarterly
[ ] Annually

11. PAYMENT TO OTHERS Make checks payable and send to:
Complete if dividend or
withdrawal checks are to Name ________________________________________________
be payable to someone
other than the registered Address ______________________________________________
shareholder(s).
City ____________________State______________Zip ________

12. AUTOMATIC INVESTMENT PLAN
Important: Attach an
unsigned voided check.

The account balance must Please transfer $_____________ ($25 minimum) from my bank
meet the minimum account and invest into the Fund
investment requirements account number (if known) _______________________________
as detailed in the on the ___________ day of each month.
prospectus within 12
months of initial Name of your bank _______________________________________
investment. ABA number ______________________________________________
Print your name(s)
_________________________________________________________
Bank Account Number
_________________________________________________________
Street address of your bank
_______________________________
City __________________ State ______________ Zip_________
</TABLE>

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

_____________, 1998

MILLENIUM TAX-FREE INCOME FUND, INC.

45 Essex Street,
Millburn, New Jersey 07041
973-379-0300

TABLE OF CONTENTS

TOPIC PAGE
General Information and History.......................................
Fundamental Investment Restrictions............................................
Municipal Obligations..........................................................
Temporary Investments..........................................................
Portfolio Transactions.........................................................
Directors and Officers.........................................................
Directors' Compensation Schedule...............................................
Investment Advisory Services...................................................
Custodian......................................................................
Auditors.......................................................................
Determining the Price of Shares................................................
Reduction of Class A Sales Charge..............................................
Distribution of Fund Shares....................................................
Performance Data...............................................................
Non-Standard Distribution Rates................................................

38
<PAGE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONJUNCTION WITH THE CLASS A, CLASS B, AND CLASS C PROSPECTUS DATED_________
, 1998. THE PROSPECTUS MAY BE OBTAINED FROM THE FUND.

GENERAL INFORMATION AND HISTORY

The Fund has been recently organized for the purposes set
forth in the Prospectus. It has had no prior history of operations.

FUNDAMENTAL INVESTMENT RESTRICTIONS

The investment restrictions set forth below and the Fund's
investment objective set forth in the Prospectus may not be changed without the
approval of the holders of more than 50% of the eligible votes. All percentage
limitations set forth in these restrictions apply as of the time of an
investment without regard to later increases or decreases in the value of
securities or total or net assets.

1. The Fund may not invest in securities other than municipal
obligations and temporary investments, and may not make loans to others except
through such investments.

2. The Fund may not purchase or sell real estate (but this will not
prevent the Fund from investing in municipal obligations secured by real estate
or interests therein) or commodities or commodity contracts.

3. The Fund may not purchase more than 50% of the outstanding
debt obligations of any one issuer. For this purpose, all debt obligations of an
issuer are treated as a single class of securities. This restriction does not
apply to debt obligations issued, guaranteed or insured by the U.S. Government,
its agencies or instrumentalities ("U.S. Government Securities").

4. The Fund may not make an investment that would cause more than 5% of
the value of its total assets to be invested in the securities (other than U.S.
Government Securities) of any one issuer. For this purpose, each state or local
governmental entity shall be deemed a separate "issuer," except that where the
entity issuing a municipal obligation differs from the entity whose revenues are
the primary source of the payment of the obligation, the entity whose revenues
are the primary source of payment shall be deemed the sole issuer with regard to
that obligation.

5. The Fund may not make an investment that would cause 25% or more of
the value of its total assets to be invested in municipal obligations the
issuers of which are located in the same state. For this purpose, the location
of an issuer shall be deemed to be the location of the governmental entity
issuing the obligation, regardless of the location of the entity whose revenues
are the primary source of payment or the location of the project or facility
which may be the subject of the obligation.

6. The Fund may not write or purchase put or call options.

<PAGE>

7. The Fund may not make an investment that would cause 25% or more of
the value of its total assets to be invested in revenue bonds or notes the
payment for which comes from revenues from any one type of activity. For this
purpose, the term "type of activity" shall include, for example, the following:
(a) sewage treatment and disposal; (b) gas provision; (c) electric power
provision; (d) water provision; (e) mass transportation systems; (f) housing;
(g) hospitals; (h) street development and repair; (i) toll roads; (j) airport
facilities; and (k) educational facilities. This restriction does not apply to
general obligation bonds or notes or to pollution control revenue bonds.

8. The Fund may not purchase securities of other registered investment
companies (as defined in the Investment Company Act of 1940), except (i) shares
of open-end investment companies investing primarily in municipal obligations
with remaining maturities of 13 months or less, provided that such purchase does
not cause the Fund to (a) have more than 5% of its total assets invested in any
one such company, (b) have more than 10% of its total assets invested in the
aggregate of such companies or (c) own more than 3% of the total outstanding
voting stock of any such company; or (ii) as part of a merger, consolidation,
reorganization or acquisition of assets.

9. The Fund may not sell securities short or purchase securities
on margin, except for such short-term credits as are necessary for the clearance
of transactions.

10. The Fund may not, except for temporary defensive purposes, make an
investment in other than municipal obligations if such investment would cause
more than 20% of the value of the Fund's total assets to be invested in
securities other than municipal obligations.

11. The Fund may not issue senior securities, or borrow money except
from banks as a temporary measure for extraordinary or emergency purposes in
amounts not exceeding 10% of the value of the Fund's total assets (excluding the
amount borrowed) at the time of such borrowing. The Fund may not pledge or
hypothecate any of its assets except in connection with permitted borrowing in
amounts not exceeding 15% of the value of its total assets (excluding the amount
borrowed) at the time of such borrowing.

12. The Fund may not buy or continue to hold securities if the
directors and officers of the Fund or the Adviser own too many of the same
securities. This would happen if any of these individuals own 1/2 of 1% or more
of the securities and the people who own that much or more own 5% of such
securities.

13. The Fund does not engage in the underwriting of securities;
however, if the Fund sells "restricted" securities it may technically be
considered an "underwriter."

NON-FUNDAMENTAL POLICIES. In addition to the foregoing
restrictions, the Fund may from time to time voluntarily undertake certain
non-fundamental policies which may be changed without shareholder approval.

MUNICIPAL OBLIGATIONS

3
<PAGE>

Occasionally, an issuing state or local governmental entity
may guarantee the payment of a revenue bond obligation, backing payment with its
taxing power. Normally, revenue bonds are paid solely from a particular revenue
source. The revenue source may be earnings from a public project such as tolls
from roads or bridges, airport revenues, earnings of publicly owned utilities or
special excises such as special improvement levies. The revenue source may also
be a private company which is utilizing a facility constructed through monies
obtained through a governmental agency or fund. There are two principal types of
revenue bonds for private facilities, industrial development bonds and pollution
control bonds. Occasionally, such bonds are also issued by governmental entities
to obtain funds for a privately operated general community facility such as a
hospital, convention hall or sports stadium.

Industrial development bonds are issued by a governmental
entity to obtain funds to finance a facility, typically an industrial plant or
factory, which is leased to or operated by a private (non-governmental) company.
State and local governments have the power in most states to permit the issuance
of industrial development bonds to provide financing aid to such companies in
order to encourage them to locate facilities within their communities. The Fund
may at times invest more than 25% of its assets in industrial development bonds.

Pollution control bonds are issued to provide funding for air
or water pollution control systems for privately operated industrial or
commercial facilities.

As described under "Investment Objectives and Policies" in the
Prospectus, the Fund may invest in municipal bonds and/or certificates of
participation that constitute investments in lease obligations or installment
purchase contract obligations (hereafter collectively called "lease
obligations") of municipal authorities or entities. As further described in the
Prospectus, certain of the lease obligations contain "non-appropriation"
clauses. The Fund will seek to minimize the special risks associated with such
securities by not investing more than 10% of its assets in lease obligations
that contain such clauses.

Municipal notes include tax, revenue and bond anticipation
obligations or general or revenue obligations of shorter maturities than
municipal bonds, generally five years or less, which are issued to obtain funds
for various public purposes.

There are, in addition, a variety of hybrid and special types
of municipal obligations as well as numerous differences in security, quality
and risk both within and among the classifications described above. Obligations
of a special governmental authority may, for instance, constitute a pledge of
the full credit and taxing power of the authority, and yet have somewhat less
security than a general state or city obligation in view of the limitations on
the authority's taxing power compared to the broader taxing power of a state or
a city.

Due to the increasing needs of state and local governments and
their widening view of public purpose, a variety of types of federal tax-exempt
financing obligations have been developed over the years and new types of
obligations may be expected in the future.

The ratings of Moody's Investors Services Inc. ("Moody's") and
Standard and Poor's Corporation ("S&P") represent their opinions as to the
quality of the municipal obligations which

<PAGE>

they undertake to rate. It should be emphasized, however, that ratings are
general and are not absolute standards of quality. Consequently, municipal bonds
with the same maturity, coupon and rating may have different yields while bonds
of the same maturity and coupon with different ratings may have the same yield.

From time to time, proposals have been introduced in Congress
for the purposes of restricting or eliminating the federal income tax exemption
for interest on municipal obligations. Similar proposals may be introduced in
the future. If such a proposal were to be enacted, the availability of municipal
obligations for investment by the Fund and the value of the Fund's portfolio
would be affected. In such event, the Fund would re-evaluate its investment
objective and policies in view of such developments.

TEMPORARY INVESTMENTS

At various times the Fund may hold cash or invest in
securities other than municipal obligations. Income from such securities may be
taxable as ordinary income. Such temporary investments may be made in any of the
following circumstances, provided that such an investment does not cause over
20% of the value of the Fund's total assets to be so invested: (1) when assets
are allocated for settlement of purchases; (2) when net cash inflow from sales
of the Fund's shares or sales of portfolio securities is of a size which does
not allow for prompt investment in attractively priced municipal obligations; or
(3) when highly liquid assets are needed to meet anticipated redemptions,
dividends or other cash needs.

In addition, during periods of adverse markets when it is
deemed advisable and practicable to take a temporary defensive position to
protect capital, the Fund may have more than 20% of its assets invested in
temporary investments and cash. While reserving this freedom to act for
defensive purposes, the Fund intends to limit its holdings of temporary taxable
investments and cash to meet the requirements for federal income tax exemption
on the dividends which the Fund pays from its municipal obligation or other
income exempt from federal income tax.

Although on occasion the Fund may purchase temporary
investments, it is the Fund's intention to be invested primarily in municipal
obligations. Temporary investments will be made only under the conditions
specified herein.

Temporary investments will be made exclusively in: (1) shares
of investment companies primarily investing in short-term instruments the income
of which is exempt from federal income tax (subject to certain limitations as to
the Fund's investments in other investment companies set forth under
"Fundamental Investment Restrictions"); (2) U.S. Government Securities; (3)
commercial paper rated within the highest grade by either Moody's or S&P
(Prime-1 or A-1, respectively); (4) other short-term debt securities issued or
guaranteed by corporations having outstanding debt rated within the two highest
grades by Moody's (Aaa or Aa) or S&P (AAA or AA); (5) certificates of deposit of
domestic commercial banks subject to regulation by the U.S. Government, or any
of its agencies or instrumentalities, with assets of $1 billion or more based on
the most recent published reports; or (6) repurchase agreements with domestic
banks or securities dealers involving any of the securities which the Fund is
permitted to hold. (Such agreements will involve the purchase of securities
subject

<PAGE>

to resale to the seller on a specified date within 7 days of purchase at a
specified price based on an agreed interest rate.) Rating requirements apply as
of the time of purchase.

PORTFOLIO TRANSACTIONS

Millenium Advisers, Inc. (the "Adviser") makes investment
decisions and arranges for the placement of portfolio transactions for the Fund,
subject to review by the Board of Directors and its Committee on Brokerage. In
this regard, the Adviser will seek to obtain the most favorable price and
execution for the transaction given the size and risk involved. In placing
executions and paying any brokerage commissions, the Adviser considers the
dealer's financial responsibility and reputation, range and quality of the
services made available to the Fund and the professional services rendered,
including execution, clearance procedures, wire service quotations and ability
to provide supplemental performance, statistical and other research information
for consideration, analysis and evaluation by the Adviser's staff. In accordance
with this policy, brokerage transactions, if any, are not executed solely on the
basis of the lowest commission rate available. Research services provided to the
Adviser by or through dealers who effect portfolio transactions for the Fund may
be used in servicing other accounts managed by the Adviser and, likewise,
services provided by dealers used for transactions of other accounts may be
utilized by the Adviser in performing services for the Fund. Subject to the
requirements of best execution, the placement of orders by securities firms for
shares of the Fund may be taken into account as a factor in the placement of
portfolio transactions.

The Adviser believes that research from dealers is desirable,
although not essential, in carrying out its functions, in that such outside
research supplements the efforts of the Adviser by corroborating data and
enabling the Adviser to consider the views, information and analyses of other
research staffs. Such views, information and analyses include such matters as
communicating with persons having special expertise on certain issuers,
industries, areas of the economy and/or securities prices, obtaining written
materials on these or other areas which might affect the economy and/or
securities prices, obtaining quotations on securities prices and obtaining
information on the activities of other institutional investors. The Adviser
researches, at its own expense, each security included in, or being considered
for inclusion in, the Fund's portfolio.

DIRECTORS AND OFFICERS

The names and addresses of the directors and officers of the
Fund are set forth below, together with their principal business affiliations
and occupations for the last five years. The asterisk following the names of
John C. Sabo and Susan P. Bowen indicates that they are each considered to be an
"interested person" of the Fund, as defined in the Investment Company Act.

JOHN C. SABO * (10/29/53), c/o Rickel Securities, Inc., 45 Essex Street,
Millburn, New Jersey 07041. Director, President and Chief Executive Officer of
the Fund; Chairman, Rickel Securities, Inc. (a registered broker-dealer) and
Millenium Advisers, Inc. (a registered investment adviser); formerly, President
(1995-1997) and Executive Vice President of Rickel & Associates, Inc. (a
registered broker-dealer).

<PAGE>

MARK BLAUSTEIN (5/5/33), c/o Rickel Securities, Inc., 45 Essex Street, Millburn,
New Jersey 07041. Director of the Fund. Retired; formerly, President (until
1993) of the Essex County Personnel and Guidance Association.

PAUL A. HARPER, JR. (12/22/41), c/o Rickel Securities, Inc., 45 Essex Street,
Millburn, New Jersey 07041. Director of the Fund. Principal, Deep South Capital,
L.L.C. (provider of investment advisory services to various commercial
institutional borrowers); Owner, Pinkert Insurance Agency, commercial insurance
brokerage.

SUSAN P. BOWEN* (12/31/62), c/o Rickel Securities, Inc., 45 Essex Street,
Millburn, New Jersey 07041. Treasurer, Chief Financial Officer and Secretary of
the Fund. Vice President and Senior Analyst, Rickel Securities, Inc. (a
registered broker-dealer); formerly, Vice President and Senior Analyst of Rickel
& Associates, Inc. (a registered broker-dealer).

The Company does not pay salaries to any of its officers. The Adviser performs
certain services on behalf of the Company and is reimbursed by the Company for
the costs of providing these services. See "Investment Advisory Services."

DIRECTORS' COMPENSATION SCHEDULE

The Fund anticipates paying its directors who are not
considered to be interested persons of the Fund compensation in an amount equal
to $5,000 per year.

INVESTMENT ADVISORY SERVICES

Millenium Advisers, Inc. (the "Adviser") serves as investment
adviser for the Fund pursuant to an Advisory Agreement adopted in accordance
with the requirements of the Investment Company Act of 1940. Pursuant to the
Advisory Agreement, the Adviser, subject to the general supervision of the
Fund's Board of Directors, manages the day to day investment operations of the
Fund, provides management advice, and furnishes statistical, executive and
clerical personnel, bookkeeping, office space, and equipment necessary to carry
out its management functions and such corporate managerial duties as are
requested by the Board of Directors of the Fund. The Fund bears all expenses
other than those specifically assumed by the Adviser under the Agreement,
including preparation of its tax returns, financial reports to regulatory
authorities, dividend determinations and transaction and accounting matters
related to its custodian bank, transfer agency, custodial and shareholder
services, and qualification of its shares under federal and state laws.

The Adviser is a wholly-owned subsidiary of the Distributor,
Rickel Securities, Inc. The Chairman, Chief Executive Officer and majority
stockholder of the Distributor is John C. Sabo, who also serves as the
President, Chief Executive Officer and director of each of the Adviser and the
Fund. The Distributor is a registered broker-dealer specializing in municipal
securities. It was formed in August, 1997 by certain former principals of Rickel
& Associates, Inc., another broker-dealer which specializes in municipal
securities.

<PAGE>

For the Adviser's services, the Fund pays the Adviser a
monthly fee at the annual rate as follows: 0.65% on average net assets up to
$250 million, 0.60% on the next $250 million of average net assets and 0.55% on
average net assets over $500 million.

The Advisory Agreement also makes provisions for portfolio
transactions and brokerage policies of the Fund which are discussed above under
"Portfolio Transactions."

In accordance with the provisions of the Investment Company
Act, the Advisory Agreement will terminate automatically upon assignment and is
subject to cancellation upon 60 days' written notice by the Fund's Board of
Directors, the vote of the holders of a majority of the Fund's outstanding
shares or the Adviser. The continuance of each Agreement must be approved at
least annually by the Fund's Board of Directors or by the vote of holders of a
majority of the outstanding shares of the Fund. In addition, any new agreement
or the continuation of the existing agreement must be approved by a majority of
directors who are not parties to the agreement or interested persons of any such
party.

The Advisory Agreement provides that the Adviser, in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties, will not be liable for any act or omission in the cause
of, or connected with rendering service under the Agreement or for any losses
that may be sustained in the purchase, holding or sale of any security.

The Adviser has adopted a Code of Ethics which regulates the
personal securities transactions of their investment personnel and other
employees and affiliates with access to information regarding securities
transactions of the Fund. Such Code of Ethics requires investment personnel to
disclose personal securities holdings upon commencement of employment and all
subsequent trading activity to the firm's Compliance Officer. Investment
personnel are prohibited from engaging in any securities transactions, including
the purchase of securities in a private offering, without the prior consent of
the Compliance Officer. Additionally, such personnel are prohibited from
purchasing securities in an initial public offering and are prohibited from
trading in any securities (i) for which the Fund has a pending buy or sell
order, (ii) which the Fund is considering buying or selling, or (iii) which the
Fund purchased or sold within seven calendar days.

CUSTODIAN

The Custodian of the Fund's assets is ___________, [ADDRESS].
The Custodian maintains all of the instruments representing the investments of
the Fund and all cash. The Custodian delivers securities against payment upon
sale and pays for securities against delivery upon purchase. The Custodian also
remits Fund assets in payment of Fund expenses, pursuant to instructions of
officers or resolutions of the Board of Directors.

AUDITORS

The Fund's auditors are __________________. The audit will
include examination of annual financial statements furnished to shareholders and
filed with the Securities and Exchange Commission, consultation on financial
accounting and reporting matters, and meeting with the Audit

<PAGE>

Committee of the Board of Directors. In addition, the auditors will review
federal and state income tax returns and related forms.

DETERMINING THE PRICE OF SHARES

The Fund will not price its shares or accept orders for
purchases or redemptions on days when the New York Stock Exchange is closed.
Such days currently include New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

REDUCTION OF CLASS A SALES CHARGES

There are a number of ways to reduce the sales charge imposed
on the purchase of the Fund's Class A shares, as described below. These
reductions are based upon the fact that there is less sales effort and expense
involved in respect to purchases by affiliated persons and purchases made in
large quantities.

FAMILY OR GROUP PURCHASES. Certain purchases made by or for
more than one person may be considered to constitute a single purchase,
including (i) purchases for family members, including spouses and children under
21 and (ii) purchases made by an organized group of persons, whether
incorporated or not, if the group has a purpose other than buying shares of
mutual funds. For further information on group purchase reductions, contact the
Distributor or your dealer.

STATEMENTS OF INTENTION. Another way to reduce the sales
charge is by signing a Statement of Intention. A Statement is included in the
Application Form included in the Prospectus. Please read it carefully before
completing it.

If you enter into a Statement of Intention you (or any "single
purchaser") may state that you intend to invest at least $100,000 in the Fund's
Class A shares over a 13-month period. The amount you say you intend to invest
may include Class A shares which you already own, valued at the offering price,
at the end of the period covered by the Statement. A Statement may be backdated
up to 90 days to include purchases made during that period, but the total period
covered by the Statement may not exceed 13 months.

Shares having a value of 5% of the amount you state you intend
to invest will be held "in escrow" to make sure that any additional sales
charges are paid.

No additional sales charge will be payable if you invest the
amount you have indicated. Each purchase under a Statement will be made as if
you were buying at one time the total amount indicated. For example, if you
indicate that you intend to invest $100,000, you will pay a sales charge of
3-1/2% on each purchase.

If you buy additional amounts during the period to qualify for
an even lower sales charge, you will be charged such lower charge. For example,
if you indicate that you intend to invest $100,000 and actually invest $250,000,
you will, by retroactive adjustment, pay a sales charge of 2-1/2%.

<PAGE>

If during the 13-month period you invest less than the amount
you have indicated, you will pay an additional sales charge. For example, if you
state that you intend to invest $250,000 and actually invest only $100,000, you
will, by retroactive adjustment, pay a sales charge of 3-1/2%. The sales charge
you actually pay will be the same as if you had purchased the shares in a single
purchase.

A Statement does not bind you to buy, nor does it bind the
Distributor to sell, the shares covered by the Statement.

RIGHTS OF ACCUMULATION. Another way to reduce the sales charge
is under a right of accumulation. This means that the larger purchase entitled
to a lower sales charge need not be in dollars invested at one time. The larger
purchases that you (or any "single purchaser") make at any one time can be
determined by adding to the amount of a current purchase the value of Fund
shares (at offering price) already owned by you.

For example, if you owned $100,000 worth (at offering price)
of the Fund's Class A shares and invest $5,000 in additional shares, the sales
charge on that $5,000 investment would be 3-1/2%, not 4-3/4%.

If you claim this right of accumulation, you or your dealer
must so notify the Distributor (or [ADMINISTRATOR], if the investment is mailed
to [ADMINISTRATOR]) when the purchase is made. Enough information must be given
to verify that you are entitled to such right.

ISSUANCE OF SHARES AT NET ASSET VALUE. There are many
situations where the sales charge will not apply to the purchase of Class A
shares, as discussed in the Prospectus. In addition, the Fund occasionally may
be provided with an opportunity to purchase substantially all the assets of a
public or private investment company or to merge another such company into the
Fund. This offers the Fund the opportunity to obtain significant assets. No
dealer concession is involved. It is industry practice to effect such
transactions at net asset value as it would adversely affect the Fund's ability
to do such transactions if the Fund had to impose a sales charge.

DISTRIBUTION OF FUND SHARES

Rickel Securities, Inc. ("the Distributor") acts as principal
underwriter of the Fund's shares on a continuing basis pursuant to a
Distributing Agreement. Pursuant to such Distributing Agreement, the Distributor
pays for all expenses in connection with the preparation, printing and
distribution of advertising and sales literature for use in offering the Fund's
shares to the public, including reports to shareholders to the extent they are
used as sales literature. The Distributor also pays for prospectuses in excess
of those which the Fund must file with the Securities and Exchange Commission
and other regulatory authorities or those forwarded to existing shareholders.
The continuation and assignment provisions of the Distributing Agreement are the
same as those of the Advisory Agreement.

<PAGE>

In addition, the Fund has adopted distribution plans with
respect to each class of its shares pursuant to Rule 12b-1 under the Investment
Company Act (the "Distribution Plans"). Payments under the Class A Distribution
Plan are limited to an annual rate of 0.25% of the average daily net asset value
of the Class A shares. Payments under the Class B and Class C Distribution Plan
are limited to an annual rate of 1.00% of the average daily net asset value of
such shares.

To the extent that any investment advisory fees paid by the
Company may be deemed to be indirectly financing any activity which is primarily
intended to result in the sale of shares of the Company within the meaning of
Rule 12b-1, the payments of such fees are authorized under the Plans.

The Distribution Plans continue annually so long as they are
approved in the manner provided by Rule 12b-1 or unless earlier terminated by
vote of the majority of the Fund's Independent Directors or a majority of the
outstanding shares. The Adviser is required to furnish quarterly written reports
to the Board of Directors detailing the amounts expended under the Distribution
Plans. The Distribution Plans may be amended provided that all such amendments
comply with the applicable requirements then in effect under Rule 12b-1.
Presently, Rule 12b-1 requires, among other procedures, that it be continued
only if a majority of the Independent Directors approve continuation at least
annually and that amendments materially increasing the amount to be spent for
distribution be approved by the Independent Directors and the shareholders. As
long as the Distribution Plans are in effect, the Fund must commit the selection
and nomination of candidates for new Independent Directors to the sole
discretion of the existing Independent Directors.

PERFORMANCE DATA

YIELD. Yield is computed in accordance with a standardized
method prescribed by the rules of the Securities and Exchange Commission and is
calculated separately for each class. Yield is a measure of the net investment
income per share (as defined) earned over a specified 30-day period expressed as
a percentage of the maximum offering price of the Fund's shares at the end of
the period. The Fund's yield figures will be determined by dividing the net
investment income per share earned during the a specified 30-day period by the
maximum offering price per share on the last day of the period, according to the
following formula:

Yield = 2 [(a - b + 1) 6 -1]
----------------------------
cd
a = dividends and interest earned during the period.

b = expenses accrued for the period.

c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.

d = the maximum offering price per share on the last day
of the period.

<PAGE>

TAX EQUIVALENT YIELD. Tax equivalent yield is the yield that a
taxable investment must generate in order to equal the Fund's yield for an
investor in a stated federal income tax bracket. The Fund's tax equivalent yield
will be computed separately for each class in accordance with the standardized
method prescribed by the Securities and Exchange Commission, by dividing that
portion of such Fund's yield (computed as described above) that is tax exempt by
one minus the stated federal income tax rate, and adding the resulting number to
that portion, if any, of the Fund's yield that is not tax exempt.

TOTAL RETURN. Total return measures both the net investment
income generated by, and the effect of any realized or unrealized appreciation
or depreciation of, the underlying investments in the Fund's portfolio. The
Fund's total return figures will be computed separately for each class in
accordance with the standardized method prescribed by the Securities and
Exchange Commission by determining the average annual compounded rates of return
over the periods indicated in the advertisement that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:

P(1+T)n = ERV

Where: P = hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
period of a hypothetical $1,000 payment made
at the beginning of such period

This calculation (i) assumes all dividends and distributions are reinvested at
net asset value on the appropriate reinvestment dates as described in the
Prospectus, and (ii) deducts (a) the maximum front-end or applicable contingent
deferred sales charge from the hypothetical initial $1,000 investment for the
one year calculation, and (b) all recurring fees, such as advisory fees, charged
as expenses to all shareholder accounts.

NON-STANDARD DISTRIBUTION RATES

DISTRIBUTION RATES. Distribution rates are computed by
dividing the income dividends for a stated period by the maximum offering price
on the last day of such period.

ANNUALIZED CURRENT DISTRIBUTION RATES. Annualized current
distribution rates are computed by multiplying income dividends for a specified
month by twelve and dividing the resulting figure by the maximum offering price
on the last day of the specified period.

TAX EQUIVALENT DISTRIBUTION RATE. Tax equivalent distribution
rate is computed by dividing that portion of the annualized current distribution
rate (computed as described above) which is tax-exempt by one minus the stated
federal income tax rate (at present, the maximum federal income tax rate of
39.6%), and adding the resulting figure to that portion, if any, of the
annualized current distribution rate which is not tax-exempt.

<PAGE>

FORM N-1A

MILLENIUM TAX-FREE INCOME FUND, INC.

PART C

OTHER INFORMATION

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

Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements: Not Applicable.

(b) Exhibits:

(1) Articles of Incorporation.

(2) Bylaws.

(3) Not applicable.

(4) Not applicable.

(5) Advisory Agreement.

(6) Distributor's Agreement.

(7) Not applicable.

(8) Custodian Agreement and Transfer, Dividend
Disbursing and Plan Agent Agreement.*

(9) Not applicable.

(10) Opinion and Consent of Counsel (McCarter & English).

(11) Not applicable.

(12) Not applicable.

(13) Subscription Agreement between Rickel Securities,
Inc. as initial shareholder and the Fund.

(14) Not applicable.

13
<PAGE>

(15)(a)Distribution Plan for Class A shares.

(15)(b)Distribution Plan for Class B shares.

(15)(c) Distribution Plan for Class C Shares.

(16) Not Applicable.

(17) Powers of Attorney.

(18) Plan pursuant to Rule 18f-3.

* To be filed by Amendment.

Item 25. Persons Controlled by or Under Common Control With Registrant
-------------------------------------------------------------
John C. Sabo is the majority stockholder of Rickel Securities,
Inc., a New Jersey corporation, owning 75% of the issued and outstanding shares
of capital stock of that corporation.

Rickel Securities, Inc. owns 100% of the issued and
outstanding shares of capital stock of the following corporations:

- Millenium Advisers, Inc., a New Jersey corporation.
- American Corporate Receipts, Inc., a New Jersey corporation.
- Millenium Tax-Free Income Fund, Inc., a Maryland corporation*.

* Rickel Securities, Inc. has provided the $100,000 initial capital of the Fund
required by the Investment Company Act of 1940. See Exhibit 13.

Item 26. Number of Holders of Securities.
--------------------------------
Not applicable.

Item 27. Indemnification.
----------------

The indemnification provisions of the Maryland General
Corporation Law (the "Law") permit, among other things, corporations to
indemnify directors and officers unless it is proved that the individual (1)
acted in bad faith or with active and deliberate dishonesty, (2) actually
received an improper personal benefit in money, property or services, or (3) in
the case of a criminal proceeding, had reasonable cause to believe that his act
or omission was unlawful. The Law also permits corporations to indemnify
directors and officers for amounts paid in settlement of stockholders'
derivative suits.

Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers & controlling
person of the registrant, the registrant has been advised that, in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act

<PAGE>

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

Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The Investment Adviser of the Registrant, Millenium Advisers,
Inc., also may be engaged as an investment adviser for accounts other than
mutual funds, although this is not presently business of a substantial nature.

John C. Sabo is the President and Chief Executive Officer of
Millenium Advisers, Inc. He also serves as the President and Chief Executive
Officer of the Fund and as Chairman and Chief Executive Officer of the
Distributor, Rickel Securities, Inc.

Susan P. Bowen is the Chief Financial Officer, Vice President
and Senior Analyst of Millenium Advisers, Inc. She also serves as the Vice
President and Senior Analyst of the Distributor, Rickel Securities, Inc.

Item 29. Principal Underwriters
----------------------
(a) Rickel Securities, Inc., located at 45 Essex Street,
Millburn, New Jersey 07041, the principal underwriter for the Registrant, does
not currently act as principal underwriter for any other investment company.

(b) Management of the Principal Underwriter.

<PAGE>

- --------------------------------------- -------------------------------------- --------------------------------------
(1) (2) (3)
Name and Principal Business
Address* Positions and Offices with Positions and Offices with
Underwriter Registrant
- --------------------------------------- -------------------------------------- --------------------------------------
John C. Sabo Chairman and Chief Executive Chief Executive Officer
Officer and President
- --------------------------------------- -------------------------------------- --------------------------------------
Susan P. Bowen Vice President and Senior Analyst Chief Financial Officer, Treasurer
and Secretary
- --------------------------------------- -------------------------------------- --------------------------------------
Arnold I. Cohen President None
- --------------------------------------- -------------------------------------- --------------------------------------
Steven Nadler Executive Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
David Netkin Executive Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Michael Belsky Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Paul Petrello Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Coleman Carven Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
James Friar Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Maxwell Smith Senior Vice President None
- --------------------------------------- -------------------------------------- --------------------------------------
Anthony Branca Compliance Officer None
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
* Unless otherwise noted, the principal business address of each person is c/o
Rickel Securities, Inc., 45 Essex Street, Millburn, New Jersey 07041.

Item 30. Location of Accounts and Records
--------------------------------
Pending the selection of an Administrator of the Fund,
accounts and records are presently maintained at the offices of Rickel
Securities, Inc., 45 Essex Street, Millburn, New Jersey 07041.

Item 31. Management Services
-------------------
Not applicable

Item 32. Undertakings
------------
Registrant hereby undertakes to file a post-effective
amendment within four to six months of the effective date of this Registration
Statement containing financial statements of the Registrant as of and for a time
period reasonably close or as soon as practicable to the date of such amendment.

<PAGE>

MILLENIUM TAX-FREE INCOME FUND, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Millburn and State of New Jersey on the 12th day
of January, 1998.

MILLENIUM TAX-FREE INCOME FUND, INC.

By: /s/ John C. Sabo
----------------
John C. Sabo
President and
Chief Executive Officer

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

Signature Title Date
--------- ----- ----
Chief Executive Officer, January 12, 1998
/s/ John C. Sabo President & Interested
- ---------------------- Director
John C. Sabo

Principal Financial January 12, 1998
/s/ Susan P. Bowen and Accounting Officer
- -----------------------
Susan P. Bowen

/s/ Mark Blaustein Independent Director January 12, 1998
- -----------------------
Mark Blaustein

/s/ Paul A. Harper, Jr. Independent Director January 12, 1998
- -----------------------
Paul A. Harper, Jr.

EXHIBIT 1

ARTICLES OF INCORPORATION
OF
MILLENIUM TAX-FREE INCOME FUND, INC.

FIRST: Incorporators. The undersigned, David F. Broderick, having a
post office address at c/o McCarter & English LLP, Four Gateway Center, 100
Mulberry Street, Newark, New Jersey 07102, being 18 years old or older, makes
these Articles of Incorporation for the purpose of forming a corporation under
the general laws of the State of Maryland.

SECOND: Name. The name of the corporation (hereinafter called the
"Corporation") is Millenium Tax-Free Income Fund, Inc.

THIRD: Purpose. The purpose for which the Corporation is formed is to
engage in, conduct, operate and carry on the business of an open-end management
investment company under the Investment Company Act of 1940 (including any
amendment thereof or other applicable Act of Congress hereafter enacted)
(hereinafter called the "1940 Act"), and to do any and all acts or things as are
necessary, convenient, appropriate, incidental or customary in connection
therewith.

FOURTH: Principal Office and Resident Agent. The address, including
street and number, if any, and the county or municipal area, of the principal
office of the Corporation within the State of Maryland, is c/o CSC-Lawyers
Incorporating Service Company, 11 East Chase Street, Baltimore City, Maryland
21202. The name and address, including street and number, if any, and the county
or municipal area, of the resident agent of the Corporation within the State of
Maryland, are CSC-Lawyers Incorporating Service Company, 11 East Chase Street,
Baltimore City, Maryland 21202.

FIFTH: Capitalization. (a) The total number of shares of capital stock
which the Corporation shall have authority to issue is 1,000,000,000 shares of
capital stock of the par value of $.01, having an aggregate par value of
$10,000,000. Without limiting the power of the Board of Directors as set forth
in paragraph (b) of this Article FIFTH, 350,000,000 shares are classified as
Class A Common Stock, 350,000,000 shares are classified as Class B Common Stock
and 100,000,000 shares are classified as Class C Common Stock.

The Class A Common Stock, Class B Common Stock and Class C Common Stock
shall represent investment in the same pool of assets and shall have the same
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption except as set forth in the Articles of Incorporation of the
Corporation and as set forth below:

(i) Expenses related to the distribution of each class of
stock and such other expenses as may be permitted by rule or order of
the Securities and Exchange Commission and as the Board of Directors
shall deem appropriate shall be borne solely by each class, and the
bearing of such expenses shall be appropriately reflected (in the

<PAGE>

manner determined by the Board of Directors) in the net asset value,
dividends, distribution and liquidation rights of the shares of such
Class;

(ii) The Class A Common Stock may be subject to a front-end
load and a Rule 12b-1 service and distribution fee as determined by the
Board of Directors from time to time prior to issuance of such stock;

(iii) The Class B Common Stock may be subject to a contingent
deferred sales charge and a Rule 12b-1 service and distribution fee as
determined by the Board of Directors from time to time prior to
issuance of such stock and shall be converted to Class A Common Stock
at the end of five (5) years after the end of the calendar month of
issuance;

(iv) The Class C Common Stock may be subject to a contingent
deferred sales charge and a Rule 12b-1 service and distribution fee as
determined by the Board of Directors from time to time prior to
issuance of such stock;

(v) Each class shall vote separately on matters pertaining
only to that class, as the Board of Directors shall from time to time
determine.

(vi) Nothing herein shall prohibit the imposition of a
redemption fee or exchange fee upon any class.

(b) For purposes of establishing classes or subclasses of stock with
different investment objectives, types of investments or distribution methods,
costs or charges, the Board of Directors may classify or reclassify any unissued
stock from time to time by setting or changing the preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of the stock. Without
limiting the generality of the foregoing, the Board of Directors may, from time
to time, (I) classify or reclassify any unissued shares of stock into classes
having "assets belonging to" such class, as described in Paragraph (c)(i) of
this Article, (ii) divide any class having "assets belonging to" such class into
subclasses with different distribution methods, costs or charges and classify or
reclassify any unissued shares of such subclass, and (iii) name and change the
name of any class or subclass of outstanding or unissued stock.

(c) Subject to the authority granted to the Board of Directors of the
Corporation in subparagraph (b) of this Article FIFTH, each class of stock of
the Corporation now outstanding and each class of stock hereafter designated by
the Directors as a class which shall have assets belonging to such class shall
have the following described powers, preferences and rights and the
qualifications, limitations and restrictions thereof shall be as follows:

(i) All consideration received by the Corporation for the
issue or sale of shares of a particular class, together with all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any assets
derived from any reinvestment of such proceeds, in whatever form the
same may be, are herein referred to as "assets belonging to" such
class.

<PAGE>

(ii) The assets belonging to a particular class of stock shall
be charged with the liabilities (including, in the discretion of the
Board of Directors or its delegate, accrued expenses and reserves)
incurred in respect of such class, and such class shall also be charged
with its shares of any general liabilities of the Corporation not
incurred in respect of any particular class, such general liabilities
to be allocated in proportion to the net asset value of the respective
classes. The allocation of such liabilities to any subclass shall be
determined by the Board of Directors or its delegate. The determination
of the Board of Directors or its delegate shall be final and conclusive
as to the amount of assets and liabilities, including accrued expenses
and reserves, which are to be allocated to one or more particular
classes or subclasses. The power to make such determinations may be
delegated by the Board of Directors from time to time to one or more of
the directors and officers of the Corporation, or to an agent of the
Corporation appointed for such purpose.

(iii) In the event of the liquidation or dissolution of the
Corporation (for whatever reason) shareholders of each class shall be
entitled to receive as a class, out of the assets of the Corporation
available for distribution to shareholders the assets belonging to such
class; and the assets so distributable to the shareholders of any class
shall be distributed among such shareholders in proportion to the
relative aggregate net asset values of the shares held by such
shareholders. In the event that there are any general assets available
for distribution not belonging to any particular class, any
distribution thereof shall be made to the holders of all such classes
in proportion to the net asset value of the respective classes.

(iv) The voting rights of the shares of each class shall be as
set forth in subparagraph (d) of this Article FIFTH.

(v) The relative rights of the shares of each class to be
redeemed or repurchased shall be as set forth in Article SEVENTH.

(vi) The relative rights of the shares of each class to
receive dividends shall be as set forth in Article NINTH.

(d) Subject to the requirements of the Investment Company Act of 1940,
at any meeting of the shareholders, each shareholder shall have one vote for
each dollar of net asset value per share for each share held irrespective of the
class or subclass thereof. On any matter submitted to a vote of shareholders,
all shares of the Corporation then issued and outstanding and entitled to vote
shall be voted in the aggregate and not by class or subclass except to the
extent class or subclass voting is required as to any matter by the laws of the
State of Maryland, the Investment Company Act of 1940 or any Regulation
thereunder or by the Board of Directors.

(e) Fractional shares shall carry proportionately all the rights
of a whole share.

SIXTH: Preemptive Rights. No holder of any of the stock of the
Corporation shall as such holder have any preemptive or other right to purchase
or subscribe for any stock which the Corporation may issue or sell, whether or
not exchangeable for any other stock of the

<PAGE>

Corporation, and whether out of the number of shares authorized by the Articles
of Incorporation as originally filed or by any amendment thereof or out of
shares of the stock of the Corporation acquired by it after the issue thereof,
other than such, if any, as the Board of Directors in its discretion may from
time to time determine to offer, or authorize to be offered, for subscription
to stockholders of the Corporation, and then only at such price or prices and
upon such terms as the Board of Directors from time to time, in its discretion,
may determine.

SEVENTH: Redemption. (a) Each holder of the stock of the Corporation
shall be entitled at any time to require the Corporation, to the extent that the
Corporation shall have any surplus available for such purpose and out of such
surplus, to purchase all or any part of the shares of the stock standing in the
name of such holder on the books of the Corporation at the net asset value of
such shares; provided, however, that the Corporation may suspend such right of
redemption or postpone payment for such shares pursuant to the 1940 Act or any
rule, regulation or order thereunder. The procedures and requirements for
redemption shall be determined by the Corporation or its duly authorized agent.

(b) Any redemptions or purchases of shares by the Corporation of any
class of the Corporation's stock shall be made solely from assets belonging to
such class.

(c) The Corporation, without the vote or consent of the stockholders of
the Corporation, may redeem all shares of stock in any stockholder's account in
which the value of such shares is less than $250, or such other minimum amount
as the Board of Directors may from time to time establish, in its discretion;
provided, that any such redemption is at a price determined in accordance with
the Corporation's then current prospectus.

EIGHTH: Number, Names and Addresses of Directors. The number of initial
directors of the Corporation shall be three. However, the By-Laws of the
Corporation may from time to time fix the number of directors at a number other
than three and may authorize the Board of Directors, by vote of a majority of
the entire Board of Directors, to increase or decrease the number of directors
fixed by these Articles or by the By-Laws. The By-Laws of the Corporation may
divide the directors of the Corporation into classes and prescribe the tenure of
office of the several classes, but no class shall be elected for a period
shorter than that from the time of the election following the division into
classes until the next annual meeting and thereafter for a period shorter than
the interval between annual meetings or for a period longer than five years, and
the term of office of at least one class shall expire each year. The names and
addresses of the initial directors of the Corporation are as follows:

Name Address
---- -------
John C. Sabo c/o Rickel Securities, Inc.
45 Essex Street
Millburn, New Jersey 07041

Paul A. Harper, Jr. c/o Rickel Securities, Inc.
45 Essex Street
Millburn, New Jersey 07041

<PAGE>

Mark Blaustein c/o Rickel Securities, Inc.
45 Essex Street
Millburn, New Jersey 07041

NINTH: Board of Directors. The following powers are expressly and
exclusively vested in the Board of Directors of the Corporation and may be
exercised without the approval of the stockholders of the Corporation.

(a) To make, alter, amend and repeal the By-Laws of the
Corporation.

(b) To declare and provide for the distribution of dividends and to
determine the amount, source, method and time thereof, except that distributions
from assets belonging to a particular class of stock shall be distributed only
to the holders of shares of such class.

(d) To authorize the purchase by the Corporation, either directly or
through an agent, of shares of its stock, in the open market or otherwise, at
prices not in excess of the net asset value of such shares.

TENTH: Net Asset Value, Other Determinations. The net asset value of
shares of capital stock of the Corporation shall be determined by or pursuant to
the direction of the Board of Directors of the Corporation. Any determination
made in good faith by or on behalf of the Board of Directors or pursuant to its
delegation or direction, as to the amount of the assets, debts, obligations or
liabilities of the Corporation, as to the net asset value, bid price or asked
price of the shares of the Corporation, as to the value of any asset or assets
of the Corporation, or as to any other matter relating to the issue, sale,
redemption, purchase, acquisition or disposition of the shares of the
Corporation, shall be final and conclusive and shall be binding upon the
Corporation and all holders of shares issued by it, and the shares of the
Corporation shall be issued and sold on the condition and understanding that any
and all such determinations shall be binding as aforesaid.

ELEVENTH: Indemnification. Subject to the provisions of the Investment
Company Act of 1940, as amended, the Corporation shall indemnify and advance
expenses to a director or officer of the Corporation in connection with any
proceeding to the fullest extent permitted by and in accordance with Section
2-418 of the Maryland General Corporation Law, as amended from time to time (the
"Indemnification Section"). Subject to the provisions of the Investment Company
Act of 1940, as amended, with respect to an employee or agent, other than a
director or officer of the Corporation, the Corporation may, as determined by
and in the discretion of the Board of Directors of the Corporation, indemnify
and advance expenses to such employee or agent in connection with a proceeding
to the extent permitted by and in accordance with the Indemnification Section.
As used in this Article Eleventh, any word or words that are defined in the
Indemnification Section shall have the same meaning as provided in the
Indemnification Section. The indemnification and advancement of expenses
provided or authorized by these

<PAGE>

Articles shall not be deemed exclusive of any other rights to which a director,
officer, employee or agent of the Corporation may be entitled.

TWELFTH. Exculpation. Subject to the provisions of the Investment
Company Act of 1940, as amended, no director or officer of the Corporation shall
be liable to the Corporation or its stockholders for money damages, except (i)
to the extent that it is proved that such director or officer actually received
an improper benefit or profit in money, property or services, for the amount of
the benefit or profit in money, property or services actually received, or (ii)
to the extent that a judgment or other final adjudication adverse to such
director or officer is entered in a proceeding based on a finding in the
proceeding that such director's or officer's action, or failure to act, was the
result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding.

THIRTEENTH: Majority Vote. Notwithstanding any provision of the General
Corporation Law of the State of Maryland requiring that any action be taken or
authorized by the affirmative vote of the holders of a designated proportion
greater than a majority of votes entitled to be cast, such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of votes entitled to vote thereon.
When shares are voted by individual class or subclass, any such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of votes entitled to vote thereon.

FOURTEENTH: Amendments. The Corporation reserves the right from time
to time to amend, alter, change, add to, or repeal any provision contained in
these Articles of Incorporation in the manner now or hereafter prescribed or
permitted by statute, including any amendment which alters the contract rights,
as expressly set forth in these Articles of Incorporation, of any outstanding
stock, and all rights conferred on stockholders and others herein are granted
subject to this reservation.

FIFTEENTH: Titles. The titles contained in these Articles of
Incorporation are for convenience only and shall not affect the interpretation
of any of the provisions thereof.

IN WITNESS WHEREOF, the undersigned has signed these Articles of
Incorporation this 7th day of January, 1998.

/s/ David F. Broderick
----------------------
David F. Broderick

EXHIBIT 2

BYLAWS
OF
MILLENIUM TAX-FREE INCOME FUND, INC.

ARTICLE I

STOCKHOLDERS

SECTION 1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or at
such other place within or without the State of Maryland as may from time to
time be designated by the Board of Directors and stated in the notice of
meeting.

SECTION 2. Annual Meetings. An annual meeting of stockholders shall be
held in December, 1997. Thereafter annual meetings shall not be required to be
held in any year in which the election of Directors is not required to be acted
upon under the Investment Company Act of 1940. If required by such Act, an
annual meeting shall be held in accordance with the Investment Company Act of
1940 in the event that less than a majority of the Directors then in office were
elected by the vote of stockholders. Any annual meeting may be called (i) by the
Board of Directors, or (ii) if required by the Investment Company Act of 1940,
by the Chief Executive Officer solely for the purposes of electing Directors and
considering the ratification of the independent public accountant selected by
the Board of Directors to audit the financial statements of the Corporation.
Annual meetings called by the Chief Executive Officer may consider other
business which is proposed by the Chief Executive Officer and properly brought
before such meetings; provided, however, that specific matters other than
election of Directors and ratification of selection of accountants may be placed
on the agenda of the meeting solely with the approval of a majority of the
entire Board of Directors.

SECTION 3. Special Meetings. Special meeting of stockholders may be
called by the Chief Executive Officer or the Board of Directors, and shall be
called upon the written request of stockholders holding at least ten percent
(10%) of the outstanding shares of stock. A request by stockholders for a
meeting shall state the purpose of the meeting and the matters proposed to be
acted upon. Unless requested by stockholders entitled to cast a majority of all
the votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
on at any special meeting of the stockholders held during the preceding 12
months. Whenever ten or more stockholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate shares constituting at least one percent (1%) of the outstanding
shares of stock, shall apply to the Directors in writing, stating that they wish
to communicate with other stockholders with a view to obtaining signatures to a
request for a meeting to consider removal of a director and accompanied by a
form of the communication and request that they wish to transmit, the Directors
shall, within five business days after receipt of such application, inform such
applicants as to the approximate cost of mailing to the stockholders of record
the proposed communication and form of request. Upon the written request of such
applicants, accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, as

<PAGE>

determined by the Directors, the Directors shall, with reasonable promptness,
mail such material to all stockholders of record at their addresses as recorded
on the books of the Corporation. Notwithstanding the foregoing, the Directors
may refuse to mail such material on the basis and in accordance with the
procedures for refusing to mail such material set forth in the last two
paragraphs of Section 16 (c) of the Investment Company Act of 1940, or any
substitute or replacement provision therefor.

SECTION 4. NOTICE OF MEETINGS OF STOCKHOLDERS. Not less than ten days'
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of the
business proposed to be transacted at any special or extraordinary meeting),
shall be given to each stockholder entitled to vote thereat and each other
stockholder entitled to notice of the meeting by leaving the same with him or at
his residence or usual place of business or by mailing it, postage prepaid, and
addressed to him or at his address as it appears upon the books of the
Corporation.

No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with records of the meeting,
either before or after the holding thereof, waives such notice.

SECTION 5. CLOSING OF TRANSFER BOOKS AND RECORD DATES. The Board of
Directors may fix the time, not exceeding twenty days preceding the date of any
meeting of stockholders, any vote at a meeting, any dividend payment date or any
date for the allotment of rights, during which the books of the Corporation
shall be closed against transfers of stock. If such books are closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of providing for the closing of the
books against transfers of stock as aforesaid, the Board of Directors may fix,
in advance, a date, not exceeding sixty days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding sixty days
preceding any dividend payment date or any date for the allotment of rights, as
a record date for the determination of the stockholders entitled to notice of or
to vote at such meeting, or entitled to receive such dividends or rights, as the
case may be; and only stockholders of record on such date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights, as
the case may be.

SECTION 6. QUORUM, ADJOURNMENT OF MEETINGS. The presence in person or
by proxy of the holders of record of a majority of the votes entitled to be cast
shall constitute a quorum at all meetings of the stockholders. If at any meeting
of the stockholders there shall be less than a quorum present, the stockholders
present at such meeting may, without further notice, adjourn the same from time
to time until a quorum shall attend, but no business shall be transacted at any
such adjourned meeting except such as might have been lawfully transacted had
the meeting not been adjourned.

SECTION 7. VOTING AND INSPECTORS. At all meetings of stockholders every
stockholder of record entitled to vote shall be entitled to one vote for each
dollar of net asset value per share standing in the stockholder's name on the
books of the Corporation (and such stockholders of record holding fractional
shares, if any, shall have proportionate voting rights). All elections shall be
had and all questions decided by a majority of the votes cast at a duly
constituted meeting, except as otherwise provided in the

<PAGE>

Articles of Incorporation or in these Bylaws or by specific statutory provision
superseding the restrictions and limitations contained in the Articles of
Incorporation or in these Bylaws.

At any election of Directors, the Board of Directors prior thereto may,
or if they have not so acted, the Chairman of the meeting may, and upon the
request of the holders of ten percent (10%) of the votes entitled to be cast at
such election shall, appoint at least one inspector of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of inspector
at such election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result of the
vote taken. No candidate for the office of Director shall be appointed such
Inspector.

The Chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten percent (10%) of the votes entitled to be cast on such election
or such matter.

SECTION 8. CONDUCT OF STOCKHOLDERS' MEETINGS. The meetings of the
stockholders shall be presided over by the President or, if he shall not be
present, by a Vice President or, if neither the President nor any Vice President
is present, by a chairman to be elected at the meeting. The Secretary of the
Corporation, if present, shall act as Secretary of such meeting or, if he is not
present, an Assistant Secretary shall so act; if neither the Secretary nor an
Assistant Secretary is present, then the meeting shall elect its Secretary.

SECTION 9. CONCERNING VALIDITY OF PROXIES, BALLOTS, ETC. At every
meeting of the stockholders, all proxies shall be received and taken in charge
of and all ballots shall be received and canvassed by the secretary of the
meeting, who shall decide all questions touching the qualification of voters,
the validity of the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in Section 7, in
which event such inspectors of election shall decide all such questions.

SECTION 10. CONSENTS. Whenever stockholders are required or permitted
to take any action by vote, such action may be taken without a meeting if the
following are filed with the records of stockholders meetings: (a) an unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter, and (b) a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at it.

ARTICLE II

BOARD OF DIRECTORS

SECTION 1. NUMBER, VACANCIES AND TENURE. The Directors may, at any time
when the stockholders are not assembled in meeting, establish, increase or
decrease the number of seats on the Board of Directors by majority vote of the
entire Board of Directors; provided, that the number of Directors shall never be
less than three (3) nor more than fifteen (15). The number of Directors may not
be decreased so as to affect the term of any incumbent Director. Except as
hereinafter provided, (i) if the number of Directors is increased, the
additional Directors to fill the vacancies thus created may be

<PAGE>

elected by majority vote of the entire Board of Directors, and (ii) any vacancy
occurring for any other cause may be filled by a majority of the remaining
Directors, even if such majority is less than a quorum. No vacancy may be filled
for any cause whatsoever unless, immediately after the filling of such vacancy,
at least two-thirds of the entire Board of Directors shall have been elected by
the stockholders of the Corporation. A Director shall hold office until the next
annual meeting of stockholders and until his successor is elected and qualified,
or until such Director's earlier death, resignation, retirement or removal;
provided, however, that if a Director was not elected to office by a vote of
stockholders, the term of such Director shall, in any event, end as of the date
of the next annual meeting of stockholders which is required to be held pursuant
to Article I, Section 1 of these Bylaws following such Director's election to
office. Such a Director may be a candidate for election to office at such annual
meeting and, if elected at such meeting, shall serve for the indefinite term
specified above.

SECTION 2. MANDATORY RETIREMENT OF DIRECTORS. A Director shall retire
from the Board of Directors and cease being a Director at the close of business
on the last day of the calendar year in which the Director attains age
seventy-two (72).

SECTION 3. REMOVAL. At any meeting of stockholders, duly called and at
which a quorum is present, the stockholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.

SECTION 4. PLACE OF MEETING. The Directors may hold their meetings,
have one or more offices, and keep the books of the Corporation outside the
State of Maryland, at any office or offices of the Corporation or at any other
place as they may from time to time by resolution determine, or in the case of
meetings, as they may from time to time by resolution determine or as shall be
specified or fixed in the respective notices or waivers of notice thereof.

SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such time and on such notice, if any, as the
Directors may from time to time determine.

The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
Directors. If an annual meeting of the stockholders is not held, then the annual
meeting of the Board of Directors shall be held as soon as may be practicable
after the close of the fiscal year of the Corporation, or at any other time as
the Chairman shall determine.

SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held from time to time upon call of the President or two or more of the
Directors, by oral or telegraphic or written notice duly served on or sent or
mailed to each Director not less than one day before such meeting. No notice
need be given to any Director who attends in person or to any Director who, in
writing executed and filed with the records of the meeting either before or
after the holding thereof, waives such notice. Such notice or waiver of notice
need not state the purpose or purposes of such meeting.

4
<PAGE>

SECTION 7. QUORUM. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been obtained.
The act of the majority of the Directors present at any meeting at which there
is a quorum shall be the act of the Directors, except as may be otherwise
specifically provided by statute, by the Articles of Incorporation or by these
Bylaws.

SECTION 8. EXECUTIVE COMMITTEE. The Board of Directors may, by the
affirmative vote of a majority of the entire Board, elect from the Directors an
Executive Committee to consist of such number of Directors, but not less than
two, as the Board may from time to time determine. The Board of Directors by
such affirmative vote shall have power at any time to change the members of such
Committee and may fill vacancies in the Committee by election from the
Directors. When the Board of Directors is not in session, the Executive
Committee shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation
(including the power to authorize the seal of the Corporation to be affixed to
all papers which may require it) except as provided by law and except the power
to increase or decrease the size of, or fill vacancies on, the Board, to remove
or appoint executive officers or to dissolve or change the permanent membership
of the Executive Committee, and the power to make or amend the Bylaws of the
Corporation. The Executive Committee may fix its own rules of procedure, and may
meet, when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. In the absence of any member of the Executive Committee,
the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint a member of the Board of Directors to act in the place of
such absent member.

SECTION 9. OTHER COMMITTEES. The Board of Directors, by the affirmative
vote of a majority of the entire Board, may appoint other committees which shall
in each case consist of such number of members, but not less than two, and shall
have and may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee may determine
its action, and fix the time and place of its meetings, unless the Board of
Directors shall otherwise provide. The Board of Directors shall have power at
any time to change the members and powers of any such committee, to fill
vacancies, and to discharge any such committee.

SECTION 10. INFORMAL ACTION BY DIRECTORS AND COMMITTEES. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such committee, as the
case may be, and if such consent is filed with the minutes of proceedings of the
Board, or of such committee, as the case may be.

SECTION 11. COMPENSATION OF DIRECTORS. No Director shall receive any
stated salary or fees from the Corporation for his services as such Director if
such Director is, otherwise than by reason of being such Director, affiliated
(as such term is defined by the Investment Company Act of 1940) with the
Corporation or with any investment adviser or principal underwriter of the
Corporation. Except as provided in the preceding sentence, Directors

<PAGE>

shall be entitled to receive such compensation from the Corporation for their
services as may from time to time be voted by the Board of Directors.

ARTICLE III

OFFICERS

SECTION 1. EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be chosen by the Board of Directors as soon as may be
practicable after the annual meeting of the stockholders. If an annual meeting
is not required to be held, such officers shall be chosen by the Board of
Directors as soon as may be practicable after the close of the fiscal year of
the Corporation, or at any other time as the Chairman shall determine. These
shall include a President, one or more Vice Presidents (the number thereof to be
determined by the Board of Directors), a Secretary and a Treasurer. The Board of
Directors or the Executive Committee may also in its discretion appoint a
Chairman of the Board of Directors, Assistant Secretaries, Assistant Treasurers,
and other officers, agents and employees, who shall have such authority and
perform such duties as the Board or the Executive Committee may determine. The
Board of Directors may fill any vacancy which may occur in any office. Two or
more offices, except those of President and Vice President, may be held by the
same person, but no officer shall execute, acknowledge or verify any instrument
in more than one capacity, if such instrument is required by law or these Bylaws
to be executed, acknowledged or verified by two or more officers.

SECTION 2. TERM OF OFFICE. The term of office of all officers shall be
one year and until their respective successors are chosen and qualify, subject,
however, to the provision for removal contained in the Articles of
Incorporation. Any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Directors, if the
Board of Directors in its judgment finds that the best interests of the
Corporation are served thereby.

SECTION 3. POWERS AND DUTIES. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices, as
well as such powers and duties as may from time to time be conferred by the
Board of Directors or the Executive Committee.

ARTICLE IV

CAPITAL STOCK

SECTION 1. CERTIFICATE OF SHARES. No certificates will be issued to
evidence ownership of any Class of shares.

SECTION 2. TRANSFER OF SHARES. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney or legal representative, upon presentation of
proper instruments of assignment and transfer, with such proof of the
authenticity of signatures as the Corporation or its agents may reasonably
require.

SECTION 3. STOCK LEDGERS. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of shares
held by them respectively, shall be kept at the principal offices of

<PAGE>

the Corporation or, if the Corporation employs a transfer agent, at the offices
of the Transfer Agent of the Corporation.

ARTICLE V

CORPORATE SEAL

The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.

ARTICLE VI

FISCAL YEAR

The fiscal year of the Corporation shall be fixed by the Board of
Directors.

ARTICLE VII

INDEMNIFICATION

Each director and officer (and his heirs, executors and administrators)
shall be indemnified by the Corporation to the extent set forth in the Articles
of Incorporation.

ARTICLE VIII

AMENDMENT OF BYLAWS

The Bylaws of the Corporation may be altered, amended, added to or
repealed by the stockholders or by majority vote of the entire Board of
Directors; but any such alteration, amendment, addition or repeal of the Bylaws
by action of the Board of Directors may be altered or repealed by the
stockholders.

EXHIBIT 5

MILLENIUM TAX-FREE INCOME FUND, INC.
ADVISORY AGREEMENT

JANUARY 12, 1998

Millenium Advisors, Inc.
c/o Rickel Securities, Inc.
45 Essex Street
Millburn, New Jersey 07041

Dear Sirs:

We herewith confirm our agreement with you as follows:

1. We desire to employ the capital of Millenium Tax-Free Income Fund, Inc. (the
"Company") by investing and reinvesting the same in securities of the type and
in accordance with the limitations specified in the registration statement under
the Securities Act of 1933 and the Investment Company Act of 1940, of which we
enclose a copy, and in such manner and to such extent as may from time to time
be approved by our Board of Directors. We desire to employ you to supervise and
assist in the management of this business for us. You shall for all purposes
herein be deemed an independent contractor, and shall, unless otherwise
expressly provided for or authorized, have no authority to act or represent us.

2. In this connection it is understood that you will from time to time employ or
associate with yourselves such person or persons as you may believe to be
particularly fitted to assist you in the execution of this Agreement, it being
understood that the compensation of such person or persons shall be paid by you
and that no obligation may be incurred on our behalf in any such respect. This
does not apply to such individuals as we may in due course elect as officers of
our corporation, except that no officer, director, stockholder or employee of
your firm shall receive compensation from us for acting as director, officer or
employee of our corporation, and you agree to pay the compensation of all such
persons. We understand that, during the continuance of this agreement, officers
of your firm will, if elected, serve as directors of our corporation and as its
principal officers.

3. You are to have complete and exclusive authority to develop and handle for us
any business of the type above mentioned which you may consider advantageous for
us, subject to the direction and control of our officers and directors. You will
furnish us with such statistical information with respect to the securities
which we may hold or contemplate purchasing as we may request. We wish to be
kept in touch with important developments affecting our Company and shall expect
you on your own initiative to furnish us from time to time with such information
as you may believe appropriate for this purpose, whether concerning the
individual companies whose securities are included in our portfolio or the
industries in which they are engaged. We shall also expect you of your own
motion to advise us whenever in your opinion conditions are such as to make it
desirable that a specific security be eliminated from our portfolio.

4. We shall expect of you your best judgment in rendering these services to us,
and we agree as an inducement to your undertaking the same that you shall

<PAGE>

not be liable hereunder for any mistake of judgment or in any other event
whatsoever, except for lack of good faith, provided that nothing herein shall be
deemed to protect or purport to protect you against any liability to us or to
our security holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of your
duties hereunder, or by reason of your reckless disregard of your obligations
and duties hereunder.

5. Except as otherwise provided below in this paragraph, you will attend to, or
arrange for the performance, at your expense, of such clerical and accounting
work related to the investment and reinvestment of our capital for us as we may
specify. We shall, however, bear all costs and expenses of or attendant upon:
(i) preparation of our federal, state and local tax returns; (ii) preparation of
certain documents we must file with the Securities and Exchange Commission;
(iii) determination of the status and payment of dividends; (iv) reconciling and
reviewing output of our custodian bank, determining the adequacy of various
accruals, approving our expenses, authorizing our bank to receive and disburse
money and securities and verifications related thereto, and interfacing with our
auditors; (v) verification of our security ledger and preparation and
maintenance of other corporate books and records; (vi) brokerage fees and
commissions; (vii) stockholders' and Directors' meetings; (viii) corporate
reports and proxy materials, including their preparation, printing and
distribution; (ix) fees of disinterested Directors; (x) taxes and interest
expenses; (xi) reports to government authorities including all expenses and
costs relating to such reports and to state securities law compliance; (xii)
custodian and transfer agent fees; (xiii) association membership dues; (xiv)
premiums on all insurance and bonds maintained for us or on our behalf; (xv)
retention of the transfer agent and registrar for our shares and the disbursing
agent for our stock-holders, including costs and expenses attendant upon
repurchase and redemption of our shares; (xvi) our counsel; and (xvii) our
independent auditors. We may arrange for you to provide some or all of the
services relating to items (i) to (xvii) above, and any other services not
directly relating to investment and reinvestment of our capital, upon such terms
and conditions as we may agree and subject to the approval and review of our
Board of Directors.

6. In consideration of such services, we shall pay you a monthly fee as of the
last day of each month in each year based upon the average daily value of net
assets during a month for which the monthly fee is calculated, as follows:

VALUE OF AVERAGE DAILY
NET ASSETS OF THE FUND
MONTHLY RATE DURING THE MONTH
- ------------ ----------------------
1/12 of .650% of ............................ First $250 Million
1/12 of .600% of ............................ Next $250 Million
1/12 of .550% of ............................ In Excess of $500 Million

provided, however, that such fee for any period which shall not be a full
monthly period shall be prorated according to the proportion which such period
bears to the full month. For this purpose, the value of our net assets shall be
computed in the same manner as the value of such net assets are computed in
connection with the determination of the net asset value of our shares.

2
<PAGE>

7. (a) You are authorized to place purchase and sale orders for our portfolio
transactions with brokers and/or dealers which, in your best judgment are able
to achieve "best execution" of such orders. "Best execution" shall mean prompt
and reliable execution at the most favorable security price obtainable, taking
into account research and other services available and the reasonableness of
commission charges. Purchases and sales of securities not listed or traded on a
securities exchange shall ordinarily be executed with primary market makers,
acting as principal, except where, in your judgment, better prices and execution
may otherwise be obtained.

(b) You are authorized to allocate brokerage and principal business to
members of securities exchanges, brokers and dealers (such members, brokers and
dealers being hereinafter referred to as "brokers") who have provided brokerage
and research services, as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934 (the "1934 Act") for us and/or other accounts,
if any, for which you exercise investment discretion (as defined in Section
3(a)(35) of the 1934 Act) and to cause us to pay a commission for effecting a
securities transaction in excess of the amount another broker would have charged
for effecting that transaction if you determine in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker, viewed in terms of either that
particular transaction or your overall responsibilities with respect to us and
the other accounts, if any, as to which you exercise investment discretion.

In reaching such determination, you will not be required to place or attempt to
place a specific dollar value on the research or execution services of a broker
or on the portion of any commission reflecting either of said services. In
demonstrating that such determinations were made in good faith, you shall be
prepared to show that all commissions were allocated and paid in accordance with
this agreement, that commissions were not allocated or paid for products or
services which were readily and customarily available and offered to the public
on a commercial basis, and that the commissions were within a reasonable range
shall be based on any available information as to the level of commissions known
to be charged by qualified brokers on com-parable transactions, but taking into
account (i) the provisions of this agreement relating to obtaining the most
favorable securities price, since it is recognized by our Board of Directors and
shareholders that it usually is more beneficial to us to obtain a favorable
price than to pay the lowest commission; and (ii) that research from brokers is
useful to you in performing your advisory activities under this Agreement.

(c) Portfolio transactions may be allocated to any broker or dealer
taking into account the sale by such broker or dealer of our shares. Any such
allocation shall be made in accordance with the provisions of this agreement
relating to obtaining "best execution".

(d) In selecting brokers for our portfolio transactions, you shall make
use of a list of a number of brokers which you and we believe, based on past and
current experience, are qualified to execute our portfolio transactions. The
brokers on the list will ordinarily be used for our portfolio transactions, but
other brokers may be used in accordance with the principles of this agreement.
The brokers on the list may be changed from time to time and will include
members of the major and regional securities exchanges and certain non-member
brokers.

<PAGE>

8. You may act as investment adviser for any other person, firm or corporation.
We recognize that you have given us the right to use the name "Millenium" in our
corporate title. If for any reason you no longer act as our investment adviser,
we shall remove the name "Millenium" from our corporate title upon demand made
by you.

9. All of our expenses shall be paid by us except for those you specifically
agree to assume under this Agreement. If the total expense payable by us for any
fiscal year (inclusive of all fees payable under this agreement but exclusive of
interest, taxes, brokerage fees and payments under any Rule 12b-1 distribution
plan) shall exceed the most restrictive applicable expense limitation prescribed
by any statute or regulatory authority of any jurisdiction in which our shares
are qualified for offer and sale, you will pay or refund to us the amount by
which such expenses exceed the amount so computed.

10. This Agreement shall become effective for an initial period of not more than
two years from its effective date, and shall continue in full force and effect
continuously thereafter, if its continuance is approved at least annually as
required by the Investment Company Act of 1940. The effective date of this
Agreement shall be the later of (i) January 12, 1998, or (ii) the date this
Agreement has been approved as required by the Investment Company Act of 1940.
As of such effective date, this Agreement shall supersede all prior investment
advisory agreements between the parties. This Agreement may be terminated at any
time, without the payment of any penalty, by our Board of Directors or by vote
of a majority of our outstanding voting securities (as defined in the 1940 Act)
on 60 days' written notice to you, or by you on 60 days' written notice to us,
and it shall be automatically terminated in the event of its assignment (as
defined in said Act).

11. As of the date of this Agreement, the Company has only one series of shares
("Fund"). In the event that the Company shall create additional Funds, this
Agreement shall apply to and be effective as to each such Fund, provided that
the Agreement is approved as required by the Investment Company Act of 1940. The
effective date of the Agreement as to each such Fund shall be the date that it
is so approved or any later date as shall be agreed to by the parties.

If the foregoing is in accordance with your understanding, will you so kindly
indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

MILLENIUM TAX-FREE INCOME FUND, INC.

By: /s/ John C. Sabo
----------------
John C. Sabo
President

Accepted as of the day and year first above written.

MILLENIUM ADVISORS, INC.

By: /s/ Susan P. Bowen
------------------
Susan P. Bowen
Chief Financial Officer

EXHIBIT 6

MILLENIUM TAX-FREE INCOME FUND, INC.

DISTRIBUTOR'S AGREEMENT

AGREEMENT dated as of January 12, 1998 between MILLENIUM TAX-FREE INCOME FUND,
INC., a Maryland corporation, hereinafter called the "Company", and RICKEL
SECURITIES, INC., a New Jersey corporation, hereinafter called the
"Distributor".

W I T N E S S E T H:

1. APPOINTMENT OF FUND DISTRIBUTOR. The Company hereby appoints the
Distributor as the exclusive distributor to sell as principal and not as agent
shares of capital stock of the Company during the term of this Agreement.

2. SALES OF CAPITAL STOCK. The Company agrees to sell and deliver to
the Distributor, upon the terms set forth herein, such fully-paid and
non-assessable shares of capital stock of the Company ("Shares") then
effectively registered for continuous offering under the Securities Act of 1933
(the "Act") as Distributor shall order from the Company, but only to the extent
that the Distributor shall have received purchase orders therefor. All orders
from the Distributor shall be subject to confirmation by the Company, and the
Company authorizes the Distributor to reject any purchase order.

The Distributor as principal may sell and distribute any Shares so
purchased, through dealers or otherwise, in such manner not inconsistent with
law and all applicable rules and regulations, including those of any applicable
self-regulatory organizations, and the provisions of this Agreement, as the
Distributor may from time to time determine. The Distributor agrees to use its
best efforts to effect sales of Shares, but does not undertake to sell any
specific number of Shares thereof.

The Distributor may in its discretion sell the Shares to such
registered and qualified retail dealers as it may select. In making agreements
with its dealers or others for sale of the Shares, the Distributor shall act
only as principal and in no sense as agent for the Company.

3. SALES BY DISTRIBUTOR - OFFERING PRICE. All Shares, whether purchased
from the Company or otherwise, shall be offered for sale and sold by the
Distributor at a price per share (hereinafter called the "Offering Price") in
accordance with the provisions of the current prospectus applicable to such
offer and sale. Any sales charge and any reduction or elimination thereof shall
be determined by the Distributor in a manner not inconsistent with law and all
applicable rules and regulations and the provisions of this Agreement, and the
Company agrees to amend its current prospectus to the extent necessary from time
to time to reflect any such determination. The Company will cause such net asset
value to be determined with such frequency and as of such times and will cause
the Offering Price to be effective for such periods as are set forth in the
current prospectus of the Company. The Company will cause such determinations to
be furnished to the Distributor as often as they are made and shall make
available to the Distributor upon request the computations underlying any such
determination.

<PAGE>

Anything to the contrary herein notwithstanding, the Company may
suspend the Offering Price currently in effect and may decline to accept or
confirm any orders for, or to make any sales of, any Shares to the Distributor
under this Agreement until such time as it shall deem it advisable to accept and
confirm such orders and to make such sales. During any period during which the
Offering Price currently in effect shall be suspended or during which the
Company shall decline to accept or confirm any such orders or make any such
sales, the Company shall be under no obligation to confirm or accept any such
orders or make any such sales at any price.

4. PAYMENT. At or prior to the time of delivery by the Company to, or

on the order of the Distributor of any Shares, the Distributor will pay or cause
to be paid to the Company or to its order an amount equal to the Offering Price
of such shares at which such order had been confirmed, less the sales charge, if
any, included thereon as aforesaid. The Distributor agrees to cause to be
remitted to the Company for the benefit of the Company or to its order all such
funds promptly after receipt thereof.

5. COMPENSATION OF DISTRIBUTOR. Any sales charges and any compensation
to be paid the Distributor out of any Distribution Plan described in 6(e) below
shall constitute the entire compensation of the Distributor. Out of such sales
charge the Distributor may allow concessions to dealers as the Distributor shall
from time to time determine.

6. ALLOCATION OF EXPENSES. The Company shall pay all expenses
connected with (i) the organization of the Company or any Fund thereof and (ii)
the offering of Shares, including without limitation all expenses of:

(a) Registering Shares for offer or sale under the federal
securities laws, except for prospectus printing costs as set forth
below; and

(b) Reports required by and under the federal securities laws;
and

(c) Issuance of Shares, including cost of stock certificates,
issue taxes (if any) and fees of legal counsel and of the transfer
agent; and

(d) Registering or qualifying Shares for offer or sale under
the securities laws of any state or other jurisdiction in which the
Distributor may arrange for the sale of the Shares; and

(e) Any Distribution Plan adopted in accordance with Rule
12b-1 under the Investment Company Act of 1940 (the "1940 Act")
providing for any payments by the Company or any Fund thereof.

The Distributor will pay, or promptly reimburse the Company for, all
expenses in connection with:

(a) Preparing, printing and distributing advertising and sales
literature for use in offering the Shares to the public, including the
cost of printing copies of the prospectus and the additional cost of
printing reports to stockholders other than copies thereof required for

<PAGE>

distribution to stockholders or for filing with any securities
authorities; and

(b) The registration or qualification of the Distributor as a
dealer or broker under state or federal laws.

Transfer taxes, if any, which may be payable in connection with the
issue and delivery of certificates in a name or names other than the name of the
Distributor will not be borne by the Company and the Distributor agrees to
indemnify and hold the Company harmless against any such transfer taxes. Any
other taxes in connection with the sale of Shares pursuant to this Agreement
will be borne by the Company.

7. COMPANY TO FURNISH INFORMATION. The Company shall furnish the
Distributor for use in connection with the sale of the Shares such information
with respect to the Company and the Shares as the Distributor may reasonably
request, including copies of documents filed with or furnished to any federal or
state securities authorities or sent to its stockholders.

8. REPRESENTATIONS AND AGREEMENTS WITH RESPECT TO REGISTRATION
STATEMENT AND PROSPECTUS.

(a) As used in this Agreement, the term "registration
statement" shall include any registration statement with respect to the
Shares which is effective under the Act including any amendment
thereto, and the term "prospectus" shall include any prospectus and
statement of additional information filed as part of such registration
statement.

(b) The Company represents that the registration statement and
prospectus will conform in all material respects to the Act and the
rules and regulations thereunder and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided that this representation will not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by the
Distributor expressly for use in the registration statement or
prospectus.

(i) of any request of the Securities and Exchange
Commission for amendments to the registration statement or
prospectus or for additional information;

(ii) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending the
effectiveness of the registration statement or prospectus or
the initiation of any proceedings for that purpose;

(iii) of the happening of any event which makes
untrue any statement, or which requires the making of any
change, in the registration statement or prospectus in order
to make the statements therein not misleading; and

(iv) of all actions of the Securities and Exchange
Commission with respect to any amendments to the registration

<PAGE>

statement or prospectus which may from time to time be filed
with the Securities and Exchange Commission under the Act.

9. INDEMNIFICATION. The Company agrees to indemnify, defend and hold
the Distributor, its officers and directors and any person who controls the
Distributor within the meaning of Section 15 of the Act, free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Distributor, its
officers, directors or any such controlling person may incur under the Act, or
under common law or otherwise, arising out of or based upon any untrue statement
of a material fact contained in the registration statement or prospectus
relating to the Company or arising out of or based upon any alleged omission to
state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished in writing by the
Distributor to the Company for use in the registration statement or prospectus
relating to the Company; provided, however, that this indemnity agreement, to
the extent that it might require indemnity for liability arising under the Act
of any person who is also an officer or director of the Company or who controls
the Company within the meaning of Section 15 of the Act, shall not inure to the
benefit of such officer, director or controlling person unless a court of
competent jurisdiction shall determine, or it shall have been determined by
controlling precedent, that such result would not be against public policy as
expressed in the Act; and further provided, that in no event shall anything
contained herein be so construed as to protect the Distributor against any
liability to the Company or to its security holders to which the Distributor
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of its duties, or by reason of its reckless
disregard of its obligations under this Agreement. The Company's agreement to
indemnify the Distributor, its officers and directors and any such controlling
person as aforesaid is expressly conditioned upon the Company being promptly
notified of any action brought against the Distributor, its officers or
directors, or any such controlling person, such notification to be given by
letter or telegram addressed to the Company at its principal business office.
The Company agrees to promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or directors in
connection with the issue and sale of any Shares.

The Distributor agrees to indemnify, defend and hold the Company, its
officers and directors and any person who controls the Company, if any, within
the meaning of Section 15 of the Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Company, its directors or
officers or any such controlling person may incur under the Act or under common
law or otherwise, but only to the extent that such liability or expense incurred
by the Company, its directors or officers or such controlling person resulting
from such claims or demands shall arise out of or be based upon any alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor to the Company for use in the Company's registration
statement or prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information or shall
arise out of or be based on any false or

<PAGE>

misleading or allegedly false or misleading sales literature relating to the
Company and prepared by the Distributor. The Distributor's agreement to
indemnify the Company, its directors and officers, and any such controlling
person as aforesaid is expressly conditioned upon the Distributor being promptly
notified of any action brought against the Company, its officers or directors
or any such controlling person, such notification being given to the Distributor
at its principal business office.

10. COMPLIANCE WITH SECURITIES LAWS. The Company represents that it is
registered as an open-end diversified management investment company under the
Investment Company Act of 1940, and agrees that it will comply with all of the
provisions of such Act and of the rules and regulations thereunder. The Company
and the Distributor each agree to comply with all of the applicable terms and
provisions of the Investment Company Act of 1940, the Securities Act of 1933
and, subject to the following provisions of this paragraph 11, all applicable
state securities ("Blue Sky") laws. The Distributor agrees to comply with all of
the applicable terms and provisions of the Securities Exchange Act of 1934. The
Company will cooperate with the Distributor (to the extent of supplying all
necessary documents, exhibits and information), and will execute and permit to
be filed with the proper public bodies, such applications (including amendments
and renewals thereof), instruments, papers and exhibits as may be appropriate to
enable the Shares to be offered for sale under the laws of such states as the
Distributor shall reasonably determine, and will cooperate with the Distributor
in the presentation of said applications (including amendments and renewals
thereof), to the end that Shares may be qualified in such states under the
respective Blue Sky laws thereof; provided that the Company shall not be
required to amend its Articles of Incorporation or Bylaws to comply with the
laws of any state, to maintain an office in any state, to change the terms of
the offering of Shares in any state from the terms set forth in its registration
statement and prospectus, to qualify as a foreign corporation in any state or to
consent to service of process in any state other than with respect to claims
arising out of Shares. The Distributor will furnish to the Company any
information known to the Distributor which is necessary or desirable in the
preparation of the Company's registration statement and prospectus and any
amendments or supplements thereto.

11. EFFECT ON DISTRIBUTION PLAN OR DISTRIBUTION PLAN AND AGREEMENT. Any
Distribution Plan or Distribution Plan and Agreement in effect on the effective
date of this Agreement which has been adopted in accordance with Rule 12b-1
under the 1940 Act shall remain in effect and any reference therein to a
Distributing Agreement or other underwriting agreement between the parties as of
any date prior thereto shall be deemed to be a reference to this Agreement.

12. EFFECTIVE PERIOD; TERMINATION. This Agreement shall become
effective for an initial period of not more than two years from the date of its
execution, and shall continue in full force and effect continuously thereafter
provided that such continuance is approved at least annually as required by the
1940 Act. This Agreement shall automatically terminate in the event of its
assignment (as defined by the 1940 Act). In addition, this Agreement may be
terminated at any time, without penalty, by either party on not more than sixty
days' nor less than thirty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party.

5
<PAGE>

IN WITNESS WHEREOF, Millenium Tax-Free Income Fund, Inc. and Rickel
Securities, Inc. have caused this instrument to be signed in several
counterparts, each of which shall be an original and which together shall
constitute one and the same Agreement, by an officer or officers thereunto duly
authorized, as of the day and year first above written.

MILLENIUM TAX-FREE INCOME FUND, INC.

By: /s/ Susan P. Bowen
-------------------
Susan P. Bowen
Chief Financial Officer

RICKEL SECURITIES, INC.

By: /s/ John C. Sabo
----------------
John C. Sabo
Chairman and CEO

EXHIBIT 10
OPINION OF COUNSEL

MCCARTER & ENGLISH, LLP
ATTORNEYS AT LAW
FOUR GATEWAY CENTER
IOO MULBERRY STREET
P.O. BOX 652
NEWARK, NJ O71O1-O652
(973) 622-4444
TELECOPIER (973) 624-7O7O

CHERRY HILL, NJ BOCA RATON, FL

NEW YORK, NY WILMINGTON, DE

PHILADELPHIA, PA

January 12, 1998

Re: Millenium Tax-Free Income Fund, Inc.
Registration Statement on Form N-1A

Millenium Tax-Free Income Fund, Inc.
c/o Rickel Securities, Inc.
45 Essex Street
Millburn, New Jersey 07041

Dear Sirs:

We have acted as special counsel for Millenium Tax-Free Income
Fund, Inc., a Maryland corporation (the "Fund") in connection with the
preparation of the Registration Statement of the Fund on Form N-1A (the
"Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act") relating to the
registration of common stock fully described in the Registration Statement
(collectively, the "Securities"). The Securities are to be sold as set forth in
the Registration Statement, and any amendments thereto, and the prospectus and
any prospectus supplement relating to the Securities.

In so acting, we have examined, and relied as to matters of
fact upon, the originals, or copies certified or otherwise identified to our
satisfaction, of the Articles of Incorporation and Bylaws of the Fund and such
other certificates (including certificates of officers of the Fund), records,
instruments and documents, and have made such other and further investigations
as we have deemed necessary or appropriate to enable us to express the opinion
set forth below. In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.

<PAGE>

Based on the foregoing, we are of the opinion that when the
issuance of the Securities has been duly authorized by appropriate corporate
action and the Securities have been sold in the manner described in the
Registration Statement, any amendment thereto and the prospectus relating the
Securities, the Securities will be legally issued and fully paid and the holders
of the Securities will be entitled to the benefits thereof.

We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name wherever appearing in
the Registration Statement. In giving the foregoing consent, we do not admit
that we are in the category of persons whose consent is required under Section 7
of the Act or the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.

Very truly yours,

/s/ McCarter & English, LLP
-----------------------
McCarter & English, LLP

EXHIBIT 13

SUBSCRIPTION AGREEMENT

TO PURCHASE SHARES OF COMMON STOCK

MILLENIUM TAX-FREE INCOME FUND, INC.
C/O RICKEL SECURITIES, INC.
45 ESSEX STREET
MILLBURN, NEW JERSEY 07041
(973) 379-0300

1. Upon the terms and conditions contained in this Subscription Agreement,
the undersigned hereby subscribes for and agrees to purchase the number of
shares indicated below of Class A Common Stock, $.01 par value per share (the
"Common Stock"), of Millenium Tax-Free Income Fund, Inc., a Maryland corporation
(the "Fund"). The undersigned has executed and delivered this Subscription
Agreement in connection with the registration of common stock described in the
Fund's Registration Statement on Form N-1A dated __________, 1998.

2. The undersigned agrees to purchase the shares of Common Stock subscribed
for herein at the subscription price (the "Subscription Price") of $100,000, and
prior to obtaining an order of the SEC accelerating the effective date of the
Registration Statement, will deliver a check, bank draft or money order payable
to "Millenium Tax-Free Income Fund, Inc." in an amount equal to the total
Subscription Price of all shares subscribed for herein.

3. The undersigned is an "Accredited Investor" as defined under Regulation
D promulgated under the Securities Act of 1933, as amended, and is acquiring its
interest in the Fund (not as nominee or agent) for investment and not with view
to, or for sale in connection with, any distribution thereof (in whole or in
part). The undersigned has no present intention of distributing, transferring,
reselling or redeeming any portion of its interest in the Fund.

<PAGE>

THE FOLLOWING IS TO BE COMPLETED BY THE UNDERSIGNED:

( 100,000 ) Number of Shares
-------------
$100,000 Total Subscription Price Due
- ---------------

RICKEL SECURITIES, INC.
45 Essex Street
Millburn, New Jersey 07041

By: /s/ John C. Sabo
----------------
John C. Sabo
Chairman and Chief Executive Officer

EXHIBIT 15(a)

MILLENIUM TAX-FREE INCOME FUND, INC.
RULE 12B-1 DISTRIBUTION PLAN
FOR CLASS A SHARES

1. PURPOSE. The Company shall finance the distribution of its Class A shares
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act")
according to the terms of this Distribution Plan (the "Plan").

2. FEES. Amounts, not exceeding in the aggregate a maximum annual amount equal
to the lesser of (a) .25% of the average daily net asset value of the Class A
shares or (b) the maximum amount provided by an applicable rule or regulation of
the National Association of Securities Dealers, Inc., during each fiscal quarter
of the Company elapsed after inception of the Plan may be paid by the Company to
the Distributor out of the assets attributable to such shares at any time after
the effective date of the Plan in order: (i) to pay the Distributor commissions
in respect of shares of the Company previously sold at any time after the
inception of the Plan, all or any part of which may be or may have been
reallowed or otherwise paid to others by the Distributor in respect of or in
furtherance of sales of shares of the Company after the inception of the Plan;
and (ii) to enable the Distributor to pay or to have paid to others who sell the
Company's shares a maintenance or service fee, at such intervals as the
distributor may determine, in respect of the Company's shares previously sold by
any such others at any time after the inception of the Plan and remaining
outstanding during the period in respect of which such fee is or has been paid.

To the extent that any investment advisory fees paid by the Company may be
deemed to be indirectly financing any activity which is primarily intended to
result in the sale of shares of the Company within the meaning of Rule 12b-1,
the payments of such fees are authorized under this Plan.

3. REQUIRED APPROVALS AND TERM. Subject to paragraph 8, the Plan shall not take
effect until it has been approved, together with any related agreements, by
votes of the majority of both (i) the Board of Directors of the Company and (ii)
those directors of the Company who are not "Interested Persons" of the Company
as defined in the Act and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to it (the "Independent
Directors"), cast in person at a meeting called for the purpose of voting on the
Plan or such agreements. Unless sooner terminated pursuant to the terms hereof,
the Plan shall continue in effect for a period of one year from its effective
date, and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for by Rule 12b-1
under the Act.

4. PERIODIC REPORTS. Any person authorized to direct the disposition of monies
paid or payable by the Company pursuant to the Plan or any related agreement
shall provide to

<PAGE>

the Company's Board of Directors, and the Board of Directors shall review at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.

5. TERMINATION. Subject to paragraph 8, the Plan may be terminated at any time
by a vote of a Majority of the Independent Directors, or by a Majority vote of
the outstanding Class A shares.

6. RELATED AGREEMENTS. Any agreement related to the Plan shall be in writing,
and shall provide:

(i) That such agreement may be terminated at any time, without payment of
penalty, by a vote of a Majority of the Independent Directors or by a
Majority vote of the Class A shares on not more than 60 days written notice
to any other party to the agreement; and

(ii) That such agreement shall terminate automatically in the event of
its assignment.

7. AMENDMENTS. The Plan may not be amended to increase materially the amount of
distribution expenses provided for in paragraph 2 unless such amendment is
approved in the manner provided for in paragraph 3, and no material amendment to
the Plan shall be made unless approved by the Board of Directors and the
Independent Directors.

8. SPECIAL PROCEDURES FOR SERIES COMPANY. If the Company is or becomes a series
company (as defined in Rule 18f-2 under the Act), then the Plan shall not take
effect as to the Class A shares of any series and no amendment may be effected
to increase materially the amount of distribution expenses as to the Class A
shares of any series until it has been approved by the Board of Directors, the
Independent Directors and the Class A shareholders of such series in the manner
provided in paragraph 3; and no material amendment to the Plan in respect of
such shares shall be made unless approved as to such shares by the Board of
Directors and Independent Directors. The Plan may be terminated as to any series
at any time by a Majority vote of the Independent Directors and by a Majority
vote of the Class A shareholders of the series.

EXHIBIT 15 (b)

MILLENIUM TAX-FREE INCOME FUND, INC.
RULE 12B-1 DISTRIBUTION PLAN
FOR CLASS B SHARES

1. PURPOSE. The Company shall finance the distribution of its Class B
shares pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Act") according to the terms of this Distribution Plan (the "Plan").

2. FEES. Amounts, not exceeding in the aggregate a maximum annual amount equal
to the lesser of (a) 1% of the average daily net asset value of the Class B
shares or (b) the maximum amount provided by an applicable rule or regulation of
the National Association of Securities Dealers, Inc., during each fiscal quarter
of the Company elapsed after the inception of the Plan may be paid by the
Company to the Distributor out of assets attributable to such shares at any time
after the effective date of the Plan in order: (i) to pay the Distributor
commissions in respect of shares of the Company previously sold at any time
after the inception of the Plan, all or any part of which may be or may have
been reallowed or otherwise paid to others by the Distributor in respect of or
in furtherance of sales of shares of the Company after the inception of the
Plan; and (ii) to enable the Distributor to pay or to have paid to others who
sell the Company's shares a maintenance or service fee, at such intervals as the
Distributor may determine, in respect of the Company's shares previously sold by
any such others at any time after the inception of the Plan and remaining
outstanding during the period in respect of which such fee is or has been paid.

To the extent that any investment advisory fees paid by the Company may be
deemed to be indirectly financing any activity which is primarily intended to
result in the sale of shares of the Company within the meaning of rule 12b-1,
the payments of such fees are authorized under this Plan.

4. PERIODIC REPORTS. Any person authorized to direct the disposition of monies
paid or payable by the Company pursuant to the Plan or any related agreement
shall provide to

<PAGE>

the Company's Board of Directors, and the Board of Directors shall review at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.

5. TERMINATION. Subject to paragraph 8, the Plan may be terminated at any
time by a vote of a Majority of the Independent Directors, or by a Majority vote
of the Company's outstanding Class B shares.

6. RELATED AGREEMENTS. Any agreement related to the Plan shall be in writing,
and shall provide:

(i) That such agreement may be terminated at any time, without payment of
penalty, by vote of a Majority of the Independent Directors or by a
Majority vote of the Company's outstanding Class B shares on not more than
60 days written notice to any other party to the agreement; and

(ii) That such agreement shall terminate automatically in the event of
its assignment.

7. AMENDMENTS. The Plan may not be amended to increase materially the amount of
distribution expenses provided for in paragraph 2 unless such amendment is
approved in the manner proved in paragraph 3, and no material amendment to the
Plan shall be made unless approved by the Board of Directors and the Independent
Directors.

8. SPECIAL PROCEDURES FOR SERIES COMPANY. If the Company is or becomes a series
company (as defined in Rule 18f-2 under the Act), then the Plan shall not take
effect as to the Class B shares of any series and no amendment may be effected
to increase materially the amount of distribution expenses as to the Class B
shares of any series until it has been approved as to the Class B shares of such
series by the Board of Directors, the Independent Directors and the Class B
shareholders of such series in the manner provided in paragraph 3; and no
material amendment to the Plan in respect of such shares shall be made unless
approved as to such shares by the Board of Directors and Independent Directors.
The Plan may be terminated as to any series at any time by vote of a Majority of
the Independent Directors or by Majority vote of the Class B shareholders of the
series.

EXHIBIT 15(c)

MILLENIUM TAX-FREE INCOME FUND, INC.
RULE 12B-1 DISTRIBUTION PLAN
FOR CLASS C SHARES

1. PURPOSE. The Company shall finance the distribution of its Class C
shares pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Act") according to the terms of this Distribution Plan (the "Plan").

2. FEES. Amounts, not exceeding in the aggregate a maximum annual amount equal
to the lesser of (a) 1% of the average daily net asset value of the Class C
shares or (b) the maximum amount provided by an applicable rule or regulation of
the National Association of Securities Dealers, Inc., during each fiscal quarter
of the Company elapsed after the inception of the Plan may be paid by the
Company to the Distributor out of the assets attributable to such shares at any
time after the effective date of the Plan in order: (i) to pay the Distributor
commissions in respect of shares of the Company previously sold at any time
after the inception of the Plan, all or any part of which may be or may have
been reallowed or otherwise paid to others by the Distributor in respect of or
in furtherance of sales of shares of the Company after the inception of the
Plan; and (ii) to enable the Distributor to pay or to have paid to others who
sell the Company's shares a maintenance or service fee, at such intervals as the
distributor may determine, in respect of the Company's shares previously sold by
any such others at any time after the inception of the Plan and remaining
outstanding during the period in respect of which such fee is or has been paid.

To the extent that any investment advisory fees paid by the Company may be
deemed to be indirectly financing any activity which is primarily intended to
result in the sale of shares of the Company within the meaning of Rule 12b-1,
the payments of such fees are authorized under this Plan.

3. REQUIRED APPROVALS AND TERMS. Subject to paragraph 8, the Plan shall not take
effect until it has been approved, together with any related agreements, by
votes of the majority of both (i) the Board of Directors of the Company and (ii)
those directors of the Company who are not "Interested Persons" of the Company
as defined in the Act and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to it (the "Independent
Directors"), cast in person at a meeting called for the purpose of voting on the
Plan or such agreements. Unless sooner terminated pursuant to the terms hereof,
the Plan shall continue in effect for a period of one year from its effective
date, and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for by Rule 12b-1
under the Act.

4. PERIODIC REPORTS. Any person authorized to direct the disposition of monies
paid or payable by the Company pursuant to the Plan or any related agreement
shall provide to

<PAGE>

the Company's Board of Directors, and the Board of Directors shall review at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.

5. TERMINATION. Subject to paragraph 8, the Plan may be terminated at any time
by a vote of a majority of the Independent Directors, or by a majority vote of
the Company's outstanding Class C shares.

6. RELATED AGREEMENTS. Any agreement related to the Plan shall be in writing,
and shall provide:

(i) That such agreement may be terminated at any time, without payment of
penalty, by vote of a majority of the Independent Directors or by a
majority vote of the Company's outstanding Class C shares on not more
than 60 days written notice to any other party to the agreement; and

(ii) That such agreement shall terminate automatically in the event
of its assignment.

7. AMENDMENTS. The Plan may not be amended to increase materially the amount of
distribution expenses provided in paragraph 2 unless such amendment is approved
in the manner provided in paragraph 3, and no material amendment to the Plan
shall be made unless approved by the Board of Directors and the Independent
Directors.

8. SPECIAL PROCEDURES FOR SERIES COMPANY. If the Company is or becomes a series
company (as defined in Rule 18f-2 under the Act), then the Plan shall not take
effect as to the Class C shares of any series and no amendment may be effected
to increase materially the amount of distribution expenses as to the Class C
shares of any series until it has been approved as to the Class C shares of such
series by the Board of Directors and the Independent Directors of such series in
the manner provided in paragraph 3; and no material amendment to the Plan in
respect of such shares shall be made unless approved as to such shares by the
Board of Directors and Independent Directors. The Plan may be terminated as to
any series at any time by vote of a majority of the Independent Directors or by
majority vote of the Class C shareholders of the series.

EXHIBIT 17

POWERS OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John C. Sabo and/or Susan P. Bowen, or
either of them, as his true and lawful attorney-in-fact and agent, with full
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments and post-effective amendments to that
certain Registration Statement of Millenium Tax-Free Income Fund, Inc. on Form
N-1A, and to file the same with all exhibits thereto, and grants unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue of this
power of attorney.

Signature Date

/s/ John C. Sabo January 12, 1998
- ----------------
John C. Sabo

/s/ Susan P. Bowen January 12, 1998
- -------------------
Susan P. Bowen

/s/ Mark Blaustein January 12, 1998
- ------------------
Mark Blaustein

/s/ Paul A. Harper, Jr. January 12, 1998
- -----------------------
Paul A. Harper, Jr.

Exhibit 18

Millenium Tax-Free Income Fund, Inc.
Plan Pursuant to Rule 18f-3, as amended
---------------------------------------
Registrant elects to offer different classes of shares of its
common stock pursuant to Rule 18f-3 under the following Plan.

1. Registrant's current Plan encompasses three classes of shares that may be
offered as follows:

(a) Class A shares with a front end sales charge ("FESC") subject to certain
exceptions, a contingent deferred sales charge ("CDSC") under certain
circumstances, and to Rule 12b-1 fees ("Rule 12b-1 fees"). The applicable
FESC, including reductions and exceptions, application of the CDSC and the
Rule 12b-1 fees are set forth in Exhibits "A" and "D" attached hereto.

(b) Class B shares at net asset value subject to (i) Rule 12b-1 fees and (ii)
a CDSC for redemptions or repurchases by the Registrant effected within a
certain period of time not exceeding five years from the date of purchase.
Class B shares outstanding will automatically convert to Class A shares
within five years after the end of the month in which the shares were
purchased. The deferred sales charges, conversion and Rule 12b-1 fees are
as set forth in Exhibits "B" and "D" attached hereto.

(c) Class C shares at net asset value subject to a fee upon redemption within
one year of purchase and Rule 12b-1 fees. The terms and conditions of the Class
C shares are as set forth in Exhibits "C" and "D" attached hereto.

2. Income, realized and unrealized capital gains and losses and expenses not
allocated to a particular class are allocated to each class on the basis of
relative net assets.

Expenses allocable to a specific class are expenses specifically incurred for
such class, including the following:

(a) Rule 12b-1 expenses;
(b) Incremental transfer agency expenses, if any;
(c) Incremental costs of preparing, printing and mailing shareholder
reports, proxy materials and prospectuses related to such class;
(d) Registration fees and other expenses of registration of the shares of
such class under laws or regulations of any jurisdiction in which the
class of shares is to be offered;
(e) Directors' fees and expenses incurred as a result of issues relating
solely to such class; and
(f) Legal and accounting expenses relating solely to such class.

<PAGE>

3. Each class will vote separately with respect to any matter as required by
applicable law or which separately affects that class. As provided in the
Articles of Incorporation, each dollar of net asset value per share is entitled
to one vote.

<PAGE>

Exhibit A

CLASS A SHARES. Class A shares are sold at their net asset
value plus a sales charge. The amounts of the sales charges are shown in the
following table.

Sales Charge Charge as
as Percentage Approximate
Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested
- ------------------ -------------- ---------------
$99,999 or less 4-3/4% 5.0%
$100,000 to $249,999 3-1/2% 3.6%
$250,000 to $499,999 2-1/2% 2.6%
$500,000 to $749,999 2% 2.0%
$750,000 to $999,999 1% 1.0%
$1,000,000 or more 0% 0.0%

On purchases of $1,000,000 or more, the investor pays no front-end sales charge
but a contingent deferred sales charge of 0.75% may be imposed if shares are
redeemed within the first year after purchase. The Distributor may pay the
financial service firm a commission during the first year after such purchase at
an annual rate as follows:

Purchase Amount Commission
- --------------- ----------
First $3,000,000 .75%
Next $2,000,000 .50%
Over $5,000,000 .25%

There are a number of ways to reduce the sales charge on the
purchase of Class A shares, as set forth below.

(i) Family Purchases: Purchases made by an individual, such individual's
spouse and children under 21 are combined and treated as a purchase of a single
person.

(ii) Group Purchases: The purchases of an organized group, whether or not
incorporated, are combined and treated as the purchase of a single person.
The organization must have been organized for a purpose other than to
purchase shares of mutual funds.

<PAGE>

(iii)Purchases for Employee Benefit Plans: Trustee or other fiduciary accounts
and Individual Retirement Accounts ("IRA") of a single employer are treated
as purchases of a single person. Purchases of and ownership by an
individual and such individual's spouse under an IRA are combined with
their other purchases and ownership.

(iv) Purchases under a Statement of Intention: By executing the "Statement of
Intention" included in the Application Form at the back of the Fund's
Prospectus, purchases of Class A shares of $100,000 or more made over a
13-month period may be made at the applicable price for the aggregate
shares actually purchased during the period.

(v) Rights of Accumulation: If investors notify their dealers or the
Distributor, they may include the Class A shares they already own (valued
at maximum offering price) in calculating the price applicable to their
current purchases.

(vi)Sales at Net Asset Value: The sales charge will not apply to: (1) Class
A shares purchased through the automatic reinvestment of dividends and
distributions; (2) Class A shares purchased by directors, officers and
employees of any fund for which the Adviser acts as investment adviser or
officers and employees of the Adviser, Sub-Adviser or Distributor including
former directors and officers and any spouse, child, parent, grandparent,
brother or sister ("immediate family members") of all of the foregoing, and
any employee benefit or payroll deduction plan established by or for such
persons; (3) Class A shares purchased by any registered representatives,
principals and employees (and any immediate family member) of securities
dealers having a sales agreement with the Distributor; (4) initial
purchases of Class A shares totaling at least $250,000 but less than
$5,000,000, made at any one time by banks, trust companies and other
financial institutions on behalf of one or more clients for which such
institution acts in a fiduciary capacity; (5) Class A shares purchased by
any single account covering a minimum of 250 participants (this 250
participant minimum may be waived for certain fee based mutual fund
marketplace programs) and representing a defined benefit plan, defined
contribution plan, cash or deferred plan qualified under 401(a) or 401(k)
of the Internal Revenue Code or a plan established under section 403(b),
457 or 501(c)(9) of such Code or "rabbi trusts"; (6) Class A shares
purchased by persons participating in a "wrap account" or similar fee-based
program sponsored and maintained by a registered broker-dealer approved by
the Fund's Distributor or by investment advisors or financial planners who
place trades for their own accounts or the accounts of their clients and
who charge a management, consulting or other fee for their services; and
clients of such investment advisors or financial planners who place trades
for their own accounts if the accounts are linked to the master account of
such investment advisor or financial planner on the books and records of
the broker or agent; and (7) Class A shares amounting to less than
$5,000,000 purchased by any state, county, city, department, authority or
similar agency. Investors may be charged a fee if they effect purchases in
fund shares through a broker or agent. The Fund may also issue Class A at

<PAGE>

net asset value incident to a merger with or acquisition of assets of an
investment company.

5
<PAGE>

Exhibit B

CLASS B SHARES. Class B shares are offered at net asset value,
without a front-end sales charge. With certain exceptions described below, the
Fund imposes a deferred sales of 5% on shares redeemed during the first year
after purchase, 4% on shares redeemed during the second year after purchase, 3%
on shares redeemed during the third year after purchase, 2% on shares redeemed
during the fourth year after purchase, and 1% on shares redeemed during the
fifth year after purchase. Class B shares will be subject to a maximum Rule
12b-1 fee at the annual rate of 1% of the class' average daily net asset value.

6
<PAGE>

Exhibit C

CLASS C SHARES. Class C shares are offered at net asset value
without a sales charge at the time of purchase. Class C shares redeemed within
one year of purchase will be subject to a 1% charge upon redemption. Class C
shares do not have a conversion feature. The Fund will not accept any purchases
of Class C shares when Class A shares may be purchased at net asset value.

The Distributor will pay a commission to the firm responsible
for the sale of Class C shares. No other fees will be paid by the Distributor
during the one-year period following purchase. The Distributor will be
reimbursed for the commission paid from 12b-1 fees paid by the Fund during the
one-year period. If Class C shares are redeemed within the one-year period after
purchase, the 1% redemption charge will be paid to the Distributor. After Class
C shares have been outstanding for more than one year, the Distributor will make
quarterly payments to the firm responsible for the sale of the shares in amounts
equal to 0.75% of the annual average daily net asset value of such shares for
sales fees and 0.25% of the annual average daily net asset value of such shares
for service and maintenance fees.

7
<PAGE>

Exhibit D

CONTINGENT DEFERRED SALES CHARGES. Any contingent deferred
sales charge imposed upon the redemption of Class A, Class B or Class C shares
is a percentage of the lesser of (i) the net asset value of the shares redeemed
or (ii) the original cost of such shares. No contingent deferred sales charge is
imposed when the investor redeems amounts derived from (a) increases in the
value of shares redeemed above the net cost of such shares or (b) certain shares
with respect to which the Fund did not pay a commission on issuance, including
shares acquired through reinvestment of dividend income and capital gains
distributions. Upon request for redemption, shares not subject to the contingent
deferred sales charge will be redeemed first. Thereafter, shares held the
longest will be the first to be redeemed.

The contingent deferred sales charge (CDSC) on Class A, B, and
C Shares that are subject to a CDSC will be waived if the redemption relates to
the following: (a) in the event of the total disability (as evidenced by a
determination by the federal Social Security Administration) of the shareholder
(including registered joint owner) occurring after the purchase of the shares
being redeemed; (b) in the event of the death of the shareholder (including a
registered joint owner); (c) for redemptions made pursuant to an automatic
withdrawal plan in an amount, on an annual basis, up to 12% of the value of the
account at the time the shareholder elects to participate in the automatic
withdrawal plan; (d) for redemptions from a qualified retirement plan or IRA
that constitute a tax-free return of contributions to avoid tax penalty; (e) on
redemptions of shares sold to directors, officers and employees of any fund for
which the Adviser acts as investment adviser or officers and employees of the
Adviser or Distributor including former directors and officers and immediate
family members of all of the foregoing, and any employee benefit or payroll
deduction plan established by or for such persons; and (f) on redemptions
pursuant to the right of the Fund to liquidate a shareholder's account if the
aggregate net asset value of the shares held in such account falls below an
established minimum amount.