As filed with the Securities and Exchange Commission on March 4, 2008.

Securities Act Registration No. 333-________

Investment Company Registration No. 811-02328



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-2

           REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
                          Pre-Effective Amendment No. ___          |_|
                         Post-Effective Amendment No. ___          |_|
                                     And/or
                          REGISTRATION STATEMENT UNDER
                     THE INVESTMENT COMPANY ACT OF 1940 |X|
                              AMENDMENT NO. 18 |X|


                       Boulder Growth & Income Fund, Inc.
               (Exact Name of Registrant as Specified In Charter)

                           2344 Spruce Street, Suite A
                             Boulder, Colorado 80302
                    (Address of Principal Executive Offices)

                                 (303) 444-5483
              (Registrant's Telephone Number, including Area Code)

                             Stephen C. Miller, Esq.
                            Joel L. Terwilliger, Esq.
                        Boulder Investment Advisers, LLC
                           2344 Spruce Street, Suite A
                             Boulder, Colorado 80302

                     (Name and Address of Agent for Service)

                                   Copies to:

                             Arthur L. Zwickel, Esq.
                     Paul, Hastings, Janofsky & Walker, LLP
                       515 South Flower Street, 25th Floor
                              Los Angeles, CA 90071


APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:  As soon as practicable  after the
effective date of this Registration Statement.

If any securities  being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities  offered in connection with a dividend  reinvestment plan, check
the following box. [x]

It is proposed that the filing will become  effective  when  declared  effective
pursuant to Section 8(c). [x]




         CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933



====================================================================================================================================
                                                                              Proposed
                 Title of Securities                                          Maximum         Proposed Maximum
                  Being Registered                       Amount Being      Offering Price    Aggregate Offering        Amount of
                                                          Registered          per Unit             Price            Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                           
Shares of  Common  Stock,  par  value  $.01 per share
("Shares")                                               10,161,006 Shares       $____         $1,000,000(1)           $39.30
------------------------------------------------------------------------------------------------------------------------------------



(1)  Estimated  solely  for the  purpose of  calculating  the  registration  fee
pursuant to Rule 457(o) under the Securities  Act of 1933, as amended.

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 that specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities Act of 1933, as amended,  or until this Registration  Statement shall
become effective on such date as the Securities and Exchange Commission,  acting
pursuant to said Section 8(a), may determine.





                       BOULDER GROWTH & INCOME FUND, INC.

                                    Form N-2

                              CROSS REFERENCE SHEET


Items In
Part A                                    Caption                                              Location in Prospectus
------------------------------------------------------------------------------------------------------------------------------------
                                                                           
Item 1.    Outside Front Cover.................................................. Front Cover Page

Item 2.    Inside Front and Outside Back Cover Page............................. Front Cover Page

Item 3.    Fee Table and Synopsis............................................... Prospectus Summary; Fee Table

Item 4.    Financial Highlights................................................. Financial Highlights

Item 5.    Plan of Distribution................................................. Not Applicable

Item 6.    Selling Stockholders................................................. Not Applicable

Item 7.    Use of Proceeds...................................................... Use of Proceeds; Investment Objective and Policies

Item 8.    General Description of the Registrant................................ Cover   Page;   Prospectus   Summary;   The   Fund;
                                                                                 Investment  Objective and  Policies;  Risk Factors;
                                                                                 Capitalization of the Fund and Other Matters

Item 9.    Management........................................................... Prospectus   Summary;   Management   of  the  Fund;
                                                                                 Portfolio Contents; Custodian and Transfer Agent

Item 10.   Capital Stock , Long-Term Debt, and Other Securities................. The Offering;  Capital Stock and Other  Securities;
                                                                                 Dividends   and   Distributions;    Dividends   and
                                                                                 Distributions; Federal Income Tax Matters

Item 11.   Defaults and Arrears on Senior Securities...........................  Not Applicable

Item 12.   Legal Proceedings.................................................... Not Applicable

Item 13.   Table of Contents of the Statement of Additional                      Table of Contents of the  Statement  of  Additional
           Information.......................................................... Information




Items In
Part B                                    Caption                                  Location in Statement of Additional Information
------------------------------------------------------------------------------------------------------------------------------------

Item 14.    Cover Page.........................................................  Front Cover Page

Item 15.    Table of Contents..................................................  Front Cover Page

Item 16.    General Information and History....................................  Not Applicable

Item 17.    Investment Objective and Policies..................................  Investment   Objective  and  Policies;   Investment
                                                                                 Policies  and  Restrictions;   Investment  Policies
                                                                                 and Techniques

Item 18.    Management.........................................................  Management of the Fund;

Item 19.    Control Persons and Principal Holders of Securities................  Management  of  the  Fund;  Security  Ownership  of
                                                                                 Certain  Beneficial  Owners;  Ownership of the Fund
                                                                                 by  Directors;  Director and Officer  Compensation;
                                                                                 Committees of the Board of Directors

Item 20.    Investment Advisory and Other Services.............................  Management  of the  Fund;  Investment  Adviser  and
                                                                                 Other  Service   Providers;   Compensation  to  the
                                                                                 Advisers   and    Administrators;    Duration   and
                                                                                 Termination of the Investment  Advisory  Agreement;
                                                                                 Potential Conflicts of Interest

Item 21.    Brokerage Allocation and Other Practices...........................  Proxy   Voting;    Code   of   Ethics;    Portfolio
                                                                                 Transactions,   Brokerage   Allocation   and  Other
                                                                                 Practices

Item 22.    Tax Status.........................................................  Federal Income Tax Matters

Item 23.    Financial Statements...............................................  Financial Statements




PART C OTHER INFORMATION

Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.





The  information  in this  Prospectus  is not  complete  and may be  changed.  A
registration  statement  relating  to the  Securities  has been  filed  with the
Securities and Exchange Commission.  We may not sell these securities until this
registration  statement is  effective.  This  Prospectus is not an offer to sell
these  securities and it is not  soliciting an offer to buy these  securities in
any state where the offer, solicitation or sale is not permitted.



                    SUBJECT TO COMPLETION, MARCH __, 2008

PROSPECTUS

                     15,241,509 RIGHTS FOR 5,080,503 SHARES

                       BOULDER GROWTH & INCOME FUND, INC.

                                  COMMON STOCK

The Boulder Growth & Income Fund, Inc. (the "Fund") is issuing  non-transferable
rights  ("Rights") to its holders of record of shares ("Shares") of common stock
("Common Stock") (such holders, "Common Stockholders").  These Rights will allow
Common Stockholders to subscribe for new Shares of Common Stock. For every three
(3)  Rights a Common  Stockholder  receives,  such  Common  Stockholder  will be
entitled to buy one (1) new Share.  Each  Common  Stockholder  will  receive one
Right for each  outstanding  Share it owns on April 7, 2008 (the "Record Date").
Fractional  Shares  will  not  be  issued  upon  the  exercise  of  the  Rights.
Accordingly,  the number of Rights to be issued to a Common  Stockholder  on the
Record  Date will be rounded up to the  nearest  whole  number of Rights  evenly
divisible by three.  Common  Stockholders on the Record Date may purchase Shares
not  acquired  by  other  Common  Stockholders  in  this  Rights  offering  (the
"Offering"), subject to limitations discussed in this Prospectus.  Additionally,
if there are not  enough  unsubscribed  Shares  to honor  all  over-subscription
requests, the Fund may, in its discretion, issue additional Shares up to 100% of
the Shares  available in the Offering to honor  oversubscription  requests.  See
"The Offering - Over-Allotment and Over-Subscription Privilege" below.

The Rights are  non-transferable,  and may not be purchased or sold. Rights will
expire without residual value at the Expiration Date (defined below). The Rights
will not be listed for trading on the NYSE, and there will not be any market for
trading Rights.  The Shares to be issued pursuant to the Offering will be listed
for trading on the NYSE,  subject to the NYSE being  officially  notified of the
issuance of those Shares.

On February 29, 2008,  the last  reported net asset value  ("NAV") per Share was
$8.27 and the last reported  sales price per Share on the NYSE was $9.66,  which
represents a 16.81% premium to the Fund's NAV per Share. The subscription  price
per Share (the "Subscription  Price") will be the NAV per Share as calculated at
the close of trading on the date of  expiration  of the  Offering  (referred  to
herein as the "Expiration Date").

STOCKHOLDERS  WHO CHOOSE TO EXERCISE THEIR RIGHTS WILL NOT KNOW THE SUBSCRIPTION
PRICE PER SHARE AT THE TIME THEY  EXERCISE  SUCH RIGHTS SINCE THE OFFERING  WILL
EXPIRE  (I.E.,  CLOSE)  PRIOR TO THE  AVAILABILITY  OF THE  FUND'S NAV AND OTHER
RELEVANT  MARKET   INFORMATION  ON  THE  EXPIRATION  DATE.  ONCE  A  STOCKHOLDER
SUBSCRIBES  FOR SHARES AND THE FUND  RECEIVES  PAYMENT OR  GUARANTEE OF PAYMENT,
SUCH  STOCKHOLDER  WILL NOT BE ABLE TO CHANGE THEIR DECISION.  THE OFFERING WILL
EXPIRE AT 5:00 P.M.,  NEW YORK CITY  TIME,  ON APRIL 30,  2008 (THE  "EXPIRATION
DATE"), UNLESS THE OFFERING IS EXTENDED AS DISCUSSED IN THIS PROSPECTUS.

For more information,  please call Morrow & Co., Inc. (the "Information  Agent")
toll free at 1-800-607-0088.

The  Fund is a  registered  closed-end,  non-diversified  management  investment
company  incorporated  under  the laws of the  State  of  Maryland.  The  Fund's
investment  objective is total return.  The Fund seeks to produce both long-term
capital appreciation through investment in common stocks and high current income
consistent with preservation of capital through  investments in income producing
securities.  See "Investment  Objective and Policies." There can be no assurance
that the  Fund's  investment  objective  will be  achieved.  Boulder  Investment
Advisers,  LLC ("BIA")  and Stewart  West Indies  Trading  Company,  Ltd.  doing
business as Stewart  Investment  Advisers ("SIA")  (collectively the "Advisers")
act as the  investment  advisers to the Fund. The address of the Fund and BIA is
2344 Spruce Street,  Suite A, Boulder,  Colorado  80302.  The address for SIA is
Bellerive, Queen Street, St. Peter, Barbados.


AN INVESTMENT IN THE FUND IS NOT  APPROPRIATE  FOR ALL INVESTORS.  NO ASSURANCES
CAN BE GIVEN  THAT THE  FUND'S  INVESTMENT  OBJECTIVE  WILL BE  ACHIEVED.  FOR A
DISCUSSION  OF CERTAIN RISK FACTORS AND SPECIAL  CONSIDERATIONS  WITH RESPECT TO
OWNING SHARES OF THE FUND, SEE "RISK FACTORS" ON PAGE 27 OF THIS PROSPECTUS.

NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION  HAS APPROVED OR DISAPPROVED  THESE  SECURITIES OR DETERMINED IF THIS
PROSPECTUS  IS TRUTHFUL OR  COMPLETE.  ANY  REPRESENTATION  TO THE CONTRARY IS A
CRIMINAL OFFENSE.



============================== ============================= ============================ ============================
                                Estimated Subscription Price     Estimated Sales Load       Estimated Proceeds to the
                                                                                                    Fund (2)
============================== ============================= ============================ ============================
============================== ============================= ============================ ============================
                                                                                          
Per Share                                 $8.27(1)                       None                         $8.27
Total                                      $8.27                         None                      $42,015,760
============================== ============================= ============================ ============================



(1) Since the Subscription Price will not be determined until after printing and
distribution of this Prospectus,  the "Estimated Subscription Price" above is an
estimate of the subscription  price based on the Fund's per-Share NAV at the end
of business on February 29, 2008, the Friday immediately  preceding the printing
and distribution of this Prospectus. See "The Offering - Subscription Price" and
"The Offering - Payment For Shares" below.

(2) Proceeds to the Fund before  deduction  of expenses  incurred by the Fund in
connection   with  the   Offering.   Offering   expenses  are  estimated  to  be
approximately  $115,600.  Funds received by check prior to the final due date of
this Offering will be deposited in a segregated interest-bearing account pending
allocation and distribution of Shares.  Interest on subscription  monies will be
paid to the Fund  regardless of whether Shares are issued by the Fund;  interest
will not be used as credit toward the purchase of Shares.

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


Trusts and other entities  affiliated  with the Horejsi family hold 16.6% of the
Common  Stock,  and  certain  other  persons  affiliated  with  the Fund and the
Advisers  (collectively  referred to herein as the "Horejsi Affiliates" and more
specifically  described  on  Pages  33  and  43 of  this  Prospectus  and in the
Statement of  Additional  Information),  may be deemed to control the Fund.  The
Horejsi  Affiliates have indicated that they will fully subscribe in the Primary
Subscription (defined below) on the same terms as other Common Stockholders. The
Horejsi  Affiliates may subscribe in the  Over-Subscription  Privilege  (defined
below).  See "The Offering -  Over-Allotment  and  Over-Subscription  Privilege"
below.

This Prospectus  concisely sets forth certain  information about the Fund that a
prospective investor should know before investing. Investors are advised to read
and retain it for future reference. A Statement of Additional Information, dated
February __, 2008 (the "SAI"),  containing additional information about the Fund
has been filed with the Securities and Exchange  Commission and is  incorporated
by reference in its entirety into this Prospectus.  A copy of the SAI, the table
of  contents  of which  appears on Page 58 of this  Prospectus,  the Fund's most
recent annual and semi-annual report to Stockholders (the "Shareholder Reports")
and additional information about the Fund and other Stockholder inquiries may be
obtained without charge by contacting Morrow & Co., Inc., the Fund's Information
Agent, at  1-800-607-0088.  The SAI and other reports and information  regarding
the Fund are available at the Fund's  website at  www.boulderfunds.net.  The SAI
and  Shareholder  Reports will be sent within two business  days of receipt of a
request.

The  Securities  and Exchange  Commission  ("SEC")  maintains  an Internet  site
(http://www.sec.gov) that contains the SAI, materials incorporated by reference,
and other information regarding the Fund.






                                TABLE OF CONTENTS


                                                                                                              
PROSPECTUS SUMMARY................................................................................................3

IMPORTANT TERMS OF THE OFFERING..................................................................................14

IMPORTANT DATES FOR THE OFFERING.................................................................................15

KEY ELEMENTS OF THE OFFERING.....................................................................................15

FEE TABLE........................................................................................................17

FINANCIAL HIGHLIGHTS.............................................................................................18

THE FUND.........................................................................................................19

USE OF PROCEEDS..................................................................................................19

INVESTMENT OBJECTIVE AND POLICIES................................................................................19

INVESTMENT PHILOSOPHY............................................................................................22

PORTFOLIO CONTENTS...............................................................................................23

RISK FACTORS.....................................................................................................27

THE OFFERING.....................................................................................................33

INFORMATION ABOUT THE FUND.......................................................................................42

MANAGEMENT OF THE FUND...........................................................................................42

OWNERSHIP OF THE FUND BY INDEPENDENT DIRECTORS...................................................................44

FEDERAL INCOME TAX MATTERS.......................................................................................48

DETERMINATION OF NET ASSET VALUE.................................................................................50

CAPITALIZATION OF THE FUND AND OTHER MATTERS.....................................................................50

DIVIDENDS AND DISTRIBUTIONS......................................................................................55

CUSTODIAN AND TRANSFER AGENT.....................................................................................57

LEGAL MATTERS....................................................................................................57

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM....................................................................57

ADDITIONAL INFORMATION...........................................................................................57

PRIVACY PRINCIPLES OF THE FUND...................................................................................57

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.....................................................58



                               PROSPECTUS SUMMARY

This summary  highlights some information that is described more fully elsewhere
in this Prospectus.  It may not contain all of the information that is important
to a stockholder or prospective  stockholder.  To understand the Offering fully,
each  stockholder or  prospective  stockholder  should read the entire  document
carefully, including the risk factors as set forth below.

The Fund

     Boulder  Growth & Income  Fund,  Inc.  (the  "Fund") is a  non-diversified,
     closed-end  management  investment  company  organized  in October 1972 and
     began  investment  activities in January 1974.  Shares of common stock, par
     value $0.01 per share ("Common  Stock"),  of the Fund ("Shares") are traded
     on the New York Stock  Exchange  (the "NYSE") under the symbol "BIF." As of
     February  29,  2008,  the Fund had  15,241,509  Shares and 1,000  shares of
     auction  market  preferred  stock  outstanding.  The average weekly trading
     volume of the Shares on the NYSE  during the  period  from  January 1, 2008
     through  February __, 2008 was _________  Shares.  As of February 29, 2008,
     the  total  net  assets  of the Fund  were  approximately  $151.0  million,
     including  $25 million in auction  market  preferred  stock  leverage.  The
     Fund's investment advisers are Boulder Investment Advisers, LLC ("BIA") and
     Stewart West Indies Trading Company, Ltd. d/b/a Stewart Investment Advisers
     ("SIA") (collectively,  the "Advisers"). The address of the Fund and BIA is
     2344 Spruce Street, Suite A, Boulder, Colorado 80302. The address of SIA is
     Bellerive, Queen Street, St. Peter, Barbados.


The Offering

     The Fund is  issuing  to its  holders  of record of Common  Stock  ("Common
     Stockholders")  as of the close of business  on April 7, 2008 (the  "Record
     Date") non-transferable rights ( "Rights") to subscribe for an aggregate of
     approximately  5,080,503  Shares  of Common  Stock  (the  "Offer").  Common
     Stockholders  will receive one Right for each outstanding  Share held as of
     the Record Date. The number of Rights to be issued to a Common  Stockholder
     on the Record Date will be rounded up to the nearest  whole  number  evenly
     divisible  by  three.  For every  three  Rights  that a Common  Stockholder
     receives,  such Common  Stockholder  may subscribe for one new Share of the
     Fund at a  subscription  price equal to the NAV per Share as  calculated at
     the close of trading on the date of expiration of the Offering (referred to
     herein as the "Expiration  Date").  No fractional  Shares will be issued. A
     Common  Stockholder's  right to acquire  Shares  during the period in which
     Rights may be exercised (the  "Subscription  Period") is referred to as the
     "Primary Subscription." See "The Offering."

     In addition  to the Primary  Subscription,  Record  Date  Stockholders  who
     exercise all of their  Rights are  entitled to  subscribe  for Shares which
     were not  otherwise  subscribed  for by others in the Primary  Subscription
     (the "Over-Subscription Privilege"). If sufficient Shares are not available
     to honor all requests under the Over-Subscription  Privilege, the Fund may,
     in its  discretion,  issue  additional  Shares  up to  100%  of the  Shares
     available in the Offering (or  5,080,503  Shares for a total of  10,161,006
     Shares)   (defined   below   as    "Over-Allotment    Shares")   to   honor
     over-subscription  requests, with such Shares subject to the same terms and
     conditions of this  Offering.  See  "Over-Allotment  and  Over-Subscription
     Privilege" below.

Purpose of the Offering

     The Board of Directors of the Fund (the  "Board")  has  determined  that it
     would be in the best interests of the Fund and its existing stockholders to
     increase the assets of the Fund. The primary reasons include:

     *    The Primary  Subscription will provide existing Common Stockholders an
          opportunity  to  purchase   additional  Shares  at  a  price  that  is
          potentially  below market value without  incurring  any  commission or
          transaction charges.

     *    Raising more cash will better  position the Fund to take  advantage of
          investment opportunities that may arise.

     *    Increasing  the Fund's  assets will  provide the Fund  flexibility  in
          maintaining the Distribution  Policy (defined below). The Distribution
          Policy permits  holders of Common Stock to realize a predictable,  but
          not assured,  level of cash flow and some liquidity  periodically with
          respect to their Common Stock without having to sell Shares.  See "The
          Offering - Purpose of the Offering" below.

     *    Increasing  Fund assets may lower the Fund's  expenses as a proportion
          of net assets  because  the Fund's  fixed costs would be spread over a
          larger asset base.  There can be no assurance  that by increasing  the
          size of the Fund, the Fund's expense ratio will be lowered.

     *    Since the Offering will increase the Fund's outstanding Shares and the
          liquidity  of the Shares,  it may  increase  the number of  beneficial
          owners of the Shares  over the long term,  which  could  increase  the
          level of market interest in and visibility of the Fund and improve the
          trading liquidity of the Shares on the NYSE.

     *    Increasing the Fund's total assets will reduce the Fund's  leverage as
          a percentage  of assets from __% to  approximately  __%  (assuming the
          Primary  Subscription  is fully  subscribed).  The  Fund is  currently
          leveraged  with $25 million of Auction  Market  Preferred  Shares (the
          "AMPS")  and the Fund  intends to maintain  this  amount of  leverage.
          Because  leveraging  increases  risk, the  additional  assets from the
          Offering will mitigate risks commonly associated with leverage.

     *    The  increase in assets will  result in the Fund  exceeding  the AMPS'
          asset-coverage ratio requirements under its Articles  Supplementary by
          a wider margin,  thus giving the Fund greater  flexibility  to buy and
          hold investments without violating those requirements.

Investment Objective and Principal Investment Strategies

     The Fund's investment  objective is total return. The Fund seeks to produce
     both income and long-term capital  appreciation by investing in a portfolio
     of equity and debt securities. The Fund invests primarily in common stocks,
     including  dividend paying common stocks such as those issued by utilities,
     real estate investment trusts ("REITs") and regulated  investment companies
     under the Code (as defined below) ("RICs").  The Fund also invests in fixed
     income securities such as U.S. government securities,  preferred stocks and
     bonds. The Fund invests primarily in securities of U.S.-based companies and
     to a lesser extent in foreign equity securities and sovereign debt, in each
     case denominated in foreign  currency.  The Fund has no restrictions on its
     ability to invest in foreign  securities.  The Fund is concentrated in real
     estate related  companies,  which means it must invest more than 25% of its
     total assets in REITs or the equity or debt  securities  of companies in or
     primarily  servicing  the real estate  industry  or deriving a  substantial
     portion of their revenue  from,  or having a  substantial  portion of their
     assets  invested in, real estate  ("Real  Estate  Related  Companies").  No
     assurance can be given that the Fund will achieve its investment objective.
     See "Investment Objective and Policies."


     The Fund is a  "non-diversified"  investment  company,  as  defined  in the
     Investment  Company Act of 1940,  as amended (the "1940 Act"),  which means
     that it is  permitted  to invest  its  assets in a more  limited  number of
     issuers than "diversified"  investment companies. A diversified company may
     not,  with respect to 75% of its total  assets,  invest more than 5% of its
     total assets in the  securities of any one issuer and may not own more than
     10% of the outstanding voting securities of any one issuer.  However, under
     Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
     (A) not  more  than 25% of the  Fund's  total  assets  may be  invested  in
     securities of any one issuer  (other than U.S.  government  securities  and
     RICs) or of any two or more  issuers  controlled  by the Fund  which may be
     deemed to be engaged in the same,  similar or related trades or businesses;
     and (B) with respect to 50% of the total value of the Fund's portfolio, (i)
     the Fund  must  limit  to 5% the  portion  of its  assets  invested  in the
     securities of a single issuer (other than U.S.  government  securities  and
     RICs),  and (ii) the  Fund  may not own  more  than 10% of the  outstanding
     voting securities of any one issuer (other than U.S. government  securities
     and RICs). The Fund intends to concentrate its common stock  investments in
     a few issuers and to take large positions in those issuers, consistent with
     being a  "non-diversified"  fund. As a result, the Fund may be subject to a
     greater risk of loss than a diversified fund or a fund that has diversified
     its  investments  more broadly.  Taking larger  positions is also likely to
     increase the  volatility of the Fund's NAV,  reflecting  fluctuation in the
     value of large Fund holdings.

     The Fund has  adopted a  concentration  policy  pursuant  to which it must,
     under normal market conditions, invest more than 25% of its total assets in
     Real Estate Related Companies.  The Fund must obtain  stockholder  approval
     prior to changing this policy.  Real Estate Related Companies include,  but
     are not  limited  to:  REITs and  other  closed-end  registered  investment
     companies  that  invest  primarily  in REITs;  home  builders;  real estate
     developers; property management companies; real estate brokerage companies;
     commercial and industrial construction  companies;  financial companies who
     make or service real estate mortgages  and/or  construction  loans;  title,
     homeowners   and  builders   risk   insurance   companies;   manufacturers,
     distributors  and  retailers  of  construction  materials  and/or  building
     supplies;   lumber,  paper,  forest  products,  and  other  companies  with
     significant  real  estate  holdings;  holding  companies  of any  of  these
     companies;  and any other  companies  that the Fund's  advisers  reasonably
     determine are "real estate related companies." Although the Fund may invest
     in Real Estate  Related  Companies  of any size,  it  currently  intends to
     invest in such companies with market  capitalizations  of greater than $500
     million.  Although the Fund  generally  invests in  U.S.-based  Real Estate
     Related  Companies,  such  companies  may invest  directly or indirectly in
     non-U.S.  properties,  and the Fund may make direct  investments in foreign
     Real Estate Related Companies.

     Under  the  1940  Act,  the  Fund is  subject  to  certain  conditions  and
     restrictions  with  regard  to its  investments  in  RICs  (see  "Portfolio
     Contents - Registered Investment Companies"). Under Subchapter M, no single
     investment  can  exceed  25% of the  Fund's  total  assets  at the  time of
     purchase.  These  percentage  limitations  are  calculated  at the  time of
     investment,  and the Fund is not  required to dispose of assets if holdings
     increase above these levels due to  appreciation.  As of February 29, 2008,
     0.00% of the Fund's  total assets were  invested in RICs,  and 30.0% of the
     Fund's total assets were invested in Berkshire Hathaway,  Inc. (NYSE: BRK).
     The  Fund  has  no  restrictions  on  its  ability  to  invest  in  foreign
     securities.  As of February 29, 2008, 29.7% of the Fund's total assets were
     invested in foreign securities.

     Under normal market conditions,  the Fund intends to invest at least 80% of
     its total assets in common  stocks,  primarily  domestic  common stocks and
     secondarily in foreign common stocks denominated in foreign currencies. The
     Fund's  investments  in common  stocks may include,  but is not limited to,
     RICs whose objective is income,  REITs,  and other  dividend-paying  common
     stocks.  The portion of the Fund's  assets that are not  invested in common
     stocks may be invested in fixed income  securities,  cash  equivalents  and
     other  income-producing  securities.  The term  "fixed  income  securities"
     includes but is not limited to corporate bonds, U.S. government securities,
     notes, bills, debentures,  preferred stocks,  convertible securities,  bank
     debt  obligations,   repurchase  agreements  and  short-term  money  market
     obligations.

     Under normal market conditions, the Fund will not have more than 20% of its
     assets in cash or cash equivalents.  The Fund may, for temporary  defensive
     purposes,  allocate  a  higher  portion  of its  assets  to cash  and  cash
     equivalents.  For this purpose,  cash  equivalents  consist of, but are not
     limited  to,   short-term  (less  than  twelve  months  to  maturity)  U.S.
     government securities,  certificates of deposit and other bank obligations,
     investment  grade corporate  bonds,  other debt  instruments and repurchase
     agreements.


     Except for the Fund's  investment  objective,  industry  concentration  and
     fundamental investment  restrictions as described in this Prospectus and in
     the SAI, the percentage  limitations  and investment  policies set forth in
     this Prospectus can be changed by the Board without stockholder approval.

     In May  2006,  the Fund  adopted  a  level-rate  distribution  policy  (the
     "Distribution  Policy") pursuant to which Common Stockholders would receive
     a consistent, but not assured, periodic cash payment.  Presently, under the
     Distribution  Policy,  the Fund makes regular  distributions at the rate of
     $0.115  per Share per  month,  or $1.38 per  Share  annually.  The  monthly
     dividend is  equivalent  to ____% of the Fund's per Share  market price and
     ___%  of the  Fund's  most  recent  NAV of  $8.27  per  share,  both  on an
     annualized  basis. The annualized  distribution rate under the Distribution
     Policy is reviewed  periodically by the Board and generally will not exceed
     the long term performance of the Fund based on a rolling 5-year performance
     history,  subject to the Board's discretion to suspend, modify or terminate
     the  Distribution  Policy at any time. See "Dividends and  Distributions  -
     Level-Rate Distribution Policy."

     The Advisers do not expect to make significant changes to the makeup of the
     Fund's  portfolio  or seek to invest  in "high  yielding"  securities  as a
     result of the  Distribution  Policy.  The Fund may carry a slightly  higher
     cash  balance  from  time to time in  order  to  fulfill  the  distribution
     payments.  If the Fund carries  higher cash  balances  during rising equity
     markets,  the Fund's  performance  may be negatively  affected  relative to
     other  equity  funds.  Conversely,  carrying  higher cash  balances  during
     declining equity markets may positively affect the Fund's  performance.  To
     avoid Code and 1940 Act requirements to make distributions in excess of the
     Distribution  Policy,  the Advisers expect to manage the portfolio slightly
     differently than in the absence of the Distribution Policy, but in a manner
     consistent with the Fund's investment objective and policies.  For example,
     the  Advisers  may  realize a loss in a security  by selling it in order to
     offset realized capital gains, whereas, absent the Distribution Policy, the
     Advisers may not have realized the loss. The Advisers also may increase the
     Fund's  position in a security with an unrealized  loss,  and  subsequently
     sell the tax lot with the  higher  tax cost basis 31 days or more after the
     purchase to avoid a wash sale, leaving the Fund with approximately the same
     position in the security but with a lower tax cost basis.  The Advisers may
     also purchase  stock of an issuer paying an unusually  large  dividend and,
     after  the  stock  begins  trading  ex-dividend,  sell the stock at a loss,
     thereby allowing the Fund to offset gains realized on other securities sold
     during the year. The Advisers enter into such  transactions  only when they
     believe that there is a high  probability  of realizing an economic  profit
     for the Fund. The investment  strategies  described  above were utilized by
     the Advisers  prior to the  implementation  of the  Distribution  Policy to
     realize  losses  for the Fund in an  effort  to be tax  efficient,  and may
     result in slightly higher  portfolio  turnover and transaction  costs.  The
     Advisers will not hold  positions with  unrealized  capital gains that they
     believe  should  be  sold  based  on  their  fundamental  analysis  of  the
     underlying  issuer.  The Advisers believe it would be better to discontinue
     the  Distribution  Policy than to see unrealized gains turn into unrealized
     losses.

     The Fund may have net  realized  gains for the fiscal year ending  November
     30, 2008. In such case,  unless the Fund (i) realizes  capital losses prior
     to November 30, 2008 in an amount  sufficient to offset all realized  gains
     for the  Fund's  fiscal  year or (ii)  obtains  exemptive  relief  from the
     Securities  and Exchange  Commission  (the "SEC") from Section 19(b) of the
     1940 Act and Rule 19b-1 under the 1940 Act prior to November 30, 2008 so it
     can  characterize  a portion  of its  previous  distributions  as  realized
     capital  gains,  the Fund would be required to distribute the entire amount
     of its net realized  capital gains for the fiscal year to its  stockholders
     in December  2008.  The per share amount of any such net  realized  capital
     gains  distribution  may be greater than per share amount at which  monthly
     distributions  previously  have  been  made  pursuant  to the  Distribution
     Policy,  and  therefore  could  shrink the Fund's  assets more quickly than
     would  otherwise  be the case.  The  Advisers  may utilize  the  investment
     strategies  described in the preceding  paragraph to realize capital losses
     in an amount sufficient to offset the Fund's realized capital gains for the
     fiscal year.

     Limitations  on investments  expressed in percentages  are measured and are
     applicable only at the time of investment. They are not measured or applied
     on an ongoing basis. There is no requirement for the Fund to sell or change
     its  portfolio  investments  resulting  from changes in  valuations to such
     investments.

Use of Leverage by the Fund

     The Fund  expects to utilize  financial  leverage  on an ongoing  basis for
     investment  purposes  specifically  through the  issuance  of the AMPS.  In
     October 2005,  the Fund issued 1,000 shares of AMPS at a purchase  price of
     $25,000 per share plus accrued  dividends.  As of February  29,  2008,  the
     Fund's total  leverage from the issuance of AMPS was  approximately  __% of
     the Fund's  total  assets.  This amount may  change,  but the Fund will not
     incur  additional  leverage in the form of preferred  shares if as a result
     its total  leverage  would exceed 50% of the Fund's total assets.  Although
     the Fund may in the future  offer  other  preferred  shares,  increase  the
     number of AMPS, or incur other  indebtedness,  which would further leverage
     the Fund, the Fund does not currently  intend to offer preferred  shares or
     to incur indebtedness, other than short-term credits in connection with the
     settlement of portfolio transactions.

     The Fund  generally  will not utilize  leverage if the Advisers  anticipate
     that leverage  would result in a lower return to Common  Stockholders  over
     time.  Use of  financial  leverage  creates an  opportunity  for  increased
     returns  for the Common  Stockholders  but,  at the same time,  creates the
     possibility   for  greater  loss   (including  the  likelihood  of  greater
     volatility  of NAV and market  price of the Shares and of  dividends),  and
     there can be no assurance  that a leveraging  strategy  will be  successful
     during any  period in which it is  employed.  Because  the fees paid to the
     Advisers and FAS  (defined  below) will be  calculated  on the basis of the
     Fund's managed assets, the fees will be higher when leverage (including the
     AMPS) is utilized, giving the Advisers an incentive to utilize leverage.


Dividends and Distributions

     In May 2006, the Fund adopted the  Distribution  Policy,  pursuant to which
     Common Stockholders would receive a consistent,  but not assured,  periodic
     cash payment.  Presently,  under the  Distribution  Policy,  the Fund makes
     regular  distributions  at the rate of $0.115 per Share per month, or $1.38
     per Share  annually.  The monthly  dividend is  equivalent to _____% of the
     Fund's per Share  market  price and ___% of the Fund's  most  recent NAV of
     $8.27 per Share, both on an annualized  basis. The annualized  distribution
     rate under the  Distribution  Policy is reviewed  periodically by the Board
     and generally  will not exceed the long term  performance of the Fund based
     on a rolling 5-year performance history,  subject to the Board's discretion
     to suspend,  modify or terminate the  Distribution  Policy at any time. The
     Fund may have net  realized  gains for the fiscal year ending  November 30,
     2008. In such case,  unless the Fund (i) realizes  capital  losses prior to
     November 30, 2008 in an amount  sufficient to offset all realized gains for
     the Fund's fiscal year or (ii) obtains  exemptive  relief from the SEC from
     Section  19(b) of the 1940 Act and Rule  19b-1  under the 1940 Act prior to
     November  30,  2008,  so it can  characterize  a  portion  of its  previous
     distributions  as  realized  capital  gains,  the Fund would be required to
     distribute  the entire  amount of its net  realized  capital  gains for the
     fiscal year to its  stockholders  in December 2008. The per share amount of
     any such net realized  capital gains  distribution  may be greater than the
     per share amount at which monthly  distributions  previously have been made
     pursuant to the Distribution  Policy, and therefore could shrink the Fund's
     assets more quickly than would otherwise be the case.

     Rights  holders who exercise  their Rights will receive newly issued Shares
     within  fifteen  (15) days of the record  date of the most  recent  monthly
     payment under the Distribution  Policy,  which record date may occur during
     the  Subscription  Period.  Common  Stockholders  who receive  newly issued
     Common  Stock in the  Offering  will not receive a  distribution  under the
     Distribution Policy with respect to such newly issued Shares for the record
     date  immediately  prior to issuance  of the newly  issued  Shares.  Common
     Stockholders  will be entitled to receive monthly  distributions for record
     dates  subsequent  to  their  receipt  of  newly  issued  Common  Stock  in
     accordance with the Distribution  Policy.  The Offering will not impact the
     distributions  to be paid to  current  Common  Stockholders  regardless  of
     whether they exercise their Rights or allow their Rights to lapse,  subject
     to suspension,  termination,  or modification of the Distribution Policy by
     the Board at any time.

     See  "Dividends and  Distributions  - Level-Rate  Distribution  Policy" and
     "Risk Factors."

Dividend Reinvestment Policy

     Common  Stockholders  receive all dividends and capital gains distributions
     in cash.  However,  the Fund has established a dividend  reinvestment  plan
     under which all Common  Stockholders  whose Shares are  registered in their
     own  name  may  elect  to  have  all  such   dividends  and   distributions
     automatically  reinvested in additional  Shares.  Common  Stockholders  who
     elect  to hold  their  Shares  in the name of a broker  or  nominee  should
     contact such broker or nominee to determine whether they may participate in
     the Plan. See "Dividends and Distributions - Dividend Reinvestment Plan."

Risk Factors

     General  Risks  of  Investing  in the  Fund.  The  Fund  is not a  complete
     investment  program  and should  only be  considered  as an  addition to an
     investor's   existing   diversified   portfolio  of  investments.   Due  to
     uncertainty inherent in all investments, there can be no assurance that the
     Fund will achieve its investment objectives.

     *    Non-Diversified    Status   Risk.    The   Fund   is   classified   as
          "non-diversified"  under the 1940 Act.  As a result,  it can  invest a
          greater portion of its assets in obligations of a single issuer than a
          "diversified" fund. The Fund will therefore be more susceptible than a
          diversified fund to being adversely  affected by any single corporate,
          economic,  political  or  regulatory  occurrence.  The Fund intends to
          diversify  its  investments  to the extent  necessary to qualify,  and
          maintain  its status,  as a regulated  investment  company  under U.S.
          federal income tax laws.  See "Risk  Factors" and "Federal  Income Tax
          Matters."

     *    Investments in Common Stocks. The Fund intends to invest, under normal
          market conditions, at least 80% of its total assets in publicly traded
          common stocks.  Common stocks generally have greater risk exposure and
          reward  potential over time than bonds. The volatility of common stock
          prices has  historically  been  greater  than  bonds,  and as the Fund
          invests  primarily  in  common  stocks,  the  Fund's  NAV may  also be
          volatile. Further, because the time horizon for the Fund's investments
          in common stock is longer,  the time necessary for the Fund to achieve
          its  objective  of total  return will likely be longer than for a fund
          that invests solely for income.


     *    Concentration  Risk. The Fund intends to concentrate  its common stock
          investments  in a few  issuers  and to take large  positions  in those
          issuers,  consistent with being a "non-diversified" fund. As a result,
          the Fund may be subject to a greater  risk of loss than a  diversified
          fund or a fund that has  diversified  its  investments  more  broadly.
          Taking larger  positions is also likely to increase the  volatility of
          the  Fund's  NAV,  reflecting  fluctuation  in the value of large Fund
          holdings.

     *    Investment in Berkshire  Hathaway.  The Fund  presently has invested a
          significant  percentage of its portfolio in Berkshire  Hathaway,  Inc.
          (NYSE: BRK) ("Berkshire").  As of February 29, 2008, the Fund held 310
          Berkshire   Class  A  shares  and  500   Berkshire   Class  B  shares,
          representing  30.0% of the Fund's  total  assets.  The Advisers do not
          currently  intend to liquidate  any portion of the Fund's  position in
          Berkshire.  Although not an insurance  company itself,  Berkshire owns
          Geico Insurance,  General Re Insurance and other insurance  companies,
          and therefore derives a significant portion of its income, and its net
          asset value, from insurance  companies.  The insurance business can be
          significantly  affected by interest rates as well as price competition
          within the industry.  In addition, an insurance company may experience
          significant  changes in its year to year operating  performance  based
          both on claims paid and on performance of invested  assets.  Insurance
          companies can also be affected by government regulations and tax laws,
          which may  change  from time to time.  A  significant  decline  in the
          market price of  Berkshire or any other  company in which the Fund has
          made a  significant  common  stock  investment  (i) would  result in a
          significant   decline  in  the  Fund's  NAV;  (ii)  may  result  in  a
          proportionate decline in the market price of the Shares; and (iii) may
          result in greater risk and market  fluctuation  than a fund that has a
          more diversified portfolio.

     *    Investments in Real Estate Related  Companies.  The Fund has adopted a
          concentration  policy  pursuant to which it must,  under normal market
          conditions,  invest  more than 25% of its total  assets in Real Estate
          Related Companies.  The Fund must obtain stockholder approval prior to
          changing this policy,  thus limiting its flexibility to liquidate such
          companies in the future should market  conditions  warrant.  Since the
          Fund will  concentrate  its assets in the real  estate  industry,  the
          Fund's performance will be generally linked to performance of the real
          estate markets.  Property values may fall due to increasing  vacancies
          or  declining  rents  resulting  from  economic,  legal,  cultural  or
          technological developments. REIT and other Real Estate Related Company
          prices also may drop  because of the failure of borrowers to pay their
          loans  and  poor  management.   Many  REITs  utilize  leverage,  which
          increases   investment  risk  and  could  adversely  affect  a  REIT's
          operations and market value in periods of rising  interest  rates,  as
          well as risks normally  associated with debt  financing.  In addition,
          there are risks  associated  with  particular  sectors of real  estate
          investments (e.g., retail,  office, hotel,  healthcare and multifamily
          properties),  although  the  Fund  does  not  intend  to  focus on any
          particular sector of real estate investments.

     *    Leveraging Risk. The Fund is currently leveraged with the AMPS. Use of
          leverage  may have a number  of  adverse  effects  on the Fund and its
          stockholders  including:  (i) leverage may magnify market fluctuations
          in the Fund's  underlying  holdings  thus  causing a  disproportionate
          change in the Fund's NAV;  (ii) the Fund's cost of leverage may exceed
          the return on the underlying  securities acquired with the proceeds of
          the leverage,  thereby diminishing rather than enhancing the return to
          stockholders  and  generally  making the Fund's  total  return to such
          stockholders  more  volatile;  (iii) the Fund may be  required to sell
          investments in order to meet dividend or interest payments on the debt
          or preferred stock it has issued when it may be  disadvantageous to do
          so; (iv)  leveraging  through the issuance of preferred stock requires
          that the holders of the  preferred  stock have class voting  rights on
          various   matters  that  could  make  it  more  difficult  for  Common
          Stockholders  to  change  the  investment   objective  or  fundamental
          policies  of the  Fund,  to  convert  it to an  open-end  fund or make
          certain other  changes;  and (v) the Fund may be forced to redeem some
          or all of the AMPS at  inopportune  times due to a  decline  in market
          value of Fund  investments.  Because the fees paid to the Advisers and
          FAS  (defined  below)  will be  calculated  on the basis of the Fund's
          managed assets,  the fees will be higher when leverage  (including the
          AMPS) is  utilized,  giving  the  Advisers  an  incentive  to  utilize
          leverage.

          In February  2008, the recent  liquidity  crisis in the credit markets
          spilled  over  into the  auction  rate  preferred  market,  disrupting
          trading in auction rate  preferred  securities  ("ARPS") like the AMPS
          and resulting in widespread  failed  auctions of ARPS. The Fund's most
          recent AMPS auction  similarly failed on [ ], 2008, and as of the date
          of  this  Prospectus,  there  has  not  been a  successful  subsequent
          auction. A failed auction occurs when there are too few buyers willing
          to bid on and purchase the ARPS at the periodic auction.  Generally in
          a failed  auction,  because there are too few buyers,  holders of ARPS
          are  unable to sell and  therefore  must  remain  holders of the ARPS,
          although  they  continue to be paid  interest on the shares they hold,
          typically at a higher  interest  rate.  In the case of the AMPS,  this
          higher rate is  referred  to as the  "Maximum  Applicable  Rate".  The
          Maximum   Applicable   Rate  is  intended  in  part  to  mitigate  the
          inconvenience and temporary  illiquidity of failed auctions,  although
          the  holder  must  continue  to  hold  the  ARPS  until  a  subsequent
          successful auction is conducted or the issuer redeems the ARPS.


          In the case of the AMPS,  the Maximum  Applicable  Rate depends on the
          credit  rating  assigned to the AMPS and the  duration of the dividend
          period. Currently, the AMPS have a Fitch rating of "AAA" and a Moody's
          rating of "Aaa" and a 28-day dividend period.  This corresponds with a
          Maximum  Applicable  Rate which is the higher of 125% of the reference
          rate (i.e., the 30-day London  Inter-Bank  Offered Rate or "LIBOR") or
          1.25% plus the reference  rate.  As of February 29, 2008,  the Maximum
          Applicable Rate for the Fund was ___%. As a point of reference,  prior
          to the first failed AMPS auction,  the rate paid by the Fund was ___%.
          Although the Maximum  Applicable  Rate  presently  paid by the Fund is
          relatively  close  to  the  rate  set at its  most  recent  successful
          auction,  these  circumstances  could  abruptly  change if  short-term
          interest rates increase.  In such event,  the Maximum  Applicable Rate
          could also increase substantially.

          Additionally,  should  the  credit  rating  assigned  to the  AMPS  be
          downgraded,  the  Maximum  Applicable  Rate  paid  by the  Fund  would
          increase depending on the revised credit rating.  For example,  should
          the AMPS' credit  rating be  downgraded to A+ by Fitch and/or to A1 by
          Moody's,  the  Maximum  Applicable  Rate  payable  by the  Fund  would
          increase to the higher of 200% of the reference rate (e.g.,  LIBOR) or
          2.00%  plus the  reference  rate.  In no  instance  would the  Maximum
          Applicable  Rate exceed the greater of 300% of the  reference  rate or
          3.00% plus the reference rate.

     *    Level-Rate  Distribution  Policy.  In May 2006  stockholders  voted in
          favor of, and the Fund adopted,  the Distribution Policy. A level-rate
          distribution policy allows a fund to provide a regular,  periodic (but
          not  assured)  distribution  to its common  stockholders  which is not
          dependent on the amount of income earned or capital gains  realized by
          the fund. An equity fund,  such as the Fund, is designed for investors
          to  participate  in  a  professionally  managed  portfolio  of  equity
          investments.  Over the long-term, equity investments have historically
          provided  higher total returns than fixed income  investments  such as
          bonds. However, unlike most fixed income funds, which pay stockholders
          a regular dividend based on the fund's investment income, equity funds
          generally  pay only one dividend per year  consisting  of a relatively
          small amount of net  investment  income and any net  realized  capital
          gains.  A  managed   distribution  permits  a  fund  to  distribute  a
          predetermined monthly amount,  regardless of when or whether income is
          earned or capital gains are realized.  However, the practice of making
          distributions  that exceed income earned or capital gains realized can
          result in the Fund making  distributions  that  consist of a return of
          capital.  A  level-rate   distribution  policy  recognizes  that  many
          investors  are  willing  to  accept  the   potentially   higher  asset
          volatility of equity  investments,  but would prefer that a consistent
          level of cash  distributions  are  available  to them  each  month for
          reinvestment or other purposes of their choosing.

          The Distribution  Policy initially provided for monthly  distributions
          at the rate of $0.10 per Share per month, or $1.20 per Share annually,
          which  represented  a 14.9% annual  distribution  rate relative to the
          Fund's NAV at the time. In February 2007,  because the NAV of the Fund
          had increased substantially since the Distribution Policy was adopted,
          and the Board wished to maintain a similar annual distribution rate to
          that originally  adopted,  the Fund increased the distribution rate to
          $0.115 per Share per month, or $1.38 per Share annually,  representing
          a 14.6%  annual  distribution  rate  relative to the Fund's NAV at the
          time. At its quarterly  meeting in January 2008, the Board  considered
          and resolved to maintain the then-current  distribution rate at $0.115
          per Share per month, or $1.38 per Share annually, representing ___% of
          the Fund's per Share  market  price and ___% of the Fund's most recent
          NAV, both on an annualized  basis. The annual  distribution rate under
          the  Distribution  Policy is  reviewed  periodically  by the Board and
          generally will not exceed the annual long term performance of the Fund
          based on a rolling 5-year performance history,  subject to the Board's
          discretion to suspend,  modify or terminate the Distribution Policy at
          any time. For the five-year  period ending December 31, 2007, the Fund
          returned 15.9% on its NAV on an annualized basis.

          Exemptive  relief  from the SEC is not  required  in the near  term in
          order to continue the Distribution Policy. The Fund has applied to the
          SEC for  exemptive  relief from Section 19(b) of the 1940 Act and Rule
          19b-1  under  the  1940  Act  to  enable  the  Fund  to  continue  the
          Distribution  Policy over the long term. Section 19(b) of the 1940 Act
          limits an investment company's ability to make multiple  distributions
          of net realized  long-term capital gains each year, subject to certain
          exceptions contained in Rule 19b-1. Historically, investment companies
          that  wished to  implement  a managed  distribution  policy  requiring
          multiple  capital  gain  distributions  per  year  routinely  received
          exemptive relief from Section 19(b).  However,  as of the date of this
          Prospectus,  the SEC has not responded either favorably or unfavorably
          to the Fund's request for exemptive  relief  originally  filed in 2004
          and amended in January 2007. It is generally believed that the SEC has
          imposed a moratorium  on granting  this type of request for  exemptive
          relief  over  concerns  that  inadequate   disclosures  by  investment
          companies  regarding  sources of  distributions  (e.g., net investment
          income,  net long-term  capital gain, return of capital) have resulted
          in fund investors not understanding  that  distributions may include a
          return of capital and do not necessarily represent a dividend yield.


          For the fiscal year ended November 30, 2007, the  Distribution  Policy
          did not  violate  Section  19(b)  because  the Fund had  capital  loss
          carry-forwards  that were  used to  offset  the  Fund's  realized  net
          capital gains and all gains not  otherwise  offset were paid to Common
          Stockholders in the calendar-year-end distribution.  Accordingly, only
          one distribution  was made pursuant to the  Distribution  Policy which
          consisted of net long-term  capital  gains in compliance  with Section
          19(b).  The Fund may similarly  have net realized gains for the fiscal
          year  ending  November  30,  2008.  In such case,  unless the Fund (i)
          realizes  capital  losses  prior to November  30,  2008,  in an amount
          sufficient to offset all realized  gains for the Fund's fiscal year or
          (ii) obtains  exemptive  relief from the SEC from Section 19(b) of the
          1940 Act and Rule 19b-1 under the 1940 Act prior to November 30, 2008,
          so it can  characterize  a portion of its  previous  distributions  as
          realized  capital gains,  the Fund would be required to distribute the
          entire amount of its net realized capital gains for the fiscal year to
          its  stockholders  in December  2008. The per share amount of any such
          net realized  capital gains  distribution  may be greater than the per
          share amount at which monthly distributions  previously have been made
          pursuant to the  Distribution  Policy,  and therefore could shrink the
          Fund's assets more quickly than would otherwise be the case.

          There are  certain  risks and  negative  impacts  associated  with the
          Distribution Policy:

          -    The  Distribution  Policy may impact the way in which the Fund is
               managed.  The Advisers do not expect to make significant  changes
               to the makeup of the Fund's  portfolio or seek to invest in "high
               yielding"  securities as a result of the Distribution Policy. The
               Fund may carry a slightly  higher cash  balance from time to time
               in  order  to  fulfill  the  distribution  payments.  If the Fund
               carries higher cash balances  during rising equity  markets,  the
               Fund's  performance may be negatively  affected relative to other
               equity funds.  Conversely,  carrying  higher cash balances during
               declining  equity  markets  may  positively   affect  the  Fund's
               performance.  To avoid  Code and  1940 Act  requirements  to make
               distributions in excess of the Distribution  Policy, the Advisers
               expect to manage the portfolio  slightly  differently than in the
               absence of the Distribution  Policy,  but in a manner  consistent
               with the Fund's investment  objective and policies.  For example,
               the  Advisers  may  realize a loss in a security by selling it in
               order to offset  realized  capital  gains,  whereas,  absent  the
               Distribution Policy, the Advisers may not have realized the loss.
               The Advisers also may increase the Fund's  position in a security
               with an unrealized loss, and  subsequently  sell the tax lot with
               the higher tax cost basis 31 days or more after the  purchase  to
               avoid a wash sale,  leaving the Fund with  approximately the same
               position in the  security  but with a lower tax cost  basis.  The
               Advisers may also purchase stock of an issuer paying an unusually
               large dividend and,  after the stock begins trading  ex-dividend,
               sell the  stock at a loss,  thereby  allowing  the Fund to offset
               gains  realized on other  securities  sold  during the year.  The
               Advisers enter into such transactions only when they believe that
               there is a high  probability of realizing an economic  profit for
               the Fund. The investment strategies described above were utilized
               by the Advisers prior to the  implementation  of the Distribution
               Policy  to  realize  losses  for the Fund in an  effort to be tax
               efficient,  and may result in slightly higher portfolio  turnover
               and transaction  costs. The Advisers will not hold positions with
               unrealized  capital gains that they believe  should be sold based
               on their  fundamental  analysis  of the  underlying  issuer.  The
               Advisers   believe  it  would  be  better  to   discontinue   the
               Distribution  Policy  than  to see  unrealized  gains  turn  into
               unrealized  losses.  The Fund may have net realized gains for the
               fiscal year ending  November 30, 2008.  In such case,  unless the
               Fund (i) realizes capital losses prior to November 30, 2008 in an
               amount  sufficient  to offset all  realized  gains for the Fund's
               fiscal year or (ii)  obtains  exemptive  relief from the SEC from
               Section  19(b) of the 1940 Act and Rule 19b-1  under the 1940 Act
               prior to November 30, 2008, so it can  characterize  a portion of
               its previous  distributions  as realized  capital gains, the Fund
               would be  required  to  distribute  the entire  amount of its net
               realized capital gains for the fiscal year to its stockholders in
               December  2008.  The per share  amount  of any such net  realized
               capital  gains  distribution  may be  greater  than the per share
               amount at which monthly  distributions  previously have been made
               pursuant to the Distribution  Policy,  and therefore could shrink
               the Fund's assets more quickly than would  otherwise be the case.
               The  Advisers  may utilize the  investment  strategies  described
               above to realize capital losses in an amount sufficient to offset
               the Fund's realized capital gains for the fiscal year.

          -    The Distribution Policy is subject to modification, suspension or
               termination  at any time by the Board.  Because the  Distribution
               Policy was  implemented  without an exemption under Section 19(b)
               of  the  1940  Act  and  Rule  19b-1,  the  Fund  must  have  the
               flexibility  to modify,  suspend or  terminate  the  Distribution
               Policy  immediately  if the Board  deems such action to be in the
               best interests of the Fund and its stockholders.


               As  discussed  above,  the  annual  distribution  rate  under the
               Distribution  Policy is  reviewed  periodically  by the Board and
               generally   will  not  exceed  the   average   annual  long  term
               performance  of the Fund  based on a rolling  5-year  performance
               history. If the Fund's long term performance declines,  the Board
               will make a  corresponding  reduction in the annual  distribution
               rate under the  Distribution  Policy.  In  addition,  the SEC may
               impose  conditions on any grant of exemptive  relief from Section
               19(b) that  require  the Board to consider  adjusting  the annual
               distribution   rate  on  a  more  frequent  basis  under  certain
               circumstances.

          -    A  modification,  suspension or termination  of the  Distribution
               Policy could result in a concurrent reduction or cessation of the
               $0.115 per Share monthly  distribution  presently  paid to Common
               Stockholders.   If  the  Distribution  Policy  was  suspended  or
               terminated,  the Fund would revert back to its prior  practice of
               distributing  only net investment income and net realized capital
               gains at the end of its fiscal year. A  modification,  suspension
               or termination of the  Distribution  Policy could have the effect
               of abruptly  creating a trading  discount (if the Fund is trading
               at or above NAV) or widening an existing trading discount.

          -    If the  Fund's  annual  total  return  is less  than  the  annual
               distribution,  the  Distribution  Policy could have the effect of
               shrinking the assets of the Fund and thus  increasing  the Fund's
               expense  ratio (i.e.,  the Fund's fixed  expenses  will be spread
               over a smaller pool of assets). The Board has determined that the
               annual  distribution  rate  should not exceed the Fund's  average
               annual  long  term  performance  of the Fund  based on a  rolling
               5-year performance history. However, there may be interim periods
               where the annual  distribution rate exceeds the short-term return
               on the Fund's NAV,  which could shrink the assets of the Fund. In
               addition,  if the Fund  does not  obtain  exemptive  relief  from
               Section  19(b)  prior to the end of its fiscal year and the Board
               elects to  characterize  the Fund's  final  distribution  for the
               calendar year as including  all net capital gain realized  during
               the year, such  distribution  could shrink the Fund's assets more
               quickly than would  otherwise be the case if the per share amount
               of any such net realized  capital gains  distribution  is greater
               than per share amount at which monthly  distributions  previously
               have been made pursuant to the Distribution Policy.

          -    A distribution which contains a return of capital, which the Fund
               expects  generally  to be the case,  will result in added  record
               keeping for Common Stockholders. Return of capital is not taxable
               to Common  Stockholders in the year it is paid.  However,  Common
               Stockholders will need to reduce the cost basis of their stock by
               the amount of the  return of capital so that,  when they sell the
               stock,  they  will  have  properly  accounted  for the  return of
               capital.  Such an adjustment will cause Common Stockholders' gain
               to be more,  or their  loss to be less,  as the case may be.  For
               example, if a Common Stockholder  purchased stock in the Fund for
               $7.00 per Share and then receives  dividends  from the Fund which
               have $1.00 per Share return of capital,  and then the stockholder
               subsequently  sells his Shares for $7.50 per Share, his gain will
               be $1.50 per Share,  since he would have  adjusted his cost basis
               downward  by $1.00 per Share  (from  $7.00 per Share to $6.00 per
               Share).  Common  Stockholders who hold their stock in non-taxable
               accounts   such  as  IRA's   will  not  need  to  make  any  such
               adjustments.  Common  Stockholders  should  contact their own tax
               advisor if they have questions regarding the tax treatment of the
               distributions under the Distribution Policy.

     *    Discount  From NAV. The common stock of  closed-end  funds  frequently
          trades at a market price that is less than the value of the net assets
          attributable to those shares (a "discount").  The possibility that the
          Shares  will  trade  at a  discount  from NAV is a risk  separate  and
          distinct from the risk that the Fund's NAV will decrease.  The risk of
          purchasing  shares of a closed-end fund that might trade at a discount
          is more  pronounced  for  investors who wish to sell their shares in a
          relatively  short  period  of  time  because,   for  those  investors,
          realization  of a gain or loss on their  investments  is  likely to be
          more  dependent  upon the existence of a premium or discount than upon
          portfolio performance.

     *    Premium  Over NAV.  The  Shares  may trade at a market  price  that is
          greater than the value of the net assets  attributable to those Shares
          (a "premium"). The possibility that the Shares will trade at a premium
          over NAV is a risk separate and distinct from the risk that the Fund's
          NAV will decrease. For those Common Stockholders who acquire Shares at
          a premium,  such  premium  may be  unsustainable.  If the price of the
          Shares falls, the Common  Stockholders will experience a loss on their
          investments.

     *    Size of the Fund.  As of  February  29,  2008,  the Fund had total net
          assets of approximately $151.0 million,  including $25 million in AMPS
          leverage.  As a fund with a relatively  small asset base, the Fund may
          be subject to certain  operational  inefficiencies  including:  higher
          expense  ratio,  less  coverage by  analysts  and the  marketplace  in
          general which can  contribute to a less active  trading market for the
          Shares and  consequently  a wider  discount,  more limited  ability to
          attract  new   investors   and/or   take   advantage   of   investment
          opportunities  and less ability to take advantage of lower transaction
          costs available to larger investors.


     *    Repurchase of the Shares.  The Fund is authorized to repurchase Shares
          on the open market when the Shares are trading at a discount  from NAV
          per  Share  as  determined  by  the  Board  from  time  to  time.  Any
          acquisition  of Shares by the Fund will  decrease  the total assets of
          the Fund and,  therefore,  have the  effect of  increasing  the Fund's
          expense  ratio and may  adversely  affect  the  ability of the Fund to
          achieve its investment  objectives.  Furthermore,  the  acquisition of
          Shares by the Fund may require the Fund to redeem the AMPS in order to
          maintain certain asset coverage  requirements.  To the extent the Fund
          may need to liquidate  investments  to fund the  repurchase of Shares,
          this may result in portfolio  turnover which will result in additional
          expenses being borne by the Fund.

     *    Dependence  on Key  Personnel.  The  Advisers are  dependent  upon the
          expertise  of Stewart  Horejsi in  providing  advisory  services  with
          respect to the Fund's  investments.  If the Advisers  were to lose the
          services of Mr.  Horejsi,  their  ability to service the Fund could be
          adversely  affected.  There  can  be  no  assurance  that  a  suitable
          replacement  could be found for Mr. Horejsi in the event of his death,
          resignation, retirement or inability to act on behalf of the Advisers.

     *    Issuer  Risk.  The value of the Fund's  portfolio  may  decline  for a
          number  of  reasons  which  directly  relate  to  the  issuers  of the
          securities in the portfolio, such as management performance, financial
          leverage and reduced demand for an issuer's goods and services.

     *    Inflation Risk. Inflation risk is the risk that the value of assets or
          income from  investments will be worth less in the future as inflation
          decreases the value of money. As inflation  increases,  the real value
          of the Fund's portfolio can decline.

     *    Repurchase  Agreements.  The  use of  repurchase  agreements  involves
          certain  risks.  For  example,  if the  seller of  securities  under a
          repurchase  agreement  defaults on its  obligation to  repurchase  the
          underlying  securities,  as a result of bankruptcy  or otherwise,  the
          Fund will seek to  dispose  of such  securities,  which  action  could
          involve costs or delays.  If the seller becomes  insolvent and subject
          to liquidation or reorganization under applicable  bankruptcy or other
          laws, the Fund's  ability to dispose of the underlying  securities may
          be restricted.  Finally,  it is possible that the Fund may not be able
          to substantiate its interest in the underlying securities.

     *    Foreign  Securities  Risk.  The Fund is permitted to invest in foreign
          securities  without  limitation.  Investment  in non-U.S.  issuers may
          involve  unique  risks  compared to investing  in  securities  of U.S.
          issuers.  These risks are more  pronounced to the extent that the Fund
          invests a  significant  portion  of its  non-U.S.  investments  in one
          region or in the securities of emerging  market  issuers.  These risks
          may include:

          -    Less  information  about  non-U.S.  issuers  or  markets  may  be
               available due to less rigorous  disclosure,  accounting standards
               or regulatory practices.

          -    Many non-U.S. markets are smaller, less liquid and more volatile.
               In a changing  market,  the  Advisers may not be able to sell the
               Fund's  portfolio  securities at times,  in amounts and at prices
               they consider reasonable.

          -    Currency  exchange  rates or controls  may  adversely  affect the
               value of the Fund's investments.

          -    The economies of non-U.S. countries may grow at slower rates than
               expected or may experience downturns or recessions.

          -    Withholdings  and other  non-U.S.  taxes may  decrease the Fund's
               return.

     *    Currency  Risk.  The  Fund  currently  holds  investments  in  foreign
          securities  and thus a portion of the  Fund's  assets may be quoted or
          denominated in non-U.S.  currencies. These securities may be adversely
          affected by  fluctuations in relative  currency  exchange rates and by
          exchange control regulations. The Fund's investment performance may be
          negatively affected by a devaluation of a currency in which the Fund's
          investments are quoted or denominated.  Further, the Fund's investment
          performance  may  be  significantly  affected,  either  positively  or
          negatively,  by currency  exchange rates because the U.S. dollar value
          of securities  quoted or denominated in another currency will increase
          or decrease  in  response to changes in the value of such  currency in
          relation to the U.S. dollar. The Fund does not currently hedge against
          the potential decline in value of foreign  currencies against the U.S.
          dollar  and does not  foresee  hedging  currency  risk in the  future,
          though it is not precluded from doing so.


     *    Sovereign  Debt Risk. An investment  in debt  obligations  of non-U.S.
          governments  and  their  political  subdivisions   ("sovereign  debt")
          involves  special  risks  that  are  not  present  in  corporate  debt
          obligations. The non-U.S. issuer of the sovereign debt or the non-U.S.
          governmental authorities that control the repayment of the debt may be
          unable or unwilling to repay  principal or interest  when due, and the
          Fund may have  limited  recourse  in the  event of a  default.  During
          periods of economic  uncertainty,  the market prices of sovereign debt
          may be more volatile than prices of debt obligations of U.S.  issuers.
          In the past, certain non-U.S.  countries have encountered difficulties
          in servicing their debt  obligations,  withheld  payments of principal
          and interest and  declared  moratoria on the payment of principal  and
          interest on their sovereign debt.

     *    Liquidity  Risk.  Although  the Fund invests  primarily in  securities
          traded on national exchanges, it may invest in less liquid assets from
          time to time that are not  readily  marketable  and may be  subject to
          restrictions on resale.  Illiquid  securities may be more difficult to
          value or may impair the  Fund's  ability to realize  the full value of
          its assets in the event of a voluntary or  involuntary  liquidation of
          such assets and thus may cause a decline in the Fund's  NAV.  The Fund
          has no  limitation on the amount of its assets that may be invested in
          securities  which  are  not  readily  marketable  or  are  subject  to
          restrictions  on resale,  although  it may not invest more than 30% of
          the value of its total assets in  securities  which have been acquired
          through private placement.  In certain situations,  the Advisers could
          find it more  difficult to sell such  securities at times,  in amounts
          and at prices they consider reasonable.

     *    Market  Disruption Risk. The terrorist attacks in the United States on
          September 11, 2001 had a disruptive effect on the securities  markets.
          The Fund cannot predict the effects of similar events in the future on
          the  U.S.  economy.   These  terrorist  attacks  and  related  events,
          including the war in Iraq, its aftermath, and continuing occupation of
          Iraq by  coalition  forces,  have led to increased  short-term  market
          volatility and may have long-term  effects on U.S. and world economies
          and markets.  A similar  disruption  of the  financial  markets  could
          impact interest rates, auctions,  secondary trading,  ratings,  credit
          risk,  inflation  and other  factors  relating to the Common Stock and
          AMPS.

     *    Anti-Takeover  Provisions Risk. The Fund's charter (the "Charter") and
          bylaws (the "Bylaws") include  provisions that could limit the ability
          of other  entities  or persons  to  acquire  control of the Fund or to
          change the composition of its Board.  Such provisions  could limit the
          ability  of  stockholders  to sell  their  Shares  at a  premium  over
          prevailing market prices by discouraging a third party from seeking to
          obtain control of the Fund.  These  provisions  include advance notice
          requirements  for  stockholder  proposals  and  super-majority  voting
          requirements for certain transactions with affiliates, open-ending the
          Fund or a merger, liquidation, asset sale or similar transaction.

     *    Investments in RICs. The Fund may invest in securities issued by other
          closed-end funds (or RICs) subject to such  limitations,  restrictions
          and conditions as imposed by Federal law.  Accordingly,  the Fund will
          be subject to the particular  risks associated with investing in other
          closed-end  funds that are  separate  from risks  associated  with the
          underlying  investments  held such RICs. Both the Fund and any RICs in
          which it invests have management fees. In addition,  the RICs in which
          the Fund invests will typically  incur other  operating  expenses that
          are borne by their  investors,  including the Fund. As a result,  Fund
          stockholders  will  bear  not  only  the  Fund's  management  fees and
          operating  expenses,  but also the  fees and  expenses  of the RICs in
          which the Fund  invests.  Investors  would  bear less  expense if they
          invested  directly in the  underlying  RICs in which the Fund invests.
          The  Fund may  also  invest  in RICs  that  are not  limited  in their
          portfolio  trading  activity and thus may  experience  high  portfolio
          turnover   rates.   Higher   turnover   rates   generally   result  in
          correspondingly  greater brokerage commissions and other transactional
          expenses  which  may be borne by the Fund,  directly  or  through  its
          investment in RICs.  Higher  turnover rates also may be more likely to
          generate capital gains that must be distributed to Fund  stockholders,
          either as a result of the Fund's  receipt  of  capital  gains from RIC
          transactions or from the Fund's trading in RICs or other investments.

     *    Investments  in Auction Rate Preferred  Securities.  From time to time
          the Fund invests in the ARPS of other closed-end  investment companies
          which carry the highest credit rating from Moodys,  S&P and Fitch.  As
          of February 29,  2008,  the Fund held  approximately  $_______ of such
          ARPS. Recently, the liquidity crisis in the credit market spilled over
          into the auction rate preferred market, disrupting trading in ARPS and
          resulting in widespread failed auctions.  A failed auction occurs when
          there are too few buyers  willing to bid on and  purchase  ARPS at the
          periodic  auction,  typically held every 7 or 28 days.  Generally in a
          failed auction,  because there are too few buyers, holders of the ARPS
          are unable to sell their shares and therefore  must remain  holders of
          the ARPS although they continue to be paid interest on the shares they
          hold,  typically  at a higher  interest  rate (e.g.,  a "fail  rate").
          Although fail rates are intended in part to mitigate the inconvenience
          and temporary  illiquidity of failed  auctions,  holders like the Fund
          must continue to hold the ARPS until a subsequent  successful  auction
          is conducted or the issuer redeems the ARPS. Consequently,  holders of
          ARPS like the Fund will have to hold ARPS until  liquidity  returns to
          the auction rate preferred market and successful auctions are held, or
          until the issuers of the ARPS elect to redeem. The Fund cannot predict
          when or if the liquidity  issues  affecting the auction rate preferred
          market will be resolved  and thus is not able to predict  when it will
          be able to liquidate its ARPS holdings.


Investment Advisers

     The Fund is  co-advised  by Boulder  Investment  Advisers,  LLC ("BIA") and
     Stewart West Indies Trading Company, Ltd. d/b/a Stewart Investment Advisers
     ("SIA")  (collectively,  the "Advisers").  The Advisers have been providing
     advisory  services to the Fund since  January  2002,  to the Boulder  Total
     Return  Fund,  Inc.  since  March 1999,  and to The Denali Fund Inc.  since
     October  2007.  As of February 29, 2008,  the Advisers had a total of $____
     million in assets under management. The Fund pays the Advisers an aggregate
     monthly fee at the annual rate of 1.25% of the Fund's average monthly total
     net  assets  (including  the  principal  amount of  leverage,  if any) (the
     "Adviser Fee"). At a regular meeting of the Board held on January 25, 2008,
     the Advisers  agreed to a waiver of advisory fees at certain  "break-point"
     levels such that, in the future, the Adviser Fee would be calculated at the
     annual rate of 1.25% on asset  levels up to $400  million,  1.10% on assets
     levels between $400-$600 million;  and 1.00% on asset levels exceeding $600
     million.  The fee waiver  agreement  has a one-year  term and is  renewable
     annually.

Administrator,  Custodian,  Transfer  Agent,  Registrar and Dividend  Disbursing
Agent

     Fund Administrative  Services,  LLC ("FAS") is an affiliate of the Advisers
     and  serves  as  the  Fund's  co-administrator.  Under  its  Administration
     Agreement with the Fund, FAS provides certain  administrative and executive
     management  services to the Fund including:  providing the Fund's principal
     offices and executive officers, overseeing and administering all contracted
     service providers,  making  recommendations to the Board regarding policies
     of the Fund,  conducting  stockholder  relations,  authorizing expenses and
     other administrative tasks.

     Under the Administration  Agreement,  FAS receives a monthly fee calculated
     at an annual rate of 0.20% of the value of the Fund's average monthly total
     net assets (including the principal amount of leverage,  if any) up to $250
     million;  0.18% of the Fund's average  monthly total net assets on the next
     $150 million;  and 0.15% on the value of the Fund's  average  monthly total
     net assets over $400 million.  FAS has agreed to waive a portion of its fee
     in  order  to  limit  the  Fund's  total  monthly  administration  expenses
     (including administration,  co-administration, transfer agent and custodian
     fees) to 0.30% of the Fund's average  monthly total net assets.  The equity
     owners of FAS are Evergreen  Atlantic,  LLC and the Lola Brown Trust No. 1B
     (the "LB Trust"),  each of which is considered to be an "affiliated person"
     of the Fund as that term is defined in the 1940 Act.

     State Street Bank and Trust Company  ("State  Street") serves as the Fund's
     co-administrator  and custodian.  As compensation  for its services,  State
     Street  receives  certain  out-of-pocket  expenses,  transaction  fees  and
     asset-based  fees of 0.058%  annually  (or a minimum of $10,500 per month),
     which are accrued daily and paid monthly.

     PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of PNC Financial
     Services Group, Inc., serves as the Fund's transfer agent,  dividend-paying
     agent and  registrar  for the  Common  Stock.  As  compensation  for PFPC's
     services  as  such,   the  Fund  pays  PFPC  a  monthly  fee  plus  certain
     out-of-pocket expenses.

     Deutsche  Bank Trust Company  Americas  serves as Auction  Agent,  transfer
     agent, dividend paying agent and registrar for the AMPS.





                                                IMPORTANT TERMS OF THE OFFERING
--------------------------------------------------------------------------------------------------------------------------------

                                                      
Total number of Shares available for Primary             5,080,503
Subscription

Total number of Shares available in the Over-Allotment   5,080,503

Number of Rights a Common Stockholder will receive for   One Right for each Share(+)
each outstanding Share owned by such Common Stockholder
on the Record Date

Number of Rights required to purchase one new Share      Three Rights for each new Share

Subscription Price                                       The NAV per Share as calculated at the close of trading on the Expiration
                                                         Date.

Estimated Subscription Price                             $8.27.  Since the  Subscription  Price  will not be  determined  until
                                                         after printing and  distribution  of this  Prospectus,  the "Estimated
                                                         Subscription  Price" is an estimate of the Subscription Price based on
                                                         the Fund's  per-share NAV at the end of business on February 29, 2008,
                                                         the Friday  immediately  preceding  the printing and  distribution  of
                                                         this Prospectus.



+    The  number of Rights to be issued to a Common  Stockholder  on the  Record
     Date will be  rounded  up to the  nearest  whole  number  of Rights  evenly
     divisible   by   three.   See   "The   Offering   -   Over-Allotment    and
     Over-Subscription Privilege" below.





                                               IMPORTANT DATES FOR THE OFFERING
--------------------------------------------------------------------------------------------------------------------------------

                                                       
Record Date                                               April 7, 2008

Subscription Period                                       April 9, 2008 to April 30, 2008

Expiration Date of the Offering                           April 30, 2008++

Deadline for delivery of Subscription Certificate and     April 30, 2008
payment of Shares, or Notice of Guaranteed Delivery (*)

Deadline for payment pursuant to Notice of Guaranteed     May 5, 2008
Delivery (*)

Confirmation to participants                              May 12, 2008

Deadline for final payment for Shares (if any)**          May 22, 2008

++   Unless the Offering is extended to a date no later than May 12, 2008.

*    Record Date Stockholders  (defined below) exercising Rights must deliver to
     the  Subscription  Agent (defined  below) by the Expiration Date either (i)
     the Subscription  Certificate together with the estimated payment or (ii) a
     Notice of Guaranteed Delivery.

**   Since  the  actual   Subscription   Price  due  from   subscribing   Common
     Stockholders (vis-a-vis the Estimated Subscription Price above) will not be
     determined  until  after  printing  and  distribution  of this  Prospectus,
     additional monies may be owed by subscribers.





                                                 KEY ELEMENTS OF THE OFFERING
--------------------------------------------------------------------------------------------------------------------------------
                                    
ONE-FOR-THREE OFFERING                 The  Offering  will give  Common  Stockholders  who own Common  Stock on the Record Date
                                       ("Record Date  Stockholders") the  non-transferable  right to purchase one new Share for
                                       every three  Rights  held.  Common  Stockholders  will receive one Right for every Share
                                       owned on the Record Date. For example,  if a Common  Stockholder  owns 300 Shares on the
                                       Record  Date,  such Common  Stockholder  will receive 300 Rights  entitling  such Common
                                       Stockholder  to purchase 100 new Shares.  Record Date  Stockholders  may exercise all or
                                       some of their Rights.

NON-TRANSFERABILITY OF RIGHTS          The Rights  are  non-transferable  and may not be purchased or sold. Rights  will  expire
                                       without residual value at the  Expiration Date. The Rights will not be listed for trading
                                       on the NYSE, and there will not be any market for trading Rights. The Shares to be issued
                                       pursuant to the Offering  will  be  listed  for  trading on the NYSE, subject to the NYSE
                                       being officially notified of the issuance of those Shares.

SUBSCRIPTION PRICE                     Under  the  Offering,  new  Shares  will be sold at a price equal to the NAV per Share as
                                       calculated at the close of trading  on  the  Expiration Date  (the "Subscription Price").
                                       Management believes that this pricing  (versus  a  percentage  discount  relative  to the
                                       market  price  or  a  pre-determined  fixed price)  will  provide  an incentive to Common
                                       Stockholders to participate in the Offering.

OVER-SUBSCRIPTION PRIVILEGE &          If  all  of  the  Rights  initially  issued  are not exercised by Record Date Stockholders,
OVER-ALLOTMENT SHARES                  any  unsubscribed  Shares  will be  offered to  other  Record  Date  Stockholders  who have
                                       exercised all of their Rights (the "Over-Subscription Privilege").  However, to the extent
                                       there  are  insufficient  unsubscribed  Shares to  satisfy all  over-subscription requests,
                                       Record Date Stockholders who have exercised all of their Rights will have preference in the
                                       Over-Subscription Privilege as discussed below. Also see "The Offering - Over-Allotment and
                                       Over-Subscription Privilege".


                                       If there  are not  enough unsubscribed Shares to honor all  over-subscription requests, the
                                       Fund may, in its discretion, issue additional Shares up to 100% of the Shares available  in
                                       the Offering to honor over-subscription requests with such additional Shares subject to the
                                       same terms and conditions of this Offering (the "Over-Allotment Shares"). The unsubscribed
                                       Shares and the Over-Allotment Shares are collectively referred to as the "Excess Shares".

                                       If there are not enough Excess Shares to fully honor all over-subscription requests, Excess
                                       Shares will be allocated to Record Date Stockholders who have exercised all of their Rights
                                       in accordance with their over-subscription request. If there are not enough  Excess  Shares
                                       to fully honor all over-subscription requests by such Record Date Stockholders, the  Excess
                                       Shares will be allocated pro-rata among such Record Date Stockholders based on the number of
                                       Rights originally issued to them by the Fund. See "The Offering - Over-Allotment and  Over-
                                       Subscription Privilege".

                                       The Horejsi  Affiliates  have  indicated  that  they  will  fully  subscribe i n the Primary
                                       Subscription on the same terms  as  other  Common  Stockholders. The Horejsi Affiliates  may
                                       subscribe in the Over-Subscription Privilege. If the Horejsi Affiliates fully exercise their
                                       Rights in  the Primary  Subscription  and the  Over-Subscription  Privilege,  under  certain
                                       circumstances (e.g., low participation by  Common Stockholders in the Offering), the Horejsi
                                       Affiliates  could  substantially increase  their percentage  ownership  of  the  Fund  at an
                                       advantageous price relative to the market price.

METHOD FOR EXERCISING RIGHTS           Except as described below,  subscription certificates  evidencing the Rights ("Subscription
                                       Certificates") will be sent to Record Date Stockholders or their nominees. If a Record Date
                                       Stockholder wishes to exercise Rights, it may do so in the following ways:

                                        1.  Complete and sign the  Subscription  Certificate. Enclose it in  the envelope provided,
                                            together with payment in full and mail or  deliver the envelope  to Colbent Corporation
                                            (the  "Subscription Agent")  at the address  indicated on the Subscription Certificate,
                                            calculating the total payment on the basis of the Estimated Subscription Price of $8.27
                                            per Share (i.e., the estimated subscription  price based  on the Fund's NAV  and market
                                            price  on   February 29,  2008.  The  completed  and  signed  Subscription  Certificate
                                            and payment must be  received by the  Expiration Date. PAYMENT  PURSUANT TO THIS METHOD
                                            MUST BE IN UNITED STATES DOLLARS BY MONEY ORDER OR CHECK DRAWN ON A BANK LOCATED IN THE
                                            UNITED  STATES,  MUST BE PAYABLE TO  THE BOULDER GROWTH &  INCOME FUND, INC.  AND  MUST
                                            ACCOMPANY AN EXECUTED SUBSCRIPTION CERTIFICATE  FOR SUCH SUBSCRIPTION CERTIFICATE TO BE
                                            ACCEPTED.  Because the subscription  price is  estimated, each  Record Date Shareholder
                                            participating in the Offering should  be prepared to pay additional  monies (if any) by
                                            the deadline for final payment for Shares as noted above under "Important Dates for the
                                            Offering."

                                        2.  A Record Date Stockholder participating in the Offering may contact its  broker, banker
                                            or trust  company,  which  can  arrange, on  such Record  Date Stockholder's behalf, to
                                            guarantee delivery of payment  and  delivery  of  a  properly  completed  and  executed
                                            Subscription  Certificate  pursuant  to  a  notice  of  guaranteed delivery ("Notice of
                                            Guaranteed Delivery")  by  the  close of  business  on the  third Business Day (defined
                                            below) after the Expiration Date.  The broker, banker, or trust company may charge such
                                            Record Date  Stockholder  a  fee for  this  service;  the  Fund  is not responsible for
                                            paying any fees charged by any such broker, bank, or trust company.

                                       Subscribing Record  Date  Stockholders  will  have  no  right  to  rescind a purchase after
                                       the Subscription Agent has  received  the  Subscription Certificate or Notice of Guaranteed
                                       Delivery. See  "The Offering - Method of Exercising Rights" and "The Offering - Payment for
                                       Shares."

                                       The Subscription Agent will  deposit  all checks received by it prior to the final due date
                                       into a segregated  interest bearing  account at  Eastern  Bank  pending distribution of the
                                       Shares from the Offering. All interest will accrue to the benefit of the Fund and investors
                                       will not earn interest on payments submitted or be able to credit such interest against any
                                       additional monies owed (if applicable).



--------------------------------------------------------------------------------------------------------------------------------
                 STOCKHOLDER INQUIRIES SHOULD BE DIRECTED TO MORROW & CO., INC., THE FUND'S INFORMATION AGENT,

                                                       AT 1-800-607-0088
--------------------------------------------------------------------------------------------------------------------------------


OFFERING FEES AND EXPENSES             The Fund expects to incur approximately $115,600 of expenses in connection with the Offering.
                                       See "Expenses of the Fund" below.

RESTRICTIONS ON FOREIGN STOCKHOLDERS   The Fund will not mail  Subscription  Certificates to Common  Stockholders  whose record
                                       addresses  are outside  the United  States or who have an APO or FPO  address.  However,
                                       Common  Stockholders whose addresses are outside the United States or who have an APO or
                                       FPO address will receive  written notice of the Offering and those who wish to subscribe
                                       to the Offering  either  partially or in full should contact the  Subscription  Agent by
                                       written  instruction  or recorded  telephone  conversation  no later than three Business
                                       Days  prior to the  Expiration  Date.  If no  instructions  have  been  received  by the
                                       Expiration Date, the Rights of those foreign Common  Stockholders will expire.  See "The
                                       Offering - Foreign Restrictions" below.

USE OF PROCEEDS                        The net proceeds of the Offering are  estimated to be  approximately  $41,900,000.  This
                                       figure is based on the Estimated  Subscription  Price per Share of $8.27 and assumes all
                                       Rights offered are exercised and that the expenses related to the Offering  estimated at
                                       approximately  $115,600 are paid. If all  Over-Allotment  Shares are sold in addition to
                                       all Primary  Subscription Shares, the gross proceeds of the Offering are estimated to be
                                       approximately  $___________.  The Advisers  anticipate that it may take up to six months
                                       for the  Fund to  invest  substantially  all of the net  proceeds  of this  Offering  in
                                       accordance with its investment  objective and policies under current market  conditions.
                                       Pending such  investment,  the Fund  anticipates  investing  the proceeds in  short-term
                                       securities  issued by the U.S.  government  or its agencies or  instrumentalities  or in
                                       high quality,  short-term or long-term  debt  obligations  or money market  instruments.
                                       See "Use of Proceeds" below.

RISK FACTORS                           See "Risk Factors" below.


                                    FEE TABLE

                                                                                                           

     STOCKHOLDER TRANSACTION EXPENSES
     --------------------------------------------------------------------------------------------------- -------------------
     Sales Load (as a percentage of the Offering price)                                                          $0

     Dividend Reinvestment and Cash Purchase Plan Fees                                                           $0


     CURRENT EXPECTED ANNUAL FUND EXPENSES BEFORE THE RIGHTS OFFERING (as a                              February _, 2008
     percentage of net assets attributable to common shares)
     --------------------------------------------------------------------------------------------------- -------------------
     Management Fees                                                                                           1.40%

     Preferred Stock broker commission and auction agent fees                                                  0.07%

     Administration, co administration and custodian fees                                                      0.32%

     Other Expenses                                                                                            0.50%

         Legal and audit fees                                                               0.16%

         Directors fees and expenses                                                        0.15%

         Printing fees                                                                      0.05%

         Insurance expenses                                                                 0.02%

         Miscellaneous and other expenses                                                   0.12%

     Acquired Funds                                                                                            0.05%

     Total Annual Expenses                                                                                     2.34%






   EXAMPLE                                                             1 YEAR       3 YEARS       5 YEARS      10 YEARS
   ---------------------------------------------------------------- ------------ ------------- ------------ -------------

                                                                                                     
   A Common Stockholder would pay the following expenses on a            $23          $72          $123          $264
   $1,000 investment assuming a 5% annual return.



The purpose of the foregoing  table and example is to assist  Rights  holders in
understanding the various costs and expenses that an investor in the Fund bears,
directly or indirectly, BUT SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE  EXPENSES  OR RATES OF  RETURN.  THE ACTUAL  EXPENSES  OF THE FUND MAY BE
GREATER OR LESS THAN THOSE SHOWN.  The figures  provided under "Other  Expenses"
are based upon  estimated  amounts for the current  fiscal  year.  The 5% annual
return shown in this example is used for  illustrative  purposes  only and in no
way should be construed as a guarantee of future  performance  of the Fund.  For
more  complete  descriptions  of certain of the Fund's  cost and  expenses,  see
"Management  of the Fund" in this  Prospectus and the SAI. Also see "Expenses of
the Fund" below.


                              FINANCIAL HIGHLIGHTS

The table  below  sets forth  selected  financial  data for a Share  outstanding
throughout the period presented.  The per Share operating performance and ratios
for the Fund's  fiscal year ended  November 30, 2007 are derived from the Fund's
2007 annual financial  statements,  which were audited by Deloitte & Touche LLP,
the Fund's publicly registered  independent  accounting firm, as stated in their
report  which  is  incorporated  by  reference  into  the SAI and  available  to
Stockholders  upon request.  The per Share operating  performance and ratios for
the Fund's fiscal year ended  November 30, 2006 are derived from the Fund's 2006
annual financial statements which were also audited by Deloitte & Touche LLP, as
stated in their report which is  incorporated by reference into the SAI. The per
Share  operating  performance  and  ratios  for the Fund's  fiscal  years  ended
November 30, 2005 and prior years were audited by the Fund's  previous  publicly
registered  independent  accounting  firm,  KPMG LLP. The following  information
should be read in conjunction  with the Financial  Statements and Notes thereto,
which are  incorporated  by reference into the SAI. The Table below contains per
share operating  performance data, total investment  returns,  ratios to average
net assets, and other supplemental data.



                              FINANCIAL HIGHLIGHTS

                                 [Insert table]



                                    THE FUND

The  Fund  is  a  non-diversified,   closed-end  management  investment  company
organized as a Maryland  corporation in October 1972.  From its  inception,  and
prior to April 26,  2002,  the Fund was named USLife  Income Fund,  Inc. and was
virtually 100% invested in corporate  bonds. In January 2002, the Fund's largest
stockholder,  the Ernest  Horejsi  Trust No. 1B (the "EH  Trust"),  succeeded in
replacing  the Board with a slate of its  nominees.  Soon  thereafter,  in April
2002,  stockholders  approved  changing  the  Fund's  investment  objective  and
corporate  name,   changing  the  Fund's   classification  from  diversified  to
non-diversified  and changing or eliminating a number of the Fund's  fundamental
investment restrictions.  Thereafter,  the Fund began the process of liquidating
its corporate bond portfolio and began investing in common  equities  consistent
with the new investment objective.

As of February 29, 2008, the Fund had 15,241,509 Shares outstanding.  The Common
Stock is traded on the NYSE under the symbol "BIF." The average  weekly  trading
volume of the Common  Stock on the NYSE during the period  from  January 1, 2008
through  February __, 2008 was ____ Shares.  As of February 29, 2008,  the total
net  assets  of  the  Fund,  including  $25  million  in  AMPS  leverage,   were
approximately $151,047,279.

The following  provides  information about the Fund's  outstanding  Shares as of
February 29, 2008:


                                                                        Amount held by
                                                                        the Fund or for
                                                          Amount              its               Amount
         Title of Class                                 Authorized          Account          Outstanding
         --------------------------------------------- -------------------- ---------------- ---------------
                                                                                     
         Common Shares..........................       250,000,000             0              15,241,509
         AMPS...................................          1,000                0                1,000



                                 USE OF PROCEEDS

Management  estimates  the net  proceeds  of the  Offering  to be  approximately
$41,900,000  based  on an  Estimated  Subscription  Price of  $8.27  per  Share,
assuming  the  Offering  is fully  subscribed  and the  expenses  related to the
Offering are approximately  $115,600.  If all Over-Allotment  Shares are sold in
addition to all Primary  Subscription Shares, the gross proceeds of the Offering
are estimated to be  approximately  $___________.  The  foregoing  estimates are
based on the closing price of the Shares on February 29, 2008. Accordingly,  the
assumptions and  projections  contained in this Prospectus are subject to change
significantly  depending  on  changes  in market  conditions  for the Shares and
performance of the Fund's portfolio.

The Advisers will invest the net proceeds of the Offering in accordance with the
Fund's investment  objective and policies.  The Advisers  anticipate that it may
take up to six  months  for  the  Fund to  invest  substantially  all of the net
proceeds of this  Offering  in  accordance  with its  investment  objective  and
policies  under current market  conditions.  Pending such  investment,  the Fund
anticipates  investing the proceeds in short-term  securities issued by the U.S.
government or its agencies or instrumentalities  or in high quality,  short-term
or  long-term  debt  obligations  or money market  instruments.  The increase in
assets as a result in the  Offering  may also be used to help the Fund  maintain
the Distribution  Policy. The Distribution Policy permits Common Stockholders to
realize a  predictable,  but not assured,  level of cash flow and some liquidity
periodically  with respect to their Common Stock without  having to sell Shares.
See the discussion regarding "Dividends and Distributions" below.


                        INVESTMENT OBJECTIVE AND POLICIES

Investment Objective.  The Fund's investment objective is total return. The Fund
seeks to produce both income and long-term capital  appreciation by investing in
a portfolio of equity and debt securities.  The Fund invests primarily in common
stocks,  including  dividend  paying  common  stocks  such as  those  issued  by
utilities, REITs and RICs. The Fund also invests in fixed income securities such
as U.S.  government  securities,  preferred  stocks and bonds.  The Fund invests
primarily  in  securities  of  U.S.-based  companies  and to a lesser  extent in
foreign  equity  securities  and  sovereign  debt, in each case  denominated  in
foreign  currency.  The Fund has no  restrictions  on its  ability  to invest in
foreign  securities.  The Fund is concentrated in Real Estate Related Companies,
which means it must invest more than 25% of its total assets in such  companies.
The Fund has adopted a Distribution Policy pursuant to which Common Stockholders
receive a consistent, but not assured, monthly cash distribution, subject to the
Board's right to suspend,  modify,  or terminate the Distribution  Policy at any
time.  Generating  sufficient cash to make distributions  under the Distribution
Policy may cause the Advisers to manage the portfolio slightly  differently than
in the absence of the Distribution  Policy,  but in a manner consistent with the
Fund's investment objective and policies.  See "Level-Rate  Distribution Policy"
below and "Risk Factors - Level-Rate  Distribution  Policy." No assurance can be
given that the Fund will achieve its investment objective.


Investment  Policies.  The Fund is a  "non-diversified"  investment  company, as
defined in the 1940 Act,  which means that it is  permitted to invest its assets
in a more limited number of issuers than "diversified"  investment companies.  A
diversified  company may not,  with respect to 75% of its total  assets,  invest
more than 5% of its total assets in the securities of any one issuer and may not
own more  than  10% of the  outstanding  voting  securities  of any one  issuer.
However,  under  Subchapter  M of the Code,  (A) not more than 25% of the Fund's
total assets may be invested in  securities  of any one issuer  (other than U.S.
government  securities and RICs) or of any two or more issuers controlled by the
Fund which may be deemed to be engaged in the same, similar or related trades or
businesses;  and (B)  with  respect  to 50% of the  total  value  of the  Fund's
portfolio,  (i) the Fund must limit to 5% the portion of its assets  invested in
the  securities of a single issuer (other than U.S.  government  securities  and
RICs),  and (ii) the Fund may not own more  than 10% of the  outstanding  voting
securities of any one issuer (other than U.S.  government  securities and RICs).
The Fund intends to  concentrate  its common stock  investments in a few issuers
and  to  take  large  positions  in  those  issuers,  consistent  with  being  a
"non-diversified"  fund. As a result,  the Fund may be subject to a greater risk
of loss than a diversified  fund or a fund that has  diversified its investments
more broadly.  Taking larger positions is also likely to increase the volatility
of the Fund's NAV, reflecting fluctuation in the value of large Fund holdings.

The Fund has adopted a  concentration  policy  pursuant to which it must,  under
normal  market  conditions,  invest  more than 25% of its  total  assets in Real
Estate Related  Companies.  The Fund must obtain  stockholder  approval prior to
changing this policy. Real Estate Related Companies include, but are not limited
to:  REITs and other  closed-end  registered  investment  companies  that invest
primarily in REITs; home builders;  real estate developers;  property management
companies;   real  estate   brokerage   companies;   commercial  and  industrial
construction  companies;  financial  companies  who make or service  real estate
mortgages  and/or  construction  loans;  title,  homeowners  and  builders  risk
insurance companies;  manufacturers,  distributors and retailers of construction
materials and/or building supplies;  lumber,  paper, forest products,  and other
companies with  significant real estate  holdings;  holding  companies of any of
these  companies;  and any other companies that the Fund's  advisers  reasonably
determine are "real estate related  companies."  Although the Fund may invest in
Real Estate  Related  Companies of any size,  it currently  intends to invest in
such  companies  with  market  capitalizations  of  greater  than $500  million.
Although the Fund generally invests in U.S.-based Real Estate Related Companies,
such companies may invest directly or indirectly in non-U.S. properties, and the
Fund may make direct investments in foreign Real Estate Related Companies.

Under the 1940 Act, the Fund is subject to certain  conditions and  restrictions
with regard to its  investments  in RICs (see  "Portfolio  Contents - Registered
Investment Companies"). Under Subchapter M of the Code, no single investment can
exceed 25% of the Fund's total assets at the time of purchase.  These percentage
limitations  are  calculated  at the  time of  investment,  and the  Fund is not
required to dispose of assets if  holdings  increase  above these  levels due to
appreciation.  As of February  29,  2008,  0.00% of the Fund's total assets were
invested in RICs,  and 30.0% of the Fund's total assets were invested in class A
and class B shares of Berkshire  Hathaway,  Inc.  (NYSE:  BRK).  The Fund has no
restrictions on its ability to invest in foreign securities.  As of February 29,
2008, 29.7% of the Fund's total assets were invested in foreign securities.

Under normal market  conditions,  the Fund intends to invest at least 80% of its
total assets in common stocks,  primarily domestic common stocks and secondarily
in  foreign  common  stocks  denominated  in  foreign  currencies.   The  Fund's
investments  in common  stocks may  include,  but is not  limited to, RICs whose
objective is income, REITs, and other dividend-paying common stocks. The portion
of the Fund's  assets that are not invested in common  stocks may be invested in
fixed income securities, cash equivalents and other income-producing securities.
The term "fixed  income  securities"  includes  but is not limited to  corporate
bonds, U.S. government securities,  notes, bills, debentures,  preferred stocks,
convertible  securities,  bank  debt  obligations,   repurchase  agreements  and
short-term money market obligations.


The portion of the Fund's  assets that are not invested in common  stocks may be
invested  in  fixed  income  securities   (including   bonds,  U.S.   government
securities, notes, bills, debentures,  preferred stocks, convertible securities,
bank  debt  obligations,  repurchase  agreements  and  short-term  money  market
obligations),  cash equivalents and income-producing common stocks. Under normal
market  conditions,  the Fund will not have more than 20% of its total assets in
cash or cash  equivalents.  The Fund  may,  for  temporary  defensive  purposes,
allocate a higher portion of its assets to cash and cash  equivalents.  For this
purpose,  cash equivalents  consist of, but are not limited to, short-term (less
than twelve months to maturity)  U.S.  government  securities,  certificates  of
deposit and other bank obligations,  investment grade corporate bonds other debt
instruments and repurchase agreements.

The Fund is also subject to the following fundamental  policies,  which may only
be changed with stockholder approval. The Fund may not:

     1.   Issue any senior securities except as permitted under the 1940 Act.

     2.   Invest in the  securities  of  companies  conducting  their  principal
          business  activity in the same  industry  if,  immediately  after such
          investment, the value of its investments in such industry would exceed
          25% of the value of its total assets;  provided  that this  limitation
          will not apply to Real Estate Related Companies.

     3.   Participate  on a joint or a joint and  several  basis in any  trading
          account  in  securities,  except  that the  Fund  may,  to the  extent
          permitted  by  rules,  regulations  or orders  of the  Securities  and
          Exchange Commission,  combine orders with others for the purchases and
          sales of securities in order to achieve the best overall execution.

     4.   Purchase or sell interests in oil, gas or other mineral exploration or
          development programs.

     5.   Purchase or sell real  estate,  except  that the Fund may  purchase or
          sell  interests  in REITs and  securities  secured  by real  estate or
          interests  therein issued by companies owning real estate or interests
          therein.

     6.   Purchase or sell commodities or commodity contracts.

     7.   Make loans other than  through  the  purchase  of debt  securities  in
          private placements and the loaning of portfolio securities.

     8.   Borrow money in an amount  exceeding the maximum  permitted  under the
          1940 Act.

     9.   Underwrite  securities of other  issuers,  except insofar as it may be
          deemed to be an underwriter in selling a portfolio  security which may
          require registration under the Securities Act of 1933, as amended (the
          "Securities Act").

     10.  Invest  more than 30% of the value of its total  assets in  securities
          which have been acquired through private placements.

     11.  Purchase or retain the  securities  of any  issuer,  if, to the Fund's
          knowledge,  those officers and directors of the Fund or its investment
          advisers who individually own beneficially  more than 1/2 of 1% of the
          outstanding securities of such issuer,  together own beneficially more
          than 5% of such outstanding securities.

     12.  Pledge,  mortgage or hypothecate  its assets except in connection with
          permitted borrowing and to the extent related to transactions in which
          the Fund is authorized to engage.

Except  for  the  Fund's  investment  objective,   industry   concentration  and
fundamental  investment  restrictions as described in this prospectus and in the
SAI,  the  percentage  limitations  and  investment  policies  set forth in this
prospectus can be changed by the Board without stockholder approval. Limitations
on investments  expressed in percentages are measured and are applicable only at
the time of  investment.  They are not measured or applied on an ongoing  basis.
There is no requirement for the Fund to sell or change its portfolio investments
resulting from changes in valuations to such investments.

Other Investment Techniques. The Fund may engage in other types of transactions,
including, but not limited to, investment in restricted and illiquid securities,
repurchase   agreements,   when-issued  and  forward  commitment   transactions,
borrowing,  securities lending and other transactions. For a description of such
types of  transactions,  see  "Investment  Policies and  Techniques"  and "Other
Investment Policies and Techniques" in the SAI.


Level-Rate  Distribution  Policy.  In May 2006,  the Fund  adopted a  level-rate
distribution  policy  (the  "Distribution  Policy")  pursuant  to  which  Common
Stockholders would receive a consistent, but not assured, periodic cash payment.
Presently,  under the Distribution Policy, the Fund makes regular  distributions
at the rate of $0.115  per Share per  month,  or $1.38 per Share  annually.  The
monthly dividend is equivalent to ____% of the Fund's per share market price and
___% of the Fund's  most  recent NAV of $8.27 per share,  both on an  annualized
basis.  The  annualized  distribution  rate  under  the  Distribution  Policy is
reviewed  periodically  by the Board and generally will not exceed the long term
performance of the Fund based on a rolling 5-year performance  history,  subject
to the Board's  discretion  to suspend,  modify or  terminate  the  Distribution
Policy at any time. See "Dividends and  Distributions - Level-Rate  Distribution
Policy."

The  Advisers  do not  expect to make  significant  changes to the makeup of the
Fund's portfolio or seek to invest in "high yielding"  securities as a result of
the Distribution  Policy. The Fund may carry a slightly higher cash balance from
time to time in order to fulfill the distribution  payments. If the Fund carries
higher cash balances during rising equity markets, the Fund's performance may be
negatively affected relative to other equity funds. Conversely,  carrying higher
cash balances during declining  equity markets may positively  affect the Fund's
performance.  To avoid Code and 1940 Act  requirements to make  distributions in
excess of the Distribution  Policy,  the Advisers expect to manage the portfolio
slightly  differently than in the absence of the Distribution  Policy,  but in a
manner  consistent  with the  Fund's  investment  objective  and  policies.  For
example, the Advisers may realize a loss in a security by selling it in order to
offset realized  capital gains,  whereas,  absent the Distribution  Policy,  the
Advisers  may not have  realized the loss.  The  Advisers  also may increase the
Fund's position in a security with an unrealized loss, and subsequently sell the
tax lot with the higher tax cost  basis 31 days or more  after the  purchase  to
avoid a wash sale,  leaving the Fund with approximately the same position in the
security but with a lower tax cost basis.  The Advisers may also purchase  stock
of an issuer  paying an unusually  large  dividend  and,  after the stock begins
trading  ex-dividend,  sell the stock at a loss,  thereby  allowing  the Fund to
offset gains  realized on other  securities  sold during the year.  The Advisers
enter  into  such  transactions  only  when they  believe  that  there is a high
probability  of  realizing  an  economic  profit  for the Fund.  The  investment
strategies   described  above  were  utilized  by  the  Advisers  prior  to  the
implementation  of the Distribution  Policy to realize losses for the Fund in an
effort to be tax efficient, and may result in slightly higher portfolio turnover
and  transaction  costs.  The Advisers will not hold positions  with  unrealized
capital  gains  that  they  believe  should be sold  based on their  fundamental
analysis of the underlying  issuer.  The Advisers  believe it would be better to
discontinue  the  Distribution  Policy  than to see  unrealized  gains turn into
unrealized losses.

The Fund may have net  realized  gains for the fiscal year ending  November  30,
2008.  In such  case,  unless  the Fund (i)  realizes  capital  losses  prior to
November 30, 2008 in an amount  sufficient to offset all realized  gains for the
Fund's  fiscal year or (ii) obtains  exemptive  relief from the  Securities  and
Exchange  Commission  (the  "SEC") from  Section  19(b) of the 1940 Act and Rule
19b-1 under the 1940 Act prior to November  30,  2008 so it can  characterize  a
portion of its previous  distributions as realized capital gains, the Fund would
be required to distribute  the entire  amount of its net realized  capital gains
for the fiscal year to its  stockholders  in December 2008. The per share amount
of any such net realized capital gains  distribution may be greater than the per
share amount at which monthly  distributions  previously have been made pursuant
to the  Distribution  Policy,  and therefore could shrink the Fund's assets more
quickly  than  would  otherwise  be the  case.  The  Advisers  may  utilize  the
investment  strategies  described in the preceding  paragraph to realize capital
losses in an amount  sufficient to offset the Fund's realized  capital gains for
the fiscal year.


                              INVESTMENT PHILOSOPHY

Common  Stocks.  With respect to the Fund's common stock  portfolio  (other than
common stocks purchased  primarily for their  income-producing  potential),  the
Advisers use an "intrinsic  value" approach to selecting and managing the Fund's
assets.  The Advisers define intrinsic value as the discounted value of the cash
that can be taken out of a business during its remaining life.  Accordingly,  in
their  securities  selection  process,  the  Advisers  put  primary  emphasis on
analysis of balance  sheets,  cash  flows,  the  quality of  management  and its
ability to  efficiently  and  effectively  allocate  capital,  various  internal
returns which indicate  profitability,  and the relationships that these factors
have to the price of a given security.  The intrinsic value approach is based on
the belief that the securities of certain  companies may sell at a discount from
the Advisers'  estimate of such companies'  "intrinsic value." The Advisers will
attempt to identify and invest in such  securities,  with the  expectation  that
such value discount will narrow over time and thus provide capital  appreciation
for the Fund. When the Fund makes an investment in common stock of an issuer, it
will likely make a significant  investment  and typically  hold such stock for a
long period of time. Over time, the Fund believes that value investing  produces
superior total returns.


Fixed Income  Investments.  In seeking its total return objective,  the Fund may
invest a portion of its assets in U.S. government securities,  preferred stocks,
bonds and other income producing securities. In selecting such investments,  the
Advisers  consider,   among  other  things,  current  yield,  liquidity,   price
variability and the underlying  fundamental  characteristics of the issuer, with
particular emphasis on debt to equity and debt coverage ratios.


                               PORTFOLIO CONTENTS

At any  given  time,  the  Fund  has  some or all of the  types  of  investments
described below. Under normal market conditions, the Fund invests primarily in a
portfolio of common  stocks and income  producing  securities  such as stocks of
REITs and other Real Estate Related  Companies,  RICs and  utilities,  bonds and
preferred stocks.

Common  Stocks.  The Fund may invest all or any  portion of its assets in common
stock.  Common  stock is defined as shares of a  corporation  that  entitle  the
holder to a pro rata share of the profits of the  corporation,  if any,  without
preference  over any  other  stockholder  or class  of  stockholders,  including
holders of the  corporation's  preferred  stock and other senior equity.  Common
stock  usually  carries  with it the right to vote and  frequently  an exclusive
right to do so. Upon liquidation, holders of common stock also have the right to
participate in the assets of the corporation after all other claims are paid.

In selecting  common stocks for investment,  the Fund expects to focus primarily
on U.S.-based  companies,  although the Fund is permitted to invest in companies
outside the U.S.  Generally,  target  companies have  consistent high returns on
equity,  while using modest  amounts of debt relative to their  industries.  The
Fund seeks  investments in businesses the Advisers  understand which have fairly
predictable and improving future earnings, and most importantly,  are reasonably
priced relative to the businesses'  earnings and anticipated growth in earnings.
The Fund does not focus its investments in "large-cap", "mid-cap" or "small-cap"
companies  since  the  Advisers  believe  it  would be  unwise  to  impose  such
investment limitations.

Real Estate Related Companies and REITs. As a matter of investment  policy,  the
Fund is  concentrated  in Real Estate  Related  Companies,  which means it must,
under normal market conditions, invest more than 25% of its total assets in such
companies.  The Fund must obtain  stockholder  approval  prior to changing  this
policy.  REITs are included in the definition of Real Estate  Related  Companies
and  comprise a  substantial  portion of the Fund's  assets.  As of February 29,
2008,  27.4% of the Fund's total  assets were  invested in REITs and real estate
related  companies.  REITs invest  primarily in  commercial  real estate or real
estate-related  loans.  A  REIT  is  not  taxed  on  income  distributed  to its
stockholders  or  unit-holders  if  it  complies  with  regulatory  requirements
relating  to  its  organization,  ownership,  assets  and  income,  and  with  a
regulatory requirement that it distribute to its stockholders or unit-holders at
least 90% of its taxable income for each taxable year.  Generally,  REITs can be
classified as equity REITs, mortgage REITs and hybrid REITs. Equity REITs invest
the majority of their assets  directly in real  property and derive their income
primarily  from rents and  capital  gains  from  appreciation  realized  through
property  sales.  Mortgage  REITs  invest the  majority of their  assets in real
estate  mortgages  and derive their income  primarily  from  interest  payments.
Hybrid REITs combine the  characteristics  of both equity and mortgage REITs. By
investing in REITs indirectly  through the Fund,  Common  Stockholders will bear
not  only the  proportionate  share  of the  expenses  of the  Fund,  but  also,
indirectly,  similar  expenses of  underlying  REITs.  The Fund invests in REITs
primarily for income.

The Fund may be subject to certain risks associated with the direct  investments
of the REITs in which it  invests.  REITs may be  affected  by  changes in their
underlying  properties  and by defaults by borrowers or tenants.  Mortgage REITs
may be affected by the quality of the credit  extended.  Furthermore,  REITs are
dependent  on  specialized  management  skills.  Some  REITs  may  have  limited
diversification  and may be subject to risks  inherent  in  financing  a limited
number of properties.  REITs depend  generally on their ability to generate cash
flow to make  distributions to stockholders or unit-holders,  and may be subject
to defaults by borrowers and to  self-liquidations.  In addition,  a REIT may be
affected by its failure to qualify for tax-free pass-through of income under the
Code or its failure to maintain exemption from registration under the 1940 Act.

Registered Investment Companies (RICs). The Fund may invest in securities issued
by RICs subject to such  limitations,  restrictions and conditions as imposed by
Federal  law.  The common stock of  closed-end  RICs can trade at a  substantial
discount to the  underlying NAV of the RIC, and the Fund may, from time to time,
invest in common  stocks  issued by RICs when they are trading at  discounts  or
when the Advisers otherwise deem market conditions appropriate. The Fund intends
to normally invest in RICs that pay dividends.  RICs that pay regular  dividends
typically  own interest  rate  sensitive  securities,  which tend to increase in
value when interest  rates  decline,  and decrease in value when interest  rates
increase.  To the extent that the Fund invests in RICs, the Fund's  stockholders
will incur expenses with respect to both the Fund and that portion of the Fund's
assets invested in other RICs.  However, as common stocks of closed-end RICs can
trade at substantial  discounts to their  underlying NAVs, the Advisers may deem
the  underlying  expense of investing in a particular RIC to have minimal impact
when compared to the discount at which the Fund may buy its shares.  The NAV and
market value of common  stocks issued by RICs will  fluctuate  with the value of
the underlying assets. The Fund may invest in the auction market preferred stock
of other  closed-end funds primarily as a means of investing the Fund's cash for
the  short-term in higher  yielding  alternatives  to  repurchase  agreements or
government  securities that include direct  obligations of the United States and
obligations   issued  by  U.S.   government   agencies   and   instrumentalities
("Government  Securities").  The  Fund  will  consider  investing  cash in these
instruments, and other short-term money market type alternatives, when the yield
spread is  adequately  attractive  over  repurchase  agreements  and  Government
Securities.  The Fund generally will invest in auction market  preferred  stocks
that are rated AAA although it may invest in lower rated securities from time to
time.


New rules  under the 1940 Act permit  RICs such as the Fund to invest  more than
10% of its total assets in other RICs with certain restrictions including: (i) a
3%  limitation  on acquiring  the total  outstanding  voting shares of any other
single RIC;  (ii) voting  shares of acquired  RICs in  accordance  with  certain
stockholder  principles;  and (iii) not acquiring  shares of other RICs with the
purpose of requiring the acquired RIC to redeem greater than one percent of that
RIC's outstanding  shares in a period of less than 30 days. As a result of these
changes  to the 1940 Act  rules,  and  consistent  with  the  Fund's  investment
objectives,  the Fund may  invest a  greater  percentage  of its  assets in RICs
subject to any restrictions or limitations imposed by Federal law.

Preferred  Stocks.  The Fund  may  invest  in  preferred  securities,  including
preferred securities issued by RICs. Preferred securities are equity securities,
but they have many  characteristics of fixed income securities,  such as a fixed
dividend  payment rate and/or a liquidity  preference  over the issuer's  common
shares. However, because preferred securities are equity securities, they may be
more susceptible to risks traditionally  associated with equity investments than
fixed income securities.  Unlike common stock, preferred securities typically do
not have voting rights.

Fixed rate preferred  stocks have fixed dividend  rates.  They can be perpetual,
with no mandatory  redemption date, or issued with a fixed mandatory  redemption
date.  Certain  issues of  preferred  stock are  convertible  into other  equity
securities.  Perpetual  preferred stocks provide a fixed dividend throughout the
life of the issue, with no mandatory retirement provisions, but may be callable.
Sinking fund  preferred  stocks  provide for the  redemption of a portion of the
issue on a regularly scheduled basis with, in most cases, the entire issue being
retired  at a future  date.  The value of fixed  rate  preferred  stocks  can be
expected to vary inversely with interest rates. Adjustable rate preferred stocks
have a  variable  dividend  rate  which is  determined  periodically,  typically
quarterly,  according to a formula  based on a specified  premium or discount to
the yield on particular Government  Securities,  typically the highest base-rate
yield of one of three  Government  Securities:  the 90-day  Treasury  bill;  the
10-year  Treasury note; and either the 20-year or 30-year Treasury bond or other
index.  The premium or discount to be added to or subtracted from this base-rate
yield is fixed at the  time of  issuance  and  cannot  be  changed  without  the
approval of the holders of the adjustable rate preferred stock.  Some adjustable
rate  preferred  stocks have a maximum and a minimum  rate and in some cases are
convertible into common stock.

Auction rate  preferred  stocks  (defined  above as "ARPS") pay  dividends  that
adjust  based on  periodic  auctions.  Such  preferred  stocks  are  similar  to
short-term  corporate money market instruments in that an auction rate preferred
stockholder  has  the  opportunity  to sell  the  preferred  stock  at par in an
auction, normally conducted at least every 49 days, through which buyers set the
dividend rate in a bidding process for the next period. The dividend rate set in
the  auction  depends  on  market  conditions  and  the  credit  quality  of the
particular issuer.  Typically, the ARPS' dividend rate is limited to a specified
maximum percentage of an external commercial paper index as of the auction date.
Further,  the terms of the auction rate preferred stocks generally  provide that
they are redeemable by the issuer at certain times or under certain conditions.

Recently,  the  liquidity  crisis in the  credit  market  spilled  over into the
auction  rate  preferred  market,  disrupting  trading in ARPS and  resulting in
widespread  failed  auctions.  A failed  auction  occurs  when there are too few
buyers  willing to bid on and purchase ARPS at the periodic  auction,  typically
held every 7 or 28 days.  Generally in a failed  auction,  because there are too
few buyers,  holders of the ARPS are unable to sell their  shares and  therefore
must remain  holders,  although  they continue to be paid interest on the shares
they hold,  typically at a higher interest rate (e.g., a "fail rate").  Although
fail rates are  intended in part to mitigate  the  inconvenience  and  temporary
illiquidity of failed auctions,  holders like the Fund must continue to hold the
ARPS until a subsequent  successful  auction is conducted or the issuer  redeems
the ARPS. Consequently, holders of ARPS like the Fund must continue to hold ARPS
until  liquidity  returns to the auction rate  preferred  market and  successful
auctions  are held,  or until the issuers of the ARPS elect to redeem.  The Fund
cannot  predict  when or if the  liquidity  issues  affecting  the auction  rate
preferred  market will be resolved  and thus is not able to predict when it will
be able to liquidate  its ARPS  holdings.  As of February 29, 2008 the Fund held
approximately $______ of ARPS.


The Fund may, from time to time, invest in preferred  securities that are rated,
or whose issuer's senior debt is rated, investment grade by Moody's and Standard
& Poor's ("S&P") at the time of investment,  although the Fund is not limited to
investments in investment grade preferred securities.  In addition, the Fund may
acquire  unrated  issues that the Advisers  deem to be  comparable in quality to
rated issues in which the Fund is authorized to invest.

Money Market Instruments.  Under normal market conditions,  the Fund may hold up
to 20% of its total assets in cash or money market instruments. The Fund intends
to invest in money market instruments  pending  investments in common stocks, to
serve as collateral in connection  with certain  investment  techniques,  and to
hold as a reserve  pending  the  payment of  dividends  to  investors.  When the
Advisers  believe  that  economic  circumstances  warrant a temporary  defensive
posture,  the Fund may invest  without  limitation  in  short-term  money market
instruments.

Money market  instruments  that the Fund may acquire  usually will be securities
rated  in the  highest  short-term  rating  category  by  Moody's  or S&P or the
equivalent from another major rating service, or securities of issuers that have
received  such  ratings  with  respect to other  short-term  debt or  comparable
unrated securities. Money market instruments in which the Fund typically expects
to invest include:  Government  Securities (as defined below);  bank obligations
(including  certificates of deposit,  time deposits and bankers'  acceptances of
U.S. or foreign banks); commercial paper rated P-l by Moody's or A-1 by S&P; and
repurchase agreements.

Repurchase Agreements.  The Fund may invest temporarily,  without limitation, in
repurchase  agreements,  which are agreements  pursuant to which  securities are
acquired by the Fund from a third party with the understanding that they will be
repurchased by the seller at a fixed price on an agreed date.  These  agreements
may be made with respect to any of the portfolio securities in which the Fund is
authorized  to  invest.  Repurchase  agreements  may be  characterized  as loans
secured  by the  underlying  securities.  The Fund  may  enter  into  repurchase
agreements  with (i) member  banks of the Federal  Reserve  System  having total
assets in excess of $500 million and (ii) securities dealers, provided that such
banks or dealers  meet certain  creditworthiness  standards  established  by the
Board.  The resale price reflects the purchase price plus an agreed-upon  market
rate of interest  which is  unrelated  to the coupon rate or date of maturity of
the  purchased  security.  The  collateral  is  marked  to  market  daily.  Such
agreements  permit  the  Fund to keep  all its  assets  earning  interest  while
retaining  "overnight"  flexibility  in pursuit of  investments of a longer term
nature.

Government Securities.  The Fund may invest in Government  Securities.  Included
among direct obligations of the United States are treasury bills, treasury notes
and treasury bonds,  which differ  principally in terms of their  maturities and
are  supported by the full faith and credit of the U.S.  government.  Securities
issued  by  U.S.  government  agencies  and   instrumentalities   include  other
securities  that are supported by the full faith and credit of the United States
(such as Government National Mortgage Association certificates); securities that
are supported by the right of the issuer to borrow from the U.S.  Treasury (such
as securities of Federal Home Loan Banks);  and securities that are supported by
the credit of the instrumentality (such as Federal National Mortgage Association
and Federal Home Loan  Mortgage  Corporation  bonds).  No assurance can be given
that the U.S.  government will provide  financial  support in the future to U.S.
government agencies,  authorities or instrumentalities that are not supported by
the full faith and  credit of the United  States.  Securities  guaranteed  as to
principal  and interest by the U.S.  government,  its agencies,  authorities  or
instrumentalities  include (i) securities for which the payment of principal and
interest  is  backed  by an  irrevocable  letter  of  credit  issued by the U.S.
government or any of its agencies,  authorities or  instrumentalities;  and (ii)
participations in loans made to non-U.S.  governments or other entities that are
so  guaranteed.  The  secondary  market for certain of these  participations  is
limited and therefore may be regarded as illiquid.

Zero  Coupon  Securities.  The Fund may invest up to 10% of its total  assets in
zero  coupon  securities  issued  by  the  U.S.  government,   its  agencies  or
instrumentalities, as well as custodial receipts or certificates underwritten by
securities dealers or banks that evidence ownership of future interest payments,
principal  payments  or both  on  certain  government  securities.  Zero  coupon
securities  pay no cash income to their holders until they mature and are issued
at substantial  discounts  from their value at maturity.  When held to maturity,
their entire return comes from the  difference  between their purchase price and
their maturity value.  Because interest on zero coupon securities is not paid on
a current  basis,  the values of  securities of this type are subject to greater
fluctuations  than are the values of securities that distribute income regularly
and may be more  speculative than such  securities.  Accordingly,  the values of
these  securities  may be highly  volatile  as interest  rates rise or fall.  In
addition,  the Fund's  investments  in zero  coupon  securities  will  result in
special tax  consequences.  Although zero coupon securities do not make interest
payments,  for tax  purposes a portion of the  difference  between a zero coupon
security's  maturity  value and its purchase price is taxable income of the Fund
each year.


Custodial  receipts  evidencing  specific coupon or principal  payments have the
same  general  attributes  as  zero  coupon  Government  Securities  but are not
considered to be Government Securities.  Although typically under the terms of a
custodial  receipt the Fund is authorized to assert its rights directly  against
the issuer of the  underlying  obligation,  the Fund may be  required  to assert
through  the  custodian  bank such rights as may exist  against  the  underlying
issuer.  Thus, in the event the underlying  issuer fails to pay principal and/or
interest  when due,  the Fund may be subject to delays,  expenses and risks that
are greater than those that would have been involved if the Fund had purchased a
direct  obligation  of the issuer.  In addition,  in the event that the trust or
custodial  account  in which  the  underlying  security  has been  deposited  is
determined  to  be  an  association  taxable  as  a  corporation,  instead  of a
non-taxable  entity,  the yield on the  underlying  security would be reduced in
respect of any taxes paid.

Lending Of  Securities.  The Fund is authorized  to lend  securities it holds to
brokers,  dealers  and  other  financial  organizations.  Loans  of  the  Fund's
securities, if and when made, may not exceed 33-1/3% of the Fund's total assets.
The Fund's loans of securities will be collateralized by cash, letters of credit
or  Government  Securities  that will be maintained at all times in a segregated
account  with the Fund's  custodian  in an amount at least  equal to the current
market value of the loaned securities.

By  lending  its  portfolio  securities,  the Fund can  increase  its  income by
continuing to receive interest on the loaned  securities,  by investing the cash
collateral  in  short-term  instruments  or by  obtaining  yield  in the form of
interest paid by the borrower when Government Securities are used as collateral.
The risk in lending  portfolio  securities,  as with other extensions of credit,
consists of the  possible  delay in recovery of the  securities  or the possible
loss of rights in the collateral should the borrower fail financially.  The Fund
will adhere to the following  conditions  whenever it lends its securities:  (i)
the Fund must receive at least 100% cash  collateral  or  equivalent  securities
from the borrower, which will be maintained by daily marking-to-market; (ii) the
borrower  must  increase  the  collateral  whenever  the  market  value  of  the
securities  loaned rises above the level of the collateral;  (iii) the Fund must
be able to terminate the loan at any time; (iv) the Fund must receive reasonable
interest on the loan, as well as any dividends,  interest or other distributions
on the loaned  securities and any increase in market value; (v) the Fund may pay
reasonable fees approved by its board of directors, including, for example, fees
to (a) the custodian in connection with support of the lending  activities,  (b)
the loan or placing broker for arranging the securities  loan,  and/or (iii) the
borrower for participating in the loan transaction; and (c) voting rights on the
loaned  securities  may pass to the borrower,  except that, if a material  event
adversely  affecting the investment in the loaned securities  occurs,  the Board
must terminate the loan and regain the Fund's right to vote the securities.

Portfolio  Turnover.  Although the Advisers are not  restricted  with respect to
portfolio  turnover,  it is not the Fund's policy to engage in transactions with
the objective of seeking  profits from short-term  trading.  It is expected that
the annual  portfolio  turnover rate of the Fund will be less than 50% excluding
securities  having a maturity of one year or less.  Because it is  difficult  to
accurately  predict portfolio  turnover rates,  actual turnover may be higher or
lower.  Higher portfolio turnover results in increased Fund expenses,  including
brokerage  commissions,  dealer mark-ups and other transaction costs on the sale
of securities and on the reinvestment in other securities.  For the fiscal years
ended  November 30, 2006 and November 30, 2007,  the Fund's  portfolio  turnover
rates  were 35% and __%,  respectively.  The Fund may also  invest in RICs which
also may not be limited in their  portfolio  trading  activity.  Higher turnover
rates generally  result in  correspondingly  greater  brokerage  commissions and
other transactional expenses which may be borne by the Fund, directly or through
its  investment  in RICs.  Higher  turnover  rates  also may be more  likely  to
generate capital gains that must be distributed to Fund stockholders,  either as
a result of the Fund's  receipt of capital gains from RIC  transactions  or from
the Fund's trading in RICs or other investments. Additionally, the Fund may have
a slightly higher portfolio turnover rate than other  similarly-situated  equity
funds due to the periodic need to liquidate securities for the purpose of making
payments  under the  Distribution  Policy and the strategy of purchasing  stocks
paying unusually large dividends and, once the stock begins trading ex-dividend,
selling  the  stock  at a loss,  allowing  the  Fund to  offset  gains  on other
securities  sold during the year. See "Dividends and  Distributions - Level-Rate
Distribution  Policy"  and  "Investment  Objective  and  Policies  -  Level-Rate
Distribution Policy."



                                  RISK FACTORS

Following is a summary of some of the matters that a stockholder  or prospective
stockholder  should consider before  investing in the Fund through the Offering.
It is not intended to be a complete review of every risk that  stockholders face
when investing in Shares:

Non-Diversified  Status Risk. The Fund is classified as "non-diversified"  under
the 1940 Act.  As a result,  it can  invest a greater  portion  of its assets in
obligations  of a  single  issuer  than a  "diversified"  fund.  The  Fund  will
therefore  be  more  susceptible  than a  diversified  fund to  being  adversely
affected by any single corporate,  economic, political or regulatory occurrence.
The Fund  intends  to  diversify  its  investments  to the extent  necessary  to
qualify,  and maintain its status, as a regulated  investment company under U.S.
federal income tax laws. See "Federal Income Tax Matters."

Investments  in Common Stocks.  The Fund intends to invest,  under normal market
conditions,  at least 80% of its total assets in publicly  traded common stocks.
Common stocks  generally  have greater risk exposure and reward  potential  over
time than bonds.  The  volatility of common stock prices has  historically  been
greater than bonds,  and as the Fund invests  primarily  in common  stocks,  the
Fund's NAV may also be  volatile.  Further,  because  the time  horizon  for the
Fund's investments in common stock is longer, the time necessary for the Fund to
achieve its objective of total return will likely be longer than for a fund that
invests solely for income.

Concentration Risk. The Fund intends to concentrate its common stock investments
in a few issuers and to take large  positions in those issuers,  consistent with
being a  "non-diversified"  fund.  As a  result,  the Fund may be  subject  to a
greater risk of loss than a diversified  fund or a fund that has diversified its
investments more broadly. Taking larger positions is also likely to increase the
volatility of the Fund's NAV, reflecting  fluctuation in the value of large Fund
holdings.

Investment in Berkshire Hathaway.  The Fund presently has invested a significant
percentage  of  its  portfolio  in  Berkshire   Hathaway,   Inc.   (NYSE:   BRK)
("Berkshire").  As of February 29,  2008,  the Fund held 310  Berkshire  Class A
shares and 500 Berkshire Class B shares,  representing 30.0% of the Fund's total
assets.  The Advisers do not  currently  intend to liquidate  any portion of the
Fund's  position  in  Berkshire.  Although  not  an  insurance  company  itself,
Berkshire  owns  Geico  Insurance,  General  Re  Insurance  and other  insurance
companies,  and therefore derives a significant  portion of its income,  and its
value,  from insurance  companies.  The insurance  business can be significantly
affected by interest rates as well as price competition within the industry.  In
addition, an insurance company may experience significant changes in its year to
year  operating  performance  based both on claims  paid and on  performance  of
invested  assets.  Insurance  companies  can  also  be  affected  by  government
regulations  and tax laws,  which may change  from time to time.  A  significant
decline in the market price of Berkshire or any other  company in which the Fund
has made a significant common stock investment (i) would result in a significant
decline in the Fund's  NAV;  (ii) may result in a  proportionate  decline in the
market  price of the  Shares;  and (iii) may result in  greater  risk and market
fluctuation than a fund that has a more diversified portfolio.

Investments  in  Real  Estate  Related   Companies.   The  Fund  has  adopted  a
concentration  policy pursuant to which it must, under normal market conditions,
invest more than 25% of its total assets in Real Estate Related  Companies.  The
Fund must obtain  stockholder  approval  prior to  changing  this  policy,  thus
limiting its flexibility to liquidate such companies in the future should market
conditions  warrant.  Since the Fund  will  concentrate  its  assets in the real
estate industry,  the Fund's performance will be generally linked to performance
of the real estate markets. Property values may fall due to increasing vacancies
or declining rents  resulting from economic,  legal,  cultural or  technological
developments.  REIT and other Real Estate  Related  Company prices also may drop
because of the failure of borrowers to pay their loans and poor management. Many
REITs utilize  leverage,  which  increases  investment  risk and could adversely
affect a REIT's operations and market value in periods of rising interest rates,
as well as risks normally associated with debt financing. In addition, there are
risks  associated  with  particular  sectors of real estate  investments  (e.g.,
retail, office, hotel, healthcare and multifamily properties), although the Fund
does not intend to focus on any particular sector of real estate investments.

Leveraging Risk. The Fund is currently  leveraged with the AMPS. Use of leverage
may have a number of adverse effects on the Fund and its stockholders including:
(i) leverage may magnify market  fluctuations in the Fund's underlying  holdings
thus causing a  disproportionate  change in the Fund's NAV; (ii) the Fund's cost
of leverage may exceed the return on the underlying securities acquired with the
proceeds of the leverage,  thereby  diminishing rather than enhancing the return
to  stockholders   and  generally   making  the  Fund's  total  return  to  such
stockholders  more volatile;  (iii) the Fund may be required to sell investments
in order to meet dividend or interest payments on the debt or preferred stock it
has issued when it may be  disadvantageous to do so; (iv) leveraging through the
issuance of preferred  stock  requires that the holders of the  preferred  stock
have class voting  rights on various  matters that could make it more  difficult
for  Common  Stockholders  to change the  investment  objective  or  fundamental
policies of the Fund,  to convert it to an open-end  fund or make certain  other
changes;  and (v) the Fund may be forced  to  redeem  some or all of the AMPS at
inopportune times due to a decline in market value of Fund investments.  Because
the fees paid to the  Advisers  and FAS will be  calculated  on the basis of the
Fund's  managed  assets,  the fees will be higher when leverage  (including  the
AMPS) is utilized, giving the Advisers an incentive to utilize leverage.


In February 2008, the recent  liquidity crisis in the credit market spilled over
into the auction  rate  preferred  market,  disrupting  trading in auction  rate
preferred  securities  ("ARPS") like the AMPS and resulting in widespread failed
auctions of ARPS. The Fund's most recent AMPS auction  similarly  failed on [ ],
2008,  and as of the date of this  Prospectus,  there has not been a  successful
subsequent  auction.  A failed  auction  occurs  when  there are too few  buyers
willing to bid on and purchase the ARPS at the periodic auction.  Generally in a
failed auction,  because there are too few buyers, holders of ARPS are unable to
sell and therefore must remain holders of the ARPS, although they continue to be
paid interest on the shares they hold,  typically at a higher  interest rate. In
the case of the AMPS, this higher rate is referred to as the "Maximum Applicable
Rate".  The  Maximum  Applicable  Rate  is  intended  in part  to  mitigate  the
inconvenience and temporary illiquidity of failed auctions,  although the holder
must  continue  to hold  the  ARPS  until a  subsequent  successful  auction  is
conducted or the issuer redeems the ARPS.

In the case of the AMPS,  the  Maximum  Applicable  Rate  depends  on the credit
rating assigned to the AMPS and the duration of the dividend period.  Currently,
the AMPS have a Fitch rating of "AAA" and a Moody's rating of "Aaa" and a 28-day
dividend period.  This  corresponds with a Maximum  Applicable Rate which is the
higher of 125% of the reference rate (i.e., the 30-day London Inter-Bank Offered
Rate or "LIBOR") or 1.25% plus the reference  rate. As of February 29, 2008, the
Maximum Applicable Rate for the Fund was ___%. As a point of reference, prior to
the first failed AMPS auction,  the rate paid by the Fund was ___%. Although the
Maximum  Applicable  Rate presently paid by the Fund is relatively  close to the
rate  set at its most  recent  successful  auction,  these  circumstances  could
abruptly  change if  short-term  interest  rates  increase.  In such event,  the
Maximum Applicable Rate could also increase substantially.

Additionally,  should the credit rating assigned to the AMPS be downgraded,  the
Maximum Applicable Rate paid by the Fund would increase depending on the revised
credit rating.  For example,  should the AMPS' credit rating be downgraded to A+
by Fitch  and/or to A1 by Moody's,  the Maximum  Applicable  Rate payable by the
Fund would increase to the higher of 200% of the reference rate (i.e., LIBOR) or
2.00% plus the reference rate. In no instance would the Maximum  Applicable Rate
exceed the  greater of 300% of the  reference  rate or 3.00% plus the  reference
rate.

Level-Rate  Distribution Policy. In May 2006 stockholders voted in favor of, and
the Fund adopted,  the  Distribution  Policy. A level-rate  distribution  policy
allows a fund to provide a regular,  periodic (but not assured)  distribution to
its common stockholders which is not dependent on the amount of income earned or
capital  gains  realized  by the fund.  An  equity  fund,  such as the Fund,  is
designed for investors to participate in a professionally  managed  portfolio of
equity  investments.  Over the long-term,  equity  investments have historically
provided  higher  total  returns than fixed  income  investments  such as bonds.
However,  unlike  most fixed  income  funds,  which pay  stockholders  a regular
dividend based on the fund's investment income,  equity funds generally pay only
one dividend per year consisting of a relatively  small amount of net investment
income and any net realized capital gains. A level-rate  distribution  permits a
fund to distribute a predetermined monthly amount, regardless of when or whether
income is earned or capital gains are realized.  However, the practice of making
distributions  that exceed income earned or capital gains realized can result in
the Fund making  distributions that consist of a return of capital. A level-rate
distribution  policy  recognizes  that many  investors are willing to accept the
potentially higher asset volatility of equity investments, but would prefer that
a consistent  level of cash  distributions  are available to them each month for
reinvestment or other purposes of their choosing.

The Distribution Policy initially provided for monthly distributions at the rate
of $0.10 per Share per month, or $1.20 per Share annually,  which  represented a
14.9%  annual  distribution  rate  relative  to the Fund's  NAV at the time.  In
February 2007, because the NAV of the Fund had increased substantially since the
Distribution  Policy was  adopted,  and the Board  wished to  maintain a similar
annual  distribution  rate to that  originally  adopted,  the Fund increased the
distribution  rate to $0.115 per Share per month,  or $1.38 per Share  annually,
representing a 14.6% annual  distribution rate relative to the Fund's NAV at the
time.  At its  quarterly  meeting  in January  2008,  the Board  considered  and
resolved to maintain the then-current  distribution rate at $0.115 per Share per
month,  or $1.38 per Share annually,  representing  ___% of the Fund's per share
market  price and ___% of the Fund's  most  recent  NAV,  both on an  annualized
basis. The annual  distribution  rate under the Distribution  Policy is reviewed
periodically  by the Board and  generally  will not exceed the annual  long term
performance of the Fund based on a rolling 5-year performance  history,  subject
to the Board's  discretion  to suspend,  modify or  terminate  the  Distribution
Policy at any time. In conducting its review of the annual distribution rate and
the Fund's performance  history,  the Board will take into account,  among other
factors,  that during  2002,  the first year the Advisers  served as  investment
advisers to the Fund,  the Fund's  portfolio  consisted  primarily of bonds that
were below investment grade, and that the Fund recognized  significant losses as
these  investments  were  liquidated and the proceeds  invested in common stocks
consistent with the Fund's new objective of total return.


Exemptive  relief  from the SEC is not  required  in the  near  term in order to
continue the Distribution  Policy. The Fund has applied to the SEC for exemptive
relief from  Section  19(b) of the 1940 Act and Rule 19b-1 under the 1940 Act to
enable the Fund to continue the Distribution  Policy over the long term. Section
19(b) of the 1940 Act limits an  investment  company's  ability to make multiple
distributions  of net realized  long-term  capital  gains each year,  subject to
certain exceptions contained in Rule 19b-1.  Historically,  investment companies
that  wished to  implement  a managed  distribution  policy  requiring  multiple
capital gain  distributions  per year routinely  received  exemptive relief from
Section  19(b).  However,  as of the  date of this  Prospectus,  the SEC has not
responded  either  favorably or  unfavorably to the Fund's request for exemptive
relief  originally  filed in 2004 and amended in January  2007.  It is generally
believed  that the SEC has imposed a moratorium on granting this type of request
for exemptive  relief over concerns that  inadequate  disclosures  by investment
companies  regarding sources of distributions  (e.g., net investment income, net
long-term  capital gain,  return of capital) have resulted in fund investors not
understanding  that  distributions  may  include a return of capital  and do not
necessarily represent a dividend yield.

For the fiscal year ended  November 30, 2007,  the  Distribution  Policy did not
violate Section 19(b) because the Fund had capital loss carry-forwards that were
used to offset the Fund's realized net capital gains and all gains not otherwise
offset  were  paid  to  stockholders  in  the  calendar-year-end   distribution.
Accordingly,  only one distribution was made pursuant to the Distribution Policy
which consisted of net long-term capital gains in compliance with Section 19(b).
The Fund may  similarly  have net  realized  gains for the  fiscal  year  ending
November 30, 2008.  In such case,  unless the Fund (i) realizes  capital  losses
prior to November 30, 2008, in an amount sufficient to offset all realized gains
for the Fund's  fiscal year or (ii) obtains  exemptive  relief from the SEC from
Section  19(b)  of the  1940  Act and Rule  19b-1  under  the 1940 Act  prior to
November  30,  2008,  so  it  can   characterize   a  portion  of  its  previous
distributions  as  realized  capital  gains,  the  Fund  would  be  required  to
distribute  the entire  amount of its net realized  capital gains for the fiscal
year to its  stockholders in December 2008. The per share amount of any such net
realized capital gains  distribution may be greater than the per share amount at
which  monthly   distributions   previously  have  been  made  pursuant  to  the
Distribution  Policy,  and therefore could shrink the Fund's assets more quickly
than would otherwise be the case.

There are certain risks and negative  impacts  associated with the  Distribution
Policy:

     -    The  Distribution  Policy  may  impact  the way in  which  the Fund is
          managed. The Advisers do not expect to make significant changes to the
          makeup of the Fund's  portfolio  or seek to invest in "high  yielding"
          securities as a result of the Distribution  Policy. The Fund may carry
          a slightly  higher cash  balance from time to time in order to fulfill
          the  distribution  payments.  If the Fund carries higher cash balances
          during rising equity markets, the Fund's performance may be negatively
          affected relative to other equity funds.  Conversely,  carrying higher
          cash balances during  declining  equity markets may positively  affect
          the Fund's  performance.  To avoid Code and 1940 Act  requirements  to
          make distributions in excess of the Distribution  Policy, the Advisers
          expect  to  manage  the  portfolio  slightly  differently  than in the
          absence of the Distribution  Policy,  but in a manner  consistent with
          the  Fund's  investment  objective  and  policies.  For  example,  the
          Advisers  may  realize a loss in a security  by selling it in order to
          offset  realized  capital  gains,  whereas,  absent  the  Distribution
          Policy, the Advisers may not have realized the loss. The Advisers also
          may  increase  the Fund's  position in a security  with an  unrealized
          loss, and subsequently sell the tax lot with the higher tax cost basis
          31 days or more after the  purchase to avoid a wash sale,  leaving the
          Fund with  approximately  the same position in the security but with a
          lower tax cost  basis.  The  Advisers  may also  purchase  stock of an
          issuer paying an unusually  large dividend and, after the stock begins
          trading  ex-dividend,  sell the stock at a loss,  thereby allowing the
          Fund to offset  gains  realized  on other  securities  sold during the
          year. The Advisers enter into such transactions only when they believe
          that there is a high  probability of realizing an economic  profit for
          the Fund. The investment  strategies  described above were utilized by
          the Advisers prior to the implementation of the Distribution Policy to
          realize losses for the Fund in an effort to be tax efficient,  and may
          result in slightly higher  portfolio  turnover and transaction  costs.
          The Advisers will not hold  positions  with  unrealized  capital gains
          that they believe should be sold based on their  fundamental  analysis
          of the underlying  issuer.  The Advisers believe it would be better to
          discontinue the Distribution  Policy than to see unrealized gains turn
          into unrealized  losses.  The Fund may have net realized gains for the
          fiscal year ending  November 30, 2008.  In such case,  unless the Fund
          (i) realizes  capital  losses prior to November 30, 2008, in an amount
          sufficient to offset all realized  gains for the Fund's fiscal year or
          (ii) obtains  exemptive  relief from the SEC from Section 19(b) of the
          1940 Act and Rule 19b-1 under the 1940 Act prior to November  30, 2008
          so it can  characterize  a portion of its  previous  distributions  as
          realized  capital gains,  the Fund would be required to distribute the
          entire amount of its net realized capital gains for the fiscal year to
          its  stockholders  in December  2008. The per share amount of any such
          net realized capital gains  distribution may be greater than per share
          amount  at which  monthly  distributions  previously  have  been  made
          pursuant to the  Distribution  Policy,  and therefore could shrink the
          Fund's  assets more  quickly  than would  otherwise  be the case.  The
          Advisers  may utilize the  investment  strategies  described  above to
          realize  capital  losses in an amount  sufficient to offset the Fund's
          realized capital gains for the fiscal year.


     -    The  Distribution  Policy is subject to  modification,  suspension  or
          termination at any time by the Board.  Because the Distribution Policy
          was  implemented  without an exemption under Section 19(b) of the 1940
          Act and Rule  19b-1,  the Fund must have the  flexibility  to  modify,
          suspend or terminate the Distribution  Policy immediately if the Board
          deems  such  action  to be in the best  interests  of the Fund and its
          stockholders.

          As  discussed   above,   the  annual   distribution   rate  under  the
          Distribution  Policy  is  reviewed   periodically  by  the  Board  and
          generally will not exceed the average annual long term  performance of
          the Fund based on a rolling 5-year performance  history. If the Fund's
          long term  performance  declines,  the Board will make a corresponding
          reduction  in the  annual  distribution  rate  under the  Distribution
          Policy.  In addition,  the SEC may impose  conditions  on any grant of
          exemptive relief from Section 19(b) that require the Board to consider
          adjusting the annual  distribution rate on a more frequent basis under
          certain circumstances.

     -    A modification,  suspension or termination of the Distribution  Policy
          could result in a concurrent  reduction or cessation of the $0.115 per
          Share monthly distribution  presently paid to Common Stockholders.  If
          the  Distribution  Policy was suspended or terminated,  the Fund would
          revert back to its prior practice of distributing  only net investment
          income and net realized capital gains at the end of its fiscal year. A
          modification,  suspension or  termination of the  Distribution  Policy
          could have the effect of abruptly  creating a trading discount (if the
          Fund is trading  at or above  NAV) or  widening  an  existing  trading
          discount.

     -    If  the  Fund's   annual   total   return  is  less  than  the  annual
          distribution,  the  Distribution  Policy  could  have  the  effect  of
          shrinking  the  assets  of the  Fund and thus  increasing  the  Fund's
          expense ratio (i.e.,  the Fund's fixed  expenses will be spread over a
          smaller  pool of  assets).  The Board has  determined  that the annual
          distribution  rate  should  not exceed the  average  annual  long term
          performance of the Fund based on a rolling 5-year performance history.
          However,  there may be interim  periods where the annual  distribution
          rate  exceeds the  short-term  return on the Fund's  NAV,  which could
          shrink  the  assets of the  Fund.  In  addition,  if the Fund does not
          obtain  exemptive  relief from  Section  19(b) prior to the end of its
          fiscal  year and the Board  elects to  characterize  the Fund's  final
          distribution  for the calendar  year as including all net capital gain
          realized  during the year, such  distribution  could shrink the Fund's
          assets more quickly than would  otherwise be the case if the per share
          amount of any such net realized capital gains  distribution is greater
          than per share amount at which monthly  distributions  previously have
          been made pursuant to the Distribution Policy.

     -    A  distribution  which  contains a return of  capital,  which the Fund
          expects  generally to be the case, will result in added record keeping
          for Common  Stockholders.  Return of capital is not  taxable to Common
          Stockholders in the year it is paid. However, Common Stockholders will
          need to  reduce  the cost  basis of their  stock by the  amount of the
          return of  capital so that,  when they sell the stock,  they will have
          properly accounted for the return of capital.  Such an adjustment will
          cause a  Common  Stockholder's  gain to be more,  or their  loss to be
          less,  as the  case  may be.  For  example,  if a  Common  Stockholder
          purchased  stock in the Fund for $7.00  per  Share  and then  receives
          dividends  from the Fund which have $1.00 per Share return of capital,
          and the stockholder subsequently sells his Shares for $7.50 per Share,
          his gain will be $1.50 per  Share,  since he would have  adjusted  his
          cost  basis  downward  by $1.00  per  Share  (from  $7.00 to $6.00 per
          Share).  Common  Stockholders  who hold  their  stock  in  non-taxable
          accounts  such as IRA's  will  not need to make any such  adjustments.
          Common  Stockholders should contact their own tax advisor if they have
          questions  regarding the tax treatment of the distributions  under the
          Distribution Policy.


Discount From Net Asset Value.  The common stock of closed-end  funds frequently
trades  at a  market  price  that is  less  than  the  value  of the net  assets
attributable  to those shares (a "discount").  The  possibility  that the Shares
will trade at a discount  from NAV is a risk separate and distinct from the risk
that the Fund's NAV will decrease. The risk of purchasing shares of a closed-end
fund that might trade at a discount or unsustainable  premium is more pronounced
for investors who wish to sell their shares in a relatively short period of time
because, for those investors, realization of a gain or loss on their investments
is likely to be more  dependent upon the existence of a premium or discount than
upon portfolio performance.

Premium  Over NAV.  The Shares may trade at a market  price that is greater than
the value of the net assets  attributable  to those  Shares (a  "premium").  The
possibility  that the Shares will trade at a premium over NAV is a risk separate
and distinct from the risk that the Fund's NAV will  decrease.  For those Common
Stockholders who acquire Shares at a premium, such premium may be unsustainable.
If the price of the Shares falls, the Common Stockholders will experience a loss
on their investments.

Size of the Fund.  As of  February  29,  2008,  the Fund had total net assets of
approximately $151.0 million,  including $25 million in AMPS leverage. As a fund
with a  relatively  small  asset  base,  the  Fund  may be  subject  to  certain
operational  inefficiencies  including:  higher expense ratio,  less coverage by
analysts and the  marketplace  in general which can  contribute to a less active
trading market for the Shares and  consequently a wider  discount,  more limited
ability  to  attract  new   investors   and/or  take   advantage  of  investment
opportunities  and less  ability to take  advantage of lower  transaction  costs
available to larger investors.

Repurchase of the Shares.  The Fund is  authorized  to repurchase  Shares on the
open  market  when the  Shares are  trading at a discount  from NAV per Share as
determined by the Board from time to time. The acquisition of Shares by the Fund
will  decrease the total assets of the Fund and,  therefore,  have the effect of
increasing the Fund's expense ratio and may adversely  affect the ability of the
Fund to achieve its  investment  objectives.  Furthermore,  the  acquisition  of
Shares by the Fund may  require the Fund to redeem the AMPS in order to maintain
certain  asset  coverage  requirements.  To the  extent  the  Fund  may  need to
liquidate  investments  to fund the  repurchase  of  Shares,  this may result in
portfolio  turnover which will result in additional  expenses being borne by the
Fund.

Dependence on Key  Personnel.  The Advisers are dependent  upon the expertise of
Stewart  Horejsi  in  providing  advisory  services  with  respect to the Fund's
investments.  If the Advisers  were to lose the services of Mr.  Horejsi,  their
ability  to  service  the Fund  could be  adversely  affected.  There  can be no
assurance  that a  suitable  replacement  could be found for Mr.  Horejsi in the
event of his death, resignation, retirement or inability to act on behalf of the
Advisers.

Issuer  Risk.  The value of the Fund's  portfolio  may  decline  for a number of
reasons which directly relate to the issuers of the securities in the portfolio,
such as management  performance,  financial  leverage and reduced  demand for an
issuer's goods and services.

Inflation  Risk.  Inflation  risk is the risk that the value of assets or income
from  investments  will be worth less in the future as inflation  decreases  the
value of money. As inflation  increases,  the real value of the Fund's portfolio
can decline.

Repurchase Agreements.  The use of repurchase agreements involves certain risks.
For example,  if the seller of securities under a repurchase  agreement defaults
on its  obligation  to  repurchase  the  underlying  securities,  as a result of
bankruptcy or otherwise, the Fund will seek to dispose of such securities, which
action  could  involve  costs or delays.  If the seller  becomes  insolvent  and
subject to liquidation or  reorganization  under applicable  bankruptcy or other
laws,  the  Fund's  ability  to  dispose  of the  underlying  securities  may be
restricted.  Finally,  it  is  possible  that  the  Fund  may  not  be  able  to
substantiate its interest in the underlying securities.

Foreign  Securities Risk. The Fund is permitted to invest in foreign  securities
without  limitation.  Investment  in non-U.S.  issuers may involve  unique risks
compared  to  investing  in  securities  of U.S.  issuers.  These risks are more
pronounced  to the extent  that the Fund  invests a  significant  portion of its
non-U.S.  investments  in one region or in the  securities  of  emerging  market
issuers. These risks may include:

     -    Less  information  about non-U.S.  issuers or markets may be available
          due to less rigorous  disclosure,  accounting  standards or regulatory
          practices.


     -    Many non-U.S. markets are smaller, less liquid and more volatile. In a
          changing  market,  the  Advisers  may not be able to sell  the  Fund's
          portfolio  securities at times, in amounts and at prices they consider
          reasonable.

     -    Currency  exchange rates or controls may adversely affect the value of
          the Fund's investments.

     -    The  economies  of non-U.S.  countries  may grow at slower  rates than
          expected or may experience downturns or recessions.

     -    Withholdings and other non-U.S. taxes may decrease the Fund's return.

Currency Risk. The Fund currently  holds  investments in foreign  securities and
thus a portion of the Fund's  assets may be quoted or  denominated  in  non-U.S.
currencies.  These  securities  may be  adversely  affected by  fluctuations  in
relative currency exchange rates and by exchange control regulations. The Fund's
investment performance may be negatively affected by a devaluation of a currency
in which the Fund's investments are quoted or denominated.  Further,  the Fund's
investment  performance  may be  significantly  affected,  either  positively or
negatively,  by  currency  exchange  rates  because  the  U.S.  dollar  value of
securities  quoted or denominated in another  currency will increase or decrease
in  response  to changes in the value of such  currency  in relation to the U.S.
dollar. The Fund does not currently hedge against the potential decline in value
of foreign  currencies  against  the U.S.  dollar and does not  foresee  hedging
currency risk in the future, though it is not precluded from doing so.

Sovereign Debt Risk. An investment in debt  obligations of non-U.S.  governments
and their political subdivisions  ("sovereign debt") involves special risks that
are not  present in  corporate  debt  obligations.  The  non-U.S.  issuer of the
sovereign  debt  or the  non-U.S.  governmental  authorities  that  control  the
repayment of the debt may be unable or unwilling to repay  principal or interest
when due,  and the Fund may have  limited  recourse  in the event of a  default.
During periods of economic uncertainty,  the market prices of sovereign debt may
be more volatile than prices of debt obligations of U.S.  issuers.  In the past,
certain non-U.S. countries have encountered difficulties in servicing their debt
obligations,  withheld payments of principal and interest and declared moratoria
on the payment of principal and interest on their sovereign debt.

Liquidity  Risk.  Although the Fund invests  primarily in  securities  traded on
national  exchanges,  it may invest in less liquid assets from time to time that
are not  readily  marketable  and may be  subject  to  restrictions  on  resale.
Illiquid  securities  may be more  difficult  to value or may  impair the Fund's
ability to realize the full value of its assets in the event of a  voluntary  or
involuntary  liquidation  of such  assets  and thus may cause a  decline  in the
Fund's NAV. The Fund has no  limitation  on the amount of its assets that may be
invested  in  securities  which are not  readily  marketable  or are  subject to
restrictions on resale, although it may not invest more than 30% of the value of
its  total  assets  in  securities  which  have been  acquired  through  private
placement. In certain situations,  the Fund could find it more difficult to sell
such securities at times, in amounts and at prices they consider reasonable.

Market  Disruption Risk. The terrorist attacks in the United States on September
11, 2001 had a  disruptive  effect on the  securities  markets.  The Fund cannot
predict the effects of similar events in the future on the U.S.  economy.  These
terrorist attacks and related events,  including the war in Iraq, its aftermath,
and  continuing  occupation of Iraq by coalition  forces,  have led to increased
short-term  market  volatility and may have long-term  effects on U.S. and world
economies  and markets.  A similar  disruption  of the  financial  markets could
impact  interest  rates,  auctions,  secondary  trading,  ratings,  credit risk,
inflation and other factors relating to the Common Stock and AMPS.

Anti-Takeover  Provisions  Risk. The Charter and Bylaws include  provisions that
could limit the ability of other  entities or persons to acquire  control of the
Fund or to change the composition of its Board.  Such provisions could limit the
ability of Common Stockholders to sell their Shares at a premium over prevailing
market prices by  discouraging  a third party from seeking to obtain  control of
the Fund. These provisions  include advance notice  requirements for stockholder
proposals and super-majority  voting requirements for certain  transactions with
affiliates, open-ending the Fund or a merger, liquidation, asset sale or similar
transaction.

Investments  in  RICs.  The  Fund  may  invest  in  securities  issued  by other
closed-end registered funds (or RICs) subject to such limitations,  restrictions
and conditions as imposed by Federal law. Accordingly,  the Fund will be subject
to the particular risks associated with investing in other closed-end funds that
are separate from risks associated with the underlying  investments held by such
RICs.  Both the Fund and any RICs in which it invests have  management  fees. In
addition,  the RICs in  which  the  Fund  invests  will  typically  incur  other
operating  expenses that are borne by their investors,  including the Fund. As a
result,  Fund  stockholders  will bear not only the Fund's  management  fees and
operating expenses, but also the fees and expenses of the RICs in which the Fund
invests.  Investors  would bear less  expense if they  invested  directly in the
underlying RICs in which the Fund invests. The Fund may also invest in RICs that
are not limited in their portfolio trading activity and thus may experience high
portfolio   turnover  rates.   Higher   turnover  rates   generally   result  in
correspondingly  greater brokerage commissions and other transactional  expenses
which may be borne by the Fund,  directly  or through  its  investment  in RICs.
Higher  turnover  rates also may be more likely to generate  capital  gains that
must be  distributed  to Fund  stockholders,  either as a result  of the  Fund's
receipt of capital  gains from RIC  transactions  or from the Fund's  trading in
RICs or other investments.


Investments  in Auction Rate  Preferred  Securities.  From time to time the Fund
invests in the ARPS of other  closed-end  investment  companies  which carry the
highest credit rating from Moodys,  S&P and Fitch.  As of February 29, 2008, the
Fund held approximately $_______ of such ARPS. Recently, the liquidity crisis in
the  credit  market  spilled  over  into  the  auction  rate  preferred  market,
disrupting trading in ARPS and resulting in widespread failed auctions. A failed
auction occurs when there are too few buyers willing to bid on and purchase ARPS
at the  periodic  auction,  typically  held every 7 or 28 days.  Generally  in a
failed auction, because there are too few buyers, holders of the ARPS are unable
to sell their shares and therefore must remain holders of the ARPS although they
continue  to be paid  interest on the shares  they hold,  typically  at a higher
interest rate (e.g., a "fail rate"). Although fail rates are intended in part to
mitigate the inconvenience and temporary illiquidity of failed auctions, holders
like the Fund  must  continue  to hold the ARPS  until a  subsequent  successful
auction is conducted or the issuer  redeems the ARPS.  Consequently,  holders of
ARPS like the Fund will have to hold ARPS until liquidity returns to the auction
rate preferred market and successful  auctions are held, or until the issuers of
the ARPS elect to  redeem.  The Fund  cannot  predict  when or if the  liquidity
issues  affecting the auction rate preferred market will be resolved and thus is
not able to predict when it will be able to liquidate its ARPS holdings.


                                  THE OFFERING

Terms of the Offering.  The Fund is issuing to Record Date  Stockholders  (i.e.,
stockholders  who hold  Shares on the Record  Date)  non-transferable  Rights to
subscribe  for  Shares.  Each  Record  Date  Stockholder  is  being  issued  one
non-transferable  Right for every one Share owned on the Record Date. The Rights
entitle a Record Date Stockholder to acquire one Share at the Subscription Price
for every  three  Rights  held.  Fractional  Shares  will not be issued upon the
exercise  of the  Rights.  Accordingly,  the  number of Rights to be issued to a
Record  Date  Stockholder  on the Record  Date will be rounded up to the nearest
whole number of Rights evenly divisible by three. Rights may be exercised at any
time during the Subscription Period which commences on April 9, 2008 and ends at
5:00 p.m., New York City time, on April 30, 2008, unless extended by the Fund to
a date not later  than May 12,  2008,  at 5:00  p.m.,  New York City  time.  See
"Expiration  of the  Offering."  The right to acquire one  additional  Share for
every three Rights held during the Subscription Period at the Subscription Price
is hereinafter referred to as the "Primary Subscription."

In addition to the Primary  Subscription,  Record Date Stockholders who exercise
all of their  Rights  are  entitled  to  subscribe  for  Shares  which  were not
otherwise   subscribed   for  by  others  in  the  Primary   Subscription   (the
"Over-Subscription  Privilege"). If sufficient Shares are not available to honor
all  requests  under  the  Over-Subscription  Privilege,  the Fund  may,  in its
discretion,  issue  additional  Shares up to 100% of the Shares available in the
Offering (or 5,080,503  Shares for a total of 10,161,006  Shares) (defined below
as  "Over-Allotment  Shares")  to honor  over-subscription  requests,  with such
Shares  subject  to  the  same  terms  and  conditions  of  this  Offering.  See
"Over-Allotment  and   Over-Subscription   Privilege"  below.  For  purposes  of
determining  the  maximum  number of  Shares a Common  Stockholder  may  acquire
pursuant to the Offering,  broker-dealers whose Shares are held of record by any
Nominee  will be deemed to be the  holders of the Rights that are issued to such
Nominee on their behalf.  The term "Nominee"  shall mean,  collectively,  CEDE &
Company  ("Cede"),  as nominee for the Depository Trust Company ("DTC"),  or any
other depository or nominee.  Shares acquired pursuant to the  Over-Subscription
Privilege are subject to allotment,  which is more fully  discussed  below under
"Over-Allotment and Over-Subscription Privilege."

The Horejsi  Affiliates  have  indicated  that they will fully  subscribe in the
Primary Subscription on the same terms as other Common Stockholders. The Horejsi
Affiliates may subscribe in the  Over-Subscription  Privilege.  However,  if the
Horejsi  Affiliates fully exercise their Rights in the Primary  Subscription and
the  Over-Subscription   Privilege,   under  certain  circumstances  (e.g.,  low
participation by Common  Stockholders in the Offering),  the Horejsi  Affiliates
could  substantially  increase  their  percentage  ownership  of the  Fund at an
advantageous  price  relative to the market price.  The Horejsi  Affiliates  are
subject to certain  limitations  on selling Shares in the Fund.  Presently,  any
Shares acquired in the Offering by the Horejsi Affiliates as "affiliates" of the
Fund as that term is  defined  under  the  Securities  Act,  may only be sold in
accordance  with  Rule  144  under  the  Securities  Act or  another  applicable
exemption  or  pursuant  to  an  effective   registration  statement  under  the
Securities  Act.  In  general,  under  Rule 144,  as  currently  in  effect,  an
"affiliate" of the Fund is entitled to sell, during a 90 day period, a number of
Shares that does not exceed the greater of 1% of the then outstanding  Shares or
the average weekly  reported  trading volume of the Common Stock during the four
calendar  weeks  preceding  such sale.  Sales under Rule 144 are also subject to
certain restrictions on the manner of sale, to notice  requirements,  and to the
availability  of current  public  information  about the Fund. In addition,  any
profit  resulting  from the sale of Shares  acquired by the  Horejsi  Affiliates
pursuant to the Over-Subscription Privilege, if the Shares are held for a period
of less than six months,  may be subject to being  returned to the Fund pursuant
to Section 16 of the Exchange Act.


Rights will be  evidenced  by  Subscription  Certificates.  The number of Rights
issued to each holder of Shares will be stated on the Subscription  Certificates
delivered to the holder.  The method by which Rights may be exercised and Shares
paid for is set forth below in "Method of  Exercising  Rights" and  "Payment for
Shares." A RIGHTS  HOLDER  WILL HAVE NO RIGHT TO  RESCIND A  PURCHASE  AFTER THE
SUBSCRIPTION  AGENT HAS RECEIVED PAYMENT OR NOTICE OF GUARANTEED  DELIVERY.  See
"Payment for Shares" below. Shares issued pursuant to an exercise of Rights will
be listed on the NYSE.

The Rights are  non-transferable  and may not be purchased or sold.  Rights will
expire without  residual  value at the  Expiration  Date. The Rights will not be
listed  for  trading on the NYSE,  and there will not be any market for  trading
Rights.  The Shares to be issued  pursuant  to the  Offering  will be listed for
trading  on the NYSE,  subject  to the NYSE  being  officially  notified  of the
issuance of those Shares.

Purpose  of the  Offering.  At a meeting  held on  February  20,  2008 the Board
approved the Offering and  determined  that it would be in the best interests of
the Fund and its existing  stockholders  to increase the assets of the Fund. The
primary reasons include:

     -    The Primary  Subscription will provide existing Common Stockholders an
          opportunity  to  purchase   additional  Shares  at  a  price  that  is
          potentially  below market value without  incurring  any  commission or
          transaction charges.

     -    Raising more cash will better  position the Fund to take  advantage of
          investment opportunities that may arise.

     -    Increasing  the Fund's  assets will  provide the Fund  flexibility  in
          maintaining  the  Distribution  Policy (see  discussion  below).  This
          policy permits Common  Stockholders to realize a predictable,  but not
          assured,  level  of cash  flow and some  liquidity  periodically  with
          respect to their Common Stock without having to sell Shares.

     -    Increasing  Fund assets may lower the Fund's  expenses as a proportion
          of net assets  because  the Fund's  fixed costs would be spread over a
          larger asset base.  There can be no assurance  that by increasing  the
          size of the Fund, the Fund's expense ratio will be lowered.

     -    Since the Offering will increase the Fund's outstanding Shares and the
          liquidity  of the Shares,  it may  increase  the number of  beneficial
          owners of the Shares  over the long term,  which  could  increase  the
          level of market interest in and visibility of the Fund and improve the
          trading liquidity of the Shares on the NYSE.

     -    Increasing the Fund's total assets will reduce the Fund's  leverage as
          a percentage of assets from ____% to approximately  ___% (assuming the
          Primary  Subscription  is fully  subscribed).  The  Fund is  currently
          leveraged  with  $25  million  of the AMPS  and the  Fund  intends  to
          maintain this amount of leverage.  Because leveraging  increases risk,
          the  additional  assets from the Offering will mitigate risks commonly
          associated with leverage.

     -    The  increase  in  assets  will  result  in  the  Fund  exceeding  the
          asset-coverage ratio requirements under its Articles  Supplementary by
          a wider margin,  thus giving the Fund greater  flexibility  to buy and
          hold investments without violating those requirements.

One of the  purposes  of the  Offering  is to provide  the Fund  flexibility  in
maintaining the Distribution  Policy. The Distribution Policy was adopted by the
Fund in May  2006.  The  Distribution  Policy  initially  provided  for  monthly
distributions  at the rate of $0.10  per  Share  per  month,  or $1.20 per Share
annually,  which  represented a 14.9% annual  distribution  rate relative to the
Fund's  NAV at the  time.  In  February  2007,  because  the NAV of the Fund had
increased substantially since the Distribution Policy was adopted, and the Board
wished  to  maintain  a  similar  annual  distribution  rate to that  originally
adopted, the Fund increased the distribution rate to $0.115 per Share per month,
or $1.38 per Share  annually,  representing  a 14.6%  annual  distribution  rate
relative  to the Fund's  NAV at the time.  At its  quarterly  meeting in January
2008,  the  Board   considered   and  resolved  to  maintain  the   then-current
distribution  rate at $0.115 per Share per month,  or $1.38 per Share  annually,
representing  ___% of the Fund's per Share  market  price and ___% of the Fund's
most recent NAV, both on an annualized basis. The annual distribution rate under
the Distribution Policy is reviewed periodically by the Board and generally will
not  exceed  the  annual  long term  performance  of the Fund based on a rolling
5-year performance history, subject to the Board's discretion to suspend, modify
or terminate the  Distribution  Policy at any time. In conducting  its review of
the annual distribution rate and the Fund's performance  history, the Board will
take into account,  among other  factors,  that during 2002,  the first year the
Advisers  served as  investment  advisers  to the  Fund,  the  Fund's  portfolio
consisted primarily of bonds that were below investment grade, and that the Fund
recognized  significant  losses as these  investments  were  liquidated  and the
proceeds  invested in common stocks  consistent with the Fund's new objective of
total return.


Generally,  distributions under the Distribution Policy will consist mostly of a
return of capital.  Distributions  may have a small  component of net investment
income,  but the exact tax  characteristics  of the  distributions  is not known
until the Fund's fiscal year-end (i.e.,  November 30 of each year). A "return of
capital"  represents a return of a Common  Stockholder's  original investment in
the  Shares,  and  should not be  confused  with a  dividend  yield.  To explain
further,  a "return of  capital"  is what the term  implies,  a return of Common
Stockholders'  capital  investment in the Fund. A return of capital generally is
not taxable.  It is not considered  "yield," "income," or "capital gains," items
which are taxable.  When Common Stockholders  receive a return of capital,  they
are getting back part of their  investment and  consequently the return of their
already-taxed capital investment is tax free to the Common Stockholders.

To the extent  Common  Stockholders  receive a return of  capital,  they will be
required  to reduce  their cost basis by the same  amount upon the sale of their
Shares.  This  adjustment to their cost basis in Shares means that,  when Common
Stockholders  decide to sell Shares in the Fund, they will have a larger capital
gain  (or  smaller  capital  loss)  than  prior  to  the  implementation  of the
Distribution  Policy.  This may  have  negative  tax  consequences,  and  Common
Stockholders  should seek their own tax advice regarding the reporting of income
and the gain or loss on the sale of the Shares.  Common Stockholders should note
the following  important  risk and other  factors  concerning  the  Distribution
Policy:

     -    The  Distribution  Policy  may  impact  the way in  which  the Fund is
          managed.

     -    Distributions, if any, may include return of capital to the extent the
          Fund's net investment  income and net capital gain are insufficient to
          meet the fixed distribution amount paid to Common Stockholders.

     -    The Board may modify,  suspend or terminate the Distribution Policy at
          any time and such modification,  suspension or termination may have an
          abrupt and adverse effect on the market price of the Shares, resulting
          in a trading  discount  (if the Fund is  trading  at or above  NAV) or
          widening an existing discount.

     -    Common  Stockholders  are  responsible for tracking and, if necessary,
          adjusting   their  cost  basis  of  Shares   should  they   receive  a
          distribution  which includes a return of capital as indicated on their
          tax form(s).

     -    The tax  characteristic  of the  distributions and exactly how much is
          net investment  income,  ordinary  income,  capital gains, if any, and
          return  of  capital,  if any,  will be  indicated  on  their  IRS Form
          1099-DIV.

     -    If  the  Fund's   annual   total   return  is  less  than  the  annual
          distribution,  the  Distribution  Policy  could  have  the  effect  of
          shrinking  the  assets  of the  Fund and thus  increasing  the  Fund's
          expense ratio (i.e.,  the Fund's fixed  expenses will be spread over a
          smaller  pool of  assets).  The Board has  determined  that the annual
          distribution  rate  should not exceed the Fund's  average  annual long
          term  performance  of the Fund based on a rolling  5-year  performance
          history.  However,  there may be  interim  periods  where  the  annual
          distribution  rate  exceeds the  short-term  return on the Fund's NAV,
          which could shrink the assets of the Fund.

For a more detailed  discussion  of the above risk factors,  see "Risk Factors -
Level-Rate Distribution Policy."

Rights holders who exercise their Rights will receive newly issued Shares within
fifteen (15) days of the record date of the most recent  monthly  payment  under
the  Distribution  Policy,  which record date may occur during the  Subscription
Period.  Common  Stockholders  who  receive  newly  issued  Common  Stock in the
Offering  will not receive a  distribution  under the  Distribution  Policy with
respect to such newly issued Common Stock for the record date immediately  prior
to issuance of the newly issued Shares.  Common Stockholders will be entitled to
receive monthly  distributions  for record dates  subsequent to their receipt of
newly issued  Common  Stock in  accordance  with the  Distribution  Policy.  The
Offering  will not impact  the  distributions  to be paid to current  holders of
Common Stock  regardless  of whether they  exercise  their Rights or allow their
Rights to lapse,  subject to suspension,  termination,  or  modification  of the
Distribution Policy by the Board at any time.


Board Considerations in Approving the Offering.  At meetings held on January 25,
2008 and February 20, 2008,  the Board  considered the approval of the Offering.
In  considering  whether or not to approve  the  Offering,  the Board  relied on
materials  prepared  and  presented  by the Fund's  management  and  independent
consultants  at the request of the Board at such  meetings  and on previous  and
separate  occasions.  Based on such materials and their  deliberations  at these
meetings,  the Board  determined  that it would be in the best  interests of the
Fund and its  stockholders  to conduct the  Offering  in order to  increase  the
assets of the Fund available for current and future investment opportunities. In
making its determination,  the Board considered the various factors discussed in
"The Offering - Purpose of the Offering".  The Board also considered a number of
other  factors,  including the ability of the Advisers to invest the proceeds of
the Offering and the effect of the Offering on the Fund's stock price.

The Board voted  unanimously  to approve the terms of the  Offering.  Two of the
Fund's  Directors  who voted to authorize the Offering are  affiliated  with the
Advisers and, therefore,  could benefit indirectly from the Offering.  The other
three directors are not  "interested  persons" of the Fund within the meaning of
the 1940 Act. The Advisers may also benefit from the Offering  because their fee
is based on the net assets of the Fund.  It is not  possible to state  precisely
the amount of additional  compensation the Advisers might receive as a result of
the Offering  because it is not known how many Shares will be subscribed for and
because the proceeds of the Offering  will be invested in  additional  portfolio
securities, which will fluctuate in value.

The Fund may, in the future,  choose to make  additional  rights  offerings from
time to time for a number of Shares  and on terms that may or may not be similar
to this Offering.  For example,  the Fund previously conducted a similar 1 for 3
rights  offering which  concluded on September 14, 2007 and resulted in the Fund
issuing  approximately  3.8 million new shares of Common Stock.  Any such future
rights   offerings  will  be  made  in  accordance   with  the  then  applicable
requirements of the 1940 Act and the Securities Act.

There can be no assurance that the Fund or its stockholders  will achieve any of
the foregoing objectives or benefits through the Offering.

The Subscription Price. The Subscription Price for the Shares to be issued under
the Offering  will be equal to the NAV per Share as  calculated  at the close of
trading on the Expiration Date. For example, if the Offering were held using the
"Estimated  Subscription  Price" (i.e.,  an estimate of the  Subscription  Price
based on the Fund's  per-share  NAV at the end of business on February 29, 2008,
the  Friday  immediately   preceding  the  printing  and  distribution  of  this
Prospectus, at which time the NAV was $8.27 then the Subscription Price would be
$8.27 per Share.

Over-Allotment and Over-Subscription  Privilege.  If all of the Rights initially
issued  are not  exercised,  any Shares  for which  subscriptions  have not been
received will be offered, by means of the Over-Subscription Privilege, to Record
Date  Stockholders who have exercised all of the Rights initially issued to them
and who wish to acquire more than the number of Shares for which the Rights held
by them are  exercisable.  Record Date  Stockholders  who  exercise all of their
Rights will have the opportunity to indicate on the Subscription Certificate how
many   unsubscribed   Shares  they  are  willing  to  acquire  pursuant  to  the
Over-Subscription Privilege.

If enough unsubscribed  Shares remain after the Primary  Subscriptions have been
exercised, all over-subscription  requests will be honored in full. If there are
not enough unsubscribed Shares to honor all over-subscription requests, the Fund
may, in its discretion,  issue additional  Shares up to 100% of Shares available
in the Offering to honor  over-requests  (defined  above as the  "Over-Allotment
Shares"),  with such  Shares  subject to the same terms and  conditions  of this
Offering.  The method by which any unsubscribed Shares or Over-Allotment  Shares
(collectively,  the "Excess Shares") will be distributed and allocated  pursuant
to the Over-Subscription Privilege is as follows:

     1.   Shares  which  were not  otherwise  subscribed  for by  others  in the
          Primary  Subscription  (the  "Over-Subscription  Privilege")  will  be
          available for purchase only if (i) the maximum number of Shares is not
          subscribed for through the exercise of the Primary Subscription by the
          Expiration Date and/or (ii) the Fund has issued Over-Allotment Shares.

     2.   If  there  are  not  enough   Excess   Shares  to  fully  satisfy  all
          over-subscription   requests   pursuant   to   the   Over-Subscription
          Privilege,  the  Excess  Shares  will  be  allocated  to  Record  Date
          Stockholders who have exercised all of their Rights in accordance with
          their over-subscription request.

     3.   If  there  are  not  enough   Excess   Shares  to  fully  satisfy  all
          over-subscription  requests  by Record Date  Stockholders  pursuant to
          paragraph (2) above,  the Excess Shares will be allocated among Record
          Date   Stockholders   who  have  exercised  all  of  their  Rights  in
          proportion,  not to the  number of Shares  requested  pursuant  to the
          Over-Subscription  Privilege, but to the number of Rights exercised by
          them; provided,  however,  that if this pro-rata allocation results in
          any Record Date Stockholder being allocated a greater number of Excess
          Shares than such Record Date Stockholder  over-subscribed for pursuant
          to the exercise of the Over-Subscription  Privilege,  then such Record
          Date  Stockholder  will be allocated only such number of Excess Shares
          as such holder  over-subscribed  for and the  remaining  Excess Shares
          will be allocated among all other Record Date Stockholders  exercising
          Over-Subscription  Privileges,  but in any event not to exceed 100% of
          the  Shares  available  in the  Offering.  The  formula  to be used in
          allocating the Excess Shares under this paragraph is as follows:



     Rights Exercised by Record Date
             Stockholder                x        Excess Shares Remaining
    ---------------------------------
     Total Rights Exercised by all
     Over-Subscribing Record Date
             Stockholders

     The  percentage of Excess Shares each  over-subscriber  may acquire will be
     rounded up to result in delivery of whole  Shares  (fractional  Shares will
     not be issued).

The forgoing  allocation process may involve a series of allocations in order to
assure  that the total  number of Shares  available  for  over-subscription  are
distributed  on a pro rata  basis.  The Fund will not  offer or sell any  Shares
which  are  not   subscribed   for  under  the  Primary   Subscription   or  the
Over-Subscription  Privilege.  The  Over-Subscription  Privilege  may  result in
additional dilution of a Shareholder's ownership percentage and voting rights.

Expiration of the Offering. The Offering will expire at 5:00 p.m., New York City
time, on the Expiration  Date,  unless  extended by the Fund to a date not later
than May 12,  2008 5:00  p.m.,  New York City  time  (the  "Extended  Expiration
Date").  Rights will expire on the Expiration Date (or Extended  Expiration Date
as the case may be) and thereafter may not be exercised.

Method of Exercising  Rights.  Rights may be exercised by filling in and signing
the reverse side of the Subscription  Certificate and mailing it in the envelope
provided,   or  otherwise  delivering  the  completed  and  signed  Subscription
Certificate to the Subscription  Agent,  together with payment for the Shares as
described below under "Payment for Shares." Rights may also be exercised through
a Rights  holder's  broker,  who may charge the Rights holder a servicing fee in
connection with such exercise.

Completed  Subscription  Certificates must be received by the Subscription Agent
prior to 5:00 p.m.,  New York City  time,  on the third  Business  Day after the
Expiration  Date (unless  payment is effected by means of a Notice of Guaranteed
Delivery as  described  below under  "Payment  for  Shares").  The  Subscription
Certificate  and  payment  should be  delivered  to Colbent  Corporation  at the
following address:

                                                                                 

              If By Mail:                              If By Hand:                     If By Overnight Courier:
              -----------                              -----------                     -----------------------
          Colbent Corporation                      Colbent Corporation                    Colbent Corporation
        Attn: Corporate Actions                  Attn: Corporate Actions                Attn: Corporate Actions
            P.O. Box 859208                      161 Bay State Drive                      161 Bay State Drive
       Braintree, MA 02185-9208                   Braintree, MA 02184                     Braintree, MA 02184



Subscription  Agent.  The  Subscription  Agent  is  Colbent  Corporation,  Attn:
Corporate Actions, P.O. Box 859208,  Braintree, MA 02185-9208.  The Subscription
Agent will receive from the Fund an amount estimated to be $_________, comprised
of the fee for its services and the  reimbursement  for certain expenses related
to the  Offering.  INQUIRIES BY ALL HOLDERS OF RIGHTS  SHOULD BE DIRECTED TO THE
INFORMATION  AGENT,  MORROW & CO. AT  1-800-965-5212;  HOLDERS MAY ALSO  CONSULT
THEIR BROKERS OR NOMINEES.

Payment for Shares.  Payment for Shares shall be calculated by  multiplying  the
Estimated  Subscription Price of $8.27 per Share times the sum of (i) the number
of Shares intended to be purchased in the Primary Subscription (e.g., the number
of Rights exercised divided by three), plus (ii) the number of additional Shares
intended  to be  over-subscribed  under  the  Over-Subscription  Privilege.  For
example, if a Common Stockholder receives 300 Rights and wishes to subscribe for
100 Shares in the Primary Subscription, and also wishes to over-subscribe for 50
additional  Shares  under  the  Over-Subscription  Privilege,  he would  send in
$827.00 plus $413.50. Record Date Stockholders who wish to acquire Shares in the
Primary Subscription or pursuant to the  Over-Subscription  Privilege may choose
between the following methods of payment:


     1.   If,  prior to 5:00  p.m.,  New York  City  time,  on the  third  (3rd)
          Business Day after the Expiration Date, the  Subscription  Agent shall
          have  received  a  Notice  of  Guaranteed   Delivery  by  telegram  or
          otherwise,  from  a bank  or  trust  company  or a  NYSE  member  firm
          guaranteeing  delivery  of (i) payment of the  Estimated  Subscription
          Price of $8.27 per Share for the Shares  subscribed for in the Primary
          Subscription and any additional  Shares subscribed for pursuant to the
          Over-Subscription Privilege and (ii) a properly completed and executed
          Subscription  Certificate,  the  subscription  will be accepted by the
          Subscription  Agent. The Subscription Agent will not honor a Notice of
          Guaranteed   Delivery   unless  a  properly   completed  and  executed
          Subscription  Certificate is received by the Subscription  Agent prior
          to 5:00 p.m.,  New York City time,  on the third  (3rd)  Business  Day
          after the Expiration Date (the "Protect Period").

     2.   Alternatively,  a  Rights  holder  can,  together  with  the  properly
          completed and executed Subscription Certificate,  send payment for the
          Shares acquired in the Primary  Subscription and any additional Shares
          subscribed  for pursuant to the  Over-Subscription  Privilege,  to the
          Subscription Agent based on the Estimated  Subscription Price of $8.27
          per  Share.   To  be  accepted,   such  payment,   together  with  the
          Subscription  Certificate,  must be received by the Subscription Agent
          prior to 5:00 p.m.,  New York City time,  on the third (3rd)  Business
          Day after the Expiration Date.

If the  Estimated  Subscription  Price is  greater  than the  actual  per  Share
purchase  price,  the excess  payment  will be applied  toward the  purchase  of
Unsubscribed  Shares to the extent  that there  remain  sufficient  unsubscribed
Shares available after the Primary Subscription and Over-Subscription  Privilege
allocations are completed. To the extent that sufficient Unsubscribed Shares are
not  available  to apply  all of the  excess  payment  toward  the  purchase  of
Unsubscribed Shares, available Shares will be allocated in the manner consistent
with that described in the section entitled "Over-Subscription Privilege" above.
Any  excess   payment   will  be  refunded  to  the  Record  Date   Stockholders
participating in the  Over-Subscription  Privilege to the extent that additional
Shares are not available.

A PAYMENT,  PURSUANT TO THE SECOND METHOD  DESCRIBED  ABOVE,  MUST ACCOMPANY ANY
SUBSCRIPTION CERTIFICATE FOR SUCH SUBSCRIPTION CERTIFICATE TO BE ACCEPTED.

Within five (5) business days following the completion of the Protect Period,  a
confirmation will be sent by the Subscription  Agent to each Common  Stockholder
(or, if the Shares on the Record  Date are held by CEDE or any other  depository
or  nominee,  to CEDE or such  other  depository  or  nominee).  The date of the
confirmation is referred to as the  "Confirmation  Date." The confirmation  will
show (i) the number of Shares  acquired  pursuant to the  Primary  Subscription;
(ii) the number of Shares, if any,  acquired  pursuant to the  Over-Subscription
Privilege; (iii) the per Share and total purchase price for the Shares; and (iv)
any additional  amount payable by such Common  Stockholder to the Fund (e.g., if
the Estimated  Subscription  Price was less than the  Subscription  Price on the
Expiration  Date)  or any  excess  to be  refunded  by the  Fund to such  Common
Stockholder  (e.g.,  if the  Estimated  Subscription  Price  was  more  than the
Subscription Price on the Expiration Date). Any additional payment required from
a Common  Stockholder must be received by the  Subscription  Agent prior to 5:00
p.m.,  New York City  time,  on the date  specified  as the  deadline  for final
payment  for Shares,  and any excess  payment to be refunded by the Fund to such
Common  Stockholder  will be mailed by the  Subscription  Agent  within ten (10)
Business Days after the Confirmation  Date. All payments by a Common Stockholder
must be made in United States Dollars by money order or by checks drawn on banks
located in the  continental  United  States  payable to Eastern  Bank  acting on
behalf of the Subscription Agent.

Whichever  of  the  above  two  methods  is  used,   issuance  and  delivery  of
certificates  for the Shares  subscribed  for are subject to collection of funds
and actual payment pursuant to any notice of guaranteed delivery.

The Subscription Agent will deposit all checks received by it prior to the final
due date into a  segregated  interest  bearing  account at Eastern  Bank pending
distribution  of the Shares from the  Offering.  All interest will accrue to the
benefit of the Fund and investors  will not earn interest on payments  submitted
nor will interest be credited toward the purchase of Shares.

YOU WILL HAVE NO RIGHT TO RESCIND YOUR SUBSCRIPTION AFTER THE SUBSCRIPTION AGENT
HAS RECEIVED THE SUBSCRIPTION CERTIFICATE OR NOTICE OF GUARANTEED DELIVERY.

If a Record  Date  Stockholder  who  acquires  Shares  pursuant  to the  Primary
Subscription  or the  Over-Subscription  Privilege  does not make payment of any
amounts  due, the Fund  reserves  the right to take any or all of the  following
actions:  (i) find  other  purchasers  for such  subscribed-for  and  unpaid-for
Shares;  (ii) apply any payment  actually  received by it toward the purchase of
the greatest  whole number of Shares which could be acquired by such holder upon
exercise of the Primary Subscription or the Over-Subscription  Privilege;  (iii)
sell all or a portion of the Shares actually purchased by the holder in the open
market, and apply the proceeds to the amounts owed; or (iv) exercise any and all
other  rights  or  remedies  to which  it may be  entitled,  including,  without
limitation,  the right to set off against payments  actually received by it with
respect to such  subscribed  Shares  and to enforce  the  relevant  guaranty  of
payment.


Holders who hold Shares for the account of others, such as brokers, trustees, or
depositaries for securities,  should notify the respective  beneficial owners of
the Shares as soon as possible to ascertain the  beneficial  owners'  intentions
and to obtain  instructions  with respect to the Rights. If the beneficial owner
so  instructs,  the record  holder of the Rights  should  complete  Subscription
Certificates and submit them to the Subscription  Agent with the proper payment.
In  addition,  beneficial  owners of Common  Stock or Rights held through such a
holder should  contact the holder and request the holder to effect  transactions
in accordance with the beneficial owner's instructions.

The  instructions  accompanying  the  Subscription  Certificates  should be read
carefully and followed in detail. DO NOT SEND  SUBSCRIPTION  CERTIFICATES TO THE
FUND OR THE ADVISERS.

The  method  of  delivery  of  Subscription  Certificates  and  payment  of  the
Subscription Price to the Subscription Agent will be at the election and risk of
the Rights holders,  but if sent by mail it is recommended that the certificates
and payments be sent by registered mail,  properly insured,  with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to
the  Subscription  Agent and clearance of payment  prior to 5:00 p.m.,  New York
City time, on the Expiration Date. Because uncertified  personal checks may take
at least five business days to clear, each Record Date Stockholder participating
in the Offering is strongly urged to pay, or arrange for payment,  by means of a
certified or cashier's check or money order.

All questions concerning the timeliness,  validity,  form and eligibility of any
exercise of Rights will be determined by the Fund, whose  determinations will be
final and  binding.  The Fund in its sole  discretion  may  waive any  defect or
irregularity,  or permit a defect or  irregularity  to be corrected  within such
time as it may determine,  or reject the purported exercise of any Right. If the
Fund elects in its sole discretion to waive any defect or  irregularity,  it may
do so on a case-by-case basis which means that not all defects or irregularities
may be waived,  if at all, or waived in the same manner as with other defects or
irregularities.  Subscriptions  will not be  deemed  to have  been  received  or
accepted until all irregularities  have been waived or cured within such time as
the  Fund  determines  in  its  sole  discretion.   Neither  the  Fund  nor  the
Subscription  Agent will be under any duty to give notification of any defect or
irregularity in connection  with the submission of Subscription  Certificates or
incur any liability for failure to give such notification.

Impact of the Offering on the Level-Rate Distribution Policy. Rights holders who
exercise  their Rights will receive newly issued Shares within fifteen (15) days
of the record date of the most recent  monthly  payment  under the  Distribution
Policy,  which  record date may occur  during the  Subscription  Period.  Common
Stockholders  who receive  newly issued  Common  Stock in the Offering  will not
receive a distribution under the Distribution  Policy with respect to such newly
issued  Shares for the record  date  immediately  prior to issuance of the newly
issued  Shares.   Common  Stockholders  will  be  entitled  to  receive  monthly
distributions  for record  dates  subsequent  to their  receipt of newly  issued
Common Stock in accordance with the Distribution  Policy.  The Offering will not
impact the distributions to be paid to current Common Stockholders regardless of
whether they  exercise  their Rights or allow their Rights to lapse,  subject to
suspension, termination, or modification of the Distribution Policy by the Board
at any time.

Delivery  of Stock  Certificates.  Certificates  representing  Shares  purchased
pursuant to the Primary Subscription will be delivered to subscribers as soon as
practicable after the corresponding  Rights have been validly exercised and full
payment for the Shares has been received and cleared.  Certificates representing
Shares purchased pursuant to the  Over-Subscription  Privilege will be delivered
to subscribers as soon as  practicable  after the Expiration  Date and after all
allocations have been conducted.

Foreign  Restrictions.  Subscription  Certificates will only be mailed to Record
Date  Stockholders  whose  addresses are within the United States (other than an
APO or FPO address).  Record Date  Stockholders  whose addresses are outside the
United States or who have an APO or FPO address will receive  written  notice of
the Offering  and those who wish to subscribe to the Offering  either in part or
in full should contact the  Subscription  Agent by written  instruction no later
than three Business Days prior to the  Expiration  Date. The Fund will determine
whether the  Offering  may be made to any such Record  Date  Stockholder.  If no
instructions  have been  received by the  Expiration  Date,  the Rights of those
foreign Record Date Stockholders will expire.


Federal Income Tax Consequences Associated with the Offering. The following is a
general  summary  of the  significant  federal  income tax  consequences  of the
receipt  of  Rights  by a Record  Date  Stockholder  and a  subsequent  lapse or
exercise of such Rights.  The discussion is based upon applicable  provisions of
the Code, the Treasury Regulations promulgated thereunder, and other authorities
currently  in effect but does not  address  any  state,  local,  or foreign  tax
consequences of the Offering. Each Common Stockholder should consult its own tax
advisor regarding  specific  questions as to federal,  state,  local, or foreign
taxes. Each Common  Stockholder should also review the discussion of certain tax
considerations  affecting  it and the Fund set forth under  "Federal  Income Tax
Matters."

For  purposes of the  following  discussion,  the term "Old Share"  shall mean a
currently outstanding Share with respect to which a Right is issued and the term
"New  Share"  shall mean a newly  issued  Share that  Record  Date  Stockholders
receive upon the exercise of their Rights.

FOR ALL RECORD DATE STOCKHOLDERS

     Neither the receipt nor the exercise of Rights by a Record Date Stockholder
     will result in taxable  income to such  stockholder  for federal income tax
     purposes   regardless  of  whether  or  not  the   stockholder   makes  the
     below-described  election which is available under Section 307(b)(2) of the
     Code (a "Section 307(b)(2) Election").

     If the fair  market  value of the Rights  distributed  to all of the Record
     Date Stockholders is more than 15% of the total fair market value of all of
     the Fund's  outstanding  Common Stock as of the Record Date, or if a Record
     Date Stockholder makes a Section 307(b)(2) Election for the taxable year in
     which such Rights were  received,  the Record  Date  Stockholder's  federal
     income tax basis in any Right  received  pursuant to the  Offering  will be
     equal to a portion of the Record Date Stockholder's existing federal income
     tax basis in the related Old Share. If made, a Section  307(b)(2)  Election
     is  effective  with  respect  to  all  Rights  received  by a  Record  Date
     Stockholder.  A Section 307(b)(2) Election is made by attaching a statement
     to the Record Date Stockholder's  federal income tax return for the taxable
     year of the Record  Date  (which is the same as the year as when the Rights
     were  received).  Record  Date  Stockholders  should  carefully  review the
     differing  federal income tax consequences  described below before deciding
     whether or not to make a Section 307(b)(2) Election.

FOR RECORD DATE  STOCKHOLDERS  WHEN THE FAIR MARKET VALUE OF RIGHTS  DISTRIBUTED
EXCEED 15% OF THE TOTAL FAIR  MARKET  VALUE OF THE FUND'S  COMMON  STOCK OR WHEN
MAKING A SECTION 307(b)(2) ELECTION

     LAPSE OF RIGHTS. If the fair market value of rights  distributed exceed 15%
     of the total  fair  market  value of the Common  Stock or if a Record  Date
     Stockholder  makes a Section  307(b)(2)  Election,  no taxable loss will be
     realized  for federal  income tax  purposes if the Record Date  Stockholder
     retains a Right but  allows it to lapse  without  exercise.  Moreover,  the
     existing  federal  income  tax basis of the  related  Old Share will not be
     reduced if such lapse occurs.

     EXERCISE OF RIGHTS.  If a Record Date  Stockholder  exercises a Right,  the
     Record Date Stockholder's  existing federal income tax basis in the related
     Old  Share  must be  allocated  between  such  Right  and the Old  Share in
     proportion  to their  respective  fair market  values as of the Record Date
     (effectively  reducing  the  Record  Date  Stockholder's  basis  in his Old
     Share). Upon such exercise of the Record Date Stockholder's Rights, the New
     Shares  received by the Record Date  Stockholder  pursuant to such exercise
     will have a federal  income tax basis equal to the sum of the basis of such
     Rights as  described in the previous  sentence and the  Subscription  Price
     paid for the New Shares (as  increased by any  servicing fee charged to the
     Record  Date  Stockholder  by his broker,  bank or trust  company and other
     similar costs). If the Record Date Stockholder  subsequently sells such New
     Shares (and holds such Shares as capital assets at the time of their sale),
     the Record Date  Stockholder will recognize a capital gain or loss equal to
     the difference  between the amount received from the sale of the New Shares
     and the  Record  Date  Stockholder's  federal  income  tax basis in the New
     Shares as  described  above.  Such  capital  gain or loss will be long-term
     capital  gain or loss if the New  Shares  are sold more than one year after
     the date that the New Shares are acquired by the Record Date Stockholder.

FOR RECORD DATE  STOCKHOLDERS NOT MAKING A SECTION  307(b)(2)  ELECTION WHEN THE
FAIR MARKET VALUE OF THE RIGHTS  DISTRIBUTED ARE LESS THAN 15% OF THE TOTAL FAIR
MARKET VALUE OF THE FUND'S OUTSTANDING COMMON STOCK

     LAPSE OF RIGHTS.  If the fair market  value of the Rights  distributed  are
     less than 15% of the total  fair  market  value of the  outstanding  Common
     Stock  and a Record  Date  Stockholder  does not make a  Section  307(b)(2)
     Election  for the  taxable  year in which such  Rights  were  received,  no
     taxable loss will be realized for federal income tax purposes if the Record
     Date Stockholder  retains a Right but allows it to lapse without  exercise.
     Moreover, the federal income tax basis of the related Old Share will not be
     reduced if such lapse occurs.


     EXERCISE OF RIGHTS. If a non-electing Record Date Stockholder exercises his
     Rights,  the federal income tax basis of the related Old Shares will remain
     unchanged and the New Shares will have a federal  income tax basis equal to
     the  Subscription  Price  paid  for the New  Shares  (as  increased  by any
     servicing fee charged to the Record Date Stockholder by his broker, bank or
     trust  company and other  similar  costs).  If the Record Date  Stockholder
     subsequently sells such New Shares (and holds such Shares as capital assets
     at the time of their sale),  the Record Date  Stockholder  will recognize a
     capital gain or loss equal to the  difference  between the amount  received
     from the sale of the New Shares and the  stockholder's  federal  income tax
     basis in the New Shares as described above.  Such capital gain or loss will
     be long-term  capital gain or loss if the New Shares are sold more than one
     year after the Record Date Stockholder  acquires the New Shares through the
     Offering.

Employee Plan Considerations. Record Date Stockholders that are employee benefit
plans subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"),  including  corporate  savings  and  401(k)  plans,  Keogh  Plans  of
self-employed  individuals and Individual  Retirement  Accounts  ("IRA") (each a
"Benefit  Plan"  and  collectively,  "Benefit  Plans"),  should  be  aware  that
additional  contributions  of cash in order to exercise Rights may be treated as
Benefit  Plan   contributions   and,  when  taken  together  with  contributions
previously  made,  may  subject a Benefit  Plan to  excise  taxes for  excess or
nondeductible  contributions.  In the  case of  Benefit  Plans  qualified  under
Section  401(a) of the  Code,  additional  cash  contributions  could  cause the
maximum   contribution   limitations  of  Section  415  of  the  Code  or  other
qualification  rules  to  be  violated.   Benefit  Plans  contemplating   making
additional  cash  contributions  to exercise  Rights  should  consult with their
counsel prior to making such contributions.

Benefit  Plans and other tax  exempt  entities,  including  governmental  plans,
should also be aware that if they borrow in order to finance  their  exercise of
Rights,  they may become subject to the tax on unrelated business taxable income
("UBTI")  under  Section  511 of the Code.  If any  portion of an IRA is used as
security for a loan,  the portion so used is also treated as  distributed to the
IRA depositor.

ERISA contains prudence and diversification  requirements and ERISA and the Code
contain  prohibited  transaction  rules that may impact the  exercise of Rights.
Among the prohibited  transaction  exemptions  issued by the Department of Labor
that may exempt a Benefit Plan's  exercise of Rights are Prohibited  Transaction
Exemption  84-24  (governing  purchases of shares in investment  companies)  and
Prohibited Transaction Exemption 75-1 (covering sales of securities).

Due to the  complexity  of these  rules  and the  penalties  for  noncompliance,
Benefit Plans should consult with their counsel  regarding the  consequences  of
their exercise of Rights under ERISA and the Code.

Benefit to the  Advisers  and  Co-Administrator.  The  Advisers and FAS (defined
above)  will  benefit  from the  Offering  because  their  fees are based on the
average total net assets of the Fund.

It is not possible to state precisely the amount of additional  compensation the
Advisers and FAS will  receive as a result of the Offering  because the proceeds
of the Offering will be invested in additional  portfolio  securities  that will
fluctuate  in value.  However,  if all Rights  are  exercised  at the  Estimated
Subscription Price of $8.27 (i.e., the estimated subscription price based on the
Fund's NAV and Share price on February 29, 2008), the annual  compensation to be
received by the Advisers and FAS would be increased by  approximately  $_______.
If the Fund issues all of the Over-Allotment  Shares, the annual compensation to
be  received  by the  Advisers  and FAS  would  be  increased  by an  additional
$________.  This is discussed in "The Investment Co-Advisory  Agreements" below.
Two of the Fund's  Directors  who voted to approve the Offering are  "interested
persons" of the Advisers  within the meaning of the 1940 Act.  These  Directors,
Susan L. Ciciora and John S. Horejsi, could benefit indirectly from the Offering
because of their  beneficial  interest in the Advisers and FAS. See "Information
Regarding  the  Advisers  and  Other  Service  Providers"  below.  While  it was
cognizant of the benefit to the  Advisers and FAS and indirect  benefit to these
"interested persons," the Board nevertheless  concluded that the Offering was in
the best interest of the Fund's stockholders.

The Fund may,  in the future and at its  discretion,  choose to make  additional
rights offerings from time to time for a number of Shares and on terms which may
or may not be similar to the Offering.  Any such future rights offerings will be
made in accordance  with the 1940 Act. Under the laws of Maryland,  the state in
which  the Fund is  incorporated,  under  certain  circumstances,  the  Board is
authorized to approve rights Offerings without obtaining  stockholder  approval.
The staff of the SEC has interpreted  the 1940 Act as not requiring  stockholder
approval of a rights  offering at a price below the then  current NAV so long as
certain conditions are met,  including a good faith  determination by the fund's
board of  directors  that such  offering  would  result in a net  benefit to the
Fund's existing stockholders.  Such future offerings would similarly benefit the
Advisers and FAS.



                           INFORMATION ABOUT THE FUND

The  Fund  is  a  non-diversified,   closed-end  management  investment  company
organized as a Maryland  corporation  in October 1972. The Fund seeks to produce
both income and long-term  capital  appreciation  by investing in a portfolio of
equity  and debt  securities.  The Fund  invests  primarily  in  common  stocks,
including dividend paying common stocks such as those issued by utilities, REITs
and  RICs.  The Fund  also  invests  in  fixed  income  securities  such as U.S.
government securities, preferred stocks and bonds. The Fund invests primarily in
securities  of U.S.-based  companies  and to a lesser  extent in foreign  equity
securities and sovereign debt, in each case denominated in foreign currency. The
Fund has no  restrictions  on its ability to invest in foreign  securities.  The
Fund is  concentrated  in Real  Estate  Related  Companies,  which means it must
invest more than 25% of its total assets in such companies.  No assurance can be
given that the Fund will achieve its  investment  objective.  The address of the
Fund is 2344 Spruce Street,  Suite A, Boulder,  Colorado 80302 and its telephone
number is (303) 444-5483.

The Fund began investment activities in January 1974 as a registered closed-end,
diversified  management  investment  company.  From its inception,  and prior to
April 26, 2002,  the Fund was named USLife  Income Fund,  Inc. and was virtually
100%  invested  in  corporate   bonds.  In  January  2002,  the  Fund's  largest
stockholder,  the Ernest Horejsi Trust No. 1B,  succeeded in replacing the Board
with a slate of its  nominees.  Soon  thereafter,  in April  2002,  stockholders
approved changing the Fund's investment  objective and corporate name,  changing
the Fund's  classification  from diversified to non-diversified  and changing or
eliminating  a  number  of  the  Fund's  fundamental  investment   restrictions.
Thereafter,  the Fund began the process of  liquidating  its bond  portfolio and
started  investing  in  common  equities  consistent  with  the  new  investment
objective.


                             MANAGEMENT OF THE FUND

The  business  and affairs of the Fund are managed  under the  direction  of the
Board.  Accordingly,  the Board is responsible for the overall management of the
Fund, including  supervision of the duties performed by the Advisers.  There are
currently five directors of the Fund,  two of whom are  "interested  persons" of
the Fund (as defined in the 1940 Act).

Information  about  Directors and Officers.  Set forth in the following table is
certain  information about each Director of the Fund,  including his or her age,
position  with the Fund,  term of office,  length of time  served and  principal
occupation during the last five years:




------------------------------ ------------------------ ---------------------------------------------- ------------------
Name, Address*, Age              Position, Length of          Principal Occupation(s) and Other         Number of Funds
                                                        Directorships Held During the Past Five Years  in Fund Complex+
                                Term Served, and Term                                                     Overseen by
                                      of Office                                                            Director
------------------------------ ------------------------ ---------------------------------------------- ------------------
------------------------------ ------------------------ ---------------------------------------------- ------------------
Independent Directors
                                                                                                      

Joel W. Looney                 Director of the Fund     Partner, Financial Management Group, LLC               4
                               since 2002. Chairman     (investment adviser), since July 1999;
Chairman                       of the Board of the      Director of Boulder Total Return Fund, Inc.
                               Fund since 2004.         ("BTF"), since 2001; Director and Chairman
Age:  46                       Current term to expire   of the Board, First Financial Fund, Inc.
                               at the 2008 annual       ("FF"), since 2003. Class I Director and
                               meeting.                 Chairman of the Board, The Denali Fund Inc.
                                                        ("DNY") since 2007.

Dr. Dean L. Jacobson           Director of the Fund     Founder and President of Forensic                      4
                               since 2006.  Current     Engineering, Inc. (engineering
Age: 69                        term to expire at the    investigations); Professor Emeritus at
                               2008 annual meeting.     Arizona State University, since 1997;
                                                        Director of BTF since 2004; Director of FF
                                                        since 2003. Class III Director of DNY since
                                                        2007.


Richard I. Barr                Director of the Fund     Retired.  Director of BTF since 1999 and               4
                               since 2002.  Current     Chairman of the Board since 2003; Director
Age:  70                       term to expire at the    of FF since 2001. Class II Director of DNY
                               2008 annual meeting.     since 2007.

------------------------------ ------------------------ ---------------------------------------------- ------------------
Interested Directors ++
------------------------------ ------------------------ ---------------------------------------------- ------------------

John S. Horejsi                Director of the Fund     Director, Horejsi Charitable Foundation                4
                               since 2004. Current      (private charitable foundation), since 1997;
Age: 40                        term to expire at the    Director of BTF and FF since 2006. Class II
                               2008 annual meeting.     Director of DNY since 2007.

Susan L. Ciciora               Director of the Fund     Trustee of the Lola Brown Trust No. 1B and             4
                               since 2006. Current      the Ernest Horejsi Trust No. 1B; Director,
Age: 43                        term to expire at the    Horejsi Charitable Foundation, Inc. (private
                               2008 annual meeting.     charitable foundation), since 1997; Director
                                                        of BTF since 2001; Director of FF since
                                                        2003. Class III Director of DNY since 2007.


*    The addresses for each Director is c/o Boulder Growth & Income Fund,  Inc.,
     2344 Spruce Street, Suite A, Boulder, Colorado 80302.

+    The "fund complex" consists of the Fund, BTF, DNY, and FF.

++   Mr. Horejsi and Ms. Ciciora are "interested  persons" of the Fund by virtue
     of their  relationship  with Stewart Horejsi,  the Fund's primary portfolio
     manager and an employee of BIA and SIA.

From  the  late  1980's  until  January,   2001,  Mr.  Looney  served,   without
compensation,  as  one of  three  trustees  of the  Mildred  Horejsi  Trust,  an
affiliate of the Fund's largest  stockholder,  the EH Trust. The address for the
EH Trust is  Resolution  Plaza,  1029 West Third Street,  Suite 400,  Anchorage,
Alaska 99501.

The EH Trust  holds  _____% of the Fund's  outstanding  Shares and is the Fund's
largest stockholder.  The EH Trust has asserted,  and the Fund has acknowledged,
that the EH Trust is a "control  person" as  contemplated  by the 1940 Act.  The
sole  trustees of the EH Trust are Badlands  Trust  Company,  LLC  ("Badlands"),
Larry L. Dunlap and Susan L. Ciciora,  Stewart Horejsi's daughter (collectively,
the "EH Trustees").  The EH Trustees may also be deemed to be control persons by
virtue of their trusteeship with the EH Trust. The EH Trustees disclaim any such
control  relationship.  The Stewart R. Horejsi Trust No. 2 (the "SRH Trust"), an
irrevocable  grantor trust established by Stewart Horejsi for the benefit of his
issue, is the sole equity owner of Badlands and may be deemed indirectly to be a
control person by virtue of its ownership of Badlands.  The SRH Trust  disclaims
any such control relationship.

As discussed  above,  the EH Trust owns ____% of the Common Stock, is a "control
person" as  contemplated  under the 1940 Act and is affiliated with entities who
own the Advisers and FAS (i.e., the Horejsi Affiliates). As a large stockholder,
EH Trust is able to  significantly  influence any matters upon which the holders
of common stock may vote, including the election of the Fund's directors and any
change in the  Fund's  investment  adviser.  Since all  members of the Board are
elected  annually,  the EH Trust may be able to effect a change of control  with
respect  to the entire  Board in a single  election.  Similarly,  several of the
Fund's  corporate  governance  provisions  grant  stockholders  voting  power or
decrease the voting  requirement  necessary to take certain actions.  As a large
stockholder,  the EH Trust will have  greater  influence  over the  adoption  or
failure  of  certain   corporate   actions   requiring  a  vote  of  the  Fund's
stockholders.  In  particular,  the EH Trust would have a greater  influence  in
compelling  a special  meeting  with the support of only a small  percentage  of
other  non-Horejsi  stockholders.  Nonetheless,  since most of the other actions
under the Fund's corporate governance provisions require the support of either a
majority or two-thirds of outstanding  Shares for a future change,  the EH Trust
cannot  effect any such change  without the support of a  substantial  number of
non-Horejsi stockholders.  However, in these instances, where an action requires
a majority or  two-thirds  voting  approval,  the EH Trust may have an effective
veto.


Together with other trusts and entities affiliated with the Horejsi family (more
particularly  defined  below as the  "Horejsi  Affiliates"),  the EH  Trust  has
asserted control with respect to three other investment companies, BTF, DNY, and
FF. As discussed  below,  the Horejsi  Affiliates also own the Advisers and FAS,
the Fund's co-administrator. The following table shows security ownership by the
Independent  Directors with respect to the Fund,  BTF, DNY and FF as of February
29, 2008.




                             OWNERSHIP OF THE FUND BY INDEPENDENT DIRECTORS
---------------------------------------------------------------------------------------------------------
 Independent Directors and Nominees        Dollar Range of Equity          Aggregate Dollar Range of
                                         Securities in the Fund (1)      Equity Securities in the Fund,
                                                                               BTF, DNY and FF(1)
-------------------------------------- -------------------------------- ---------------------------------
                                                                        
           Richard I. Barr                   $10,001 to $50,000                  Over $100,000
           Joel W. Looney                    $50,001 to $100,000                 Over $100,000
        Dr. Dean L. Jacobson                 $10,001 to $50,000               $50,001 to $100,000
-------------------------------------- -------------------------------- ---------------------------------


(1) Based on closing prices on February 29, 2008.

Direct  ownership of the Common Stock by all officers and  directors of the Fund
is less than one  percent.  John S.  Horejsi  and Susan L.  Ciciora,  interested
directors of the Fund, are  discretionary  beneficiaries of the EH Trust and may
be deemed to have indirect beneficial  ownership of the common stock held by the
EH Trust.  Mr. Horejsi and Ms. Ciciora  disclaim all such beneficial  ownership.
Mr. Horejsi does not directly own any Shares.  Ms. Ciciora does not directly own
any Shares. Stephen Miller, the Fund's president,  is an officer and director of
Badlands and may be deemed to have indirect  beneficial  ownership of the Shares
held by the EH Trust.  However,  because two of the EH Trustees  are required in
order for the EH Trust to vote or exercise dispositive authority with respect to
Shares owned by the EH Trust, Mr. Miller disclaims  beneficial ownership of such
Shares.

The names of the  officers of the Fund and certain  additional  information  are
listed in the table below.  Each officer was elected to office by the Board at a
meeting  held on April 27, 2007 or August 3, 2007.  Each  officer will hold such
office until a successor has been elected by the Board.




------------------------------ -------------------------- ----------------------------------------------------------
Name, Address**, Age           Position, Length of Term     Principal Occupation(s) and Other Directorships Held
                               Served, and Term of          During the Past Five Years
                               Office
------------------------------ -------------------------- ----------------------------------------------------------
                                                    
Stephen C. Miller              President of the Fund      President of and General Counsel for BIA, since 1999;
Age:  55                       since January 2002 and     Manager, FAS, since 1999; Vice President of SIA, since
                               Director from January      1998; Director and President of BTF since 1999 (resigned
                               2002 through October       as Director in 2004); Director and President of FF since
                               2004. Appointed            2003 (resigned as Director and Chairman in 2004);
                               annually.                  President of DNY since 2007; officer of various other
                                                          entities affiliated with the Horejsi family; Of Counsel,
                                                          Krassa & Miller, LLC since 1991.


Carl D. Johns                  Chief Financial Officer,   Vice President and Treasurer of BIA and Assistant
Age: 45                        Chief Accounting           Manager of FAS, since April, 1999; Vice President, Chief
                               Officer, Vice President    Financial Officer and Chief Accounting Officer of BTF and
                               Treasurer since            since 1999, FF since August 2003, and DNY since October
                               January 2002. Appointed    2007.
                               annually.

Joel L. Terwilliger            Chief Compliance Officer   Associate General Counsel for BIA, SIA, FAS, BTF, DNY,
Age: 39                        since August 3, 2007.      FF, and the Fund, since 2006; Senior Associate/Managing
                               Appointed annually.        Counsel, Great-West Life & Annuity Insurance Company,
                                                          2002-2006.

Stephanie J. Kelley            Secretary since January    Secretary of BTF since October 2000, FF since August
Age:  51                       2002.  Appointed           2003, and DNY since October 2007; Assistant Secretary
                               annually.                  and Assistant Treasurer of various other entities
                                                          affiliated with the Horejsi family; Employee, FAS, since
                                                          March 1999.

Nicole L. Murphey              Assistant Secretary        Assistant Secretary of BTF since October 2000, FF since
Age:  31                       since January 2002.        August 2003, and DNY since October 2007; Employee, FAS,
                               Appointed annually.        since July 1999.




** The  addresses  for each officer is c/o Boulder  Growth & Income Fund,  Inc.,
2344 Spruce Street, Suite A, Boulder, Colorado 80302.


Information  Regarding  the Advisers and Other  Service  Providers.  The Fund is
co-advised by BIA and SIA.  Since January 2002, the Advisers have been providing
advisory  services to the Fund. The Advisers also provide  advisory  services to
BTF (since March 1999) and to DNY (since October 2007). As of February 29, 2008,
the Advisers had a total of $_____ million in assets under management.

Boulder Investment Advisers, LLC. BIA was formed on April 8, 1999, as a Colorado
limited liability  company and is registered as an investment  adviser under the
Investment  Advisers Act of 1940,  as amended.  Together with SIA, BIA serves as
the investment  co-adviser to three registered  closed-end investment companies,
the Fund,  BTF, and DNY (together,  the "Boulder  Funds"),  which  currently are
BIA's only clients.  Stewart R. Horejsi is an employee of and investment manager
for both Advisers and has extensive  experience  managing  common stocks for the
Fund as well as for the various  other trusts and entities  affiliated  with the
Horejsi  family (the  "Horejsi  Affiliates").  The members of BIA are  Evergreen
Atlantic,  LLC, a Colorado  limited  liability  company,  located at 2344 Spruce
Street,  Suite A,  Boulder  CO 80302 and the LB  Trust,  an  irrevocable  Alaska
domiciled trust,  whose address is c/o Badlands Trust Company,  LLC,  Resolution
Plaza,  1029  West  Third  Street,  Suite  400,  Anchorage,  Alaska  99501  (the
"Members").  The  Members  each hold a 50%  interest  in BIA.  The  Members  are
"affiliated  persons" of the Fund (as that term is defined in the 1940 Act). Mr.
Horejsi,  his daughter  Susan L. Ciciora,  and his son John S. Horejsi (Susan L.
Ciciora and John S. Horejsi are both  "interested"  directors of the Fund),  are
discretionary  beneficiaries  under the LB Trust as well as under other  Horejsi
family affiliated trusts which own Evergreen Atlantic,  LLC.  Accordingly,  as a
result of this relationship,  each of Stewart R. Horejsi,  Susan L. Ciciora, and
John S. Horejsi may directly or indirectly benefit from the relationship between
the Fund and BIA.

Stewart Investment Advisers.  SIA is a Barbados  international business company,
incorporated  on November 12, 1996 and is registered  as an  investment  adviser
under the Investment  Advisers Act of 1940, as amended. As discussed above, SIA,
together with BIA,  serves as the  investment  co-adviser to the Boulder  Funds,
which presently are SIA's only clients.  SIA is wholly owned by the Stewart West
Indies Trust, an irrevocable  trust domiciled in Alaska,  established by Stewart
Horejsi in 1996  primarily to benefit his issue (the "West Indies  Trust").  The
West Indies  Trust's  address is c/o Badlands  Trust  Company,  LLC,  Resolution
Plaza, 1029 West Third Street,  Suite 400, Anchorage,  Alaska 99501. Mr. Horejsi
is not a beneficiary under the West Indies Trust.  However,  John S. Horejsi and
Susan L. Ciciora,  Mr.  Horejsi's  son and daughter and the Fund's  "interested"
directors, are discretionary beneficiaries under the West Indies Trust and thus,
as a result of this  relationship,  may directly or indirectly  benefit from the
relationship between the Fund and SIA.

SIA is not  domiciled in the United States and  substantially  all of its assets
are located  outside the United  States.  As a result,  it may be  difficult  to
realize  judgments  of  courts  of  the  United  States  predicated  upon  civil
liabilities  under federal  securities  laws of the United States.  The Fund has
been advised that there is  substantial  doubt as to (i) the  enforceability  in
Barbados of such civil  remedies and  criminal  penalties as are afforded by the
federal  securities  laws of the United  States;  (ii)  whether the  appropriate
foreign  courts would  enforce  judgments of United  States  courts  obtained in
actions  against  SIA  predicated  upon the civil  liability  provisions  of the
federal securities laws, or (iii) whether a Barbados court would enforce,  in an
original action, liabilities against SIA predicated solely on federal securities
laws.  Pursuant to the  advisory  agreement  between  SIA and the Fund,  SIA has
appointed  the  Secretary of the Fund  (presently  Stephanie  Kelley in Boulder,
Colorado)  as its agent for service of process in any legal action in the United
States, thus subjecting it to the jurisdiction of the United States courts.

Portfolio  Managers.  Stewart R. Horejsi is the Fund's primary portfolio manager
and,  together with Carl D. Johns,  the Fund's Vice President and Treasurer,  is
responsible for the day-to-day  management of the Fund's assets and is primarily
responsible for the Fund's asset allocation. Mr. Horejsi is 70 years old and has
been an  employee  of both BIA and SIA  since  2001.  Mr.  Horejsi  has been the
President  or  Manager  of  various   subsidiaries  of  various  Horejsi  family
affiliates  since June 1986,  and the  investment  manager for  various  Horejsi
Affiliates  since 1982. He was a director of BTF until November,  2001;  General
Manager of Brown  Welding  Supply,  LLC from 1994 until 1999;  and a director of
Sunflower  Bank from 1982 to 2000. Mr. Horejsi has been President and a Director
of the Horejsi  Charitable  Foundation,  Inc.  since 1997. He received a Masters
Degree in Economics  from Indiana  University  in 1961 and a Bachelor of Science
Degree in Industrial Management from the University of Kansas in 1959.


Carl D. Johns,  the Fund's Vice President and Treasurer,  is also Vice President
and  Treasurer  for BIA and,  together  with Mr.  Horejsi,  is  responsible  for
research,  managing  the Fund's  fixed  income  portfolio  and BIA's  day-to-day
advisory  activities.  He has worked for BIA since 1999. Since 2002, he has been
Chief Financial Officer,  Chief Accounting Officer, Vice President and Treasurer
of the Fund as well as BTF (since  1999),FF  (since 2004) and DNY (since  2007).
Mr. Johns is also the assistant  manager of FAS. Prior to joining BIA, Mr. Johns
worked at Flaherty and Crumrine,  Incorporated,  from 1992 to 1998.  During that
period he was an Assistant Treasurer for the Preferred Income Fund Incorporated,
the Preferred  Income  Opportunity Fund  Incorporated,  and the Preferred Income
Management  Fund  Incorporated.   Mr.  Johns  received  a  Bachelors  Degree  in
Mechanical  Engineering  at the  University  of Colorado in 1985,  and a Masters
Degree in Finance from the University of Colorado in 1991.

Additional  information  regarding the portfolio managers'  compensation,  other
accounts managed and ownership of Shares is included in the SAI.

The Investment Co-Advisory Agreements.  The Advisers and the Fund are parties to
investment  co-advisory  agreements  dated as of April 26,  2002 (the  "Advisory
Agreements").  Under the terms of the Advisory Agreements,  the Advisers provide
advisory  services  regarding  asset  allocation,  manage the  investment of the
Fund's assets and provide such investment research,  advice and supervision,  in
conformity with the Fund's investment  objective and policies,  as necessary for
the operations of the Fund. The Advisory Agreements provide, among other things,
that the Advisers will bear all expenses in connection  with the  performance of
their  services  under  the  Advisory  Agreements,  although  the Fund will bear
certain other expenses to be incurred in its operation, including organizational
expenses,  taxes,  interest,  brokerage costs and commissions and stock exchange
fees;  fees of  Directors  of the Fund who are not also  officers,  directors or
employees of the Advisers;  Securities and Exchange  Commission fees; state Blue
Sky qualification fees; insurance premiums; outside auditing and legal expenses;
costs  of  maintenance  of  the  Fund's  existence;  membership  fees  in  trade
associations; stock exchange listing fees and expenses; and litigation and other
extraordinary or non-recurring expenses.

The  Advisory  Agreements  provide  that the Fund shall pay to the  Advisers for
their  services  an  aggregate  monthly  fee at the annual  rate of 1.25% of the
Fund's  average  monthly total net assets (the  "Adviser  Fee")  (including  the
principal  amount  of  leverage,  if  any).  Under  the  terms  of the  Advisory
Agreements, the Advisers split the Adviser Fee as determined by the Advisers and
approved  by the Board from time to time.  Presently,  the  Adviser Fee is split
between BIA and SIA 25% and 75%,  respectively.  Although the Advisers intend to
devote  such  time and  effort  to the  business  of the  Fund as is  reasonably
necessary to perform their  respective  duties to the Fund,  the services of the
Advisers are not  exclusive  and the Advisers  may provide  similar  services to
other investment companies and other clients and may engage in other activities.
At a regular  meeting of the Board held on January 25, 2008, the Advisers agreed
to a waiver of advisory fees at certain  "break-point"  levels such that, in the
future, the Adviser Fee would be calculated at the annual rate of 1.25% on asset
levels up to $400 million, 1.10% on assets levels between $400-$600 million; and
1.00% on asset levels  exceeding  $600 million.  The fee waiver  agreement has a
one-year term and is renewable  annually.  A discussion  regarding the basis for
the Board's approval of the Advisory  Agreements can be found in the Shareholder
Reports  which are  available  to  Stockholders  upon  request  or at the Fund's
website at www.boulderfunds.net.

The Advisory  Agreements  provide that the Advisers  shall not be liable for any
error of judgment or mistake of law or omission or any loss suffered by the Fund
in  connection  with the matters to which the  agreements  relate,  although the
agreements  do not  protect  or  purport to protect  the  Advisers  against  any
liability to the Fund to which the Advisers would otherwise be subject by reason
of  willful  misfeasance,  bad faith or gross  negligence  on their  part in the
performance  of  their  duties  or from  reckless  disregard  by  them of  their
obligations  and duties  under the  agreements.  Each  Advisory  Agreement  also
provides for  indemnification  by the Fund of the  Advisers and their  partners,
members,  officers,  employees,  agents  and  control  persons  for  liabilities
incurred  by them in  connection  with their  services  to the Fund,  subject to
certain limitations and conditions.

Each Advisory  Agreement  will continue in effect  without a term so long as its
continuation is specifically  approved at least annually by both (i) the vote of
a majority  of the Board or the vote of a  majority  of the  outstanding  voting
securities of the Fund (as such term is defined in the 1940 Act) and (ii) by the
vote  of a  majority  of the  directors  who are not  parties  to such  Advisory
Agreement or interested persons (as such term is defined in the 1940 Act) of any
such party, cast in person at a meeting called for the purpose of voting on such
approval.  Any of the Advisory  Agreements  may be  terminated as a whole at any
time by the  Fund,  without  the  payment  of any  penalty,  upon  the vote of a
majority of the Board or a majority of the outstanding  voting securities of the
Fund or by the Advisers on 60 days' written notice by either party to the other.
Except as otherwise provided by order of the Securities and Exchange  Commission
or any rule or provision of the 1940 Act, each of the Advisory  Agreements  will
terminate  automatically  in the  event of  their  assignment  (as such  term is
defined in the 1940 Act and the rules thereunder).


Fund Administrative  Services, LLC. The Fund's co-administrator is FAS. FAS is a
Colorado  limited  liability  company whose  principal place of business is 2344
Spruce Street, Suite A, Boulder,  Colorado 80302. FAS also has offices at 200 S.
Santa Fe, Suite 4, Salina,  KS 67401.  The members of FAS are the LB Trust (50%)
and  Evergreen  Atlantic,  L.L.C.  (50%)  (the  "Members"),  each  of  which  is
considered to be an  "affiliated  person" of the Fund as that term is defined in
the 1940 Act. The officers of FAS are Stephen C. Miller, manager; Carl D. Johns,
assistant manager; Laura Rhodenbaugh, secretary/treasurer; and Stephanie Kelley,
assistant  secretary.  Since  January  2002,  FAS  has  been  providing  certain
administrative and executive  management  services to the Fund,  including among
other things  negotiation of service  provider  contracts,  oversight of service
providers,  maintenance of the Fund's policies and procedures,  and provision of
compliance,   legal  and  fund  accounting   services.   FAS  provides   similar
administrative  and  executive  management  services to BTF since March 1999, FF
since August 2003, and DNY since October 2007.

The Fund and FAS are parties to an  Administration  Agreement  dated February 1,
2004 (the  "Administration  Agreement").  FAS is owned by the  Members,  who, as
indicated  above,  are also the  owners  of BIA and are  included  in the  group
referred to herein as the Horejsi  Affiliates.  As discussed  above,  Stewart R.
Horejsi and his son John S.  Horejsi and  daughter  Susan L. Ciciora (the Fund's
"interested"  directors),  are discretionary  beneficiaries under the Lola Brown
Trust No. 1B, one of the Members of FAS, and under the trusts that own Evergreen
Atlantic, LLC, the other Member of FAS.

Under the Administration  Agreement,  the Fund pays FAS a monthly fee calculated
at an annual rate of 0.20% of the value of the Fund's average  monthly total net
assets (including the principal amount of leverage,  if any) up to $250 million;
0.18% of the Fund's  average  monthly total net assets on the next $150 million;
and, 0.15% on the value of the Fund's average monthly total net assets over $400
million. Notwithstanding,  FAS has agreed to cap the Fund's total administration
costs at 0.30% (including administration,  co-administration, transfer agent and
custodian  fees).  Accordingly,  FAS has  agreed to waive a  portion  of its fee
should the total monthly administration expenses exceed 0.30%.

State  Street  Bank and Trust  Company.  State  Street  Bank and  Trust  Company
(formerly known as Investors Bank & Trust Company) ("State Street"),  located at
200  Clarendon  Street,  Boston,  Massachusetts  02116,  serves  as  the  Fund's
co-administrator  and custodian.  On February 4, 2007, State Street  Corporation
("SSC")   entered   into  an   Agreement   and  Plan  of   Reorganization   (the
"Reorganization  Agreement") with Investors  Financial Services Corp.  ("IFSC"),
the  parent  company  of  Investors  Bank  &  Trust  Company.  Pursuant  to  the
Reorganization  Agreement,  IFSC  merged  into SSC  effective  July 2, 2007.  As
co-administrator,   State  Street  provides  certain  services   including  fund
accounting  and   preparation  of  materials  for  Board   meetings.   Under  an
administration  agreement  and  custody  agreement  between  the Fund and  State
Street,   the  Fund  pays  State   Street  a  combined   monthly  fee  for  both
co-administrative  and custodian services calculated at an annual rate of 0.058%
of the value of the  Fund's  average  monthly  total net assets  (including  the
principal amount of leverage,  if any) up to $300 million and 0.04% on the value
of the Fund's average  monthly total net assets over $300 million,  or a minimum
monthly fee of $10,500.  Presently,  because of the level of the Fund's  average
monthly  total net  assets,  the Fund pays the  minimum of $10,500  monthly.  In
addition, State Street receives certain out-of-pocket expenses, transaction fees
and certain charges for securities transactions.

PFPC Inc. The transfer agent,  dividend  disbursing  agent and registrar for the
Shares is PFPC Inc. ("PFPC"), an indirect,  majority-owned subsidiary of the PNC
Financial  Services  Group,  Inc.  PFPC  is  located  at  4400  Computer  Drive,
Westborough,  MA 01581-5120.  As compensation for PFPC's services, the Fund pays
PFPC a monthly fee plus certain out-of-pocket expenses.

Expenses of the Fund. The expenses payable by the Fund include:  management fees
payable to the Advisers; administrative, bookkeeping and pricing fees payable to
FAS; fees and expenses of the independent  registered  public  accounting  firm;
fees for  transfer  agent,  registrar,  custodian  and  portfolio  recordkeeping
services;  expenses in  connection  with the  Distribution  Policy and  Dividend
Reinvestment  Program;  expenses in connection  with  obtaining  quotations  for
calculating the Fund's NAV; taxes (if any) and the preparation of the Fund's tax
returns;  brokerage  fees  and  commissions;  interest;  costs of  Director  and
Stockholder  meetings;  expenses  of  printing  and  mailing  reports  and proxy
materials to Stockholders;  fees for the maintenance of the Fund's organization;
membership dues for investment company industry trade associations;  legal fees;
stock exchange listing fees and expenses;  fees to federal and state authorities
for  filing  reports  and the  registration  of  Shares;  fees and  expenses  of
non-interested  Directors;   insurance  and  fidelity  bond  premiums;  and  any
extraordinary  expenses of a non-recurring nature (for example, the Fund expects
to incur approximately $115,600 of expenses in connection with the Offering).



                           FEDERAL INCOME TAX MATTERS

Taxation  of the  Fund.  The Fund has  qualified  and  elected  to be taxed as a
regulated  investment company under Subchapter M of the Code.  Accordingly,  the
Fund must,  among other things,  (a) derive in each taxable year at least 90% of
its gross income  (including  tax-exempt  interest)  from  dividends,  interest,
payments with respect to certain  securities  loans,  and gains from the sale or
other disposition of stock,  securities or foreign  currencies,  or other income
(including but not limited to gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock,  securities  or
currencies;  and (b)  diversify its holdings so that, at the end of each quarter
of the Fund's  taxable  year (i) at least 50% of the market  value of the Fund's
total assets is represented by cash and cash items, U.S. Government  securities,
the securities of other  regulated  investment  companies and other  securities,
with such other securities  limited,  in respect of any one issuer, to an amount
not greater than 5% of the value of the Fund's total assets and to not more than
10% of the outstanding  voting securities of such issuer; and (ii) not more than
25% of the market value of the Fund's total assets is invested in the securities
of any one issuer (other than U.S.  Government  securities and the securities of
other  regulated  investment  companies)  or of any two or more issuers that the
Fund  controls  and which are  determined  to be  engaged  in the same  trade or
business or similar or related trades or businesses.

As a regulated  investment  company,  the Fund  generally is not subject to U.S.
federal income tax on income and gains that it distributes  each taxable year to
its  stockholders,  if at  least  90% of the sum of the  Fund's  (i)  investment
company taxable income (which includes,  among other items, dividends,  interest
and any excess of net short-term capital gains over net long-term capital losses
and other  taxable  income  other than any net capital  gain (as defined  below)
reduced by deductible  expenses)  determined without regard to the deduction for
dividends  paid and (ii) its net  tax-exempt  interest  (the excess of its gross
tax-exempt  interest over certain  disallowed  deductions).  The Fund intends to
distribute at least annually substantially all of such income.

Amounts not  distributed  on a timely basis in accordance  with a  calendar-year
distribution  requirement  are subject to a  nondeductible  4% excise tax at the
Fund level.  To avoid this tax, the Fund must  distribute  during each  calendar
year an amount equal to the sum of (1) at least 98% of its ordinary  income (not
taking into account any capital gains or losses) for the calendar  year;  (2) at
least 98% of its capital  gains in excess of its capital  losses  (adjusted  for
certain ordinary losses) for a one-year period generally ending on October 31 of
the  calendar  year  (unless,  an  election is made by a fund with a November or
December year-end to use the Fund's fiscal year); and (3) certain  undistributed
amounts from previous  years on which the Fund paid no U.S.  federal income tax.
While the Fund intends to distribute  any income and capital gains in the manner
necessary to minimize imposition of the 4% excise tax, there can be no assurance
that  sufficient  amounts of the Fund's taxable income and capital gains will be
distributed to avoid entirely the imposition of the tax. In that event, the Fund
will be  liable  for the tax  only on the  amount  by which it does not meet the
foregoing distribution requirement.

If for any  taxable  year the Fund does not  qualify as a  regulated  investment
company,  all of its taxable  income  (including  its net capital gains) will be
subject  to  tax  at  regular   corporate   rates   without  any  deduction  for
distributions  to  stockholders,  and  such  distributions  will be  taxable  to
stockholders  as  ordinary  dividends  to the extent of the Fund's  current  and
accumulated earnings and profits.

Taxation of  Stockholders.  Distributions  paid to stockholders by the Fund from
its ordinary  income or from an excess of net short-term  capital gains over net
long-term   capital  losses  (together   referred  to  hereinafter  as  "regular
dividends")  are taxable to stockholders as ordinary income to the extent of the
Fund's earning and profits. Distributions made to stockholders from an excess of
net long-term  capital gains over net short-term  capital losses  ("capital gain
dividends"),  including  capital gain  dividends  credited to  stockholders  but
retained by the Fund, are taxable to  stockholders  as long-term  capital gains,
regardless  of  the  length  of  time   stockholders  have  owned  Fund  shares.
Distributions in excess of the Fund's earnings and profits will first reduce the
adjusted tax basis of shares held by a stockholder  and, after such adjusted tax
basis is  reduced  to  zero,  will  constitute  capital  gains  to  stockholders
(assuming the shares are held as a capital asset).


Special rules apply to regular  dividends paid to individuals.  Such a dividend,
with  respect to taxable  years ending on or before  December  31, 2010,  may be
subject to tax at the rates generally  applicable to long-term capital gains for
individuals  (currently at a maximum rate of 15%),  provided that the individual
receiving  the dividend  satisfies  certain  holding  period  requirements.  The
long-term capital gains rates will generally apply to the portion of the regular
dividends paid by the Fund to an individual in a particular taxable year that is
attributable to qualified  dividends  received by the Fund in that taxable year.
The Fund does not expect to have  significant  dividends  that will  qualify for
this tax rate due to its significant holdings in REITs (distributions from which
generally  do not  qualify).  For  this  purpose,  "qualified  dividends"  means
dividends  received  by the Fund after  December  31,  2002 from  United  States
corporations  and  qualifying  foreign  corporations,  provided  that  the  Fund
satisfies  certain  holding period  requirements in respect of the stock of such
corporations.  In the case of securities lending transactions,  payments in lieu
of dividends are not qualified dividends.

Generally,  not later than 60 days after the close of its taxable year, the Fund
will provide  stockholders  with a written notice  designating the amount of any
regular dividends that may qualify for the reduced rate,  capital gain dividends
and other distributions.

The sale or other disposition of common shares of the Fund will generally result
in capital gain or loss to stockholders,  and will be long-term  capital gain or
loss if the  shares  have  been held for more than one year at the time of sale.
Any loss upon the sale or  exchange  of Fund  shares held for six months or less
will be treated as  long-term  capital  loss to the extent of any  capital  gain
dividends received (including amounts credited as an undistributed  capital gain
dividend) by  stockholders.  A loss  realized on a sale or exchange of shares of
the Fund will be disallowed if other Fund shares are acquired  (whether  through
the automatic  reinvestment  of dividends or  otherwise)  within a 61-day period
beginning  30 days  before and ending 30 days after the date that the shares are
disposed of. In such case, the basis of the shares  acquired will be adjusted to
reflect the  disallowed  loss.  Present law taxes both  long-term and short-term
capital gains of corporations at the rates  applicable to ordinary  income.  For
individual  (non-corporate)  taxpayers,  however,  short-term  capital gains and
ordinary  income are  currently  taxed at a maximum rate of 35% while  long-term
capital gains  recognized on or after May 6, 2003 are taxed at a maximum rate of
15%.

Dividends  and other  taxable  distributions  are taxable to  stockholders  even
though they are reinvested in additional  shares of the Fund.  Although the Fund
does not  intend to pay  dividends  in  January,  if it does pay such a dividend
which was declared in the previous October, November or December to stockholders
of record on a specified date in one of such months,  then such dividend will be
treated for tax purposes as being paid by the Fund and received by  stockholders
on December 31 of the year in which the dividend was declared.  The Fund intends
to distribute all net  investment  income and any capital gains during the month
of December of each year.

The Fund is  required  in certain  circumstances  to backup  withhold on taxable
dividends and certain other payments paid to non-corporate holders of the Fund's
shares who do not furnish the Fund with their  correct  taxpayer  identification
number (in the case of individuals,  their Social  Security  number) and certain
certifications,  or who are  otherwise  subject  to backup  withholding.  Backup
withholding is not an additional tax. Any amounts withheld from payments made to
stockholders  may be refunded or credited  against a stockholders'  U.S. federal
income  tax  liability,  if any,  provided  that  the  required  information  is
furnished to the Internal Revenue Service.

The foregoing is a general and abbreviated summary of the provisions of the Code
and the Treasury  regulations in effect as they directly  govern the taxation of
the Fund and its  stockholders.  These  provisions  are  subject  to  change  by
legislative or  administrative  action,  and any such change may be retroactive.
Stockholders  are  urged  to  consult  their  tax  advisers  regarding  specific
questions as to U.S. federal, foreign, state, local income or other taxes.

Taxation  Regarding the Distribution  Policy.  The Fund has adopted a level-rate
distribution  policy (defined above as the  "Distribution  Policy")  whereby the
Fund makes monthly  distributions  to stockholders  from net investment  income,
capital gains and/or return of capital, subject to the Board's right to suspend,
modify,  or  terminate  the  distributions  at  any  time.  See  "Dividends  and
Distributions - Level-Rate Distribution Policy."

Generally,  distributions  under the Policy will  consist  mostly of a return of
capital  to  stockholders.  Distributions  may  have a  small  component  of net
investment income,  but the exact tax  characteristics of the distributions will
not be known until the Fund's fiscal year-end (i.e.,  November 30 of each year).
A "return of capital" represents a return of a stockholder's original investment
in the Fund's  shares,  and  should not be  confused  with a dividend  yield.  A
"return of capital" is a return of stockholders' capital investment in the Fund.
A return of capital is generally not taxable and is not  considered  "yield," or
"income," or "capital gains," items which are taxable. When stockholders receive
a return  of  capital,  they are  getting  back  part of  their  investment  and
consequently the return of their already-taxed capital investment is tax free to
the stockholders.


An  IRS  Form  1099-DIV  will  be  sent  to  stockholders   indicating  the  tax
characteristic of the distributions  they received and exactly how much would be
net investment  income,  ordinary  income,  capital gains, if any, and return of
capital,  if any. This Form 1099-DIV should help stockholders in determining the
tax treatment of their distributions under the Distribution  Policy.  Currently,
the Fund does not expect  that  distributions  will  include  any  capital  gain
component.  To the extent stockholders  receive a return of capital they will be
required  to adjust  their cost basis by the same  amount upon the sale of their
Fund  shares.  This  adjustment  to their cost basis in shares of the Fund means
that,  when  stockholders  do decide to sell their  shares of stock in the Fund,
they will have a larger capital gain (or smaller capital loss) than prior to the
implementation  of  the  Distribution   Policy.   This  may  have  negative  tax
consequences;  stockholders  should  seek  their own tax  advice  regarding  the
reporting of income and the gain or loss on the sale of the Fund's shares.

Although the Fund may indicate  what it expects the tax  characteristics  of its
distributions  to be, it is subject to change  depending  on a number of factors
including market conditions  throughout the year and the magnitude of income and
realized gains for the year.  Any portion of a distribution  that is paid by the
Fund out of net investment income, or from capital gains, will be taxable at the
appropriate  rates,  and this  information,  as stated  above,  will be given to
stockholders  on  IRS  Form  1099-DIV.   Stockholders   can  expect  to  receive
tax-reporting  information for 2008  distributions  from either their brokers or
from the Fund's transfer agent indicating the exact composition per share of the
dividends and  distributions  received  during the calendar  year.  Stockholders
should  consult  their tax  advisor  for proper  tax  treatment  of each  Fund's
distributions.


                        DETERMINATION OF NET ASSET VALUE

The NAV of  common  stock of the Fund is  computed  based  upon the value of the
Fund's portfolio  securities and other assets. NAV per Share is determined as of
the close of the regular trading session on the NYSE no less frequently than the
last business day of each week and month,  provided,  however,  that if any such
day is a holiday or determination of NAV on such day is  impracticable,  the NAV
is calculated  on such earlier or later day as  determined by the Advisers.  The
Fund calculates NAV per Share by subtracting the Fund's  liabilities  (including
accrued  expenses,  dividends  payable and any  borrowings  of the Fund) and the
liquidation  value of any  outstanding  preferred  stock from the  Fund's  total
assets (the value of the  securities  the Fund holds plus cash or other  assets,
including  interest accrued but not yet received) and dividing the result by the
total number of Shares outstanding.

The Fund values its  holdings  by using  market  quotations  provided by pricing
services,  prices  provided  by market  makers  or  estimates  of market  values
obtained from yield data  relating to  instruments  or  securities  with similar
characteristics  in  accordance  with  procedures   established  by  the  Board.
Short-term  securities  having  a  maturity  of 60 days or less  are  valued  at
amortized cost, which approximates  market value. Any securities or other assets
for which  current  market  quotations  are not readily  available are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision and responsibility of the Board.


                  CAPITALIZATION OF THE FUND AND OTHER MATTERS

Repurchase of Common Shares.  Shares of closed-end  investment  companies  often
trade at a discount  to their  NAVs,  and the Shares have in the past and may in
the future  trade at a discount to their NAV.  The market price of the Shares is
determined  by such factors as relative  demand for and supply of such Shares in
the market,  the Fund's NAV,  general  market and economic  conditions and other
factors beyond the control of the Fund.  Although the Common Stockholders do not
have the right to require  the Fund to redeem  their  Shares,  the Fund may take
action,  from time to time,  to  repurchase  Shares  in the open  market or make
tender offers for its Shares at their NAV.  This may, but will not  necessarily,
have the effect of reducing any market discount from NAV.

Any acquisition of Shares by the Fund will decrease the total assets of the Fund
and,  therefore,  may have the effect of increasing the Fund's expense ratio and
may  adversely  affect  the  ability  of the  Fund  to  achieve  its  investment
objectives.  Furthermore,  the acquisition of Shares by the Fund may require the
Fund  to  redeem  the  AMPS  in  order  to  maintain   certain  asset   coverage
requirements.  To the extent the Fund may need to liquidate  investments to fund
repurchase of Shares, this may result in portfolio turnover,  which will in turn
result in  additional  expenses  being  borne by the Fund.  The Board  currently
considers  the  following  factors to be  relevant  to a  potential  decision to
repurchase Shares: the extent and duration of the discount, the liquidity of the
Fund's  portfolio,  the impact of any action on the Fund or its stockholders and
market  considerations.  Any Share  repurchases or tender offers will be made in
accordance  with the  requirements  of the  Securities  Exchange Act of 1934, as
amended (the "Exchange Act") and the 1940 Act. See "Repurchase of Shares" in the
SAI.


Capitalization.  The Charter  authorizes the issuance of  250,000,000  shares of
common   stock,   par  value   $0.01  per  share.   The  Board  has   authorized
reclassification  of up to  10,000  of these  shares  in one or more  series  of
preferred  stock, of which 1,000 have been  reclassified  and issued as AMPS. In
2002, Fund  stockholders  approved an amendment to the Charter which  authorizes
the Board,  without  stockholder  approval,  to increase  the Fund's  authorized
capital. Pursuant to such amendment, and in connection with a rights offering in
2002, the Board  approved an amendment to increase the  authorized  stock of the
Fund to its current level.

Rights with Regard to Dividends,  Voting and  Liquidation.  Shares,  when issued
against payment therefor, are fully paid and non-assessable.  The Shares have no
preemptive,  conversion, exchange, or redemption rights. Each Share has one vote
and shares  equally in dividends and  distributions  when and if declared by the
Fund and in the Fund's net assets upon  liquidation.  All voting  rights for the
election of directors are non-cumulative. Consequently, the holders of more than
50% of the Shares can elect 100% of the directors then nominated for election if
they  choose to do so (subject  to the right of holders of  preferred  shares to
elect  directors) and, in such event,  the holders of the remaining  Shares will
not be able to elect any directors.

Common Stock.  The Fund conducted a one-for-one  rights offering in 2002,  which
doubled the number of common shares  outstanding at the time. The Fund conducted
a rights offering again in 2007, which resulted in the issuance of approximately
3.8 million  common shares  outstanding  at the time. The Fund is conducting the
Offering  and  may  conduct  rights  offerings  in the  future.  Any  additional
offerings of shares of capital  stock,  if made,  will  require  approval by the
Board. Any additional  offering of Shares will be subject to the requirements of
the 1940 Act that  common  shares  may not be issued  at a price  below the then
current NAV  (exclusive of  underwriting  discounts and  commissions)  except in
connection  with an offering to existing  stockholders  or with the consent of a
majority of the common stockholders.

The Common  Stock  traded on the NYSE from  January 1974 to April 29, 2002 under
the symbol  "UIF."  From April 30,  2002 to the  present,  the Common  Stock has
traded on the NYSE under the symbol  "BIF." On  February  29,  2008,  there were
15,241,509  Shares issued and  outstanding,  the NAV per Share was $8.27 and the
closing price per Share on the NYSE was $9.66.

Trading and Net Asset Value Information.  In the past, the Shares have traded at
both a premium  and at a  discount  in  relation  to NAV.  Although  the  Shares
recently  have been  trading at a premium  above NAV,  there can be no assurance
that this premium will  continue  after the Offering or that the Shares will not
again trade at a discount. Shares of closed-end investment companies such as the
Fund frequently trade at a discount from NAV. See "Risk Factors." The Shares are
listed and traded on the NYSE.  The average  weekly trading volume of the Shares
on the NYSE during the calendar  year ended  December 31, 2007 was  ____________
Shares. The following table shows for the quarters  indicated:  (i) the high and
low sale price of the  Shares on the NYSE;  (ii) the high and low NAV per Share;
and (iii) the high and low  premium or  discount to NAV at which the Shares were
trading (as a percentage of NAV).


                                  [INSERT TABLE]


On February 29, 2008, the Friday  immediately prior to the effective date of the
Offering,  the last  reported sale price per Share on the NYSE was $9.66 and the
Fund's NAV per Share was $8.27.  The premium of the Shares on February  29, 2008
was 16.81%.

Preferred  Stock.  Under the Charter,  the Board is  authorized  to classify and
reclassify any unissued  Shares as part of an issuance of preferred  stock.  The
Board is also authorized to set or change the  preferences,  conversion or other
rights,  voting  powers,  restrictions,  limitations  as to dividends  and other
distributions,  qualifications  or terms or  conditions  of  redemption  of such
Shares.  Under the 1940 Act, the Fund is permitted to have outstanding more than
one series of preferred  shares so long as no single  series has a priority over
another  series as to the  distribution  of assets of the Fund or the payment of
dividends.  Holders of Shares and outstanding  preferred shares of the Fund have
no preemptive  right to purchase any preferred  shares that might be issued.  On
July 29, 2005, the Board authorized the  reclassification of up to 10,000 of the
Fund's unissued Shares as preferred stock.


As of February 29, 2008, the Fund has outstanding 1,000 shares of Auction Market
Preferred Shares  (previously  defined as the AMPS). The AMPS were issued with a
liquidation  preference  per  share of  $25,000,  plus  accumulated  and  unpaid
dividends,  and are  senior  securities  of the Fund.  The AMPS  were  issued on
November 14, 2005,  and the first  dividend  payment date was November 15, 2005.
The AMPS normally have a dividend  period  consisting of 28 days. The Board may,
from time to time, declare a different dividend period upon giving notice to the
holders of the AMPS. Dividends on the AMPS are cumulative from the date they are
first issued and are payable when, as and if declared by the Board, out of funds
legally  available  therefor.  The dividend  rate for the AMPS is  determined by
auction.  The dividend  rate for the initial  dividend  period was 3.85% and the
first auction was held on November 14, 2005.  The current  dividend rate paid by
the  Fund  for  its  AMPS  leverage  is  _______%  as of  the  auction  held  on
___________, 2008.

In February 2008, the recent  liquidity crisis in the credit market spilled over
into the auction  rate  preferred  market,  disrupting  trading in auction  rate
preferred  securities  ("ARPS") like the AMPS and resulting in widespread failed
auctions of ARPS. The Fund's most recent AMPS auction  similarly  failed on [ ],
2008,  and as of the date of this  Prospectus,  there has not been a  successful
subsequent  auction.  A failed  auction  occurs  when  there are too few  buyers
willing to bid on and purchase the ARPS at the periodic auction.  Generally in a
failed auction,  because there are too few buyers, holders of ARPS are unable to
sell and therefore must remain holders of the ARPS, although they continue to be
paid interest on the shares they hold,  typically at a higher  interest rate. In
the case of the AMPS, this higher rate is referred to as the "Maximum Applicable
Rate".  The  Maximum  Applicable  Rate  is  intended  in part  to  mitigate  the
inconvenience and temporary illiquidity of failed auctions,  although the holder
must  continue  to hold  the  ARPS  until a  subsequent  successful  auction  is
conducted or the issuer redeems the ARPS.

In the case of the AMPS,  the  Maximum  Applicable  Rate  depends  on the credit
rating assigned to the AMPS and the duration of the dividend period.  Currently,
the AMPS have a Fitch rating of "AAA" and a Moody's rating of "Aaa" and a 28-day
dividend period.  This  corresponds with a Maximum  Applicable Rate which is the
higher of 125% of the reference rate (i.e., the 30-day London Inter-Bank Offered
Rate or "LIBOR") or 1.25% plus the reference  rate. As of February 29, 2008, the
Maximum Applicable Rate for the Fund was ___%. As a point of reference, prior to
the first failed AMPS auction,  the rate paid by the Fund was ___%. Although the
Maximum  Applicable  Rate presently paid by the Fund is relatively  close to the
rate  set at its most  recent  successful  auction,  these  circumstances  could
abruptly  change if  short-term  interest  rates  increase.  In such event,  the
Maximum Applicable Rate could also increase substantially.

Additionally,  should the credit rating assigned to the AMPS be downgraded,  the
Maximum Applicable Rate paid by the Fund would increase depending on the revised
credit rating.  For example,  should the AMPS' credit rating be downgraded to A+
by Fitch  and/or to A1 by Moody's,  the Maximum  Applicable  Rate payable by the
Fund would increase to the higher of 200% of the reference rate (i.e., LIBOR) or
2.00% plus the reference rate. In no instance would the Maximum  Applicable Rate
exceed the  greater of 300% of the  reference  rate or 3.00% plus the  reference
rate.

It was a condition  to their  issuance  that the AMPS be issued with a rating of
not less than "Aaa" from Moody's Investor Services,  Inc.  ("Moody's") and "AAA"
from Fitch, Inc. ("Fitch").  These ratings are an assessment of the capacity and
willingness of an issuer to pay preferred stock obligations. The ratings are not
a recommendation to purchase, hold, or sell those shares, inasmuch as the rating
does not comment as to market price or  suitability  for a particular  investor.
The rating agency guidelines  described above also do not address the likelihood
that an  owner  of AMPS  will be able to  sell  such  shares  in an  auction  or
otherwise. The ratings are based on current information furnished to Moody's and
Fitch by the Fund and the Advisers and information  obtained from other sources.
The ratings may be changed,  suspended  or  withdrawn,  in the rating  agencies'
discretion,  as  a  result  of  changes  in,  or  the  unavailability  of,  such
information.  In connection with the receipt of such rating,  the composition of
the Fund's  portfolio must reflect  guidelines  established by Moody's and Fitch
and the Fund is required to maintain a minimum  discounted  asset  coverage with
respect to the AMPS.

Holders of AMPS do not have the right to cause the Fund to redeem their  shares.
The Fund may,  however,  be  required  by  applicable  law or by  rating  agency
guidelines  to redeem the AMPS if, for example,  the Fund does not meet an asset
coverage  ratio  required  by law or correct a failure  to meet a rating  agency
guideline  in a timely  manner.  The Fund may also  voluntarily  redeem the AMPS
without the consent of its holders.

The 1940 Act requires that the holders of any preferred shares,  voting together
as a single class separate from the holders of common shares,  have the right to
elect at least two directors of the Fund at all times and to elect a majority of
the directors at any time if two years' dividends on the AMPS have not been paid
and the Fund has not eliminated all dividend arrearages. The holders of AMPS and
any other outstanding  preferred shares will vote as a separate class on certain
other  matters as required  under the Charter,  the 1940 Act, and Maryland  law.
Each AMPS share  carries  one vote with  respect to matters on which AMPS can be
voted.  AMPS, when issued against payment  therefor,  will be fully paid and non
assessable and have no preemptive, conversion or cumulative voting rights.


Effects of  Leverage.  The only  obligation  that the Fund has to holders of the
AMPS is to pay the  agreed-upon  dividend  rate as set by auction every 28 days.
Any  income  earned in  excess of such  dividend  rate and Fund  expenses  would
directly benefit Common Stockholders. The Fund may not pay any ordinary dividend
to Common  Stockholders  until after all  dividends due the holders of AMPS have
been  paid.  The  following   table  is  designed  to  assist   stockholders  in
understanding  the effects of leverage on an investment in the Fund. The figures
appearing  in the table are  hypothetical  and actual  returns may be greater or
less than those appearing in the table.


                                                                                
Assumed Return on Portfolio Assets (Net of          -10%        -5%        0%         5%        10%
Expenses)
                                                  ---------- ---------- ---------- --------- ----------

Corresponding Actual Returns to Common            [-17.9%]   [-10.2%]    [-2.5%]    [5.2%]    [12.9%]
Stockholders Under Current Capital Structure
(i.e.,  prior to Offering)

Corresponding Expected Returns to Common          [-16.6%]    [-9.4%]    [-2.3%]    [4.8%]    [11.9%]
Stockholders Post Offering



The following  factors  associated with  leveraging,  in addition to those items
discussed in "Risk Factors and Special Considerations" above, could increase the
investment risk and volatility of the price of the Shares:

     (1)  leveraging  exaggerates  any  increase or decrease in the value of the
     Shares;

     (2) the dividend requirements on preferred stock may exceed the income from
     the portfolio  securities  purchased with the proceeds from the issuance of
     preferred stock;

     (3) a  decline  in  NAV  results  if  the  investment  performance  of  the
     additional  securities  purchased  fails  to cover  their  cost to the Fund
     (including any dividend requirements of preferred stock);

     (4) a decline in NAV could  affect the  ability of the Fund to make  Common
     Stock dividend payments;

     (5) a failure to pay  dividends or make  distributions  could result in the
     Fund's ceasing to qualify as a regulated investment company under the Code;
     and

     (6) if the asset coverage for preferred stock or debt  securities  declines
     to less than two hundred percent or three hundred percent, respectively (as
     a result of market fluctuations or otherwise),  the Fund may be required to
     sell a portion of its investments when it may be disadvantageous to do so.

Pursuant  to  Section  18 of the 1940 Act,  it is  unlawful  for the Fund,  as a
registered closed-end investment company, to issue any class of senior security,
or to sell any such  security  of which it is an issuer,  unless it can  satisfy
certain "asset coverage" ratios. The asset coverage ratio means the ratio of the
value of the total assets of such  investment  company (less all liabilities and
indebtedness  not represented by senior  securities) to the aggregate  amount of
debt  securities of such investment  company (plus the  involuntary  liquidation
preference of the preferred stock of such company). If the senior securities are
stock, such as the AMPS, such stock must have an asset coverage of at least 200%
immediately  after  issuance  or sale of such  stock.  If the senior  securities
represent an indebtedness (i.e., "debt  securities"),  such debt securities must
have an asset  coverage of at least 300%  immediately  after issuance or sale of
such debt  securities.  Subject  to  certain  exceptions,  if the Fund  fails to
satisfy these asset coverage ratios,  it will, among other things, be prohibited
from  declaring any dividend  (except a dividend  payable in stock issued by the
Fund) or declaring any other  distribution.  Notwithstanding  the  foregoing,  a
registered  investment  company  may, to the extent  permitted  by the 1940 Act,
segregate  assets or "cover"  transactions  in order to avoid the  creation of a
class of senior security.

The rating  received by the Fund on its AMPS,  or on any other  senior  security
which it may issue,  is an assessment of the capacity of the Fund to satisfy its
obligations on the AMPS or such other senior  security.  However,  the rating on
AMPS does not eliminate or mitigate the risks  associated  with investing in the
Fund's  securities.  In  addition,  should  the rating on the AMPS be lowered or
withdrawn by the relevant  rating agency,  there may be an adverse effect on the
market value of the AMPS. The Fund may also be required to redeem all or part of
the AMPS. If such partial or whole redemption of the AMPS occurs, as a result of
the change in or  withdrawal  of the rating,  the Common  Stock of the Fund will
lose any potential benefits associated with a leveraged capital structure.


Voting Rights  Associated with the AMPS.  Except as otherwise  indicated in this
Prospectus  and  in  the  SAI,  or as  provided  in  the  Charter  and  Articles
Supplementary  or as otherwise  required by law, holders of AMPS will have equal
voting  rights with holders of Common Stock and any other  Preferred  Stock (one
vote per  share) and will vote  together  with  holders of Common  Stock and any
other  preferred  shares as a single  class.  Holders of  outstanding  Preferred
Stock,  including AMPS, voting as a separate class, are entitled to elect two of
the  Fund's  directors.  The  remaining  directors  are  elected  by  holders of
outstanding Common Stock voting as a separate class. In addition, if at any time
dividends  (whether or not earned or  declared) on AMPS are due and unpaid in an
amount equal to two full years of dividends,  and  sufficient  cash or specified
securities  have not been  deposited  with the auction  agent for the payment of
such  dividends,  the sole remedy of holders of outstanding  Preferred  Stock is
that the  number  of  directors  constituting  the Board  will be  automatically
increased by the smallest number that,  when added to the two directors  elected
exclusively  by the  holders  of  Preferred  Stock  as  described  above,  would
constitute  a majority  of the Board.  The  holders of  Preferred  Stock will be
entitled to elect that  smallest  number of  additional  directors  at a special
meeting of stockholders held as soon as possible and at all subsequent  meetings
at which  directors  are to be elected,  unless such special  voting  rights are
terminated  as  explained  below.  The terms of office  of the  persons  who are
directors  at the time of that  election  will  continue  unless the election of
additional  directors  by holders of  Preferred  Stock would cause the number of
directors to exceed 12. If the Fund  thereafter pays in full all accumulated and
unpaid  dividends on all outstanding  Preferred Stock, the special voting rights
stated  above  will  cease and the terms of office of the  additional  directors
elected by the holders of the Preferred Stock will automatically terminate.

The  affirmative  vote of a  majority  of the votes  entitled  to be cast by the
holders of the  outstanding  shares of AMPS or such higher  percentage as may be
required by the Charter,  voting as a separate class,  will be required to amend
the Charter so as to adversely affect in any material respect any contract right
of the AMPS or the  holders  thereof  expressly  set forth in the  Charter.  The
affirmative  vote of at least a majority of the votes entitled to be cast by the
outstanding  holders of AMPS,  voting as a separate  class,  will be required to
issue any shares of  Preferred  Stock  ranking  prior to or on a parity with the
AMPS  as to  the  payment  of  dividends  or the  distribution  of  assets  upon
dissolution,  liquidation  or winding up of the  affairs of the Fund (other than
previously  authorized and unissued shares of AMPS, including any shares of AMPS
purchased or redeemed by the Fund), or increase the authorized amount of AMPS or
any other  Preferred  Stock.  Unless a higher  percentage is provided for in the
Charter,  the  affirmative  vote  of a  majority  of the  outstanding  AMPS  (as
determined under the 1940 Act),  voting as a separate class, will be required to
approve any plan or reorganization  adversely affecting the shares or any action
requiring  a vote of  security  holders  under  Section  13(a)  of the  1940 Act
including,  among other things,  changes in the Fund's  investment  objective or
changes in certain restrictions  described above under "Investment Objective and
Policies" and in the SAI under  "Investment  Objective and Policies - Investment
Restrictions."  The class vote of holders of shares of AMPS described above will
in each case be in addition to a separate  vote of the  requisite  percentage of
the votes entitled to be cast by holders of Shares and outstanding  AMPS, voting
as a single class, necessary to authorize the action in question.

The voting provisions with respect to the AMPS described in this Prospectus will
not apply if at, or prior to,  the time at which the act with  respect  to which
the vote would otherwise be required is effected, all outstanding AMPS have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemptions.

Anti-Takeover Provisions of the Charter and Bylaws. At a meeting of stockholders
held in May 2004,  stockholders  approved  a  comprehensive  range of  corporate
governance  proposals  which  abolished  or  changed a number  of  anti-takeover
provisions  previously  adopted  by the  Fund.  These  included,  among  others,
proposals to (i)  declassify the Board;  (ii) elect  directors by a plurality of
votes cast; (iii) permit  stockholders to effect Bylaw amendments;  (iv) set the
number of directors at exactly five;  and (v) prohibit the Fund from opting into
the Maryland  Unsolicited  Takeovers  Act.  Nonetheless,  the Fund presently has
provisions in its Charter and Bylaws which may still have the effect of limiting
the  ability of other  entities  or persons to acquire  control of the Fund,  to
cause it to engage in certain  transactions or to modify its structure (commonly
referred to as "anti-takeover" provisions):

     (1) The Charter requires the affirmative vote of at least two-thirds of the
votes  entitled  to be cast by  holders  of common  stock to  approve,  adopt or
authorize (a) certain  business  combinations  (e.g.,  merger,  consolidation or
liquidation,  or sale,  lease,  exchange,  mortgage,  pledge,  transfer or other
disposition  of  the  Fund's  assets,   etc.);  (b)  voluntary   liquidation  or
dissolution  of  the  Fund;  (c)  stockholder   proposals  regarding  investment
decisions;  (d) conversion from a closed-end to an open-end  investment company;
or (e) a self-tender  for, or  acquisition  by the Fund of, more than 25% of the
Fund's outstanding shares of stock, during any twelve-month period.


     (2) The Fund's Bylaws contain  provisions the effect of which is to prevent
matters,   including   nominations  of  Directors,   from  being  considered  at
stockholders'  meetings where the Fund has not received  sufficient prior notice
of the matters.

The percentage of votes required under these provisions,  which are greater than
the  minimum  requirements  under  Maryland  law or the 1940 Act,  makes it more
difficult to effect a change in the Fund's business or management and could have
the effect of  depriving  holders  of common  shares of an  opportunity  to sell
shares at a premium over prevailing  market prices by discouraging a third party
from  seeking  to  obtain  control  of the  Fund in a tender  offer  or  similar
transaction.  The Board, however, has considered these anti-takeover  provisions
and believes that they are in the best interests of stockholders.

Reports  to  Stockholders.  The Fund sends  unaudited  semi-annual  reports  and
audited annual reports,  including lists of investments  held, to  stockholders.
The Fund also maintains these reports on its website at www.boulderfunds.net.

Available Information.  The Fund is subject to the informational requirements of
the  Exchange  Act and the 1940 Act and in  accordance  therewith is required to
file reports,  proxy  statements and other  information  with the Securities and
Exchange  Commission.  Any such reports,  proxy statements and other information
can be inspected and copied at the public reference facilities of the Commission
at 100 F  Street,  N.E.,  Washington,  D.C.  20549,  the  Commission's  New York
Regional Office at 3 World Financial Center, Suite 400, New York, New York 10281
and its Chicago Regional Office at 175 W. Jackson Boulevard, Suite 900, Chicago,
Illinois 60604. Reports,  proxy statements and other information  concerning the
Fund can also be  inspected  at the offices of the NYSE,  20 Broad  Street,  New
York, New York 10005.

Additional  information  regarding the Fund and the Offering is contained in the
Registration Statement on Form N-2, including amendments, exhibits and schedules
thereto,  relating to the  Offering  filed by the Fund with the  Securities  and
Exchange Commission. This prospectus does not contain all of the information set
forth in the  Registration  Statement,  including any  amendments,  exhibits and
schedules  thereto.  For further  information  with  respect to the Fund and the
Shares  offered  hereby,  reference  is  made  to  the  Registration  Statement.
Statements  contained in this  Prospectus  as to the contents of any contract or
other  document  referred to are not  necessarily  complete and in each instance
reference  is made to the copy of such  contract or other  document  filed as an
exhibit to the  Registration  Statement,  each such statement being qualified in
all respects by such reference.

A copy of the  Registration  Statement  may be inspected  without  charge at the
Securities and Exchange Commission's  principal office in Washington,  D.C., and
copies of all or any part thereof may be obtained from the  Commission  upon the
payment of certain fees prescribed by the Commission. The Commission maintains a
website  (http://www.sec.gov)  that contains the Registration  Statement,  other
documents  incorporated by reference,  and other  information the Fund has filed
electronically with the Commission, including proxy statements and reports filed
under the Exchange Act.


                           DIVIDENDS AND DISTRIBUTIONS

Level-Rate  Distribution Policy. In May 2006, stockholders of the Fund approved,
and the Fund adopted, the Distribution Policy. The Distribution Policy initially
provided for monthly  distributions at the rate of $0.10 per Share per month, or
$1.20 per Share annually,  which  represented a 14.9% annual  distribution  rate
relative to the Fund's NAV at the time. In February 2007, because the NAV of the
Fund had increased  substantially since the Distribution Policy was adopted, and
the  Board  wished  to  maintain  a  similar  annual  distribution  rate to that
originally adopted, the Fund increased the distribution rate to $0.115 per Share
per month, or $1.38 per Share annually, representing a 14.6% annual distribution
rate relative to the Fund's NAV at the time. At its quarterly meeting in January
2008,  the  Board   considered   and  resolved  to  maintain  the   then-current
distribution  rate at $0.115 per Share per month,  or $1.38 per Share  annually,
representing  ___% of the Fund's per share  market  price and ___% of the Fund's
most recent NAV, both on an annualized basis. The annual distribution rate under
the Distribution Policy is reviewed periodically by the Board and generally will
not  exceed  the  annual  long term  performance  of the Fund based on a rolling
5-year performance history, subject to the Board's discretion to suspend, modify
or terminate the  Distribution  Policy at any time. In conducting  its review of
the annual distribution rate and the Fund's performance  history, the Board will
take into account,  among other  factors,  that during 2002,  the first year the
Advisers  served as  investment  advisers  to the  Fund,  the  Fund's  portfolio
consisted primarily of bonds that were below investment grade, and that the Fund
recognized  significant  losses as these  investments  were  liquidated  and the
proceeds  invested in common stocks  consistent with the Fund's new objective of
total return.  There are certain risks associated with the Distribution  Policy;
see "Risk Factors - Level-Rate Distribution Policy."


Generally,  distributions under the Distribution Policy will consist mostly of a
return of capital.  Distributions  may have a small  component of net investment
income,  but the exact tax  characteristics  of the  distributions  is not known
until the Fund's fiscal year-end (i.e.,  November 30 of each year). A "return of
capital"  represents a return of a Common  Stockholder's  original investment in
the  Shares,  and  should not be  confused  with a  dividend  yield.  To explain
further,  a "return of  capital"  is what the term  implies,  a return of Common
Stockholders'  capital  investment in the Fund. A return of capital generally is
not taxable.  It is not  considered  "yield," or  "income," or "capital  gains,"
items which are taxable.  When Common Stockholders  receive a return of capital,
they are getting back part of their  investment and  consequently  the return of
their already-taxed capital investment is tax free to the Common Stockholders.

Currently,  the Fund does not expect that distributions will include any capital
gain component.  To the extent Common  Stockholders  receive a return of capital
they will be  required  to adjust  their cost basis by the same  amount upon the
sale of their Shares.  This adjustment to their cost basis in Shares means that,
when Common  Stockholders  decide to sell  Shares in the Fund,  they will have a
larger capital gain (or smaller  capital loss) than prior to the  implementation
of the Distribution Policy. This may have negative tax consequences,  and Common
Stockholders  should seek their own tax advice regarding the reporting of income
and the gain or loss on the sale of the Shares.  Common Stockholders should note
the following  important  risk and other  factors  concerning  the  Distribution
Policy:

(degree) The Distribution Policy may impact the way in which the Fund is
managed.

     *    Distributions, if any, may include return of capital to the extent the
          Fund's net investment  income and net capital gain are insufficient to
          meet the fixed distribution amount paid to Common Stockholders.

     *    The Board may modify,  suspend or terminate the Distribution Policy at
          any time and such modification,  suspension or termination may have an
          abrupt and adverse effect on the market price of the Shares, resulting
          in a trading  discount  (if the Fund is  trading  at or above  NAV) or
          widening an existing discount.

     *    Common  Stockholders  are  responsible for tracking and, if necessary,
          adjusting   their  cost  basis  of  Shares   should  they   receive  a
          distribution  which includes a return of capital as indicated on their
          tax form(s).

     *    The tax  characteristic  of the  distributions and exactly how much is
          net investment  income,  ordinary  income,  capital gains, if any, and
          return  of  capital,  if any,  will be  indicated  on  their  IRS Form
          1099-DIV.

     *    If  the  Fund's   annual   total   return  is  less  than  the  annual
          distribution,  the  Distribution  Policy  could  have  the  effect  of
          shrinking  the  assets  of the  Fund and thus  increasing  the  Fund's
          expense ratio (i.e.,  the Fund's fixed  expenses will be spread over a
          smaller pool of assets).  The Board will  conduct an annual  review of
          the distribution  rate under the Distribution  Policy to address these
          issues (e.g., shrinking assets and increasing expense ratio) but there
          may be interim periods when the annualized  distribution  rate exceeds
          the short-term return on the Fund's NAV.

For a more detailed  discussion  of the above risk factors,  see "Risk Factors -
Level-Rate Distribution Policy."

Rights holders who exercise their Rights will receive newly issued Shares within
fifteen (15) days of the record date of the most recent  monthly  payment  under
the  Distribution  Policy,  which record date may occur during the  Subscription
Period.  Common  Stockholders  who  receive  newly  issued  Common  Stock in the
Offering  will not receive a  distribution  under the  Distribution  Policy with
respect to such newly issued Common Stock for the record date immediately  prior
to issuance of the newly issued Shares.  Common Stockholders will be entitled to
receive monthly  distributions  for record dates  subsequent to their receipt of
newly issued  Common  Stock in  accordance  with the  Distribution  Policy.  The
Offering  will not impact  the  distributions  to be paid to current  holders of
Common Stock  regardless  of whether they  exercise  their Rights or allow their
Rights to lapse,  subject to suspension,  termination,  or  modification  of the
Distribution Policy by the Board at any time.

Dividend  Reinvestment  Plan.  The  Fund has  adopted  a  Dividend  Reinvestment
Program,  or "DRIP  program,"  whereby  participating  Common  Stockholders  may
reinvest their dividends back into the Fund. To participate in the DRIP program,
Stockholders  should contact the  Information  Agent by calling  1-800-607-0088.
Shareholders  will be sent the terms and  conditions  of the DRIP  program and a
form of authorization  for the  reinvestment of dividends.  The DRIP plan allows
Common  Stockholders to build their Shares in the Fund  automatically  with each
dividend payment.  If the Shares are trading at a discount to NAV at the time of
the  dividend  payment,  the Plan Agent  will  arrange to buy Shares on the open
market as long as the Shares  remain at a discount.  If the market  price of the
Shares  trade at or above the NAV,  then the Fund will  issue new  Shares at the
greater of NAV or 95% of the market price per Share on the payment date.


The  DRIP  program  is  available  to  all  registered  Stockholders;  that  is,
stockholders  who hold  stock in their  own name,  and not held in  street  name
through a brokerage firm.  Registered  holders will automatically be enrolled in
the DRIP plan. Therefore,  Common Stockholders who are registered  stockholders,
and do not wish to participate, must contact the Plan Agent by phone or by mail,
and request that dividends be paid in cash,  rather than in Shares.  Most Common
Stockholders  hold their stock through a brokerage firm,  which means Shares are
held in "street name." Common  Stockholders  who hold Shares in street name, may
participate   in  the  DRIP  program  only  if  their   brokerage  firm  permits
participation.

For  more   information,   please  call  the  Information  Agent  toll  free  at
1-800-607-0088.


                          CUSTODIAN AND TRANSFER AGENT

State Street Bank and Trust Company  serves as the Fund's  co-administrator  and
custodian and will maintain custody of the securities and cash of the Fund. PFPC
Inc.  serves as the  transfer  agent of the Fund.  Deutsche  Bank Trust  Company
Americas  serves as Auction Agent,  transfer  agent,  dividend  paying agent and
registrar for the AMPS.


                                  LEGAL MATTERS

Certain  legal  matters in  connection  with the  Offering  will be passed on by
Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.


                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The data in the "Financial  Highlights"  section of this  prospectus are derived
from financial  statements for the fiscal year-ended  November 30, 2007, and for
the fiscal year-ended  November 30, 2006, have been audited by Deloitte & Touche
LLP, the Fund's  independent  registered public accounting firm,  located at 555
17th  Street,  Denver,  Colorado,  as  indicated  in their  report with  respect
thereto,  and are  incorporated by reference  herein in reliance on their report
given on their authority as experts in auditing and accounting.


                             ADDITIONAL INFORMATION

The  prospectus and the SAI do not contain all of the  information  set forth in
the  Registration  Statement  that the Fund has filed  with the  Securities  and
Exchange Commission.  The complete  Registration  Statement may be obtained from
the SEC upon payment of the fee prescribed by its rules and regulations. The SAI
can be obtained without charge by calling (877) 561-7914.  Statements  contained
in this  prospectus  as to the  contents  of any  contract  or  other  documents
referred to are not necessarily  complete,  and, in each instance,  reference is
made to the copy of such contract or other  document  filed as an exhibit to the
Registration  Statement  of  which  this  prospectus  forms  a part,  each  such
statement being qualified in all respects by such reference.


                         PRIVACY PRINCIPLES OF THE FUND

The Fund has established the following  policy regarding  information  about the
Fund's stockholders:

     Privacy  Statement.  Pursuant to SEC  Regulation  S-P  (Privacy of Consumer
     Financial  Information)  the  Directors  of the Fund,  BTF, DNY and FF (the
     "Boulder   Funds")  have   established  the  following   policy   regarding
     information  about  the  Boulder  Funds'  stockholders.   We  consider  all
     stockholder data to be private and  confidential,  and we hold ourselves to
     the highest standards in its safekeeping and use.


     General  Statement.  The Boulder  Funds may collect  nonpublic  information
     (e.g., name, address,  email address,  Social Security Number, Boulder Fund
     holdings  (collectively,  "Personal  Information")) about stockholders from
     transactions  in Boulder  Fund shares.  The Boulder  Funds will not release
     Personal  Information  about  current  or former  stockholders  (except  as
     permitted  by law) unless one of the  following  conditions  is met: (i) we
     receive  prior  written  consent  from the  relevant  stockholder;  (ii) we
     believe  the   recipient  to  be  such   stockholder   or  its   authorized
     representative;  (iii) to service or support the business  functions of the
     Boulder Funds (as explained in more detail below),  or (iv) we are required
     by law to release Personal Information to the recipient.  The Boulder Funds
     have not and will not in the future give or sell Personal Information about
     their current or former stockholders to any company,  individual,  or group
     (except as permitted by law) and as otherwise provided in this policy.

     In the  future,  the Boulder  Funds may make  certain  electronic  services
     available  to their  stockholders  and may  solicit a  stockholder's  email
     address and contact  such  stockholder  by email,  telephone  or U.S.  mail
     regarding the  availability  of such  services.  The Boulder Funds may also
     contact  stockholders  by email,  telephone or U.S. mail in connection with
     these  services,  such as to confirm  enrollment in electronic  stockholder
     communications  or to update a stockholder's  Personal  Information.  In no
     event will the Boulder Funds transmit a stockholder's  Personal Information
     via email without consent.

     Use of  Personal  Information.  The  Boulder  Funds will only use  Personal
     Information (i) as necessary to service or maintain stockholder accounts in
     the ordinary course of business and (ii) to support  business  functions of
     the  Boulder  Funds and their  affiliated  businesses.  This means that the
     Boulder Funds may share certain Personal Information,  only as permitted by
     law,  with  affiliated  businesses  of the  Boulder  Funds,  and that  such
     information  may be used for  non-Boulder-Fund-related  solicitation.  When
     Personal Information is shared with the Boulder Funds' business affiliates,
     the Boulder Funds may do so without  providing the  stockholders the option
     of preventing these types of disclosures as permitted by law.

     Safeguards  Regarding Personal  Information.  Internally,  we also restrict
     access to Personal  Information  to those who have a specific  need for the
     records. We maintain physical,  electronic,  and procedural safeguards that
     comply with Federal  standards to guard  Personal  Information.  Any doubts
     about the confidentiality of Personal Information,  as required by law, are
     resolved in favor of  confidentiality.  The Boulder Funds and their Service
     Providers  restrict  access to non-public  personal  information  about its
     stockholders  to employees of the Boulder  Funds'  investment  advisers and
     their affiliates with a legitimate  business need for the information.  The
     Boulder Funds  maintain  physical,  electronic  and  procedural  safeguards
     designed  to  protect  the   non-public   personal   information  of  their
     stockholders.  For  more  information  about  the  Boulder  Funds'  privacy
     policies, please visit http://www.boulderfunds.net.

NO  PERSON  HAS  BEEN  AUTHORIZED  TO  GIVE  ANY  INFORMATION  OR  TO  MAKE  ANY
REPRESENTATIONS  NOT  CONTAINED  IN THIS  PROSPECTUS.  IF GIVEN  OR  MADE,  SUCH
INFORMATION OR  REPRESENTATION  CAN NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND OR THE FUND'S ADVISERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR THE  SOLICITATION  OF AN OFFER  TO BUY ANY  SECURITY  OTHER  THAN THE
SHARES OF COMMON STOCK  OFFERED BY THIS  PROSPECTUS,  NOR DOES IT  CONSTITUTE AN
OFFER TO SELL OR THE  SOLICITATION  OF AN OFFER TO BUY SHARES OF COMMON STOCK BY
ANYONE  IN ANY  JURISDICTION  IN  WHICH  SUCH  OFFER  OR  SOLICITATION  WOULD BE
UNLAWFUL.  NEITHER THE DELIVERY OF THIS  PROSPECTUS  NOR ANY SALE MADE HEREUNDER
SHALL,  UNDER ANY  CIRCUMSTANCES,  CREATE AN IMPLICATION  THAT THERE HAS BEEN NO
CHANGE IN THE FACTS AS SET FORTH IN THE PROSPECTUS OR IN THE AFFAIRS OF THE FUND
SINCE THE DATE HEREOF.



          TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

THE FUND.......................................................................1
USE OF PROCEEDS................................................................2
INVESTMENT OBJECTIVE AND POLICIES..............................................2
INVESTMENT POLICIES AND RESTRICTIONS...........................................3
INVESTMENT POLICIES AND TECHNIQUES.............................................4
MANAGEMENT OF THE FUND........................................................12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS...............................13
OWNERSHIP OF THE FUND BY DIRECTORS............................................13
DIRECTOR AND OFFICER COMPENSATION.............................................14
COMMITTEES OF THE BOARD OF DIRECTORS..........................................15
INVESTMENT ADVISERS AND OTHER SERVICE PROVIDERS...............................16
COMPENSATION TO THE ADVISERS AND ADMINISTRATORS...............................19
DURATION AND TERMINATION OF THE INVESTMENT ADVISORY AGREEMENTS................19
POTENTIAL CONFLICTS OF INTEREST...............................................19
PROXY VOTING..................................................................20
CODE OF ETHICS................................................................20
PORTFOLIO TRANSACTIONS, BROKERAGE ALLOCATION AND OTHER PRACTICES..............20
REPURCHASE OF SHARES..........................................................21
FEDERAL INCOME TAX MATTERS....................................................22
PERFORMANCE-RELATED, COMPARATIVE AND OTHER INFORMATION........................27
FINANCIAL STATEMENTS..........................................................27
ADDITIONAL INFORMATION........................................................28

Appendix A - Proxy Voting Policies and Procedures




                       BOULDER GROWTH & INCOME FUND, INC.

                       STATEMENT OF ADDITIONAL INFORMATION

Boulder Growth & Income Fund, Inc. (the "Fund") is a closed-end, non-diversified
management investment company. This Statement of Additional Information does not
constitute a prospectus,  but should be read in conjunction  with the prospectus
relating  hereto dated February __, 2008 (the  "Prospectus").  This Statement of
Additional  Information  does not include  all  information  that a  prospective
investor  should  consider  before  participating  in the rights  offering  (the
"Offering")  described  in the  Prospectus  or otherwise  purchasing  the Fund's
common stock. A copy of the Prospectus may be obtained without charge by calling
the  Fund's  co-administrator  (Fund  Administrative  Services,  LLC)  at  (877)
561-7914.  You may also obtain a copy of the  Prospectus on the  Securities  and
Exchange Commission's website  (http://www.sec.gov).  Capitalized terms used but
not defined in this Statement of Additional  Information have the meanings given
to them in the Prospectus.

THE INFORMATION IN THIS STATEMENT OF ADDITIONAL  INFORMATION IS NOT COMPLETE AND
MAY BE  CHANGED.  WE MAY  NOT  SELL  THESE  SECURITIES  UNTIL  THE  REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE  COMMISSION IS EFFECTIVE.  THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE  SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.

This Statement of Additional Information is dated February __, 2008.




                                TABLE OF CONTENTS

THE FUND                                                                       1
USE OF PROCEEDS                                                                2
INVESTMENT OBJECTIVE AND POLICIES                                              2
INVESTMENT POLICIES AND RESTRICTIONS                                           3
INVESTMENT POLICIES AND TECHNIQUES                                             4
MANAGEMENT OF THE FUND                                                        12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                               12
OWNERSHIP OF THE FUND BY DIRECTORS                                            13
DIRECTOR AND OFFICER COMPENSATION                                             14
COMMITTEES OF THE BOARD OF DIRECTORS                                          14
INVESTMENT ADVISERS AND OTHER SERVICE PROVIDERS                               16
COMPENSATION TO THE ADVISERS AND ADMINISTRATORS                               18
DURATION AND TERMINATION OF THE INVESTMENT ADVISORY AGREEMENTS                18
POTENTIAL CONFLICTS OF INTEREST                                               18
PROXY VOTING                                                                  19
CODE OF ETHICS                                                                19
PORTFOLIO TRANSACTIONS, BROKERAGE ALLOCATION AND OTHER PRACTICES              19
REPURCHASE OF SHARES                                                          20
FEDERAL INCOME TAX MATTERS                                                    21
PERFORMANCE-RELATED, COMPARATIVE AND OTHER INFORMATION                        25
FINANCIAL STATEMENTS                                                          26
ADDITIONAL INFORMATION                                                        26


                                    THE FUND

From its  inception in 1972 until 2002,  the Fund was called USLife Income Fund,
Inc. (the  "Predecessor  Fund").  The Predecessor Fund was managed to provide "a
high level of current  income," was virtually  100% invested in corporate  bonds
and was  classified as a diversified  fund under the  Investment  Company Act of
1940,  as amended (the "1940  Act").  At a special  stockholder  meeting held in
April 2002,  stockholders approved changes in the Fund's name, in the investment
objective to "total return" and in the Fund's classification from diversified to
non-diversified,  and  eliminated or changed  certain of the Fund's  fundamental
investment   policies.   See  "Fundamental   Policies"  below.  After  the  Fund
implemented these changes,  the Fund's advisers liquidated a substantial portion
of the Fund's bond portfolio.



                                 USE OF PROCEEDS

The  proceeds of the  Offering  will be invested in  accordance  with the Fund's
investment objective and policies as soon as practicable.  The Advisers (defined
below)  anticipate  that it may take up to six  months  for the  Fund to  invest
substantially  all of the net proceeds of this Offering in  accordance  with its
investment objective and policies under current market conditions.  Pending such
investment, the Fund anticipates investing the proceeds in short-term securities
issued by the U.S.  government or its agencies or  instrumentalities  or in high
quality,  short-term or long-term debt obligations or money market  instruments.
The  increase in assets as a result in the Offering may also be used to help the
Fund  maintain the  Distribution  Policy (as defined  below).  The  Distribution
Policy permits Common  Stockholders  to realize a predictable,  but not assured,
level of cash flow and some liquidity  periodically with respect to their Common
Stock without having to sell Shares. See "Investment Policies and Restrictions -
Other  Investment  Techniques  and  Policies - Level-Rate  Distribution  Policy"
below.


                        INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment  objective is total return. The Fund seeks to produce both
income and long-term capital  appreciation by investing in a portfolio of equity
and debt  securities.  The Fund invests  primarily in common  stocks,  including
dividend  paying common  stocks such as those issued by  utilities,  real estate
investment trusts ("REITs") and registered  investment  companies ("RICs").  The
Fund also invests in fixed income securities such as U.S. government securities,
preferred  stocks  and  bonds.  The Fund  invests  primarily  in  securities  of
U.S.-based  companies and to a lesser extent in foreign  equity  securities  and
sovereign debt, in each case  denominated in foreign  currency.  The Fund has no
restrictions  on its  ability  to  invest  in  foreign  securities.  The Fund is
concentrated in Real Estate Related  Companies,  which means it must invest more
than 25% of its  total  assets  in REITs or the  equity  or debt  securities  of
companies  in or  primarily  servicing  the real  estate  industry or deriving a
substantial  portion of their revenue  from, or having a substantial  portion of
their assets  invested in, real estate.  No assurance can be given that the Fund
will achieve its investment objective.

The Fund is a "non-diversified"  investment company, as defined in the 1940 Act,
which means that it is permitted  to invest its assets in a more limited  number
of issuers than "diversified"  investment  companies.  A diversified company may
not, with respect to 75% of its total  assets,  invest more than 5% of its total
assets in the  securities of any one issuer and may not own more than 10% of the
outstanding voting securities of any one issuer.  However, under Subchapter M of
the Internal  Revenue Code of 1986, as amended (the  "Code"),  (A) not more than
25% of the Fund's total assets may be invested in  securities  of any one issuer
(other than U.S.  government  securities and RICs) or of any two or more issuers
controlled by the Fund which may be deemed to be engaged in the same, similar or
related trades or businesses,  and (B) with respect to 50% of the total value of
the Fund's  portfolio,  (i) the Fund must limit to 5% the  portion of its assets
invested  in the  securities  of a single  issuer  (other  than U.S.  government
securities  and  RICs),  and (ii)  the  Fund  may not own  more  than 10% of the
outstanding  voting  securities  of any one issuer  (other than U.S.  government
securities  and  RICs).  The  Fund  intends  to  concentrate  its  common  stock
investments  in a few  issuers  and to take large  positions  in those  issuers,
consistent  with being a  "non-diversified"  fund. As a result,  the Fund may be
subject  to a greater  risk of loss than a  diversified  fund or a fund that has
diversified its investments more broadly. Taking larger positions is also likely
to increase the  volatility  of the Fund's NAV,  reflecting  fluctuation  in the
value of large Fund holdings.

Under normal market  conditions,  the Fund intends to invest at least 80% of its
net assets in common stocks, primarily domestic common stocks and secondarily in
foreign common stocks denominated in foreign currencies.  The Fund's investments
in common  stocks may  include,  but is not limited to, RICs whose  objective is
income,  REITs,  and other  dividend-paying  common  stocks.  The portion of the
Fund's  assets that are not  invested in common  stocks may be invested in fixed
income securities,  cash equivalents and other income-producing  securities. The
term "fixed income securities" includes, but is not limited to, corporate bonds,
U.S.  government  securities,   notes,  bills,  debentures,   preferred  stocks,
convertible  securities,  bank  debt  obligations,   repurchase  agreements  and
short-term money market obligations.

The portion of the Fund's  assets that are not invested in common  stocks may be
invested  in  fixed  income  securities   (including   bonds,  U.S.   government
securities, notes, bills, debentures,  preferred stocks, convertible securities,
bank  debt  obligations,  repurchase  agreements  and  short-term  money  market
obligations),  cash equivalents and income-producing common stocks. Under normal
circumstances,  the Fund will not have  more  than 20% of its  assets in cash or
cash equivalents.  The Fund may, for temporary  defensive  purposes,  allocate a
higher  portion of its assets to cash and cash  equivalents.  For this  purpose,
cash  equivalents  consist  of, but are not limited  to,  short-term  (less than
twelve months to maturity) U.S. government  securities,  certificates of deposit
and  other  bank  obligations,  investment  grade  corporate  bonds  other  debt
instruments and repurchase agreements.



                      INVESTMENT POLICIES AND RESTRICTIONS

INDUSTRY  CONCENTRATION  POLICY.  The Fund has  adopted a  concentration  policy
pursuant to which it must, under normal market conditions,  invest more than 25%
of its total  assets in Real  Estate  Related  Companies.  The Fund must  obtain
stockholder  approval  prior  to  changing  this  policy.  Real  Estate  Related
Companies include, but are not limited to: REITs and other closed-end registered
investment companies that invest primarily in REITs; home builders;  real estate
developers;  property  management  companies;  real estate brokerage  companies;
commercial and industrial construction  companies;  financial companies who make
or service real estate mortgages and/or construction  loans;  title,  homeowners
and builders risk insurance companies; manufacturers, distributors and retailers
of  construction  materials  and/or building  supplies;  lumber,  paper,  forest
products,  and other companies with significant  real estate  holdings;  holding
companies of any of these  companies;  and any other  companies  that the Fund's
advisers reasonably determine are "real estate related companies".  Although the
Fund may invest in Real  Estate  Related  Companies  of any size,  it  currently
intends to invest in such companies with market  capitalizations of greater than
$500 million.  Although the Fund  generally  invests in  U.S.-based  Real Estate
Related Companies,  such companies may invest directly or indirectly in non-U.S.
properties,  and the Fund may make  direct  investments  in foreign  Real Estate
Related Companies.

FUNDAMENTAL POLICIES. A number of the Fund's investment policies,  listed below,
are "fundamental"  policies (the "Fundamental  Policies"),  which means that the
policies may not be changed without the approval of the holders of a majority of
the Fund's  outstanding  voting securities (which for this purpose and under the
1940 Act means the lesser of (i) 67% of the shares  represented  at a meeting at
which more than 50% of the outstanding  shares are represented or (ii) more than
50% of the outstanding shares). The Fund may not:

     1.   Issue any senior securities except as permitted under the 1940 Act.

     2.   Invest in the  securities  of  companies  conducting  their  principal
          business  activity in the same  industry  if,  immediately  after such
          investment, the value of its investments in such industry would exceed
          25% of the value of its total assets;  provided  that this  limitation
          will not apply to Real Estate Related Companies.

     3.   Participate  on a joint or a joint and  several  basis in any  trading
          account  in  securities,  except  that the  Fund  may,  to the  extent
          permitted by rules,  regulations or orders of the SEC,  combine orders
          with  others for the  purchases  and sales of  securities  in order to
          achieve the best overall execution.

     4.   Purchase or sell interests in oil, gas or other mineral exploration or
          development programs.

     5.   Purchase or sell real  estate,  except  that the Fund may  purchase or
          sell REITs and securities  secured by real estate or interests therein
          issued by companies owning real estate or interests therein.

     6.   Purchase or sell commodities or commodity contracts.

     7.   Make loans other than  through  the  purchase  of debt  securities  in
          private placements and the loaning of portfolio securities.


     8.   Borrow money in an amount  exceeding the maximum  permitted  under the
          1940 Act.

     9.   Underwrite  securities of other  issuers,  except insofar as it may be
          deemed to be an underwriter in selling a portfolio  security which may
          require registration under the Securities Act of 1933.

     10.  Invest  more than 30% of the value of its total  assets in  securities
          which have been acquired through private placements.

     11.  Purchase or retain the  securities  of any  issuer,  if, to the Fund's
          knowledge,  those officers and directors of the Fund or its investment
          adviser who individually  own beneficially  more than 1/2 of 1% of the
          outstanding securities of such issuer,  together own beneficially more
          than 5% of such outstanding securities.

     12.  Pledge,  mortgage or hypothecate  its assets except in connection with
          permitted borrowing and to the extent related to transactions in which
          the Fund is authorized to engage.

With the exception of the Fund's  investment  objective  (i.e.,  total  return),
Concentration Policy and Fundamental Policies,  all other policies,  statements,
objectives, terms and conditions may be changed by the Fund's Board of Directors
(the "Board") without stockholder approval. Limitations on investments expressed
in percentages  are measured and are applicable  only at the time of investment.
They are not measured or applied on an ongoing  basis.  There is no  requirement
for the Fund to sell or change its portfolio  investments resulting from changes
in valuations to such investments.




                       INVESTMENT POLICIES AND TECHNIQUES

The following  information  supplements the discussion of the Fund's  investment
objective, policies and techniques that are described in the Prospectus.

PORTFOLIO  INVESTMENTS.  Under  normal  market  conditions,  the Fund intends to
invest at least  80% of its net  assets in  common  stocks,  primarily  domestic
common stocks and  secondarily in foreign  common stocks  denominated in foreign
currencies.  The Fund's  investments  in common  stocks may include,  but is not
limited to, RICs whose  objective is income,  REITs,  and other  dividend-paying
common stocks.  The portion of the Fund's assets that are not invested in common
stocks may be invested in fixed income  securities,  cash  equivalents and other
income-producing  securities. The term "fixed income securities" includes but is
not limited to  corporate  bonds,  U.S.  government  securities,  notes,  bills,
debentures,  preferred stocks,  convertible  securities,  bank debt obligations,
repurchase agreements and short-term money market obligations.

COMMON  STOCKS.  The Fund may invest all or any  portion of its assets in common
stock.  Common  stock is defined as shares of a  corporation  that  entitle  the
holder to a pro rata share of the profits of the  corporation,  if any,  without
preference  over any  other  stockholder  or class  of  stockholders,  including
holders of the  corporation's  preferred  stock and other senior equity.  Common
stock  usually  carries  with it the right to vote and  frequently  an exclusive
right to do so.  Holders of common stock also have the right to  participate  in
the assets of the corporation upon  liquidation  after all other claims are paid
or provided for.

In selecting  common stocks for investment,  the Fund expects to focus primarily
on U.S.-based companies and secondarily on the common stock of foreign companies
denominated  in foreign  currencies.  The Fund is  permitted  to invest  without
limitation in companies outside the U.S.  Generally,  target companies will have
consistent  high returns on equity,  while using modest amounts of debt relative
to their  industries.  The Fund seeks investments in businesses which the Fund's
investment advisers,  Boulder Investment Advisers,  LLC ("BIA") and Stewart West
Indies  Trading  Company,   Ltd.  d/b/a  Stewart  Investment   Advisers  ("SIA")
(collectively  the "Advisers"),  understand,  which have fairly  predictable and
improving future earnings, and most importantly,  are priced reasonably relative
to the businesses'  earnings and anticipated  growth in earnings.  The Fund will
not necessarily  focus its investments in "large-cap",  "mid-cap" or "small-cap"
companies  since  the  Advisers  believe  it  would be  unwise  to  impose  such
investment limitations.

Investments in small or middle  capitalization  companies  involve  greater risk
than is customarily  associated with larger,  more established  companies due to
the  greater  business  risks of  small  size,  limited  markets  and  financial
resources,  narrow  product lines and the frequent lack of depth of  management.
The   securities   of  small  or   medium-sized   companies   are  often  traded
over-the-counter,  and may not be traded in volumes typical of securities traded
on a national  securities  exchange.  Consequently,  the  securities  of smaller
companies may have limited market stability and may be subject to more abrupt or
erratic market movements than securities of larger,  more established  companies
or the market averages in general.

When the Fund makes an  investment  in a common  stock,  it will  likely  make a
significant  investment  and typically hold it for a long period of time. In the
long run,  the Fund  believes  that  value  investing  produces  superior  total
returns.  However,  value stocks can remain undervalued for long periods of time
and may never reach what the Advisers  believe are their full intrinsic  values,
or, as with any  security may decline in value.  In  addition,  value stocks may
fall out of favor with  investors  and may  under-perform  growth  stocks during
given periods.

The Advisers may purchase stock of an issuer paying an unusually  large dividend
and,  after  the stock  begins  trading  ex-dividend,  sell the stock at a loss,
thereby  allowing the Fund to offset  gains  realized on other  securities  sold
during  the year.  The  Advisers  enter  into such  transactions  only when they
believe that there is a high probability of realizing an economic profit for the
Fund. This investment  strategy may result in slightly higher portfolio turnover
and transaction costs.

REAL ESTATE  INVESTMENT  TRUSTS. As a matter of investment  policy,  the Fund is
concentrated in Real Estate Related Companies, which means it will, under normal
market  conditions,  invest more than 25% of its total assets in such companies.
The Fund must obtain  stockholder  approval prior to changing this policy.  Real
Estate  Investment Trusts or REITs are included in the definition of Real Estate
Related Companies and comprise a substantial portion of the Fund's assets. REITs
invest primarily in commercial real estate or real estate-related  loans. A REIT
is not taxed on income  distributed to its  stockholders  or  unit-holders if it
complies with regulatory  requirements relating to its organization,  ownership,
assets and income,  and with a regulatory  requirement that it distribute to its
stockholders or unit-holders at least 90% of its taxable income for each taxable
year.  Generally,  REITs can be classified as equity REITs,  mortgage  REITs and
hybrid REITs.  Equity REITs invest the majority of their assets directly in real
property  and derive their income  primarily  from rents and capital  gains from
appreciation realized through property sales. Mortgage REITs invest the majority
of their assets in real estate  mortgages and derive their income primarily from
interest payments.  Hybrid REITs combine the  characteristics of both equity and
mortgage REITs. By investing in REITs indirectly through the Fund,  stockholders
will bear not only the  proportionate  share of the  expenses  of the Fund,  but
also,  indirectly,  similar  expenses of underlying  REITs.  The Fund invests in
REITs primarily for income.


The Fund may be subject to certain risks associated with the direct  investments
of the REITs.  REITs may be affected by changes in their  underlying  properties
and by defaults by borrowers or tenants.  Mortgage  REITs may be affected by the
quality of the credit extended.  Furthermore, REITs are dependent on specialized
management  skills.  Some  REITs  may have  limited  diversification  and may be
subject to risks  inherent in financing a limited  number of  properties.  REITs
depend generally on their ability to generate cash flow to make distributions to
stockholders or unit-holders, and may be subject to defaults by borrowers and to
self-liquidations. In addition, a REIT may be affected by its failure to qualify
for  tax-free  pass-through  of income under the Code or its failure to maintain
exemption from registration under the 1940 Act.

REGISTERED  INVESTMENT  COMPANIES.  The Fund may invest in securities  issued by
Registered   Investment   Companies   ("RICs")  subject  to  such   limitations,
restrictions  and  conditions  as imposed by Federal  law.  The common  stock of
closed-end RICs can trade at a substantial discount to the underlying NAV of the
RIC, and the Fund may, from time to time, invest in common stocks issued by RICs
when they are trading at discounts or when the  Advisers  otherwise  deem market
conditions  appropriate.  The Fund  intends to normally  invest in RICs that pay
dividends. RICs that pay regular dividends typically own interest rate sensitive
securities,  which tend to increase in value when interest  rates  decline,  and
decrease  in value when  interest  rates  increase.  To the extent that the Fund
invests in RICs,  the Fund's  stockholders  will incur  expenses with respect to
both the Fund and that  portion of the Fund's  assets  invested  in other  RICs.
However, as common stocks of closed-end RICs can trade at substantial  discounts
to their  underlying  net asset  values,  the Advisers  may deem the  underlying
expense of investing in a particular RIC to have minimal impact when compared to
the discount at which the Fund may buy their shares. The NAV and market value of
common  stock  issued by RICs will  fluctuate  with the value of the  underlying
assets.  The Fund may  invest in the  auction  market  preferred  stock of other
closed-end  funds  primarily  as a means of  investing  the Fund's  cash for the
short-term  in higher  yielding  alternatives  to  repurchase  agreements  or US
treasury securities. The Fund will consider investing cash in these instruments,
and other  short-term money market type  alternatives,  when the yield spread is
adequately  attractive  over repurchase  agreements and US treasuries.  The Fund
generally  will  invest in auction  market  preferred  stocks that are rated AAA
although it may invest in lower rated securities from time to time.

Recent  rules  under the 1940 Act permit the Fund to invest more than 10% of its
assets in other RICs with certain restrictions including: (i) a 3% limitation on
acquiring  the total  outstanding  voting  shares of any other single RIC,  (ii)
voting  shares  of  acquired  RICs  in  accordance   with  certain   stockholder
principles,  and (iii) not  acquiring  shares of other RICs with the  purpose of
requiring  the  acquired  RIC to redeem  greater  than one percent of that RIC's
outstanding  shares in a period  of less than 30 days.  As a result of new rules
under the 1940 Act, and consistent with the Fund's  investment  objectives,  the
Fund may  invest a  greater  percentage  of its  assets in RICs  subject  to any
restrictions or limitations imposed by Federal law.

BONDS. Prior to April 26, 2002, the Fund was called USLife Income Fund, Inc. and
was  virtually  100%  invested in  corporate  bonds.  Since the Fund changed its
investment  objective on April 26, 2002, the Advisers have liquidated all of the
Fund's bond portfolio.

Bonds,  or fixed  income  securities,  are debt  obligations  issued by the U.S.
government and its agencies,  corporations,  municipalities and other borrowers.
The  market  values of fixed  income  investments  will  change in  response  to
interest  rate changes and other  factors.  During  periods of falling  interest
rates,  the  values of  outstanding  fixed  income  securities  generally  rise.
Conversely,  during  periods  of  rising  interest  rates,  the  values  of such
securities  generally  decline.  Changes by  recognized  rating  agencies in the
rating of any fixed  income  security  and in the  ability  of an issuer to make
payments of interest and principal  also affect the value of these  investments.
Changes in the value of portfolio  securities will not  necessarily  affect cash
income derived from these securities, but will affect the Fund's NAVs.

Corporations  issue bonds and notes to raise  money for  working  capital or for
capital  expenditures  such  as  plant  construction,  equipment  purchases  and
expansion.  In return for the money loaned to the  corporation,  the corporation
promises to pay  bondholders  interest and to repay the principal  amount of the
bond or note.

PREFERRED  STOCKS.  The Fund  may  invest  in  preferred  securities.  Preferred
securities are equity securities,  but they typically have many  characteristics
of fixed  income  securities,  such as a fixed  dividend  payment  rate and/or a
preference over the issuer's common shares as to the payment of dividends and/or
the distribution of assets upon liquidation.  However,  because preferred stocks
are  equity  securities,  they may be more  susceptible  to risks  traditionally
associated with equity investments than fixed income  securities.  Unlike common
stock, preferred securities typically do not have general voting rights.

Fixed rate preferred  stocks have fixed dividend  rates.  They can be perpetual,
with no mandatory  redemption date, or issued with a fixed mandatory  redemption
date.  Certain  issues of  preferred  stock are  convertible  into other  equity
securities.  Perpetual  preferred stocks provide a fixed dividend throughout the
life of the issue, with no mandatory retirement provisions, but may be callable.
Sinking fund  preferred  stocks  provide for the  redemption of a portion of the
issue on a regularly scheduled basis with, in most cases, the entire issue being
retired  at a future  date.  The value of fixed  rate  preferred  stocks  can be
expected to vary inversely with interest rates. Adjustable rate preferred stocks
have a  variable  dividend  rate  which is  determined  periodically,  typically
quarterly,  according to a formula  based on a specified  premium or discount to
the  yield  on  particular  U.S.  Treasury  securities,  typically  the  highest
base-rate yield of one of three U.S.  Treasury  securities:  the 90-day Treasury
bill; the 10-year Treasury note; and either the 20-year or 30-year Treasury bond
or other index.  The premium or discount to be added to or subtracted  from this
base-rate  yield is fixed at the time of issuance and cannot be changed  without
the  approval  of the  holders of the  adjustable  rate  preferred  stock.  Some
adjustable  rate preferred  stocks have a maximum and a minimum rate and in some
cases are convertible into common stock.


Auction  rate  preferred  stocks pay  dividends  that  adjust  based on periodic
auctions. Such preferred stocks are similar to short-term corporate money market
instruments in that an auction rate preferred stockholder has the opportunity to
sell the preferred stock at par in an auction, normally conducted at least every
49 days, through which buyers set the dividend rate in a bidding process for the
next period.  The dividend rate set in the auction depends on market  conditions
and the credit quality of the  particular  issuer.  Typically,  the auction rate
preferred stock's dividend rate is limited to a specified maximum  percentage of
an external commercial paper index as of the auction date. Further, the terms of
the auction rate preferred stocks generally  provide that they are redeemable by
the issuer at certain times or under certain conditions.

Recently,  the  liquidity  crisis in the credit  markets  spilled  over into the
auction  rate  preferred  market,  disrupting  trading in ARPS and  resulting in
widespread  failed  auctions.  A failed  auction  occurs  when there are too few
buyers  willing to bid on and purchase ARPS at the periodic  auction,  typically
held every 7 or 28 days.  Generally in a failed  auction,  because there are too
few buyers,  holders of the ARPS are unable to sell their  shares and  therefore
must remain  holders of the ARPS,  although they continue to be paid interest on
the shares they hold, typically at a higher interest rate (e.g., a "fail rate").
Although  fail rates are  intended in part to  mitigate  the  inconvenience  and
temporary illiquidity of failed auctions, holders like the Fund must continue to
hold the ARPS until a subsequent  successful  auction is conducted or the issuer
redeems the ARPS. Consequently,  holders of ARPS like the Fund will have to hold
ARPS until liquidity returns to the auction rate preferred market and successful
auctions  are held,  or until the issuers of the ARPS elect to redeem.  The Fund
cannot  predict  when or if the  liquidity  issues  affecting  the auction  rate
preferred  market will be resolved  and thus is not able to predict when it will
be able to  liquidate  its ARPS  holdings.  As of  [__________]  the  Fund  held
approximately $______ of ARPS.

The Fund may, from time to time, invest in preferred  securities that are rated,
or whose issuer's senior debt is rated, investment grade by Moody's and Standard
& Poor's ("S&P") at the time of investment,  although the Fund is not limited to
investments in investment grade preferred securities.  In addition, the Fund may
acquire  unrated  issues that the Advisers  deem to be  comparable in quality to
rated issues in which the Fund is authorized to invest.

MONEY MARKET INSTRUMENTS.  Under normal conditions,  the Fund may hold up to 20%
of its assets in cash or money market instruments. The Fund intends to invest in
money market  instruments  pending  investments  in common  stocks,  to serve as
collateral in connection with certain  investment  techniques,  and to hold as a
reserve pending the payment of dividends to investors. When the Advisers believe
that economic  circumstances warrant a temporary defensive posture, the Fund may
invest without limitation in short-term money market instruments.

Money market  instruments  that the Fund may acquire will be securities rated in
the highest short-term rating category by Moody's Investors Service  ("Moody's")
or S&P or the  equivalent  from another  major  rating  service,  securities  of
issuers that have received such ratings with respect to other short-term debt or
comparable  unrated  securities.  Money  market  instruments  in which  the Fund
typically  expects  to  invest  include:   U.S.  government   securities;   bank
obligations  (including  certificates  of deposit,  time  deposits  and bankers'
acceptances of U.S. or foreign banks);  commercial paper rated P-l by Moody's or
A-1 by S & P; and repurchase agreements.

REPURCHASE AGREEMENTS.  The Fund may invest temporarily,  without limitation, in
repurchase  agreements,  which are agreements  pursuant to which  securities are
acquired by the Fund from a third party with the understanding that they will be
repurchased by the seller at a fixed price on an agreed date.  These  agreements
may be made with respect to any of the portfolio securities in which the Fund is
authorized  to  invest.  Repurchase  agreements  may be  characterized  as loans
secured  by the  underlying  securities.  The Fund  may  enter  into  repurchase
agreements  with (i) member  banks of the Federal  Reserve  System  having total
assets in excess of $500 million and (ii) securities dealers, provided that such
banks or dealers  meet  certain  creditworthiness  standards.  The resale  price
reflects the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or date of maturity of the purchased security.  The
collateral is marked to market daily.  Such  agreements  permit the Fund to keep
all its assets  earning  interest  while  retaining  "overnight"  flexibility in
pursuit of investments of a longer term nature.


The use of repurchase  agreements  involves certain risks.  For example,  if the
seller of securities under a repurchase  agreement defaults on its obligation to
repurchase  the  underlying  securities,  as  a  result  of  its  bankruptcy  or
otherwise, the Fund will seek to dispose of such securities,  which action could
involve  costs or  delays.  If the  seller  becomes  insolvent  and  subject  to
liquidation or  reorganization  under  applicable  bankruptcy or other laws, the
Fund's  ability to  dispose  of the  underlying  securities  may be  restricted.
Finally,  it is  possible  that  the Fund  may not be able to  substantiate  its
interest in the  underlying  securities.  To minimize this risk,  the securities
underlying the  repurchase  agreement will be held by the custodian at all times
in an amount at least equal to the repurchase price, including accrued interest.
If the seller fails to repurchase the securities,  the Fund may suffer a loss to
the extent proceeds from the sale of the underlying securities are less than the
repurchase price.

GOVERNMENT  SECURITIES.  The Fund may invest in securities  that include  direct
obligations  of the United  States  and  obligations  issued by U.S.  government
agencies and instrumentalities ("Government Securities").  Included among direct
obligations of the United States are Treasury bills, Treasury notes and Treasury
bonds, which differ principally in terms of their maturities.  Securities issued
by U.S.  government  agencies and  instrumentalities  are:  securities  that are
supported by the full faith and credit of the United  States (such as Government
National Mortgage  Association  certificates);  securities that are supported by
the right of the issuer to borrow from the U.S.  Treasury (such as securities of
Federal Home Loan Banks); and securities that are supported by the credit of the
instrumentality  (such as Federal National Mortgage Association and Federal Home
Loan  Mortgage  Corporation  bonds).  No  assurance  can be given  that the U.S.
government  will  provide  financial  support in the  future to U.S.  government
agencies,  authorities or  instrumentalities  that are not supported by the full
faith and credit of the United States. Securities guaranteed as to principal and
interest by the U.S. government, its agencies,  authorities or instrumentalities
include (i) securities for which the payment of principal and interest is backed
by an irrevocable  letter of credit issued by the U.S.  government or any of its
agencies,  authorities or  instrumentalities;  and (ii)  participations in loans
made to non-U.S.  governments  or other  entities  that are so  guaranteed.  The
secondary  market for certain of these  participations  is limited and therefore
may be regarded as illiquid.

ZERO  COUPON  SECURITIES.  The Fund may invest up to 10% of its total  assets in
zero  coupon  securities  issued  by  the  U.S.  government,   its  agencies  or
instrumentalities as well as custodial receipts or certificates  underwritten by
securities dealers or banks that evidence ownership of future interest payments,
principal  payments  or both  on  certain  government  securities.  Zero  coupon
securities  pay no cash income to their holders until they mature and are issued
at substantial  discounts  from their value at maturity.  When held to maturity,
their entire return comes from the  difference  between their purchase price and
their maturity value.  Because interest on zero coupon securities is not paid on
a current  basis,  the values of  securities of this type are subject to greater
fluctuations  than are the values of securities that distribute income regularly
and may be more  speculative than such  securities.  Accordingly,  the values of
these  securities  may be highly  volatile  as interest  rates rise or fall.  In
addition,  the Fund's  investments  in zero  coupon  securities  will  result in
special tax  consequences.  Although zero coupon securities do not make interest
payments,  for tax  purposes a portion of the  difference  between a zero coupon
security's  maturity  value and its purchase price is taxable income of the Fund
each year.

Custodial  receipts  evidencing  specific coupon or principal  payments have the
same  general  attributes  as  zero  coupon  Government  Securities  but are not
considered to be Government Securities.  Although typically under the terms of a
custodial  receipt the Fund is authorized to assert its rights directly  against
the issuer of the  underlying  obligation,  the Fund may be  required  to assert
through  the  custodian  bank such rights as may exist  against  the  underlying
issuer.  Thus, in the event the underlying  issuer fails to pay principal and/or
interest  when due,  the Fund may be subject to delays,  expenses and risks that
are greater than those that would have been involved if the Fund had purchased a
direct  obligation  of the issuer.  In addition,  in the event that the trust or
custodial  account  in which  the  underlying  security  has been  deposited  is
determined  to  be  an  association  taxable  as  a  corporation,  instead  of a
non-taxable  entity,  the yield on the  underlying  security would be reduced in
respect of any taxes paid.

BORROWINGS.  The Fund reserves the right to borrow funds to the extent permitted
by its Fundamental Policies.  See "Fundamental  Policies" above. The proceeds of
borrowings may be used for any valid  purpose,  including,  without  limitation,
liquidity,  investing and repurchases of capital stock of the Fund. The Fund may
borrow  money only in an amount up to one-third of the value of the Fund's total
assets.  Borrowing is a form of leverage  and, in that respect,  entails  risks,
including  volatility in net asset value,  market value and income available for
distribution.

LENDING OF  SECURITIES.  The Fund is authorized  to lend  securities it holds to
brokers,  dealers  and  other  financial  organizations.  Loans  of  the  Fund's
securities, if and when made, may not exceed 33-1/3% of the Fund's total assets.
The Fund's loans of securities will be collateralized by cash, letters of credit
or  Government  Securities  that will be maintained at all times in a segregated
account  with the Fund's  custodian  in an amount at least  equal to the current
market value of the loaned securities.

By  lending  its  portfolio  securities,  the Fund can  increase  its  income by
continuing to receive interest on the loaned  securities,  by investing the cash
collateral  in  short-term  instruments  or by  obtaining  yield  in the form of
interest paid by the borrower when Government Securities are used as collateral.
The risk in lending  portfolio  securities,  as with other extensions of credit,
consists of the  possible  delay in recovery of the  securities  or the possible
loss of rights in the collateral should the borrower fail financially.  The Fund
will adhere to the following  conditions  whenever it lends its securities:  (i)
the Fund must receive at least 100% cash  collateral  or  equivalent  securities
from the borrower, which will be maintained by daily marking-to-market; (ii) the
borrower  must  increase  the  collateral  whenever  the  market  value  of  the
securities  loaned rises above the level of the collateral;  (iii) the Fund must
be able to terminate the loan at any time; (iv) the Fund must receive reasonable
interest on the loan, as well as any dividends,  interest or other distributions
on the loaned  securities and any increase in market value; (v) the Fund may pay
reasonable fees approved by its board of directors, including, for example, fees
to (a) the custodian in connection with support of the lending  activities,  (b)
the loan or placing broker for arranging the securities  loan,  and/or (iii) the
borrower for participating in the loan transaction; and (c) voting rights on the
loaned  securities  may pass to the borrower,  except that, if a material  event
adversely  affecting the investment in the loaned securities  occurs,  the Board
must terminate the loan and regain the Fund's right to vote the securities.


SHORT SALES  AGAINST THE BOX.  The Fund may make short  sales of  securities  in
order to reduce  market  exposure  and/or to increase its income if at all times
when a short  position is open, the Fund owns an equal or greater amount of such
securities or owns preferred stock, debt or warrants convertible or exchangeable
into an equal or greater number of the shares of common stocks sold short. Short
sales of this  kind are  referred  to as short  sales  "against  the  box."  The
broker-dealer  that executes a short sale generally invests the cash proceeds of
the sale  until  they are paid to the  Fund.  Arrangements  may be made with the
broker-dealer  to obtain a portion of the  interest  earned by the broker on the
investment  of short  sale  proceeds.  The Fund will  segregate  the  securities
against  which short sales  against the box have been made in a special  account
with its custodian. Not more than 10% of the Fund's net assets (taken at current
value) may be held as collateral for such sales at any one time.

ILLIQUID SECURITIES.  The Fund may invest in illiquid securities.  Historically,
illiquid  securities  have included  securities  subject to contractual or legal
restrictions on resale because they have not been registered under the 1933 Act,
securities which are otherwise not readily marketable and repurchase  agreements
having  a  maturity  of  longer  than  seven  days.  Restricted  securities  are
securities that may not be sold freely to the public absent  registration  under
the 1933 Act, or an exemption from  registration.  The Fund has no limitation on
the  amount of its  assets  that may be  invested  in  securities  which are not
readily marketable or are subject to restrictions on resale, although it may not
invest more than 30% of the value of its total assets in  securities  which have
been acquired through private placement.

The Board has  delegated  the function of making  day-to-day  determinations  of
liquidity to the Advisers pursuant to guidelines approved by the Board. The Fund
is a  closed-end  fund which means that  managing  liquidity  for the purpose of
stockholder  redemptions  is not an  issue  as it  might  otherwise  be  with an
open-end fund.  Accordingly,  the Advisers are not constrained in this regard in
their day-to-day  management of the portfolio,  knowing that redemptions are not
an issue.  Moreover, a majority of the securities in the Fund, both historically
and currently, are exchange-traded securities with relatively good liquidity. In
the few cases where the liquidity of certain securities is less so, the Advisers
will take into  account a number of factors  in  reaching  liquidity  decisions,
including, but not limited to: (1) the frequency of trades for the security, (2)
the number of dealers  willing and ready to purchase and sell the security,  (3)
whether any dealers have agreed to make a market in the security, (4) the number
of other  potential  purchasers  for the  security,  and (5) the  nature  of the
securities and the nature of the marketplace trades.

WHEN-ISSUED,  DELAYED DELIVERY AND FORWARD COMMITMENT TRANSACTIONS. The Fund may
purchase and sell securities, including Government Securities, on a when-issued,
delayed delivery or forward  commitment basis.  Typically,  no income accrues on
securities  the Fund has committed to purchase prior to the time delivery of the
securities  is made,  although  the Fund may earn  income on  securities  it has
segregated.

When  purchasing  a security  on a  when-issued,  delayed  delivery,  or forward
commitment  basis,  the Fund  assumes the rights and risks of  ownership  of the
security, including the risk of price fluctuations,  and takes such fluctuations
into account when  determining its NAV.  Because the Fund is not required to pay
for the  security  until the delivery  date,  these risks are in addition to the
risks  associated  with  the  Fund's  other  investments.  If the  Fund  remains
substantially  fully invested at a time when when-issued,  delayed delivery,  or
forward commitment purchases are outstanding, the purchases may result in a form
of leverage.

When the Fund has sold a security on a when-issued, delayed delivery, or forward
commitment  basis,  the Fund does not participate in future gains or losses with
respect to the security. If the other party to a transaction fails to deliver or
pay for  the  securities,  the  Fund  could  miss a  favorable  price  or  yield
opportunity  or could suffer a loss.  The Fund may dispose of or  renegotiate  a
transaction after it is entered into, and may sell when-issued, delayed delivery
or forward commitment securities before they are delivered,  which may result in
a capital gain or loss. There is no percentage limitation on the extent to which
the Fund may purchase or sell securities on a when-issued,  delayed delivery, or
forward commitment basis.



                    OTHER INVESTMENT TECHNIQUES AND POLICIES

AMPS  LEVERAGE.  The Fund is  leveraged  with  1,000  shares of  auction  market
preferred stock (the "AMPS"). The AMPS are senior to the common stock and result
in  the  financial  leveraging  of the  common  stock.  Dividends  on  AMPS  are
cumulative.  The Fund is  required to meet  certain  asset  coverage  tests with
respect to the AMPS. If the Fund fails to meet these  requirements  and does not
correct such  failure,  the Fund may be required to redeem,  in part or in full,
the AMPS at a redemption  price of $25,000 per share plus an amount equal to the
accumulated  and  unpaid  dividends  on such  shares  in  order  to  meet  these
requirements.  Additionally,  failure to meet the foregoing  asset  requirements
could restrict the Fund's ability to pay dividends to common stock  stockholders
and  could  lead  to  sales  of  portfolio   securities  at  inopportune  times.
Nevertheless, the Fund's management believes that well-managed leverage can have
a beneficial effect on common  stockholders' total return.  Leverage can provide
enough additional income to pay a substantial portion of Fund expenses, if there
is enough of a positive  spread between the borrowed money and the return on the
assets  acquired with such monies.  Use of leverage may have a number of adverse
effects on the Fund and its  stockholders,  including:  (i) leverage may magnify
market  fluctuations  in  the  Fund's  underlying   holdings,   thus  causing  a
disproportionate  change in the Fund's NAV; (ii) the Fund's cost of leverage may
exceed the return on the underlying securities acquired with the proceeds of the
leverage,  thereby  diminishing rather than enhancing the return to stockholders
and generally making the Fund's total return to such stockholders more volatile;
(iii) the Fund may be required to sell  investments in order to meet dividend or
interest payments on the debt or preferred stock when it may be  disadvantageous
to do so; and (iv)  leveraging  through the issuance of preferred stock requires
that the  holders of the  preferred  stock have class  voting  rights on various
matters that could make it more difficult for the holders of the common stock to
change the investment  objective or fundamental policies of the Fund, to convert
it to an open-end fund or make certain other changes.

Although the Fund will focus its use of leverage on producing  income,  the Fund
may also purchase  other  income-producing  securities  (e.g.,  RICs,  REITs and
dividend-paying  common  stocks)  or   non-dividend-paying   common  stocks  for
long-term  appreciation.  The  Fund is  limited  in its use of  leverage  to the
maximum amount permitted pursuant to Section 18 of the 1940 Act.

RISKS  ASSOCIATED WITH LEVERAGE.  The AMPS leverage (or any other leverage) will
create an opportunity  for increased  return but, at the same time, will involve
special  risk  considerations.  Leveraging  will  magnify  declines  as  well as
increases  in the net asset  value of the common  stock and in the net return on
the Fund's  portfolio.  Although the principal of the Fund's AMPS is fixed,  the
Fund's assets may change in value during the time the AMPS are outstanding, thus
increasing  exposure to capital risk. To the extent the return  derived from the
assets  obtained with the AMPS proceeds  exceeds the interest and other expenses
that the Fund will have to pay,  the Fund's net return  will be greater  than if
AMPS leverage was not used.  Conversely,  however, if the return from the assets
obtained  with the AMPS  proceeds is not  sufficient  to cover the dividends and
cost of the AMPS,  the net return of the Fund will be less than if AMPS leverage
was not used, and therefore the amount  available for distribution to the Fund's
stockholders as dividends will be reduced.

In February 2008, the recent liquidity crisis in the credit markets spilled over
into the auction rate  preferred  market,  disrupting  trading in auction market
preferred  stock  ("ARPS")  (similar to the AMPS) and  resulting  in  widespread
failed auctions of ARPS. The Fund's most recent AMPS auction similarly failed on
[ ], 2008, and as of the date of this Statement of Additional Information, there
has not be a successful  subsequent  auction. A failed auction occurs when there
are too few  buyers  willing  to bid on and  purchase  the ARPS at the  periodic
auction.  Generally  in a failed  auction,  because  there  are too few  buyers,
holders  of ARPS are unable to sell and  therefore  must  remain  holders of the
ARPS,  although  they  continue  to be paid  interest  on the shares  they hold,
typically at a higher  interest rate. In the case of the AMPS,  this higher rate
is referred to as the "Maximum  Applicable Rate". The Maximum Applicable Rate is
intended in part to mitigate the  inconvenience  and  temporary  illiquidity  of
failed  auctions,  although  the holder  must  continue to hold the AMPS until a
subsequent successful auction is conducted or the issuer redeems the ARPS.

In the case of the AMPS,  the  Maximum  Applicable  Rate  depends  on the credit
rating assigned to the AMPS and the duration of the dividend period.  Currently,
the AMPS have a Fitch rating of "AAA" and a Moody's rating of "Aaa" and a 28-day
dividend period.  This  corresponds with a Maximum  Applicable Rate which is the
higher of 125% of the reference rate (i.e., the 30-day London Inter-Bank Offered
Rate or "LIBOR") or 1.25% plus the  reference  rate.  As of  ______________  the
Maximum Applicable Rate for the Fund was ___%. As a point of reference, prior to
the first failed AMPS auction,  the rate paid by the Fund was ___%. Although the
Maximum Applicable Rate presently paid by the Fund is relatively low compared to
the rate set at its most recent successful  auction,  these  circumstances could
abruptly  change if  short-term  interest  rates  increase.  In such event,  the
Maximum Applicable Rate could also increase substantially.

Additionally,  should the credit rating assigned to the AMPS be downgraded,  the
Maximum Applicable Rate paid by the Fund would increase depending on the revised
credit rating.  For example,  should the AMPS' credit rating be downgraded to A+
by Fitch  and/or to A1 by Moody's,  the Maximum  Applicable  Rate payable by the
Fund would increase to the higher of 200% of the reference rate (i.e., LIBOR) or
2.00% plus the reference rate. In no instance would the Maximum  Applicable Rate
exceed the  greater of 300% of the  reference  rate or 3.00% plus the  reference
rate.


BORROWING THROUGH  REPURCHASE  AGREEMENTS.  The Fund may borrow by entering into
reverse repurchase agreements with any member bank of the Federal Reserve System
and any  broker-dealer  or any  foreign  bank  that has been  determined  by the
Advisers to be  creditworthy.  Under a reverse  repurchase  agreement,  the Fund
would sell securities and agree to repurchase them at a mutually agreed date and
price. At the time the Fund enters into a reverse repurchase agreement,  it will
establish  and maintain a segregated  account with its custodian or a designated
sub-custodian,  containing  cash or liquid  obligations  having a value not less
than the repurchase  price  (including  accrued  interest).  Reverse  repurchase
agreements  involve the risk that the market value of the  securities  purchased
with the  proceeds  of the sale of  securities  received by the Fund may decline
below the price of the securities  the Fund is obligated to  repurchase.  In the
event the buyer of securities  under a reverse  repurchase  agreement  files for
bankruptcy  or  becomes  insolvent,  the buyer or its  trustee or  receiver  may
receive  an  extension  of time to  determine  whether  to  enforce  the  Fund's
obligation to repurchase the  securities,  and the Fund's use of the proceeds of
the reverse  repurchase  agreement may  effectively  be  restricted  pending the
decision.  Any reverse  repurchase  agreements  entered into by the Fund will be
treated  as  borrowings  for  purposes  of  calculating  the  Fund's   borrowing
limitation.

LEVEL-RATE  DISTRIBUTION POLICY. In May 2006 stockholders voted in favor of, and
the Fund adopted, a level-rate  distribution policy (the "Distribution Policy").
A level-rate  distribution  policy allows a fund to provide a regular,  periodic
(but not assured) distribution to its common stockholders which is not dependent
on the amount of income earned or capital gains  realized by the fund. An equity
fund,  such  as  the  Fund,  is  designed  for  investors  to  participate  in a
professionally  managed  portfolio of equity  investments.  Over the  long-term,
equity  investments have  historically  provided higher total returns than fixed
income investments such as bonds. However, unlike most fixed income funds, which
pay  stockholders  a regular  dividend  based on the fund's  investment  income,
equity funds generally pay only one dividend per year consisting of a relatively
small amount of net  investment  income and any net realized  capital  gains.  A
level-rate  distribution  permits a fund to distribute a  predetermined  monthly
amount,  regardless  of when or whether  income is earned or  capital  gains are
realized.  However,  the  practice of making  distributions  that exceed  income
earned or capital  gains  realized  can result in the Fund making  distributions
that consist of a return of capital. A level-rate distribution policy recognizes
that  many  investors  are  willing  to  accept  the  potentially  higher  asset
volatility of equity  investments,  but would prefer that a consistent  level of
cash  distributions  are available to them each month for  reinvestment or other
purposes of their choosing.

The Distribution Policy initially provided for monthly distributions at the rate
of $0.10 per Share per month, or $1.20 per Share annually,  which  represented a
14.9%  annual  distribution  rate  relative  to the Fund's  NAV at the time.  In
February 2007, because the NAV of the Fund had increased substantially since the
Distribution  Policy was  adopted,  and the Board  wished to  maintain a similar
annual  distribution  rate to that  originally  adopted,  the Fund increased the
distribution  rate to $0.115 per Share per month,  or $1.38 per Share  annually,
representing a 14.6% annual  distribution rate relative to the Fund's NAV at the
time.  At its  quarterly  meeting  in January  2008,  the Board  considered  and
resolved  to  maintain  the  current  distribution  rate at $0.115 per Share per
month,  or $1.38 per Share annually,  representing  ___% of the Fund's per share
market  price and ___% of the Fund's  most  recent  NAV,  both on an  annualized
basis.  For the  five-year  period ending  December 31, 2007,  the Fund returned
15.9% on its NAV on an annualized basis. The annual  distribution rate under the
Distribution Policy is reviewed periodically by the Board and generally will not
exceed the annual long term  performance  of the Fund based on a rolling  5-year
performance  history,  subject to the Board's  discretion to suspend,  modify or
terminate the  Distribution  Policy at any time. In conducting its review of the
annual distribution rate and the Fund's performance history, the Board will take
into account, among other factors, that during 2002, the first year the Advisers
served as  investment  advisers  to the Fund,  the  Fund's  portfolio  consisted
primarily  of  bonds  that  were  below  investment  grade,  and  that  the Fund
recognized  significant  losses as these  investments  were  liquidated  and the
proceeds  invested in common stocks  consistent with the Fund's new objective of
total return.

Exemptive  relief  from the SEC is not  required  in the  near  term in order to
continue the Distribution  Policy. The Fund has applied to the SEC for exemptive
relief from  Section  19(b) of the 1940 Act and Rule 19b-1 under the 1940 Act to
enable the Fund to continue the Distribution  Policy over the long term. Section
19(b) of the 1940 Act limits an  investment  company's  ability to make multiple
distributions  of net realized  long-term  capital  gains each year,  subject to
certain exceptions contained in Rule 19b-1.  Historically,  investment companies
that  wished to  implement  a managed  distribution  policy  requiring  multiple
capital gain  distributions  per year routinely  received  exemptive relief from
Section  19(b).  However,  as of the  date of this  Prospectus,  the SEC has not
responded  either  favorably or  unfavorably to the Fund's request for exemptive
relief  originally  filed in 2004 and amended in January  2007.  It is generally
believed  that the SEC has imposed a moratorium on granting this type of request
for exemptive  relief over concerns that  inadequate  disclosures  by investment
companies  regarding sources of distributions  (e.g., net investment income, net
long-term  capital gain,  return of capital) have resulted in fund investors not
understanding  that  distributions  may  include a return of capital  and do not
necessarily represent a dividend yield.


For the fiscal year ended  November 30, 2007,  the  Distribution  Policy did not
violate Section 19(b) because the Fund had capital loss carry-forwards that were
used to offset the Fund's realized net capital gains and all gains not otherwise
offset were paid to Common Stockholders in the  calendar-year-end  distribution.
Accordingly,  only one distribution was made pursuant to the Distribution Policy
which consisted of net long-term capital gains in compliance with Section 19(b).
The Fund may  similarly  have net  realized  gains for the  fiscal  year  ending
November 30, 2008.  In such case,  unless the Fund (i) realizes  capital  losses
prior to November 30, 2008, in an amount sufficient to offset all realized gains
for the Fund's  fiscal year or (ii) obtains  exemptive  relief from the SEC from
Section  19(b)  of the  1940  Act and Rule  19b-1  under  the 1940 Act  prior to
November  30,  2008,  so  it  can   characterize   a  portion  of  its  previous
distributions  as  realized  capital  gains,  the  Fund  would  be  required  to
distribute  the entire  amount of its net realized  capital gains for the fiscal
year to its  stockholders in December 2008. The per share amount of any such net
realized capital gains  distribution may be greater than the per share amount at
which  monthly   distributions   previously  have  been  made  pursuant  to  the
Distribution  Policy,  and therefore could shrink the Fund's assets more quickly
than would otherwise be the case.

There are certain risks and negative  impacts  associated with the  Distribution
Policy:

     *    The  Distribution  Policy  may  impact  the way in  which  the Fund is
          managed. The Advisers do not expect to make significant changes to the
          makeup of the Fund's  portfolio  or seek to invest in "high  yielding"
          securities as a result of the Distribution  Policy. The Fund may carry
          a slightly  higher cash  balance from time to time in order to fulfill
          the  distribution  payments.  If the Fund carries higher cash balances
          during rising equity markets, the Fund's performance may be negatively
          affected relative to other equity funds.  Conversely,  carrying higher
          cash balances during  declining  equity markets may positively  affect
          the Fund's  performance.  To avoid Code and 1940 Act  requirements  to
          make distributions in excess of the Distribution  Policy, the Advisers
          expect  to  manage  the  portfolio  slightly  differently  than in the
          absence of the Distribution  Policy,  but in a manner  consistent with
          the  Fund's  investment  objective  and  policies.  For  example,  the
          Advisers  may  realize a loss in a security  by selling it in order to
          offset  realized  capital  gains,  whereas,  absent  the  Distribution
          Policy, the Advisers may not have realized the loss. The Advisers also
          may  increase  the Fund's  position in a security  with an  unrealized
          loss, and subsequently sell the tax lot with the higher tax cost basis
          31 days or more after the  purchase to avoid a wash sale,  leaving the
          Fund with  approximately  the same position in the security but with a
          lower tax cost  basis.  The  Advisers  may also  purchase  stock of an
          issuer paying an unusually  large dividend and, after the stock begins
          trading  ex-dividend,  sell the stock at a loss,  thereby allowing the
          Fund to offset  gains  realized  on other  securities  sold during the
          year. The Advisers enter into such transactions only when they believe
          that there is a high  probability of realizing an economic  profit for
          the Fund. The investment  strategies  described above were utilized by
          the Advisers prior to the implementation of the Distribution Policy to
          realize losses for the Fund in an effort to be tax efficient,  and may
          result in slightly higher  portfolio  turnover and transaction  costs.
          The Advisers will not hold  positions  with  unrealized  capital gains
          that they believe should be sold based on their  fundamental  analysis
          of the underlying  issuer.  The Advisers believe it would be better to
          discontinue the Distribution  Policy than to see unrealized gains turn
          into unrealized  losses.  The Fund may have net realized gains for the
          fiscal year ending  November 30, 2008.  In such case,  unless the Fund
          (i) realizes  capital  losses prior to November 30, 2008, in an amount
          sufficient to offset all realized  gains for the Fund's fiscal year or
          (ii) obtains  exemptive  relief from the SEC from Section 19(b) of the
          1940 Act and Rule 19b-1 under the 1940 Act prior to November  30, 2008
          so it can  characterize  a portion of its  previous  distributions  as
          realized  capital gains,  the Fund would be required to distribute the
          entire amount of its net realized capital gains for the fiscal year to
          its  stockholders  in December  2008. The per share amount of any such
          net realized capital gains  distribution may be greater than per share
          amount  at which  monthly  distributions  previously  have  been  made
          pursuant to the  Distribution  Policy,  and therefore could shrink the
          Fund's  assets more  quickly  than would  otherwise  be the case.  The
          Advisers  may utilize the  investment  strategies  described  above to
          realize  capital  losses in an amount  sufficient to offset the Fund's
          realized capital gains for the fiscal year.

     *    The  Distribution  Policy is subject to  modification,  suspension  or
          termination at any time by the Board.  Because the Distribution Policy
          was  implemented  without an exemption under Section 19(b) of the 1940
          Act and Rule  19b-1,  the Fund must have the  flexibility  to  modify,
          suspend or terminate the Distribution  Policy immediately if the Board
          deems  such  action  to be in the best  interests  of the Fund and its
          stockholders.

          As  discussed   above,   the  annual   distribution   rate  under  the
          Distribution  Policy  is  reviewed   periodically  by  the  Board  and
          generally will not exceed the average annual long term  performance of
          the Fund based on a rolling 5-year performance  history. If the Fund's
          long term  performance  declines,  the Board will make a corresponding
          reduction  in the  annual  distribution  rate  under the  Distribution
          Policy.  In addition,  the SEC may impose  conditions  on any grant of
          exemptive relief from Section 19(b) that require the Board to consider
          adjusting the annual  distribution rate on a more frequent basis under
          certain circumstances.


     *    A modification,  suspension or termination of the Distribution  Policy
          could result in a concurrent  reduction or cessation of the $0.115 per
          Share monthly distribution  presently paid to Common Stockholders.  If
          the  Distribution  Policy was suspended or terminated,  the Fund would
          revert back to its prior practice of distributing  only net investment
          income and net realized capital gains at the end of its fiscal year. A
          modification,  suspension or  termination of the  Distribution  Policy
          could have the effect of abruptly  creating a trading discount (if the
          Fund is trading  at or above  NAV) or  widening  an  existing  trading
          discount.

     *    If  the  Fund's   annual   total   return  is  less  than  the  annual
          distribution,  the  Distribution  Policy  could  have  the  effect  of
          shrinking  the  assets  of the  Fund and thus  increasing  the  Fund's
          expense ratio (i.e.,  the Fund's fixed  expenses will be spread over a
          smaller  pool of  assets).  The Board has  determined  that the annual
          distribution  rate  should  not exceed the  average  annual  long term
          performance of the Fund based on a rolling 5-year performance history.
          However,  there may be interim  periods where the annual  distribution
          rate  exceeds the  short-term  return on the Fund's  NAV,  which could
          shrink  the  assets of the  Fund.  In  addition,  if the Fund does not
          obtain  exemptive  relief from  Section  19(b) prior to the end of its
          fiscal  year and the Board  elects to  characterize  the Fund's  final
          distribution  for the calendar  year as including all net capital gain
          realized  during the year, such  distribution  could shrink the Fund's
          assets more quickly than would  otherwise be the case if the per share
          amount of any such net realized capital gains  distribution is greater
          than per share amount at which monthly  distributions  previously have
          been made pursuant to the Distribution Policy.

     *    A  distribution  which  contains a return of  capital,  which the Fund
          expects  generally to be the case, will result in added record keeping
          for Common  Stockholders.  Return of capital is not  taxable to Common
          Stockholders in the year it is paid. However, Common Stockholders will
          need to  reduce  the cost  basis of their  stock by the  amount of the
          return of  capital so that,  when they sell the stock,  they will have
          properly accounted for the return of capital.  Such an adjustment will
          cause a  Common  Stockholder's  gain to be more,  or their  loss to be
          less,  as the  case  may be.  For  example,  if a  Common  Stockholder
          purchased  stock in the Fund for $7.00  per  Share  and then  receives
          dividends  from the Fund which have $1.00 per Share return of capital,
          and then the stockholder  subsequently  sells his Shares for $7.50 per
          Share, his gain will be $1.50 per Share,  since he would have adjusted
          his cost basis  downward  by $1.00 per Share  (from $7.00 to $6.00 per
          Share).  Common  Stockholders  who hold  their  stock  in  non-taxable
          accounts  such as IRA's  will  not need to make any such  adjustments.
          Common  Stockholders should contact their own tax advisor if they have
          questions  regarding the tax treatment of the distributions  under the
          Distribution Policy.


                             MANAGEMENT OF THE FUND

The  business  and affairs of the Fund are managed  under the  direction  of the
Board of  Directors.  Accordingly,  the  Board is  responsible  for the  overall
management of the Fund,  including  supervision  of the duties  performed by the
Advisers.  There  are five  Directors  of the  Fund.  Two of the  Directors  are
"interested persons" of the Fund (as defined in the 1940 Act). The Directors who
are not "interested  persons" of the Fund are referred to herein as "Independent
Directors."  See  "Management  of the  Fund" in the  Prospectus  for  additional
information about the Directors and officers of the Fund.



                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following  table sets forth  certain  information  regarding the  beneficial
ownership of the Fund's shares as of  [BaselineDataDate],  by each person who is
known by the Fund to beneficially own 5% or more of the Fund's common stock.



     Name and Address* of Owner       Number of Shares   Number of Shares       Percentage
                                      Directly Owned     Beneficially Owned     Beneficially Owned
------------------------------------- ------------------ ---------------------- -----------------------

                                                                       
Ernest  Horejsi  Trust  No.  1B (the  2,533,974          2,533,974              16.6%
"EH Trust")

Badlands Trust Company, LLC                              ---**                  16.6%

Stewart R. Horejsi Trust No. 2                           ---**                  16.6%
------------------------------------- ------------------ ---------------------- -----------------------
Aggregate Shares Owned**              2,533,974          2,533,974              16.6%
===================================== ================== ====================== =======================




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

*    The  address  of each  listed  owner is c/o  Badlands  Trust  Company,  LLC
     ("Badlands"),  Resolution  Plaza,  1029  Weest  Third  Street,  Suite  400,
     Anchorage, Alaska 99501.

**   Excludes shares owned by the EH Trust. Badlands is one of three trustees of
     the EH Trust.  Badlands is a private trust company organized under the laws
     of Alaska and is wholly  owned by the  Stewart R.  Horejsi  Trust No. 2, an
     irrevocable  trust  organized  by Stewart R. Horejsi for the benefit of his
     issue.  The managers of Badlands  are Larry L.  Dunlap,  Stephen C. Miller,
     Laura  Rhodenbaugh,  Laura Tatooles,  and Ron Kukes,  each of whom disclaim
     beneficial  ownership  of shares  owned by the EH Trust.  Mr.  Miller is an
     officer and manager of  Badlands.  Because two of the Trust's  trustees are
     required in order for the Trust to vote or exercise  dispositive  authority
     with respect to shares owned by the Trust, Mr. Miller disclaims  beneficial
     ownership of such shares.

Information  as to  beneficial  ownership  in the  previous  paragraph  has been
obtained from a representative of the beneficial  owners;  all other information
as to  beneficial  ownership is based on reports filed with the  Securities  and
Exchange Commission (the "SEC") by such beneficial owners.

As of February  __,  2008 Cede & Co., a nominee  partnership  of the  Depository
Trust  Fund,  held of  record,  but not  beneficially,  ____________  shares  or
_______%  of common  stock  outstanding  of the Fund.  As of  February  __, 2008
officers and Directors of the Fund,  as a group,  owned  ________  shares of the
Fund's common stock (including the aggregate shares of common stock owned by the
EH Trust as set forth above), representing ___% of common stock outstanding.



                       OWNERSHIP OF THE FUND BY DIRECTORS

Set forth in the following  table are the current  members of the Board together
with the dollar range of equity securities  beneficially  owned by each Director
as of February __,  2008,  as well as the  aggregate  dollar range of the Fund's
equity  securities  in all funds  overseen  in the Fund's  family of  investment
companies  (i.e.,  other funds managed by BIA and SIA and which hold  themselves
out as related companies).





-------------------------------------- -------------------------------- ---------------------------------
                                           Dollar Range of Equity          Aggregate Dollar Range of
                                           Securities in the Fund        Equity Securities in All Funds
                                                                          in the Family of Investment
                                                                                   Companies
-------------------------------------- -------------------------------- ---------------------------------
        Independent Directors
-------------------------------------- -------------------------------- ---------------------------------
                                                                         
        Dr. Dean L. Jacobson                 $10,001 to $50,000               $50,001 to $100,000
           Richard I. Barr                   $10,001 to $50,000                  Over $100,000
           Joel W. Looney                    $50,001 to $100,000                 Over $100,000
-------------------------------------- -------------------------------- ---------------------------------
        Interested Directors
-------------------------------------- -------------------------------- ---------------------------------

           John S. Horejsi                     Over $100,000+                    Over $100,000
          Susan L. Ciciora                     Over $100,000+                    Over $100,000



+    2,533,974  shares of the Fund are held by the EH  Trust,  with  respect  to
     which  Mr.  Horejsi  and  Ms.  Ciciora  are  discretionary   beneficiaries.
     Accordingly,  Mr.  Horejsi and Ms.  Ciciora may be deemed to have  indirect
     beneficial  ownership of such Shares.  Mr. Horejsi and Ms. Ciciora disclaim
     all such beneficial ownership. Neither Ms. Ciciora nor Mr. Horejsi directly
     own any shares of the Fund.

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

None of the Independent  Directors or their family members owned beneficially or
of record any  securities  of the Advisers or any person  directly or indirectly
controlling, controlled by, or under common control with the Advisers.




                        DIRECTOR AND OFFICER COMPENSATION

The following table sets forth certain information regarding the compensation of
the  Independent  Directors  for the fiscal year ended  November  30,  2007.  No
persons  other than the  Independent  Directors,  as set forth below,  currently
receive  compensation  from  the Fund  for  acting  as a  Director  or  officer.
Directors and officers of the Fund do not receive pension or retirement benefits
from the Fund.



                                           Aggregate Total          Compensation from
  Name of Person and Position with the      Compensation       the Fund and Fund Complex
                  Fund                      from the Fund          Paid to Directors
----------------------------------------- ------------------- ----------------------------
                                                                  
Richard I. Barr, Director                         $                        $
                                                                       (4 funds)

Dr. Dean Jacobson, Director                       $                        $
                                                                       (4 funds)

Joel W. Looney, Director and Chairman             $                        $
of the Board                                                           (4 funds)

Susan L. Ciciora, Director
                                                  $0                      $0
John S. Horejsi, Director
                                                  $0                      $0



Each Director of the Fund who was not a director,  officer or employee of one of
the  Advisers,  or any of their  affiliates,  receives a fee of $8,000 per annum
plus $3,000 for each in person meeting,  $500 for each Audit  Committee  meeting
and $500 for each telephonic meeting of the Board. In addition,  the Chairman of
the Board and the Chairman of the Audit  Committee  receives $1,000 per meeting.
Each  non-interested   Director  of  the  Fund  is  reimbursed  for  travel  and
out-of-pocket  expenses  associated with attending Board and Committee meetings.
The Board  held ___  meetings  (___ of which were held by  telephone  conference
call) during the fiscal year ended  November 30, 2007.  Each Director  currently
serving in such capacity for the entire fiscal year attended at least 75% of the
meetings of Directors and any  Committee of which he is a member.  The aggregate
remuneration  paid to the  Directors  of the Fund for acting as such  during the
fiscal year ended November 30, 2007 amounted to $________.



                      COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE. The Fund has an audit committee consisting solely of all of the
Fund's  Independent  Directors (i.e.,  Messrs.  Looney,  Barr and Jacobson) (the
"Audit  Committee").  The  purpose  of the Audit  Committee  is to assist  Board
oversight  of the  integrity  of the  Fund's  financial  statements,  the Fund's
compliance with legal and regulatory  requirements,  the  independent  auditor's
qualifications  and independence  and the performance of the Fund's  independent
auditors. The Audit Committee reviews the scope and results of the Fund's annual
audit with the Fund's  independent  accountants and recommends the engagement of
such  accountants.  Management,  however,  is responsible  for the  preparation,
presentation  and  integrity  of  the  Fund's  financial  statements,   and  the
independent  accountants  are  responsible  for planning and carrying out proper
audits and  reviews.  The Board of Directors  adopted a written  charter for the
Audit  Committee  on January 23, 2002 and most  recently  amended the Charter on
January 23,  2004.  A copy of the Audit  Committee  Charter  was  attached as an
exhibit to the Fund's proxy statement dated March 8, 2007.

The Audit Committee is composed  entirely of the Fund's  independent  Directors,
consisting of Messrs.  Jacobson,  Barr,  and Looney.  The Board of Directors has
determined that Joel Looney qualifies as an "audit committee  financial expert,"
as defined under the Securities and Exchange  Commission's  Regulation S-K, Item
401(h).  The Audit  Committee  is in  compliance  with  applicable  rules of the
listing  requirements  for  closed-end  fund  audit  committees;  including  the
requirement  that all members of the audit committee be  "financially  literate"
and that at least one member of the audit committee have  "accounting or related
financial management expertise," as determined by the Board. The Audit Committee
is required to conduct its operations in accordance with applicable requirements
of the Sarbanes-Oxley Act and the Public Company Accounting Oversight Board, and
the members of the Audit Committee are subject to the fiduciary duty to exercise
reasonable care in carrying out their duties. Each member of the Audit Committee
is independent, as that term is defined by the NYSE Listing Standards. The Audit
Committee  met ___ times  during the fiscal year ended  November  30,  2007.  In
connection with the audited financial  statements as of and for the period ended
November  30, 2007  included in the Fund's  Annual  Report for the period  ended
November 30, 2007 (the "Annual  Report"),  at meetings  held on January 17, 2007
and January 26, 2007, the Audit  Committee  considered and discussed the audited
financial  statements  with  management  and the  independent  accountants,  and
discussed  the  audit  of  such  financial   statements   with  the  independent
accountants.


The Audit  Committee  has received the written  disclosures  and letter from the
independent  accountants required by Independence Standards Board Standard No. 1
(Independence  Discussions  with Audit  Committees)  and has discussed  with the
independent  accountants their independence.  The Audit Committee discussed with
the independent  accountants the accounting  principles  applied by the Fund and
such  other  matters  brought to the  attention  of the Audit  Committee  by the
independent  accountants  required by  Statement of Auditing  Standards  No. 61,
Communications With Audit Committees, as currently modified or supplemented.

The  members  of the  Audit  Committee  are not  professionally  engaged  in the
practice  of  auditing  or  accounting  and are not  employed by the Fund in any
accounting,  financial  management or internal control capacity.  Moreover,  the
Audit  Committee  relies on and makes no independent  verification  of the facts
presented  to it or  representations  made  by  management  or  the  independent
accountants.  Accordingly,  the Audit Committee's  oversight does not provide an
independent  basis to  determine  that  management  has  maintained  appropriate
accounting and financial reporting principles and policies, or internal controls
and procedures,  designed to assure  compliance  with  accounting  standards and
applicable   laws  and   regulations.   Furthermore,   the   Audit   Committee's
considerations  and discussions  referred to above do not provide assurance that
the audit of the Fund's financial  statements has been carried out in accordance
with generally accepted  accounting  standards or that the financial  statements
are presented in accordance with generally accepted accounting principles.

NOMINATING  COMMITTEE.  The Board of Directors has a nominating  committee  (the
"Nominating  Committee") consisting of Messrs. Looney,  Jacobson and Barr, which
is responsible for considering candidates for election to the Board in the event
a position is vacated or created.  Each member of the  Nominating  Committee  is
independent,  as  that  term is  defined  by the  NYSE  Listing  Standards.  The
Nominating  Committee  met ___ times  during the fiscal year ended  November 30,
2007.

The  Nominating  Committee  does  not  have a  formal  process  for  identifying
candidates. The Nominating Committee takes into consideration such factors as it
deems  appropriate  when  nominating  candidates.   These  factors  may  include
judgment,  skill,  diversity,  experience  with  investment  companies and other
organizations  of comparable  purpose,  complexity,  size and subject to similar
legal  restrictions and oversight,  the interplay of the candidate's  experience
with  the  experience  of other  Board  members,  and the  extent  to which  the
candidate would be a desirable addition to the Board and any committees thereof.
The  Nominating  Committee  will consider all  qualified  candidates in the same
manner.  The  Nominating  Committee may modify its policies and  procedures  for
director  nominees  and  recommendations  in  response  to changes in the Fund's
circumstances, and as applicable legal or listing standards change.

The  Nominating  Committee  will consider  director  candidates  recommended  by
stockholders  (if a vacancy  were to exist) and  submitted  in  accordance  with
applicable law and the following  procedures.  Pursuant to the Fund's Bylaws, at
any annual  meeting of the  stockholders,  only  business that has been properly
brought before the meeting will be conducted.  To be properly brought before the
annual  meeting,  the business  must be (i)  specified in the notice of meeting,
(ii) by or at the direction of the Board,  or (iii) otherwise  properly  brought
before the meeting by a stockholder.  For business to be properly brought before
the annual  meeting by a  stockholder,  the  stockholder  must have given timely
notice  thereof  in  writing  to the  Secretary  of the Fund.  To be  timely,  a
stockholder's  notice must be  delivered  to the  Secretary of the Fund no later
than 5:00 p.m.,  Mountain Time, on the 120th day prior to the first  anniversary
of the date of mailing of the notice for the preceding  year's  annual  meeting.
However,  if the date of the annual  meeting is advanced or delayed by more than
30 days from the first  anniversary  of the date of the preceding  year's annual
meeting,  for notice by the  stockholder to be timely,  it must be delivered not
later than 5:00 p.m.,  Mountain Time, on the later of the 120th day prior to the
date of such annual  meeting or the tenth day  following the day on which public
announcement of the date of such meeting is first made. The public  announcement
of a  postponement  or adjournment of an annual meeting shall not commence a new
time period for the giving of a stockholder's notice as described above.

Pursuant to the Fund's Bylaws,  such stockholder's  notice shall set forth as to
each  individual  whom the  stockholder  proposes  to nominate  for  election or
reelection  as a director,  (A) the name,  age,  business  address and residence
address of such  individual,  (B) the class,  series and number of any shares of
stock of the Fund that are beneficially  owned by such individual,  (C) the date
such shares were acquired and the  investment  intent of such  acquisition,  (D)
whether  such  stockholder  believes  any  such  individual  is,  or is not,  an
"interested  person" of the Fund,  as  defined  in the 1940 Act and  information
regarding such individual that is sufficient,  in the discretion of the Board or
any  committee  thereof  or any  authorized  officer  of the Fund,  to make such
determination and (E) all other information  relating to such individual that is
required to be disclosed in  solicitations  of proxies for election of directors
in an election  contest  (even if an election  contest is not  involved),  or is
otherwise  required,  in each case pursuant to Regulation  14A (or any successor
provision) under the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules thereunder  (including such individual's written consent to
being named in the proxy  statement as a nominee and to serving as a director if
elected).



                 INVESTMENT ADVISERS AND OTHER SERVICE PROVIDERS

The Fund is co-advised by Boulder Investment  Advisers,  LLC ("BIA") and Stewart
West Indies Trading  Company,  Ltd. d/b/a Stewart  Investment  Advisers  ("SIA")
(collectively,  the  "Advisers").  The  Advisers  have been  providing  advisory
services to the Fund since  January  2002,  to Boulder  Total Return Fund,  Inc.
since March  1999,  and to The Denali  Find Inc.  since  October 26, 2007 (on an
interim basis until the advisory  agreements  were approved by  stockholders  of
that Fund as of February 22, 2008).  As of February __, 2008, the Advisers had a
total of $____ million in assets under management.

BOULDER INVESTMENT ADVISERS, LLC. BIA was formed on April 8, 1999, as a Colorado
limited liability  company and is registered as an investment  adviser under the
Investment  Advisers Act of 1940, as amended.  Stewart R. Horejsi is an employee
of and  investment  manager  for  both  Advisers  and has  extensive  experience
managing  common stocks for the Fund as well as for the various other trusts and
entities  affiliated  with the Horejsi  family (the "Horejsi  Affiliates").  The
members of BIA are Evergreen Atlantic, LLC, whose address is 2344 Spruce Street,
Suite A,  Boulder CO 80302,  and the Lola Brown  Trust No. 1B (the "LB  Trust"),
whose address is c/o Badlands Trust Company,  LLC,  Resolution  Plaza, 1029 West
Third Street,  Suite 400, Anchorage,  Alaska 99501 (the "Members").  Each of the
Members hold a 50% interest in BIA. The Members are "affiliated  persons" of the
Fund (as that term is defined in the 1940 Act).  Mr. Horejsi and John S. Horejsi
and Susan L. Ciciora,  Mr.  Horejsi's son and  daughter,  respectively,  and the
Fund's two "interested" Directors, are discretionary  beneficiaries under the LB
Trust as well as under other Horejsi  Affiliates  which own Evergreen  Atlantic,
LLC. Accordingly, as a result of this relationship,  each of Stewart R. Horejsi,
John S. Horejsi and Susan L. Ciciora may directly or indirectly benefit from the
relationship between the Fund and BIA.

STEWART INVESTMENT ADVISERS.  SIA is a Barbados  international  business company
incorporated  on November  12,  1996.  SIA is wholly  owned by the Stewart  West
Indies Trust (the "West Indies Trust"), an irrevocable trust domiciled in Alaska
and established by Mr. Horejsi in 1996 primarily to benefit his issue.  The West
Indies Trust's  address is c/o Badlands Trust Company,  LLC,  Resolution  Plaza,
1029 West Third Street, Suite 400, Anchorage, Alaska 99501. Mr. Horejsi is not a
beneficiary under the West Indies Trust.  However,  John S. Horejsi and Susan L.
Ciciora,  Mr.  Horejsi's  son  and  daughter,   respectively,   and  the  Fund's
"interested"  Directors,  are discretionary  beneficiaries under the West Indies
Trust and thus,  as a result of this  relationship,  may directly or  indirectly
benefit from the relationship between SIA and the Fund.

SIA is not  domiciled in the United States and  substantially  all of its assets
are located  outside the United  States.  As a result,  it may be  difficult  to
realize  judgments  of  courts  of  the  United  States  predicated  upon  civil
liabilities  under federal  securities  laws of the United States.  The Fund has
been  advised  that  there  is  substantial  doubt as to the  enforceability  in
Barbados of such civil  remedies and  criminal  penalties as are afforded by the
federal securities laws of the United States. Pursuant to the advisory agreement
between SIA and the Fund, SIA has appointed the Secretary of the Fund (presently
Stephanie  Kelley in Boulder,  Colorado)  as its agent for service of process in
any legal action in the United States, thus subjecting it to the jurisdiction of
the United States courts.

CO-ADVISORY  AGREEMENTS.  The  Advisers  and the Fund are parties to  investment
co-advisory  agreements dated as of April 26, 2002 (the "Advisory  Agreements").
Under  the terms of the  Advisory  Agreements,  the  Advisers  provide  advisory
services regarding asset allocation,  manage the investment of the Fund's assets
and provide such investment research, advice and supervision, in conformity with
the Fund's investment objective and policies, as necessary for the operations of
the Fund. The Advisory Agreements provide, among other things, that the Advisers
will bear all expenses in  connection  with the  performance  of their  services
under the Advisory Agreements.

The Advisory Agreements provide that the Fund shall pay to the Advisers for
their services an aggregate monthly fee at the annual rate of 1.25% of the
Fund's average monthly net assets, including the principal amount of leverage,
if any (the "Adviser Fee"). The Adviser Fee is higher than the fees paid by most
similarly situated U.S. investment companies. Under the terms of the Advisory
Agreements, the Advisers share the Adviser Fee as determined by the Advisers and
approved by the Board from time to time. Presently, BIA and SIA receive 25% and
75%, respectively, of the Adviser Fee. Although the Advisers intend to devote
such time and effort to the business of the Fund as they deem reasonably
necessary to perform their respective duties to the Fund, the services of the
Advisers are not exclusive and the Advisers may provide similar services to
other investment companies and other clients and may engage in other activities.
At a regular meeting of the Board held on January 25, 2008, the Advisers agreed
to a waiver of advisory fees at certain "break-point" levels such that, in the
future, the Adviser Fee would be calculated at the annual rate of 1.25% on asset
levels up to $400 million, 1.10% on assets levels between $400-$600 million; and
1.00% on asset levels exceeding $600 million.

The Advisory  Agreements  provide that the Advisers  shall not be liable for any
error of judgment or mistake of law or omission or any loss suffered by the Fund
in  connection  with the matters to which the  agreements  relate,  although the
agreements  do not  protect  or  purport to protect  the  Advisers  against  any
liability to the Fund to which the Advisers would otherwise be subject by reason
of  willful  misfeasance,  bad faith or gross  negligence  on their  part in the
performance  of  their  duties  or from  reckless  disregard  by  them of  their
obligations  and duties  under the  agreements.  Each  Advisory  Agreement  also
provides for  indemnification  by the Fund of the  Advisers and their  partners,
members,  officers,  employees,  agents  and  control  persons  for  liabilities
incurred  by them in  connection  with their  services  to the Fund,  subject to
certain limitations and conditions.


PORTFOLIO MANAGERS.  Stewart R. Horejsi is the Fund's primary investment manager
and,  together with Carl D. Johns,  the Fund's Vice President and Treasurer,  is
responsible for the day-to-day  management of the Fund's assets.  Mr. Horejsi is
primarily  responsible for the Fund's asset allocation and Mr. Johns,  also Vice
President  and  Treasurer of BIA, is  responsible  for research and managing the
Fund's fixed income portfolio.  Messrs. Horejsi and Johns are referred to herein
as the  "Portfolio  Managers".  The  Portfolio  Managers  act  as the  portfolio
managers with respect to the Fund and two other registered investment companies,
the Boulder Total Return Fund, Inc.  ("BTF") and The Denali Fund ("DNY").  As of
February __, 2008, BTF had total assets,  including  leverage,  of approximately
$____ million and DNY had total assets,  including  leverage,  of  approximately
$____ million.  Mr.  Horejsi also acts as a financial  consultant to the Horejsi
Affiliates and manages their portfolios of equities having an aggregate value of
approximately $____ million as of December 31, 2007.

The Portfolio Managers are compensated with fixed salaries which are established
based on a number of considerations,  including, among others, job and portfolio
performance,  industry compensation and comparables, and years of experience and
service with the Adviser.  The Portfolio Managers are reviewed from time to time
and their  salaries  may be adjusted  based on their  recent and  long-term  job
performance and cost of living increases.  Generally,  the Portfolio Managers do
not receive  bonuses.  Conflicts  of interest may arise in  connection  with the
Portfolio Managers'  management of the Fund's  investments.  This is because the
Portfolio  Managers  also serve as portfolio  managers to BTF, DNY and the other
accounts  described  above  that may have  investment  objectives  identical  or
similar to those of the Fund. See "Potential Conflicts of Interest" below.

Mr. Horejsi does not directly own any shares of the Fund. However, the EH Trust,
which has engaged Mr. Horejsi as a financial consultant and of which Mr. Horejsi
is a  discretionary  beneficiary,  holds  2,533,974  shares  of the  Fund  as of
February  __,  2008.  Accordingly,  Mr.  Horejsi may be deemed to have  indirect
beneficial  ownership  of such shares  which have a dollar range in excess of $1
million.  Mr. Horejsi disclaims all such beneficial  ownership.  Mr. Johns holds
between $50,001 and $100,000 of the shares of the Fund as of February __, 2008.

FUND ADMINISTRATIVE  SERVICES, LLC. Fund Administrative Services, LLC ("FAS") is
the Fund's co-administrator.  FAS is a Colorado limited liability company formed
in 1994.  Its  principal  place of  business  is 2344  Spruce  Street,  Suite A,
Boulder,  Colorado  80302 and it has  offices  in Kansas at 200 S.  Santa Fe #4,
Salina,  Kansas  67401.  The members of FAS are the LB Trust (50%) and Evergreen
Atlantic,  LLC (50%).  Stewart R. Horejsi, the Fund's portfolio manager, his son
John S.  Horejsi and his  daughter  Susan L.  Ciciora,  the Fund's  "interested"
Directors,  are  discretionary  beneficiaries of the LB Trust, and of the trusts
which own  Evergreen  Atlantic,  LLC. The officers of FAS are Stephen C. Miller,
manager; Carl Johns, assistant manager; Laura Rhodenbaugh,  secretary/treasurer;
and Stephanie Kelley,  assistant secretary.  Since January of 2002, FAS has been
providing certain  administrative and executive management services to the Fund,
including  among  other  things  negotiation  of  service  provider   contracts,
oversight  of  service  providers,   maintenance  of  the  Fund's  policies  and
procedures, and provision of compliance, legal and fund accounting services. FAS
has also  provided such  administrative  and  executive  management  services to
Boulder Total Return Fund,  Inc. since March of 1999, to First  Financial  Fund,
Inc. since August of 2003 and DNY since October of 2007.

The Fund and FAS are parties to an  administration  agreement  dated February 1,
2004.  Under the  administration  agreement,  the Fund  pays FAS a  monthly  fee
calculated at an annual rate of 0.20% of the value of the Fund's average monthly
net assets up to $250 million; 0.18% of the Fund's average monthly net assets on
the next $150 million;  and,  0.15% on the value of the Fund's  average  monthly
assets over $400 million.  FAS has agreed to cap the Fund's total administration
costs at 0.30% (including administration,  co-administration, transfer agent and
custodian  fees),  and  therefore  waives a portion  of its fee should the total
monthly administration expenses exceed 0.30% on an annualized basis.

STATE  STREET  BANK AND TRUST  COMPANY.  State  Street  Bank and  Trust  Company
(formerly known as Investors Bank & Trust Company) ("State Street"),  located at
200  Clarendon  Street,  Boston,  Massachusetts  02116,  serves  as  the  Fund's
co-administrator  and custodian.  On February 4, 2007, State Street  Corporation
("SSC")   entered   into  an   Agreement   and  Plan  of   Reorganization   (the
"Reorganization  Agreement") with Investors  Financial Services Corp.  ("IFSC"),
the  parent  company  of  Investors  Bank  &  Trust  Company.  Pursuant  to  the
Reorganization  Agreement,  IFSC  merged  into SSC  effective  July 2, 2007.  As
co-administrator,   State  Street  provides  certain  services   including  fund
accounting  and   preparation  of  materials  for  Board   meetings.   Under  an
administration  agreement  and  custody  agreement  between  the Fund and  State
Street,   the  Fund  pays  State   Street  a  combined   monthly  fee  for  both
co-administrative  and custodian services calculated at an annual rate of 0.058%
of the value of the  Fund's  average  monthly  total net assets  (including  the
principal amount of leverage,  if any) up to $300 million and 0.04% on the value
of the Fund's average  monthly total net assets over $300 million,  or a minimum
monthly fee of $10,500.  Presently,  because of the level of the Fund's  average
monthly  total net  assets,  the Fund pays the  minimum of $10,500  monthly.  In
addition, State Street receives certain out-of-pocket expenses, transaction fees
and certain  charges for  securities  transactions.  All  customary  fees of the
custodian are paid by the Fund.




                 COMPENSATION TO THE ADVISERS AND ADMINISTRATORS

Information is provided in this Statement of Additional Information and the
Prospectus concerning the Advisers and Administrator and their agreements with
the Fund. The amounts paid to such persons during the last three fiscal years
or, if shorter, the period during which the entity was retained to provide
services to the Fund are as follows:



Name of Entity                                                                 Fees Paid by the Fund+
                                                               -------------------------------------------------------
                                                       fiscal        2005               2006              2007
-------------------------------------------------------------- ------------------ ----------------- ------------------
                                                                                                 
Boulder Investment Advisers, LLC
Stewart Investment Advisers
Fund Administrative Services, LLC
Investors  Bank & Trust  Company  (now known as State  Street
Bank and Trust Company)*


*    Investors  Bank  began  providing  administration  services  to the Fund on
     October 1, 2004.

+    All figures are on a cash basis.



         DURATION AND TERMINATION OF THE INVESTMENT ADVISORY AGREEMENTS


The terms of the  Advisory  Agreements  were  approved by the Board at a regular
meeting of the Board held on  January  25,  2008,  including  a majority  of the
Directors  who are not parties to the agreement or  "interested  persons" of any
such party (as such term is defined in the 1940 Act).

Each Advisory  Agreement  will continue in effect  without a term so long as its
continuation is specifically  approved at least annually by both (i) the vote of
a majority  of the Board or the vote of a  majority  of the  outstanding  voting
securities of the Fund (as such term is defined in the 1940 Act) and (ii) by the
vote  of a  majority  of the  directors  who are not  parties  to such  Advisory
Agreement or interested persons (as such term is defined in the 1940 Act) of any
such party, cast in person at a meeting called for the purpose of voting on such
approval.  Any of the Advisory  Agreements  may be  terminated as a whole at any
time by the  Fund,  without  the  payment  of any  penalty,  upon  the vote of a
majority of the Board or a majority of the outstanding  voting securities of the
Fund or by the Advisers on 60 days' written notice by either party to the other.
Except as otherwise provided by order of the SEC or any rule or provision of the
1940 Act, each of the Advisory  Agreements will terminate  automatically  in the
event of its  assignment  (as such term is defined in the 1940 Act and the rules
thereunder).


                         POTENTIAL CONFLICTS OF INTEREST


The Fund is managed by the Advisers,  who also serve as  investment  advisers to
two other closed-end  investment  companies with investment  objectives somewhat
identical  or  similar  to  those  of the  Fund.  Mr.  Horejsi  also  manages  a
substantial  portfolio  of  securities  for the Horejsi  Affiliates.  Securities
frequently  meet the investment  objectives of the Fund, the Horejsi  Affiliates
and such other funds and  accounts.  In such cases,  the decision to recommend a
purchase  to one fund or  account  rather  than  another is based on a number of
factors.  The determining  factors in most cases are the amount of securities of
the issuer then  outstanding,  the value of those  securities and the market for
them. Other factors considered in the investment  recommendations  include other
investments that each fund or account presently has in a particular industry and
the  availability  of investment  funds in each fund or account.  It is possible
that at times  identical  securities  will be held by more than one fund  and/or
account.  However,  positions  in the same issue may vary and the length of time
that any fund or account may choose to hold its investment in the same issue may
likewise vary.



To the  extent  that  more  than one of the  funds or  accounts  managed  by the
Advisers seeks to acquire the same security at about the same time, the Fund may
not be able to acquire as large a position in such  security as it desires or it
may have to pay a higher price for the  security.  However,  with respect to the
Horejsi  Affiliates and the other private account  managed by the Advisers,  the
Horejsi  Affiliates  and such other private  account have consented to allow the
funds managed by the Adviser to complete  their  transactions  in any particular
security  before the Horejsi  Affiliates or such other  private  account will be
allowed to  transact  in such  security,  thus  giving the funds  managed by the
Advisers the first opportunity to trade in a particular  security.  The Fund may
not be able to  obtain  as large an  execution  of an order to sell or as high a
price for any particular  portfolio  security if the Advisers  decide to sell on
behalf of another  account the same portfolio  security at the same time. On the
other hand, if the same  securities  are bought or sold at the same time by more
than one fund or account,  the resulting  participation  in volume  transactions
could produce better executions for the Fund. In the event more than one account
purchases or sells the same  security on a given date,  the  purchases and sales
will normally be made as nearly as practicable on a pro rata basis in proportion
to the amounts  desired to be  purchased or sold by each  account.  Although the
other fund  managed  by the  Advisers  may have the same or  similar  investment
objectives and policies as the Fund, its portfolio does not generally consist of
the same  investments  as the Fund and its  performance  results  are  likely to
differ from those of the Fund.


                                  PROXY VOTING

The Board has  delegated  to BIA the  authority to vote proxies on behalf of the
Fund.  The Board has approved the proxy voting  guidelines  of the Fund and will
review the guidelines and suggest changes they deem advisable.  A summary of the
Fund's and BIA's proxy  voting  policies  and  procedures  are  attached to this
Statement of Additional Information as Appendix A. Information regarding how the
Fund voted  proxies  relating  to  portfolio  securities  during the most recent
12-month  period ended June 30 is available  without  charge,  upon request,  by
calling FAS at 1-877-561-7914,  and on the Securities and Exchange  Commission's
website, at www.sec.gov.


                                 CODE OF ETHICS

The Fund and the Advisers  have adopted a joint code of ethics  pursuant to Rule
17j-1  under  the  1940  Act  that is  applicable  to  officers,  directors  and
designated  employees of the Fund and the Advisers,  as applicable (the "Code of
Ethics").  The Code of Ethics  permits  such  personnel  to  engage in  personal
securities transactions for their own account,  including securities that may be
purchased  or held by the Fund,  and is designed to prescribe  means  reasonably
necessary to prevent  conflicts  of interest  from  arising in  connection  with
personal  securities  transactions.  The Code of Ethics is on file with,  and is
available from, the Securities and Exchange  Commission's  Public Reference Room
in Washington,  D.C.  Information on the operation of the Public  Reference Room
may be obtained  by calling  the  Commission  at  1-(202)-942-8090.  The Code of
Ethics is also  available  on the EDGAR  database on the  Commission's  internet
website at  http://www.sec.gov.  Copies of the Code of Ethics  may be  obtained,
after paying a duplicating  fee, by electronic  request to the following  e-mail
address:  publicinfo@sec.gov,  or by writing the  Commission's  Public Reference
Section, Washington, D.C. 20549-0102.


        PORTFOLIO TRANSACTIONS, BROKERAGE ALLOCATION AND OTHER PRACTICES

All orders for the purchase or sale of portfolio securities are placed on behalf
of the Fund by the  Advisers  pursuant to  authority  contained  in the Advisory
Agreements. The Advisers seek best execution in selecting brokers and dealers to
effect  the  Fund's  transactions  and  negotiating  prices  and  any  brokerage
commissions.  The Fund may purchase  certain money market  instruments  directly
from an issuer,  in which case no commissions or discounts are paid. No separate
brokerage commission is typically paid on bond transactions, which are typically
executed on a principal basis, in contrast to common stock  transactions,  where
brokerage  commissions  are the  norm.  The  Fund  paid  approximately  $56,000,
$55,000, and $____ in brokerage  commissions for the fiscal years ended November
30, 2005, 2006 and 2007, respectively.

The Advisers are  responsible for effecting the Fund's  securities  transactions
and will do so in a manner it deems fair and reasonable to  stockholders  of the
Fund and not according to any formula.  The Advisers' primary  considerations in
selecting  the manner of  executing a  securities  transaction  for the Fund are
prompt execution of orders, the size and breadth of the market for the security,
the reliability,  integrity, financial condition and execution capability of the
firm,  the  difficulty  in  executing  the order,  and the best net  price.  The
Advisers have established procedures whereby it monitors, periodically evaluates
and reports to the Board the cost and quality of execution  services provided by
brokers  selected by the  Advisers  to execute  transactions  for the Fund.  The
evaluation is made  primarily  based on a comparison of  commissions  charged by
other broker with similar capabilities and trade execution.


There are many  instances  when, in the judgment of the Advisers,  more than one
firm can offer  comparable  execution  services.  In selecting among such firms,
consideration  may be given to those  firms  which  supply  research  and  other
services  in  addition  to  execution  services  (often  referred  to  as  "soft
dollars"),  although the Fund does not typically rely on such research. The Fund
has adopted a policy to deal with such "soft dollar" arrangements as follows:

     (a)  All soft dollar arrangements  affecting the Funds must fall within the
          safe  harbor of  Section  28(e) of the  Securities  Exchange  Act,  as
          amended, as determined by the Funds' chief compliance officer.

     (b)  All soft  dollar  transactions  must be  disclosed  to the Boards on a
          quarterly basis.

     (c)  When third party research is obtained with soft dollars,  the Advisers
          must maintain  documentation  that the research  directly  assists the
          Advisers in their management of the Funds' portfolios.

     (d)  The Advisers  must  disclose any other  benefits  that the Advisers or
          their  affiliates or other  clients  might receive  regarding the soft
          dollar benefits.

     (e)  The  Advisers  must test and  document  that  brokers who provide soft
          dollar  research have the capability to provide best execution  taking
          into    consideration   the   broker's    financial    responsibility,
          responsiveness,  the commission rate or spread involved, and the range
          of services offered by such broker.

Although the Advisory  Agreements contain no restrictions on portfolio turnover,
it is not the Fund's  policy to engage in  transactions  with the  objective  of
seeking profits from short-term  trading.  The annual portfolio turnover rate of
the Fund is generally less than 50%,  excluding  securities having a maturity of
one year or less.  Because  it is  difficult  to  accurately  predict  portfolio
turnover  rates,  actual  turnover  may be  higher or  lower.  Higher  portfolio
turnover results in increased Fund expenses,  including  brokerage  commissions,
dealer mark-ups and other transaction costs on the sale of securities and on the
reinvestment in other  securities.  For the fiscal years ended November 30, 2006
and November 30, 2007,  the Fund's  portfolio  turnover rates were 35% and ___%,
respectively.


                              REPURCHASE OF SHARES

The  Fund  is  a  closed-end   investment   company  and  therefore  its  common
stockholders  do not have the right to cause the Fund to  redeem  their  shares.
Instead,  the Fund's common shares trade in the open market at a price that is a
function of several factors, including NAV, dividend stability,  relative demand
for and  supply of such  shares  in the  market,  general  market  and  economic
conditions,  dividend stability,  dividend levels (which are in turn affected by
expenses),  and other factors. Because shares of a closed-end investment company
may  frequently  trade at prices  lower than NAV (a  "Discount"),  the Board may
consider  actions  that  might be taken to  reduce  or  eliminate  any  material
Discount in respect of common  shares,  which may include the repurchase of such
shares in the open  market or in  private  transactions,  the making of a tender
offer  for such  shares at NAV,  or the  conversion  of the Fund to an  open-end
investment  company.  The Board may decide not to take any of these actions.  In
addition,  there can be no assurance that share repurchases or tender offers, if
undertaken, will reduce any Discount.

Since the Fund has issued the AMPS, the Fund's ability to repurchase  shares of,
or  tender  for,  its  common  stock  may  be  limited  by  the  asset  coverage
requirements  of the 1940  Act and by  asset  coverage  and  other  requirements
imposed by various  rating  agencies.  No assurance  can be given that the Board
will decide to undertake  share  repurchases or tenders or, if undertaken,  that
repurchases  and/or tender offers will result in the Fund's common stock trading
at a price  that is close  to,  equal to or above  NAV.  The Fund may  borrow to
finance  repurchases and/or tender offers. Any tender offer made by the Fund for
its shares may be at a price equal to or less than the NAV of such  shares.  Any
service fees incurred in connection  with any tender offer made by the Fund will
be borne by the Fund and will not reduce the stated  consideration to be paid to
tendering stockholders.

Subject  to its  investment  limitations,  the Fund may  borrow to  finance  the
repurchase  of  common  shares  or to  make  a  tender  offer.  Interest  on any
borrowings to finance share repurchase  transactions or the accumulation of cash
by the Fund in  anticipation  of share  repurchases  or tenders  will reduce the
Fund's net income. Any share repurchase, tender offer or borrowing that might be
approved by the Board would have to comply  with the  Exchange  Act and the 1940
Act and the rules and regulations under each of those Acts.

Although the  decision to take action in response to a Discount  will be made by
the Board at the time it considers such issue, it is the Board's present policy,
which may be changed by the Board, not to authorize repurchases of common shares
or a tender  offer for such  shares if (1) such  transactions,  if  consummated,
would (a) result in the  delisting  of the common  shares from the NYSE,  or (b)
impair the Fund's status as a regulated investment company under the Code (which
would make the Fund a taxable  entity,  causing the Fund's income to be taxed at
the  corporate  level in addition to the  taxation of  stockholders  who receive
dividends from the Fund) or as a registered  closed-end investment company under
the 1940 Act; (2) the Fund would not be able to liquidate  portfolio  securities
in an orderly manner and  consistent  with the Fund's  investment  objective and
policies  in order  to  repurchase  shares;  or (3)  there  is,  in the  Board's
judgment,  any (a) material legal action or proceeding  instituted or threatened
challenging such transactions or otherwise  materially  adversely  affecting the
Fund, (b) general  suspension of or limitation on prices for trading  securities
on the  NYSE,  (c)  declaration  of a banking  moratorium  by  Federal  or state
authorities  or any  suspension  of  payment  by U.S.  banks in  which  the Fund
invests,  (d)  material  limitation  affecting  the Fund or the  issuers  of its
portfolio  securities by Federal or state authorities on the extension of credit
by lending institutions or on the exchange of foreign currency, (e) commencement
of war, armed  hostilities or other  international or national calamity directly
or indirectly involving the United States, or (f) other event or condition which
would have a material  adverse effect  (including any adverse tax effect) on the
Fund or its stockholders if shares were repurchased. The Board may in the future
modify these conditions in light of experience.


The  repurchase by the Fund of its common shares at prices below NAV will result
in an increase in the net asset value of those  shares that remain  outstanding.
However, there can be no assurance that share repurchases or tenders at or below
net asset value will result in the Fund's common shares trading at a price equal
to their NAV.  Nevertheless,  the fact that the Fund's shares may be the subject
of repurchase or tender offers at NAV from time to time, or that the Fund may be
converted to an open-end company,  may be helpful in reducing any spread between
market price and NAV that might otherwise exist.

In  addition,  a purchase  by the Fund of its common  shares will  decrease  the
Fund's total assets, which would likely have the effect of increasing the Fund's
expense ratio. Any purchase by the Fund of its common shares at a time when AMPS
are outstanding will increase the leverage  applicable to the outstanding common
shares then remaining and decrease the asset coverage of the AMPS.

Before deciding whether to take any action if the common shares trade below NAV,
the Board would likely consider all relevant  factors,  including the extent and
duration of the Discount,  the liquidity of the Fund's portfolio,  the impact of
any  action  that  might be taken on the  Fund or its  stockholders  and  market
considerations.  Based on these considerations, even if the Fund's shares should
trade at a Discount,  the Board may determine  that, in the interest of the Fund
and its stockholders, no action should be taken.


                           FEDERAL INCOME TAX MATTERS

The  following  is a summary  discussion  of  certain  U.S.  federal  income tax
consequences  that may be  relevant  to a  stockholder  acquiring,  holding  and
disposing  of  common  shares.   This   discussion  does  not  address  the  tax
consequences  to  stockholders  that are  subject to special  rules,  including,
without  limitation,  banks and  financial  institutions,  insurance  companies,
dealers in securities or foreign currencies, foreign stockholders, tax-exempt or
tax-deferred  plans,   accounts,   or  entities,  or  investors  who  engage  in
constructive sale or conversion  transactions.  In addition, the discussion does
not address state,  local or foreign tax  consequences,  and it does not address
any tax  consequences  other  than U.S.  federal  income tax  consequences.  The
discussion  reflects  applicable tax laws of the United States as of the date of
this  Statement  of  Additional  Information,  which tax laws may be  changed or
subject to new  interpretations by the courts,  Treasury or the Internal Revenue
Service  (the  "IRS")  retroactively  or  prospectively.  No  attempt is made to
present a detailed explanation of all U.S. federal income tax concerns affecting
the Fund or its  stockholders,  and the  discussion  set forth  herein  does not
constitute tax advice.  Investors are urged to consult their own tax advisers to
determine  the  specific  tax  consequences  to them of  investing  in the Fund,
including the applicable  federal,  state, local and foreign tax consequences to
them and the effect of possible changes in tax laws.

As required by U.S. Treasury Regulations governing tax practice,  you are hereby
advised that any written tax advice contained herein was not written or intended
to be used (and  cannot be used) by any  taxpayer  for the  purpose of  avoiding
penalties  that may be  imposed  under  the  Code.  Any  person  reviewing  this
discussion  should seek advice based on such person's  particular  circumstances
from an independent tax adviser.

The Fund has  qualified  and  elected  to be treated  each year as a  "regulated
investment company" under Subchapter M of the Code and to comply with applicable
distribution  requirements so that it generally will not pay U.S. federal income
tax on  income  of  the  Fund,  including  net  capital  gains,  distributed  to
stockholders.  In order to  qualify  as a  regulated  investment  company  under
Subchapter M of the Code, which qualification this discussion assumes,  the Fund
must,  among  other  things,  derive at least 90% of its gross  income  for each
taxable year from  dividends,  interest,  payments  with  respect to  securities
loans, gains from the sale or other disposition of stock,  securities or foreign
currencies,  or other income (including gains from options,  futures and forward
contracts)  derived  with  respect to its  business of  investing in such stock,
securities or currencies (the "90% income test").  In addition to satisfying the
requirements  described  above,  the Fund must satisfy an asset  diversification
test in order to qualify as a regulated investment company.  Under this test, at
close of each quarter of the Fund's  taxable  year, at least 50% of the value of
the Fund's assets must consist of cash and cash items  (including  receivables),
U.S. Government securities,  securities of other regulated investment companies,
and  securities  of other  issuers (as to which the Fund must not have  invested
more than 5% of the value of the Fund's  total assets in  securities  of any one
such  issuer  and as to which  the Fund  must not have held more than 10% of the
outstanding  voting securities of any one such issuer),  and no more than 25% of
the value of its total assets may be invested in the securities (other than U.S.
Government securities and securities of other regulated investment companies) of
any one issuer,  or of two or more issuers which the Fund controls and which are
engaged in the same or similar or related trades or businesses.


Net  income   derived  from  an  interest  in  a  "qualified   publicly   traded
partnership,"  as defined  in the Code,  is  treated  as  qualifying  income for
purposes of the 90% income  test,  and for the  purposes of the  diversification
requirements  described above, the outstanding  voting  securities of any issuer
includes the equity securities of a qualified publicly traded partnership and no
more than 25% of the value of a regulated  investment company's total assets may
be  invested  in the  securities  of  one  or  more  qualified  publicly  traded
partnerships.   In  addition,   the  separate   treatment  for  publicly  traded
partnerships  under the  passive  loss rules of the Code  applies to a regulated
investment   company  holding  an  interest  in  a  qualified   publicly  traded
partnership, with respect to items attributable to such interest.

If the Fund  qualifies as a regulated  investment  company and, for each taxable
year, it distributes to its stockholders an amount equal to or exceeding the sum
of (i) 90% of its "investment company taxable income" as that term is defined in
the Code (which includes, among other things,  dividends,  taxable interest, and
the  excess of any net  short-term  capital  gains  over net  long-term  capital
losses, as reduced by certain deductible expenses) and (ii) 90% of the excess of
its gross tax-exempt interest, if any, over certain disallowed  deductions,  the
Fund generally  will not be subject to U.S.  federal income tax on any income of
the Fund, including "net capital gain" (the excess of net long-term capital gain
over net short-term capital loss), distributed to stockholders.  However, if the
Fund has met such  distribution  requirements but chooses not to distribute some
portion  of its  investment  company  taxable  income or net  capital  gain,  it
generally will be subject to U.S. federal income tax at regular  corporate rates
on the amount retained.  The Fund intends to distribute at least annually all or
substantially  all of its  investment  company  taxable  income,  net tax-exempt
interest, and net capital gain. If for any taxable year the Fund did not qualify
as a regulated  investment company, it would be treated as a corporation subject
to U.S.  federal  income tax and all  distributions  out of earnings and profits
would be taxed to stockholders as ordinary income.  In addition,  the Fund could
be required to  recognize  unrealized  gains,  pay taxes and make  distributions
(which could be subject to interest charges) before  requalifying as a regulated
investment company.

Under the Code,  the Fund will be subject  to a  nondeductible  4% U.S.  federal
excise tax on a portion of its undistributed taxable ordinary income and capital
gains if it fails to meet certain distribution requirements with respect to each
calendar  year.  The Fund intends to make  distributions  in a timely manner and
accordingly  does not expect to be subject to the excise tax,  but as  described
below,  there  can  be no  assurance  that  the  Fund's  distributions  will  be
sufficient to avoid entirely this tax.

Assuming  that the Fund has  sufficient  earnings  and profits,  dividends  from
investment   company   taxable  income  are  taxable  as  ordinary   income  and
distributions from net capital gain, if any, that are designated as capital gain
dividends  are taxable as long-term  capital gains for U.S.  federal  income tax
purposes without regard to the length of time the stockholder has held shares of
the Fund. Since the Fund's income is derived primarily from interest,  dividends
of the Fund  from its  investment  company  taxable  income  generally  will not
constitute  "qualified dividend income" for federal income tax purposes and thus
will not be eligible for the favorable  federal long-term capital gain tax rates
on qualified dividend income. In addition, the Fund's dividends are not expected
to  qualify  for  any  dividends-received  deduction  that  might  otherwise  be
available for certain dividends  received by stockholders that are corporations.
Capital  gain  dividends  distributed  by the  Fund to  individual  stockholders
generally  will  qualify for the maximum 15% U.S.  federal tax rate on long-term
capital  gains.  Under  current  law,  the maximum 15% U.S.  federal tax rate on
qualified  dividend  income and  long-term  capital gains will cease to apply to
taxable years beginning after December 31, 2010.

Distributions  by the Fund in  excess  of the  Fund's  current  and  accumulated
earnings  and  profits  will be  treated as a return of capital to the extent of
(and in  reduction  of) the  stockholder's  tax basis in its shares and any such
amount in excess of that  basis will be treated as gain from the sale of shares,
as discussed below. The U.S. federal income tax status of all distributions will
be reported to stockholders  annually.  If the Fund retains any net capital gain
for a taxable year, the Fund may designate the retained amount as  undistributed
capital gains in a notice to stockholders who, if subject to U.S. federal income
tax on long-term  capital  gains,  (i) will be required to include in income for
U.S. federal income tax purposes, as long-term capital gain, their proportionate
shares of such  undistributed  amount, and (ii) will be entitled to credit their
proportionate  shares  of the tax paid by the Fund on the  undistributed  amount
against their U.S. federal income tax liabilities,  if any, and to claim refunds
to the extent the credit exceeds such liabilities.

Although  dividends  generally  will be treated as  distributed  when paid,  any
dividend  declared  by the  Fund as of a record  date in  October,  November  or
December and paid during the following  January will be treated for U.S. federal
income tax purposes as received by  stockholders  on December 31 of the calendar
year in which it is declared.  In addition,  certain  other  distributions  made
after the close of a taxable year of the Fund may be "spilled  back" and treated
as paid by the Fund  (except  for  purposes  of the 4% excise  tax)  during such
taxable year.  In such case,  stockholders  generally  will be treated as having
received  such  dividends  in the taxable year in which the  distributions  were
actually made.


If the Fund invests in certain pay-in-kind  securities,  zero coupon securities,
deferred interest securities or, in general,  any other securities with original
issue  discount  (or with market  discount if the Fund elects to include  market
discount in income  currently),  the Fund  generally  must accrue income on such
investments for each taxable year,  which generally will be prior to the receipt
of the corresponding cash payments.  However, the Fund must distribute, at least
annually,  all or substantially all of its investment company taxable income and
net tax-exempt  interest,  including such accrued  income,  to  stockholders  to
qualify as a regulated  investment company under the Code and avoid U.S. federal
income  and  excise  taxes.  Therefore,  the  Fund may  have to  dispose  of its
portfolio  securities under  disadvantageous  circumstances to generate cash, or
may have to borrow the cash, to satisfy distribution requirements.

The Fund may invest  significantly  in debt  obligations  that are in the lowest
rating  categories or are unrated,  including  debt  obligations  of issuers not
currently paying interest or who are in default. Investments in debt obligations
that are at risk of or in default  present  special tax issues for the Fund. Tax
rules are not  entirely  clear  about  issues such as when the Fund may cease to
accrue interest,  original issue discount or market  discount,  when and to what
extent  deductions  may be taken  for bad  debts or  worthless  securities,  how
payments  received  on  obligations  in  default  should  be  allocated  between
principal  and income and whether  exchanges  of debt  obligations  in a workout
context are taxable.  These and other  issues will be addressed by the Fund,  in
the event it  invests  in such  securities,  in order to seek to ensure  that it
distributes  sufficient income to preserve its status as a regulated  investment
company and does not become subject to U.S. federal income or excise tax.

If the Fund utilizes  leverage  through  borrowing or issuing AMPS, a failure by
the Fund to meet the asset coverage  requirements  imposed by the 1940 Act or by
any rating organization that has rated such leverage, or additional restrictions
that  may  be  imposed  by  certain  lenders  on the  payment  of  dividends  or
distributions  potentially  could  limit or suspend  the Fund's  ability to make
distributions  on  its  common  shares.  Such  a  limitation  or  suspension  or
limitation  could  prevent  the  Fund  from  distributing  at  least  90% of its
investment  company  taxable income and net  tax-exempt  interest as is required
under the Code and  therefore  might  jeopardize  the Fund's  qualification  for
taxation as a regulated  investment  company under the Code and/or might subject
the Fund to the 4% excise tax  discussed  above.  Upon any  failure to meet such
asset coverage requirements,  the Fund may, in its sole discretion,  purchase or
redeem  shares of preferred  stock in order to maintain or restore the requisite
asset  coverage  and  avoid  the  adverse  consequences  to  the  Fund  and  its
stockholders of failing to satisfy the distribution requirement. There can be no
assurance,  however,  that any such action would achieve these  objectives.  The
Fund will endeavor to avoid restrictions on its ability to distribute dividends.

For U.S. federal income tax purposes,  the Fund is permitted to carry forward an
unused net capital loss for any year to offset its capital gains, if any, for up
to eight years following the year of the loss. To the extent subsequent  capital
gains are offset by such losses,  they would not result in U.S.  federal  income
tax  liability  to the Fund and are not  expected to be  distributed  as such to
stockholders.

At the time of an investor's  purchase of Fund shares, a portion of the purchase
price may be attributable  to realized or unrealized  appreciation in the Fund's
portfolio or undistributed taxable income of the Fund. Consequently,  subsequent
distributions by the Fund with respect to these shares from such appreciation or
income  may be  taxable  to such  investor  even  if the  trading  value  of the
investor's  shares  is,  as a result  of the  distributions,  reduced  below the
investor's cost for such shares and the distributions  economically  represent a
return of a portion of the investment.

Foreign  exchange  gains and  losses  realized  by the Fund in  connection  with
certain  transactions  involving foreign  currency-denominated  debt securities,
certain  options and futures  contracts  relating to foreign  currency,  foreign
currency  forward  contracts,  foreign  currencies,  or payables or  receivables
denominated in a foreign  currency are subject to Section 988 of the Code, which
generally  causes  such gains and losses to be  treated as  ordinary  income and
losses and may affect the  amount,  timing and  character  of  distributions  to
stockholders.  Under Treasury regulations that may be promulgated in the future,
any gains from such  transactions  that are not  directly  related to the Fund's
principal business of investing in stock or securities (or its options contracts
or futures contracts with respect to stock or securities) may have to be limited
in order to enable the Fund to satisfy the 90% income  test.  If the net foreign
exchange loss for a year were to exceed the Fund's  investment  company  taxable
income (computed  without regard to such loss), the resulting  ordinary loss for
such year  would not be  deductible  by the Fund or its  stockholders  in future
years.

Sales and other  dispositions of Fund shares are taxable events for stockholders
that are subject to tax. Stockholders should consult their own tax advisers with
reference to their individual  circumstances to determine whether any particular
transaction  in Fund shares is properly  treated as a sale for tax purposes,  as
the following  discussion assumes,  and the tax treatment of any gains or losses
recognized  in such  transactions.  In  general,  if Fund  shares are sold,  the
stockholder  will  recognize  gain or loss equal to the  difference  between the
amount  realized  on the sale and the  stockholder's  adjusted  tax basis in the
shares sold. Such gain or loss will be treated as long-term capital gain or loss
if the shares sold were held for more than one year and otherwise generally will
be  treated  as  short-term  capital  gain  or  loss.  Any  loss  realized  by a
stockholder  upon the sale or other  disposition  of shares  with a tax  holding
period of six months or less will be treated as a long-term  capital loss to the
extent of any amounts treated as distributions  of long-term  capital gains with
respect to such shares.  Losses on sales or other  dispositions of shares may be
disallowed under "wash sale" rules in the event  substantially  identical shares
of the Fund are  purchased  (including  those made pursuant to  reinvestment  of
dividends  and/or  capital  gains  distributions)  within  a  period  of 61 days
beginning  30 days  before  and  ending  30 days  after a  redemption  or  other
disposition  of  shares.  In such a case,  the  disallowed  portion  of any loss
generally would be included in the U.S. federal tax basis of the shares acquired
in the other investments.  The ability to otherwise deduct capital losses may be
subject to other limitations under the Code.


Under Treasury regulations,  if a stockholder  recognizes a loss with respect to
shares of $2 million or more for an  individual  stockholder,  or $10 million or
more for a  corporate  stockholder,  in any  single  taxable  year (or a greater
amount over a combination of years),  the  stockholder  must file with the IRS a
disclosure  statement on Form 8886.  Stockholders  who own portfolio  securities
directly are in many cases excepted from this reporting  requirement  but, under
current  guidance,  stockholders  of  regulated  investment  companies  are  not
excepted. A stockholder who fails to make the required disclosure to the IRS may
be subject to substantial  penalties.  The fact that a loss is reportable  under
these regulations does not affect the legal  determination of whether or not the
taxpayer's  treatment of the loss is proper.  Stockholders  should  consult with
their tax advisers to determine the  applicability of these regulations in light
of their individual circumstances.

Options written or purchased and futures  contracts  entered into by the Fund on
certain securities,  indices and foreign currencies,  as well as certain forward
foreign currency contracts, may cause the Fund to recognize gains or losses from
marking-to-market even though such options may not have lapsed, been closed out,
or exercised,  or such futures and forward contracts may not have been performed
or closed  out.  The tax rules  applicable  to these  contracts  may  affect the
characterization  of some  capital  gains  and  losses  realized  by the Fund as
long-term or short-term. Certain options, futures and forward contracts relating
to foreign  currencies  may be subject to Section 988, as described  above,  and
accordingly may produce ordinary income or loss.  Additionally,  the Fund may be
required to recognize gain if an option,  futures contract,  short sale or other
transaction  that is not  subject  to the  mark-to-market  rules is treated as a
"constructive  sale" of an  "appreciated  financial  position"  held by the Fund
under Section 1259 of the Code. Any net  mark-to-market  gains and/or gains from
constructive  sales may also have to be distributed to satisfy the  distribution
requirements referred to above even though the Fund may receive no corresponding
cash amounts,  possibly  requiring the  disposition  of portfolio  securities or
borrowing to obtain the necessary cash.  Losses on certain  options,  futures or
forward contracts and/or  offsetting  positions  (portfolio  securities or other
positions  with  respect  to  which  the  Fund's  risk of loss is  substantially
diminished by one or more  options,  futures or forward  contracts)  may also be
deferred  under the tax  straddle  rules of the Code,  which may also affect the
characterization  of capital gains or losses from straddle positions and certain
successor  positions as long-term or  short-term.  Certain tax  elections may be
available that would enable the Fund to ameliorate  some adverse  effects of the
tax rules  described in this  paragraph.  The tax rules  applicable  to options,
futures,  forward  contracts  and  straddles  may affect the amount,  timing and
character  of  the  Fund's   income  and  gains  or  losses  and  hence  of  its
distributions to stockholders.

The  federal  income tax  treatment  of the Fund's  investment  in  transactions
involving  swaps,  caps,  floors,  and  collars  and  structured  securities  is
uncertain and may be subject to recharacterization by the IRS. To the extent the
tax treatment of such securities or transactions  differs from the tax treatment
expected by the Fund,  the timing or character of income  recognized by the Fund
could  be  affected,  requiring  the Fund to  purchase  or sell  securities,  or
otherwise change its portfolio, in order to comply with the tax rules applicable
to regulated investment companies under the Code.

The IRS has taken the position  that if a regulated  investment  company has two
classes or more of shares, it must designate distributions made to each class in
any year as  consisting  of no more than  such  class's  proportionate  share of
particular  types of income,  including  ordinary income and net capital gain. A
class's  proportionate  share  of a  particular  type of  income  is  determined
according to the percentage of total dividends paid by the regulated  investment
company  to such  class.  Consequently,  if both  common  shares  and  AMPS  are
outstanding,  the Fund intends to designate distributions made to the classes of
particular types of income in accordance with the classes'  proportionate shares
of such income.  Thus, the Fund will designate  dividends  constituting  capital
gain  dividends  and other  taxable  dividends in a manner that  allocates  such
income  between the holders of common shares and AMPS in proportion to the total
dividends  paid to each class during the taxable  year, or otherwise as required
by applicable law.

The Fund may be  subject  to  withholding  and other  taxes  imposed  by foreign
countries, including taxes on interest, dividends and capital gains with respect
to its investments in those countries, which would, if imposed, reduce the yield
on or return from those investments.  Tax conventions  between certain countries
and the U.S. may reduce or eliminate such taxes in some cases. The Fund does not
expect to satisfy the requirements for passing through to its stockholders their
pro rata shares of qualified  foreign  taxes paid by the Fund,  with the general
result that  stockholders  would not be entitled to any  deduction or credit for
such taxes on their own tax returns.


Federal law requires  that the Fund  withhold (as "backup  withholding")  28% of
reportable  payments,  including  dividends,  capital gain distributions and the
proceeds of redemptions  and exchanges or  repurchases  of Fund shares,  paid to
stockholders who have not complied with IRS regulations.  In order to avoid this
withholding   requirement,   stockholders   must   certify   on  their   Account
Applications,  or on separate IRS Forms W-9, that the Social  Security Number or
other  Taxpayer  Identification  Number they provide is their correct number and
that they are not  currently  subject  to backup  withholding,  or that they are
exempt  from  backup  withholding.  The Fund may  nevertheless  be  required  to
withhold if it receives notice from the IRS or a broker that the number provided
is  incorrect  or backup  withholding  is  applicable  as a result  of  previous
underreporting of interest or dividend income.

The  description of certain U.S.  federal tax  provisions  above relates only to
U.S. federal income tax  consequences  for  stockholders  who are U.S.  persons,
i.e., U.S. citizens or residents or U.S. corporations,  partnerships,  trusts or
estates,  and who are subject to U.S.  federal income tax.  Investors other than
U.S.  persons  may be subject to  different  U.S.  tax  treatment,  including  a
non-resident alien U.S.  withholding tax at the rate of 30% or at a lower treaty
rate on  amounts  treated as  ordinary  dividends  from the Fund and,  unless an
effective  IRS Form W-8BEN or other  authorized  withholding  certificate  is on
file, to backup  withholding  at the rate of 28% on certain other  payments from
the Fund.  Under the provisions the 2004 Tax Act,  dividends paid by the Fund to
non-U.S.  stockholders  that are  derived  from  short-term  capital  gains  and
qualifying net interest  income  (including  income from original issue discount
and  market  discount),  and  that  are  properly  designated  by  the  Fund  as
"interest-related   dividends"  or  "short-term  capital  gain  dividends,"  are
generally not subject to U.S.  withholding  tax,  provided that the income would
not be  subject  to  federal  income  tax if  earned  directly  by the  non-U.S.
stockholder.  In addition,  pursuant to the 2004 Tax Act,  distributions  of the
Fund  attributable  to gains  from sales or  exchanges  of "U.S.  real  property
interests" (as defined in the Code and regulations) (including certain U.S. real
property holding corporations) are generally subject to U.S. withholding tax and
may give rise to an obligation on the part of the non-U.S. stockholder to file a
United States tax return. The provisions  contained in the 2004 Tax Act relating
to  distributions to stockholders  who are non-U.S.  persons  generally apply to
distributions with respect to taxable years of the Fund beginning after December
31,  2004 and before  January 1, 2008 and there can be no  guarantee  that these
provisions will be extended.  Stockholders should consult their own tax advisers
on these matters and on state, local, foreign and other applicable tax laws.


             PERFORMANCE-RELATED, COMPARATIVE AND OTHER INFORMATION

PERFORMANCE-RELATED  INFORMATION.  From time to time, in  advertisements,  sales
literature or reports to  stockholders,  the past performance of the Fund may be
illustrated and/or compared with that of other investment companies with similar
investment  objectives.  For example, yield or total return of the Fund's shares
may be  compared to averages  or  rankings  prepared by Lipper,  Inc.,  a widely
recognized  independent service which monitors mutual fund performance;  the S&P
500 Index; the Dow Jones  Industrial  Average;  or other  comparable  indices or
investment  vehicles.  In addition,  the performance of the Fund's shares may be
compared to  alternative  investment  or savings  vehicles  and/or to indices or
indicators of economic activity, e.g., inflation or interest rates. The Fund may
also  include  securities  industry  or  comparative   performance   information
generally  and  in  advertising  or  materials   marketing  the  Fund's  shares.
Performance  rankings and listings  reported in newspapers or national  business
and financial publications,  such as Barron's,  Business Week, Consumers Digest,
Consumer Reports,  Financial World, Forbes,  Fortune,  Investors Business Daily,
Kiplinger's  Personal Finance Magazine,  Money Magazine,  New York Times,  Smart
Money, USA Today, U.S. News and World Report, The Wall Street Journal and Worth,
may also be cited (if the Fund is listed  in any such  publication)  or used for
comparison,  as well as  performance  listings and rankings  from various  other
sources including  Bloomberg  Financial  Markets,  CDA/Wiesenberger,  Donoghue's
Mutual  Fund  Almanac,  Ibbotson  Associates,  Investment  Company  Data,  Inc.,
Johnson's  Charts,  Kanon Bloch Carre and Co.,  Lipper,  Inc.,  Micropal,  Inc.,
Morningstar,  Inc.,  Schabacker  Investment  Management and Towers Data Systems,
Inc. In addition,  from time to time,  quotations  from articles from  financial
publications such as those listed above may be used in advertisements,  in sales
literature or in reports to stockholders of the Fund. The Fund may also present,
from time to time, historical  information depicting the value of a hypothetical
account in one or more classes of the Fund since inception.

Past performance is not indicative of future results. At any time in the future,
yields  and  total  return  may be higher or lower  than past  yields  and total
return, and there can be no assurance that any historical results will continue.

THE  ADVISERS.  From time to time,  the Advisers may use, in  advertisements  or
information  furnished  to  present  or  prospective  stockholders,  information
regarding the Advisers  including,  without  limitation,  information  regarding
their  investment  style,  countries of  operation,  organization,  professional
staff, clients (including other registered investment  companies),  assets under
management  and  performance  record.  These  materials may refer to opinions or
rankings of the Advisers' overall investment management performance contained in
third-party reports or publications.



                              FINANCIAL STATEMENTS

INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM.  The statements of assets and
liabilities,  statement of operations,  statement of investments,  and financial
highlights of the Fund as of November 30, 2007,  incorporated  by reference into
this Statement of Additional Information, have been audited by Deloitte & Touche
LLP ("Deloitte"),  the Fund's independent  registered public accounting firm, as
set forth in its report thereon appearing  elsewhere herein,  and is included in
reliance  upon such report  given upon the  authority of such firm as experts in
accounting and auditing.  Deloitte & Touche USA LLP, located at 555 17th Street,
Denver,  Colorado,  has  served  as the  Fund's  independent  registered  public
accounting  firm since July 2006.  The Audit  Committee of the Board will select
the Fund's  independent  accountants  for the Fund's fiscal year ending November
30, 2008 at the Board's  regular  quarterly  meeting in July 2008. The financial
statements  and report of the  independent  registered  public  accounting  firm
incorporated  by reference  into this Statement of Additional  Information  have
been so  incorporated  and the financial  highlights  included in the prospectus
have been so  included in  reliance  upon the report of Deloitte  given on their
authority as experts in auditing and accounting.

INCORPORATION  BY REFERENCE.  The Fund's audited  Portfolio of  Investments  and
Statement of Assets and Liabilities  dated November 30, 2007;  audited Statement
of Operations and Statement of Changes in Net Assets for the year ended November
30, 2007; and report of the independent  registered  public  accounting firm for
the year ended  November 30, 2007,  are included in the Fund's Annual Report for
the fiscal year ended November 30, 2007, and  incorporated  herein by reference.
You may request a free copy of this  Statement of Additional  Information or the
Fund's annual and semi-annual reports, request other information about the Fund,
or make stockholder  inquiries by calling FAS at (877) 561-7914 or by writing to
the Fund.  This Statement of Additional  Information  and annual and semi-annual
reports   are  also   available   free  of   charge   on  the   Fund's   website
(http://www.boulderfunds.net)  and on the Securities  and Exchange  Commission's
website  (http://www.sec.gov),  which also contains other  information about the
Fund. You may also email requests for these documents to  publicinfo@sec.gov  or
make a request in writing to the  Securities  and Exchange  Commission's  Public
Reference Section,  Washington,  D.C. 20549-0102. The Fund's registration number
under the 1940 Act is 811-02328.


                             ADDITIONAL INFORMATION

A Registration Statement on Form N-2, including amendments thereto,  relating to
the shares  offered  hereby,  has been filed by the Fund with the Securities and
Exchange  Commission,  Washington,  D.C. The  prospectus  and this  Statement of
Additional  Information do not contain all of the  information  set forth in the
Registration  Statement,  including  any exhibits  and  schedules  thereto.  For
further  information  with  respect to the Fund and the shares  offered  hereby,
reference is made to the  Registration  Statement.  Statements  contained in the
prospectus  and this  Statement of Additional  Information as to the contents of
any contract or other document  referred to are not necessarily  complete and in
each instance  reference is made to the copy of such contract or other  document
filed as an exhibit to the  Registration  Statement,  each such statement  being
qualified in all respects by such reference.


Part C.  Other Information.

Item 25.  Financial Statements and Exhibits

     1.   Financial Statements:

          a.   Part A. Financial  highlights are included in Part A (Prospectus)
               of this Registration Statement.

          b.   Part B. The  Fund's  financial  statements  are  included  in the
               Fund's 2007 annual report to stockholders and are incorporated by
               reference  into the Statement of Additional  Information  of this
               Registration Statement.  The statements in the 2007 annual report
               include:

               i.   Report of Independent Accountants. (1)

               ii.  Statement of assets and liabilities as of November 30, 2007.
                    (1)

               iii. Statement  of  operations  for the year ended  November  30,
                    2007. (1)

               iv.  Statement  of cash  flows for the year  ended  November  30,
                    2007. (1)

               v.   Statement  of  changes  in net  assets for each of the years
                    ended November 30, 2006 and 2007. (1)

               vi.  Schedule of Investments as of November 30, 2007. (1)

     2.   Exhibits

          a.   Fund's Charter

               i.   Articles of Incorporation of the Fund dated October 27, 1972
                    (2)

               ii.  Articles of Amendment dated October 9, 1991 (2)

               iii. Articles of Amendment dated November 20, 1998 (2)

               iv.  Articles Supplementary dated January 27, 2000(2)

               v.   Articles of Amendment dated April 26, 2002(2)

               vi.  Articles of Amendment dated October 21, 2002(2)

               vii. Articles of Amendment dated October 23, 2002(2)

               viii. Articles Supplementary dated April 8, 2004(3)

               ix.  Articles of Amendment and Restatement dated May 18, 2004(3)

               x.   Articles of Amendment dated April 25, 2005(3)

               xi.  Articles of Amendment dated May 25, 2005((3))

               xii. Articles  Supplementary  Creating  and  Fixing the Rights of
                    Preferred Stock dated October 14 , 2005((4))

          b.   Amended and Restated By-laws of the Fund ((6))

          c.   Not applicable

          d.   Share Certificate and Subscription Documents

               i.   Specimen  certificate  for  common  shares.  To be  filed by
                    amendment.

               ii.  Form of Notice of Intent. To be filed by amendment.

               iii. Form of Subscription Certificate. To be filed by amendment.

               iv.  Form of Broker Split Request. To be filed by amendment.

               v.   Form of Broker  Certification  and  Request  for  Additional
                    Rights. To be filed by amendment.

               vi.  Form of Nominee Holder Over-Subscription  Certification.  To
                    be filed by amendment.

               vii. Form  of  DTC   Over-Subscription   Form.  To  be  filed  by
                    amendment.

               viii. Form of  Notice  of  Guaranteed  Delivery.  To be  filed by
                    amendment.

               ix.  Information  Agent Fee Agreement among the Fund and Morrow &
                    Co., Inc. To be filed by amendment.

               x.   Subscription  Agent Fee Agreement among the Fund and Colbent
                    Corporation. To be filed by amendment.


          e.   Dividend Reinvestment Plan ((3))

          f.   Not applicable

          g.   Investment Advisory Agreements

               i.   Amended and Restated  Investment  Advisory  between the Fund
                    and Boulder Investment Advisers,  L.L.C. ("BIA") dated April
                    26, 2002 (2)

               ii.  Amended and Restated  Investment  Advisory Agreement between
                    the Fund and Stewart Investment Advisers, Ltd. ("SIA") dated
                    April 26, 2002 ((2))

          h.   Form of  Purchase  Agreement  between  the Fund,  BIA and Merrill
               Lynch (5)

          i.   Not applicable.

          j.   Custody  Agreement  between the Fund and  Investors  Bank & Trust
               Company (3)

          k.   Other Material Agreements

               i.   Transfer  Agency  Agreement  between the Fund and PFPC, Inc.
                    ((3))

               ii.  Administration   Agreement   between   the   Fund  and  Fund
                    Administrative Services, LLC. ((3))

               iii. Amendment to  Administration  Agreement between the Fund and
                    Fund Administrative Services, LLC ((3))

               iv.  Administration Agreement between the Fund and Investors Bank
                    & Trust Company ((3))

               v.   Delegation  Agreement  between the Fund and Investors Bank &
                    Trust Company ((3))

               vi.  Auction Agency Agreement  between the Fund and Deutsche Bank
                    Americas Trust Company ((5))

               vii. )

          l.   Opinions of Counsel

               i.   Opinion and consent of Paul Hastings  Janofsky & Walker LLP.
                    To be filed by amendment.

               ii.  Opinion and consent of Ballard  Spahr  Andrews &  Ingersoll,
                    LLP. To be filed by amendment.

          m.   Consent to Service of Process with respect to Stewart West Indies
               Trading Company, Ltd. (SIA) (5)

          n.   Consent of Deloitte & Touche LLP. To be filed by amendment.

          o.   Not applicable

          p.   Not applicable

          q.   Not applicable

          r.   Code of Ethics of the Fund, BIA and SIA. ((7))

          s.   Power of Attorney (included on signature page)

          t.   Financial Data Schedule (EDGAR version only)

(1) Incorporated  herein by reference to the Registrant's Form  N-CSR--Certified
Shareholder  Report filed on February 8, 2008, for year ending November 30, 2007
(Investment   Company   Act   File   No.   811-02328;    EDGAR   Accession   No.
0001104659-08-008527).

(2)  Incorporated  herein by reference to  Amendment  No. 8 to the  Registration
Statement on Form N-2/A of the Registrant filed on November 20, 2002 (Securities
Act File No. 33-100634; EDGAR Accession Number 0000950117-02-002800.

(3)  Incorporated  hereby by reference to  Amendment  No. 9 to the  Registration
Statement on Form N-2 of the Registrant  filed on July 11, 2005  (Securities Act
File No. 333-126503; EDGAR Accession Number 0001099343-05-000027.)

(4)  Incorporated  hereby by reference to Amendment  No. 11 to the  Registration
Statement on Form N-2/A of the Registrant  filed on October 11, 2005 (Securities
Act File No. 333-126503; EDGAR Accession Number 0001099343-05-000040.)


(5)  Incorporated  hereby by reference to Amendment  No. 10 to the  Registration
Statement on Form N-2/A of the Registrant  filed on October 7, 2005  (Securities
Act File No. 333-126503; EDGAR Accession Number 0001099343-05-000038.)

(6)  Incorporated  hereby by reference to Amendment  No. 13 to the  Registration
Statement on Form N-2 of the  Registrant  filed on May 7, 2007  (Securities  Act
File No. 333-142681; EDGAR Accession Number 0001099343-07-000061.)

(7)  Incorporated  hereby by reference to Amendment  No. 14 to the  Registration
Statement on Form N-2 of the Registrant  filed on July 20, 2007  (Securities Act
File No. 333-142681; EDGAR Accession Number 0001099343-07-000074.)


Item 26. Marketing Arrangements.   Not Applicable.

Item 27. Other Expenses of Issuance and Distribution.  The Fund expects to incur
approximately  $115,600  of  expenses  in  connection  with  the  Offering.  The
following  table  identifies  the  significant   expenses  associated  with  the
Offering.



                                                                      
NYSE Fees                                                                $3,600
Printing Costs                                                          $14,000
Fees and Expenses of Qualification Under State Securities                    $-
Laws
Auditing Fees and Expenses                                               $5,000
Legal Fees and Expenses                                                 $45,000
Subscription Agent Expense                                              $20,000
Information Agent Expenses                                              $10,100
Street Account Proxy - Direct Bill from ADP                              $8,000
Underwriter Expenses                                                         $0
Postage and Delivery Charges                                             $5,000
Miscellaneous                                                            $5,000
TOTAL ESTIMATED COSTS                                                  $115,600



Item 28.  Persons controlled by or under common control with the Fund.  None.

Item 29.  Number of Holders of Shares.



                                                                                 
------------------------------------------------ --------------------------------------------
Title of Class                                   Record Holders as of February __, 2008
------------------------------------------------ --------------------------------------------
Common Stock, par value $.01 per share                                          ____________
------------------------------------------------ --------------------------------------------
Taxable Auction Market Preferred Stock,                                                1,000
Par value $.01 per share
------------------------------------------------ --------------------------------------------



Item 30.  Indemnification.  Section 2-418 of the General  Corporation Law of the
State of Maryland,  Article VIII of the  Registrant's  Articles of Incorporation
(incorporated  by  reference  as an  Exhibit  to this  Registration  Statement),
Article 5.2 of the Registrant's By-laws (incorporated by reference as an Exhibit
to  this  Registration  Statement),   and  the  Investment  Advisory  Agreements
(incorporated by reference as an Exhibit to this Registration Statement) provide
for  indemnification.  Insofar as indemnification  for liabilities arising under
the Securities  Act of 1933 (the "Act") may be permitted to directors,  officers
and controlling persons of the Registrant, pursuant to the foregoing provisions,
or  otherwise,  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 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 issue.


Item 31. Business and Other Connections of the Investment Adviser. Registrant is
fulfilling the requirement of this Item 31 to provide a list of the officers and
directors of its investment advisers,  together with information as to any other
business, profession,  vocation or employment of a substantial nature engaged in
by that entity or those of its officers and directors during the past two years,
by  incorporating  herein by reference the information  contained in the current
Form ADV filed with the  Securities  and Exchange  Commission by each of BIA and
SIA on March 29,  2007  pursuant  to the  Investment  Advisers  Act of 1940,  as
amended.

Item 32.  Location of Accounts and Records.

                                                  

Fund Administrative Services, L.L.C.                 Co-Administrator
2344 Spruce Street, Suite A
Boulder, CO 80302

State Street Bank and Trust Company                  Co-Administrator
200 Clarendon Street
PO Box 9130
Boston, MA 02117

PFPC, Inc.                                           Transfer Agent for Common Shares
400 Bellevue Parkway
Wilmington, DE 19809

State Street Bank and Trust Company                  Custodian
200 Clarendon Street
PO Box 9130
Boston, MA 02117

Deutsche Bank Trust Company Americas                 Transfer Agent for Auction Market Preferred Stock
280 Park Avenue, 9th Floor
New York, NY 10017



Item 33.  Management Services. Not applicable.

Item 34.  Undertakings

     1.   The Registrant hereby undertakes to suspend the offering of the Rights
          until it amends its Prospectus if (a) subsequent to the effective date
          of its Registration Statement,  the net asset value per share declines
          more  than 10  percent  from its net  asset  value per share as of the
          effective  date of the  Registration  Statement  or (b) the net  asset
          value per share  increases to an amount greater than the estimated net
          proceeds from the Offering as stated in the Prospectus.

     2.   Not applicable.

     3.   Not applicable.

     4.   Not applicable.

     5.   The Registrant hereby undertakes that:

          a.   for  the  purposes  of  determining   any  liability   under  the
               Securities Act of 1933, the information  omitted from the form of
               prospectus filed as part of a registration  statement in reliance
               on Rule 430A and contained in the form of prospectus filed by the
               Registrant  under Rule 497(h)  under the  Securities  Act of 1933
               shall be deemed to be part of the  Registration  Statement  as of
               the time it was declared effective.

          b.   for the purpose of determining any liability under the Securities
               Act of 1933, each  post-effective  amendment that contains a form
               of prospectus shall be deemed to be a new Registration  Statement
               relating to the securities  offered therein,  and the offering of
               the  securities  at that time  shall be deemed to be the  initial
               bona fide offering thereof.

     6.   The Registrant  hereby undertakes to send by first class mail or other
          means designed to ensure equally prompt delivery,  within two business
          days of  receipt  of an oral or  written  request,  any  Statement  of
          Additional Information.


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,  and the
Investment Company Act of 1940, as amended,  the Registrant has duly caused this
Amendment  to its  Registration  Statement  to be  signed  on its  behalf by the
undersigned,  thereunto duly authorized, in the City of Boulder and the State of
Colorado, on the 4th day of March, 2008.

                                   BOULDER GROWTH & INCOME FUND, INC.


                                   By:      /s/ Stephen C. Miller

                                            President

POWER OF ATTORNEY

KNOW ALL PEOPLE BY THESE  PRESENTS,  that each person  whose  signature  appears
below constitutes and appoints Stephen C. Miller and Carl D. Johns, and each and
any of them, his true and lawful  attorneys-in-fact  and agents, with full power
of substitution  and  resubstitution,  for him and his name, place and stead, in
any and all capacities,  to sign any or all amendments (including post-effective
amendments)  to the  Registration  Statement  for the Boulder Total Return Fund,
Inc. on Form N-2, and to sign any registration statement that is to be effective
upon filing pursuant to Rule 462  promulgated  under the Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith,  with the Securities and Exchange Commission,  granting
unto  said  attorneys-in-fact  and  agents,  and each of them,  full  power  and
authority to do and perform each and every act and thing requisite and necessary
to be done; hereby ratifying and confirming all that said  attorneys-in-fact and
agents,  or any of them, or their substitute or substitutes,  may lawfully do or
cause to be done by virtue thereof.

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





Signature                                Title                                               Date
---------------------------------------- --------------------------------------------------- ---------------------------------
---------------------------------------- --------------------------------------------------- ---------------------------------
                                                                                       
/s/ Stephen C. Miller                    Chief Executive Officer and President               March  4, 2008
---------------------------------------- --------------------------------------------------- ---------------------------------
/s/ John S. Horejsi*                     Director                                            March 4, 2008
/s/ Susan L. Ciciora*                    Director                                            March 4, 2008
/s/ Joel L. Looney*                      Director and Chairman of the Board                  March 4, 2008
/s/ Dr. Dean L. Jacobson*                Director                                            March 4, 2008
/s/ Richard I. Barr*                     Director                                            March 4, 2008
/s/ Carl D. Johns*                       Chief Financial Officer, Chief Accounting           March 4, 2008
                                         Officer, Vice President and Treasurer



*By Stephen C. Miller, attorney in fact