PROSPECTUS

                      9,450,000 RIGHTS FOR 3,150,000 SHARES
                         BOULDER TOTAL RETURN FUND, INC.


                                  COMMON STOCK


The Boulder Total Return Fund, Inc. (the "Fund") is issuing  transferable rights
("Rights") to its shareholders. These Rights will allow you to subscribe for new
shares of common  stock of the Fund (the  "Common  Stock").  For every three (3)
Rights you receive,  you will be entitled to buy one (1) new share of the Common
Stock.  You will  receive one Right for each  outstanding  Fund share you own on
June 20, 2003 (the "Record Date").  The number of Rights issued to a shareholder
on the Record  Date will be rounded up to the  nearest  number of Rights  evenly
divisible  by three.  In the case of shares of common  stock held of record by a
Nominee  (defined  below),  the number of Rights  issued to the Nominee  will be
adjusted to permit rounding up (to the nearest number of Rights evenly divisible
by three) of the Rights to be received by beneficial owners for whom the Nominee
is the holder of record  only if the  Nominee  provides to the Fund on or before
the close of business on July 3, 2003 a written representation of the number of
Rights required for such rounding. The term "Nominee" shall mean,  collectively,
Cede & Co. ("Cede"), as nominee for the Depository Trust Company ("DTC"), or any
other depository or nominee. Shareholders on the Record Date may purchase shares
not acquired by other  shareholders  in this Rights  offering (the  "Offering"),
subject to  limitations  discussed  in this  Prospectus.  See  "Oversubscription
Privilege" below.

The Rights are transferable and will be listed for trading on the New York Stock
Exchange  ("NYSE")  under the symbol "BTF RT" for the duration of the  Offering.
The  Fund's  shares  of Common  Stock are also  listed,  and the  shares  issued
pursuant to this Offering will be listed, on the NYSE under the symbol "BTF." On
June 13, 2003,  the last reported net asset value per share of the Fund's shares
was $16.40 and the last reported  sales price of a share on the NYSE was $13.74.
The subscription price per share (the  "Subscription  Price") will be 95% of the
lesser of (a) the  Fund's  per-share  net  asset  value  ("NAV")  on the date of
expiration  of the  Offering  (referred  to  herein  as the  "Pricing  Date"  or
"Expiration Date"), or (b) the average  volume-weighted sale price of a share of
the  Common  Stock on the  NYSE on the  Pricing  Date  and the four  immediately
preceding  trading  days.  The  "average-volume  weighted sale price" takes into
consideration  the  volume  and sale  price of each and every sale of the Fund's
shares during a 5-day period.

SHAREHOLDERS  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 PRICING DATE.  ONCE YOU SUBSCRIBE FOR YOUR
SHARES AND THE FUND  RECEIVES  PAYMENT OR GUARANTEE OF PAYMENT,  YOU WILL NOT BE
ABLE TO CHANGE YOUR DECISION.  THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JULY 11, 2003 (THE "EXPIRATION DATE"),  UNLESS THE OFFERING IS EXTENDED
AS DISCUSSED IN THIS PROSPECTUS.

For more information, please call Georgeson Shareholder Communications Inc. (the
"Information Agent") toll free at 1-800-965-5212.

The Fund is a closed-end,  diversified management investment company. The Fund's
investment objective is total return. The Fund seeks to achieve its objective by
investing in common stocks for long-term capital appreciation.  These stocks may
or may not pay a  dividend.  The  Fund  may  also  invest  in  income  producing
securities,  namely dividend paying common stocks (e.g.,  real estate investment
trusts ("REITs"), utilities and other registered investment companies ("RICs")),
as well as corporate bonds, corporate preferred stock, government securities, or
other income  producing  securities,  to achieve current income  consistent with
preservation  of capital.  The income  component is  secondary to the  long-term
capital  appreciation  component.  No assurance  can be given that the Fund will
achieve its investment  objective.  The Fund typically  invests in securities of
U.S.-based  companies,  though it is not limited to investing in the U.S.  stock
market.  The Fund  anticipates  a low turnover  rate in its  portfolio of common
stocks and, with respect to common stocks held for capital  appreciation  rather
than  income,  seeks to  invest in stocks  that  have a proven  track  record of
earnings and the prospect of increased  future value through  growth in revenues
and profits.  The Fund has the  flexibility  to invest in companies of any size;
however,  it is  expected  that it will  not  make  significant  investments  in
start-up companies, initial public offerings, non-public companies, or companies
with little or no operating history.

Boulder Investment Advisers, LLC ("BIA") and Stewart Investment Advisers ("SIA")
(collectively  the "Advisers")  act as the investment  advisers to the Fund. The
address of the Fund and BIA is 1680 38th Street,  Suite 800,  Boulder,  Colorado
80301.  SIA,  whose legal name is Stewart  West Indies  Trading  Company,  Ltd.,
resides at 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  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  AND  SPECIAL  CONSIDERATIONS"  ON PAGE 7 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                                $13.12(1)                       None                      $41,328,000
Total                                    $13.12                          None                      $41,328,000
============================== ============================= ============================ ============================



(1) Since the Subscription Price will not be determined until after printing and
distribution of this Prospectus, the Subscription Price above is estimated based
on the  closing  price of a share  of the  Common  Stock  on June  13,  2003 and
applying  the pricing  formula set forth on the Cover Page and  described  below
under  "Subscription  Price"  (i.e.,  95% of the  lesser  of (a)  the NAV on the
Pricing  Date or (b) the  average  volume-weighted  sale price of a share of the
Common Stock on the NYSE on the Pricing Date and the four immediately  preceding
trading days) (the "Estimated  Subscription Price"). The average volume-weighted
closing  sales price of the Fund's shares on June 13, 2003 was $13.81 per share.
See "Subscription Price" and "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  $140,000.  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.




                  The Date of this Prospectus is June 20, 2003



Shareholders  who do not fully  exercise  their Rights  should  expect that they
will, at the completion of the Offering,  own a smaller proportional interest in
the Fund than if they exercised  their Rights (i.e.,  dilution).  As a result of
the  Offering  you  will  experience  an  immediate  dilution,  which  could  be
substantial,  of the aggregate  net asset value of your shares.  This is because
the Subscription Price per share (and thus the net proceeds to the Fund for each
new share  sold) will be less than the  Fund's net asset  value per share on the
Expiration  Date. The Fund cannot state precisely the extent of this dilution at
this time  because  the Fund  does not know  what the net asset  value or market
value per share  will be when the  Offering  expires or what  proportion  of the
Rights will be exercised.  Trusts and other entities affiliated with the Horejsi
family  hold  41.84% of the Fund's  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 Page 10 of this
Prospectus  and the in the SAI  (defined  below)),  may be deemed to control the
Fund. The Horejsi  Affiliates have indicated that they intend to fully subscribe
in  the   Offering's   primary   subscription   and  may   participate   in  the
over-subscription  privilege  in such  manner  and on the  same  terms  as other
shareholders.

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
June 20, 2003 (the "SAI") containing  additional  information about the Fund has
been filed with the SEC 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 32 of  this  Prospectus,  may be  obtained  without  charge  by  contacting
Georgeson  Shareholder  Communications,  Inc. the Fund's  Information  Agent, at
1-800-965-5212.  The SAI will be sent within two  business  days of receipt of a
request.




                                TABLE OF CONTENTS



Prospectus Summary                                   1

  Purpose and Summary of the Offering                1

  Board Considerations.                              1

  Important Terms of the Offering                    2

  Important Dates for the Offering                   2

  Key Elements of the Offering                       3

  Fee Table                                          5

Financial Highlights                                 5

Information Regarding the Fund                       7

Risk Factors and Special Considerations              7

  Dilution                                           7

  Discount From Net Asset Value                      7

  Repurchase and Charter Provisions                  8

  Diversified Status                                 8

  Industry Risks and Risks Associated With
  the Fund's Investments                             8

  Foreign Securities                                 8

  Dependence on  Key Personnel                       8

  Leveraging                                         8

The Offering                                         9

  Terms of the Offering                              9

  Purpose of the Offering                            11

  Reasons for Conducting the Offering                11

  The Subscription Price                             13

  Over-Subscription Privilege                        13

  Expiration of the Offering                         13

  Sales By Subscription Agent                        13

  Method of Transferring Rights                      14

  Method of Exercising Rights                        14

  Subscription Agent                                 14

  Payment for Shares                                 14

  Delivery of Stock Certificates.                    16

  Foreign Restrictions                               16

  Federal Income Tax Consequences
  Associated With the Offering                       16

  Employee Plan Considerations                       17

Use of Proceeds                                      18

  Investment Opportunities                           18

  Benefit to the Advisers and Co-Administrator       18

  Expenses of the Fund                               18

Information About the Fund                           19

Management of the Fund                               19

  Board of Directors                                 19

  Information Regarding the Advisers and
  Co-Administrator                                   19

    Boulder Investment Advisers, L.L.C               19

    Stewart Investment Advisers                      19

    Portfolio Managers                               20

    Fund Administrative Services, LLC                20

  The Investment Co-Advisory Agreements              20

  Co-Administration Agreement                        21

Investment Objective and Policies                    21

  Investment Objective                               21

  Diversification                                    21

  Investment Policies                                22

  Other Investment Techniques                        22

  Risks Associated With the Fund's Investments       22

    Investments In Common Stocks                     22

    Investments In Real Estate Investment Trusts     22

    Investments In Other Registered Investment
    Companies                                        23

    Investments In Preferred Stocks and Bonds        23

    AMPs and AMPs Auction Risk                       23

  Investment Philosophy                              23

    Common Stocks                                    23

    Cash and Cash Equivalents                        24

    Fixed Income Investments                         24

  Dividends and Distributions                        24

  Dividend Reinvestment Plan                         25

  Taxation of the Fund                               25

  Taxation of Shareholders                           25

  State and Local Tax Matters                        26

Determination of Net Asset Value                     26

Capital Stock and Other Matters                      26

  Capitalization                                     26

  Market Price and Net Asset Value Information       27

  Preferred Stock                                    27

  Effects of Leverage                                28

  Voting Rights Associated With the AMPs             29

  Repurchase of Common Shares                        29

  Rights With Regard to Dividends, Voting
  and Liquidation                                    29

  Anti-Takeover Provisions of the Charter
  and By-Laws                                        30

  Other Service Providers.                           31

    Custodian                                        31

    Transfer Agent                                   31

    Independent Accountants                          31

    Legal Matters                                    31

  Reports To Shareholders                            31

  Available Information                              31

  Statement of Additional Information; SAI -
  Table of Contents                                  32





                               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 you. To understand the Offering  fully,  you should read the entire  document
carefully, including the risk factors.

PURPOSE AND SUMMARY OF THE OFFERING. The Fund has determined that it would be in
the best  interests  of the Fund and its existing  shareholders  to increase the
assets of the Fund. The primary reasons are as follows:

     o    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.

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

     o    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.

     o    Since the Offering will  increase the Fund's  outstanding  shares,  it
          will likely  increase the number of beneficial  owners of Fund shares,
          which could increase the level of market interest in and visibility of
          the Fund and improve the trading liquidity of the Fund's shares on the
          NYSE.

     o    By increasing  the Fund's total  assets,  the Offering will reduce the
          Fund's leverage as a percentage of assets from 33.4% to  approximately
          28.4%  (assuming  the  Offering  is  fully  subscribed).  The  Fund is
          currently  leveraged  with $77.5  million of  Taxable  Auction  Market
          Preferred  Stock (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 Offering seeks to reward  existing  shareholders by giving them the right to
purchase  additional  shares at a price  below  market  and/or  net asset  value
without incurring any commission or other transaction  charges. The distribution
to  shareholders  of transferable  rights,  which  themselves may have intrinsic
value, will also afford non-subscribing  shareholders the potential of receiving
a cash  payment  upon  sale of such  Rights,  receipt  of which may be viewed as
partial  compensation for the possible  dilution of their interests in the Fund.
See "Reasons for  Conducting  the  Offering" and "Key Elements of the Offering -
Transferable Rights" below.

BOARD  CONSIDERATIONS.  At a  meeting  held on  April  22,  2003,  the  Board of
Directors of the Fund (the "Board") approved a transferable rights offering, the
substantive terms of which would permit shareholders to acquire one new share of
the Fund for every three rights held (i.e., a one-for-three rights offering) for
a  subscription  price  equal to 95% of the lesser of (a) the NAV on the Pricing
Date or (b) the  average  volume-weighted  sale  price of a share of the  Common
Stock on the NYSE on the Pricing Date and the four immediately preceding trading
days. The following is a brief  background of the Board's  consideration  of the
Offering.

On January 21, 2003, at a regularly  scheduled meeting of the Board,  Management
recommended  the Board's  consideration  of a rights  offering  and  distributed
extensive  materials  regarding  an overview of rights  offerings as well as the
legal,  practical and financial  issues the Board should consider in coming to a
decision  to approve a rights  offering.  At this  meeting,  although  the Board
considered the viability of a rights  offering for the Fund in general terms, it
nonetheless  resolved to have Management  supplement and expand its analysis and
present a formal and more  detailed  proposal for a rights  offering at the next
regularly  scheduled meeting.  At this meeting,  the independent  members of the
Board (the  "Independent  Directors") also resolved to engage an independent and
disinterested  consultant to advise the Board,  and particularly the Independent
Directors,  on the viability and  appropriateness  of a rights  offering for the
Fund.  After  the  January  meeting,  the  Independent   Directors   interviewed
representatives  of Thomas J. Herzfeld,  Inc.  ("Herzfeld"),  a consulting  firm
recognized as an expert in the field of  closed-end  investment  companies.  The
Independent  Directors  selected  and engaged  Herzfeld to prepare an  extensive
analysis of rights offerings and their viability and  appropriateness  vis-a-vis
the Fund.

At the  Board's  regularly  scheduled  meeting  on April  22,  2003,  Management
provided  additional analysis (e.g.,  previously  requested by the Board and its
counsel prior to the April meeting) and a formal  proposal for the Offering.  At
the  request of  counsel  for the  Independent  Directors,  Management  provided
additional  requested  research,  analysis and background material regarding the
proposed  Offering.  Prior to the April  meeting,  representatives  of  Herzfeld
presented to the Board and Management a written analysis of rights offerings and
specific  recommendations  regarding the proposed offering.  A representative of
Herzfeld also attended the April  meeting and made an oral  presentation  of the
Herzfeld  materials,  entertained  questions  from the  Board,  Management,  the
Advisers, the Fund's counsel and counsel for the Independent Directors,  and met
privately with the Independent  Directors,  their counsel and the Fund's counsel
to discuss the Offering. In summary, Herzfeld advised the Board that in its view
a


          well-structured  and well-timed  rights offering can be a good way for
          [the Fund] to raise capital, if this additional capital will allow the
          fund to take advantage of investment  opportunities,  reduce  expenses
          and maintain asset coverage which would ensure  continued high Moody's
          ratings of [the Fund's]  preferred shares and unencumbered  trading of
          the portfolio . . .

          In the current depressed market environment new capital would give the
          adviser assets to invest at bargain prices,  and an increase in assets
          would allow greater  realization of economies of scale and a reduction
          of expense ratio (emphasis added).

Following those  discussions,  and based on recommendations  from Herzfeld,  the
Board, including all of the Independent  Directors,  determined that the pricing
of the Offering should be 95% (as  recommended by Fund  Management) of the lower
of NAV or market price,  taking into account the lower dilution likely to result
from the higher price and historical information supplied by Herzfeld supporting
a  conclusion  that the higher price  should not  jeopardize  the success of the
Offering.

Finally, the Independent Directors conditioned their approval of the Offering on
the  Advisers  agreeing to waive  one-half of any  advisory  fees which would be
charged against the proceeds from the Offering until such time as 50% or more of
the  sum of (i)  the  proceeds  of the  Offering  and  (ii)  any  cash  or  cash
equivalents held by the Fund on April 22, 2003  (approximately $22 million) have
been invested in common stock equities in accordance with the Fund's  investment
objective. The Advisers agreed to this condition.

At a special telephonic meeting of the Board on June 9, 2003, after review of a
draft of this Prospectus in substantially  its final form, the Board,  including
the Independent  Directors voting separately,  unanimously approved the issuance
of this  Prospectus  and the final terms of the Offering.  The Offering does not
require shareholder approval.

Notwithstanding the above, there can be no assurances that the Offering will be
successful nor can there be any assurance that, by increasing the assets of the
Fund, the above noted benefits will be realized.


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

Total number of shares available for          3,150,000
primary subscription

Number of Rights you will receive for each    One Right for each share(+)
outstanding share you own on the Record Date

Subscription                                  Price 95% of the lesser of (a) the
                                              NAV on the Pricing Date or (b) the
                                              average volume-weighted sale price
                                              of a share of the Common Stock on
                                              the NYSE on the Pricing Date and
                                              the four immediately preceding
                                              trading days.

Estimated Subscription Price                  $13.12

+ The number of Rights to be issued to a Record Date Shareholder (defined below)
will be rounded up to the nearest number of Rights evenly divisible by three.




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

Record Date                                              June 20, 2003

Subscription Period                     June 20, 2003 to July 11, 2003

Expiration Date and Pricing Date of the                  July 11, 2003++
Offering

Deadline for delivery of Subscription                    July 11, 2003
Certificate and payment of shares, or
Notice of Guaranteed Delivery (*)

Deadline for payment pursuant to Notice of               July 18, 2003
Guaranteed Delivery (*)

Confirmation to participants                             July 23, 2003

Deadline for final payment for shares (if               August 4, 2003
any)**




++   Unless the Offering is extended to a date no later than July 21, 2003.


*    Record Date Shareholders  (defined below) exercising Rights must deliver to
     the  Subscription  Agent 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  shareholders
     (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
--------------------------------------------------------------------------------

o    ONE-FOR-THREE OFFERING

                    The Offering will give shareholders of record the "right" to
                    purchase  one new share of the Fund for every  three  rights
                    held.  For example,  if you own 300 shares on the  announced
                    record date,  you will receive 300 Rights  entitling  you to
                    purchase  100 new shares of the Fund.  Shareholders  will be
                    able  to  exercise  all or some of  their  Rights.  However,
                    Record Date  Shareholders  who do not  exercise all of their
                    Rights   will   not   be   able   to   participate   in  the
                    Over-Subscription    Privilege.    See    "Over-Subscription
                    Privilege" below.

o    TRANSFERABLE RIGHTS

                    The Rights  issued in the Offering  will be  "transferable",
                    will be traded on the NYSE and will  afford  non-subscribing
                    shareholders  the option of selling their Rights on the NYSE
                    or through the Subscription Agent. Selling the Rights allows
                    a non-exercising  shareholder  (i.e., a shareholder who does
                    not wish to purchase  additional shares in the Offering) the
                    ability to offset some of the dilution which would otherwise
                    occur. See discussion of "Dilution" below. In contrast, in a
                    non-transferable  rights  offering  (i.e., an offering where
                    the rights  cannot be traded),  non-exercising  shareholders
                    would experience full dilution.

                    There can be no assurance  that a liquid trading market will
                    develop  for the  Rights  or that the  price  at which  such
                    Rights  trade  will   approximate  the  amount  of  dilution
                    otherwise  realized  by a  non-exercising  shareholder.  The
                    period  during  which Rights will trade will be limited and,
                    upon  expiration of the  Offering,  the Rights will cease to
                    trade and will have no residual value.  See "Sale of Rights"
                    below.

o    SUBSCRIPTION PRICE

                    Under the Offering, new shares will be sold at a price equal
                    to 95% of the lesser of (a) the NAV on the  Pricing  Date or
                    (b) the average volume-weighted sale price of a share of the
                    Common  Stock on the NYSE on the  Pricing  Date and the four
                    immediately preceding trading days. Management believes that
                    this pricing  formula  (versus a higher or lower  percentage
                    discount or a  pre-determined  fixed  price) will provide an
                    incentive to shareholders (as well as others who might trade
                    in the transferable Rights) to participate in the Offering.

o    OVER-SUBSCRIPTION PRIVILEGE

                    If all of the Rights  initially  issued are not exercised by
                    Record Date  Shareholders,  any unsubscribed  shares will be
                    offered to other  Record  Date  Shareholders  who have fully
                    exercised the Rights  initially  issued to them and who wish
                    to acquire  additional shares. If shares are insufficient to
                    honor all  over-subscriptions,  the available shares will be
                    allocated pro-rata among those who  over-subscribe  based on
                    the number of Rights originally issued to them.

                    The  Horejsi  Affiliates  may  or  may  not  exercise  their
                    Over-Subscription Privilege. If the Horejsi Affiliates fully
                    exercise their  Over-Subscription  Privilege,  under certain
                    circumstances  (e.g.,  low shareholder  participation in the
                    Offering,    the    trading    of   the   Rights   and   the
                    over-subscription  privilege),  the Horejsi Affiliates could
                    substantially  increase  their  percentage  ownership in the
                    Fund at an  advantageous  price.

o    METHOD FOR EXERCISING RIGHTS

                    Except  as  described   below,   subscription   certificates
                    evidencing the Rights ("Subscription  Certificates") will be
                    sent to Record Date  Shareholders or their nominees.  If you
                    wish to exercise your Rights, you 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  $13.12  per  share  (i.e.,  the
                         estimated  subscription  price  based on the Fund's NAV
                         and market price on June 13, 2003).  Your completed and
                         signed  Subscription  Certificate  and payment  must be
                         received by the Expiration  Date. A 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  TOTAL  RETURN
                         FUND, INC. AND MUST ACCOMPANY AN EXECUTED  SUBSCRIPTION
                         CERTIFICATE  FOR SUCH  SUBSCRIPTION  CERTIFICATE  TO BE
                         ACCEPTED.



                    2.   Contact your broker, banker or trust company, which can
                         arrange,  on your  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.
                         Your broker,  banker or trust  company may charge a fee
                         for this  service.  The Notice of  Guaranteed  Delivery
                         must be received by the Expiration Date.

                    Rights  holders  will have no right to  rescind  a  purchase
                    after the  Subscription  Agent has received the Subscription
                    Certificate or Notice of Guaranteed Delivery. See "The Offer
                    - Method of Exercising  Rights" and "The Offer - 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.


 -------------------------------------------------------------------------------
              SHAREHOLDER INQUIRIES SHOULD BE DIRECTED TO GEORGESON
            SHAREHOLDER COMMUNICATIONS, INC., THE FUND'S INFORMATION
                            AGENT, AT 1-800-965-5212.
 -------------------------------------------------------------------------------


o  SALE OF RIGHTS

                    The Rights are  transferable  until the Expiration  Date and
                    will be  admitted  for  trading  on the  NYSE.  Although  no
                    assurance  can be given that a market  for the  Rights  will
                    develop,  trading in the Rights on the NYSE will begin three
                    Business  Days prior to the Record Date and may be conducted
                    until the close of  trading  on the last  NYSE  trading  day
                    prior to the Expiration  Date.  The value of the Rights,  if
                    any,  will be reflected by the market  price.  Rights may be
                    sold  by  individual  holders  or  may be  submitted  to the
                    Subscription  Agent for sale.  Any Rights  submitted  to the
                    Subscription   Agent  for  sale  must  be  received  by  the
                    Subscription Agent on or before Thursday, July 10, 2003, one
                    Business  Day prior to the  Expiration  Date,  due to normal
                    settlement  procedures.  Trading  of the  Rights on the NYSE
                    will be conducted on a when-issued basis until and including
                    the date on which the  Subscription  Certificates are mailed
                    to Record Date shareholders and thereafter will be conducted
                    on a regular  way basis  until and  including  the last NYSE
                    trading day prior to the  Expiration  Date.  The shares will
                    begin  trading  ex-Rights  two  Business  Days  prior to the
                    Record Date. If the  Subscription  Agent receives Rights for
                    sale in a timely  manner,  it will use its best  efforts  to
                    sell the Rights on the NYSE. Any commissions will be paid by
                    the  selling  Rights  holders.  Neither  the  Fund  nor  the
                    Subscription  Agent will be  responsible if Rights cannot be
                    sold and neither has  guaranteed any minimum sales price for
                    the Rights.  For  purposes of this  Prospectus,  a "Business
                    Day" shall mean any day on which trading is conducted on the
                    NYSE.


 -------------------------------------------------------------------------------
           SHAREHOLDERS ARE URGED TO OBTAIN A RECENT TRADING PRICE FOR
            THE RIGHTS ON THE NYSE FROM THEIR BROKER, BANK, FINANCIAL
                         ADVISOR OR THE FINANCIAL PRESS.
 -------------------------------------------------------------------------------


o    OFFERING FEES AND EXPENSES

                    The Fund expects to incur approximately $140,000 of expenses
                    in connection  with the Offering.  See "Fees and Expenses of
                    The Offering" below.

o    RESTRICTIONS ON FOREIGN SHAREHOLDERS

                    The  Fund  will  not  mail   Subscription   Certificates  to
                    shareholders  whose record  addresses are outside the United
                    States or who have an APO or FPO address. Shareholders whose
                    addresses  are outside the United  States or who have an APO
                    or FPO address  and 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 the  Subscription  Agent has received no
                    instruction  by  such  date,  the  Subscription  Agent  will
                    attempt to sell all Rights  and remit the net  proceeds,  if
                    any, to such shareholders.  If the Rights can be sold, sales
                    of these Rights will be deemed to have been  effected at the
                    weighted average price received by the Subscription Agent on
                    the day the Rights are sold,  less any applicable  brokerage
                    commissions, taxes and other expenses.



o    USE OF PROCEEDS

                    The  net  proceeds  of  the  Offering  are  estimated  to be
                    approximately  $41,194,000.  This  figure  is  based  on the
                    Estimated Subscription Price per share of $13.12 and assumes
                    all shares offered are sold and that the expenses related to
                    the Offering  estimated at approximately  $140,000 are paid.
                    The  Advisers  anticipate  that it may take up to six months
                    for the Fund to invest these proceeds in accordance with its
                    investment  objective  and  policies  under  current  market
                    conditions.   Pending  investment,   the  proceeds  will  be
                    invested in certain short-term debt instruments. See "Use of
                    Proceeds"  below.

o    RISK FACTORS

                    See "Risk Factors and Special Considerations" below.





                                    FEE TABLE



SHAREHOLDER TRANSACTION EXPENSES
------------------------------------------------------------------------------------------------- ----------------------------
                                                                                               

Sales Load (as a percentage of the Offering price)                                                $0
Dividend Reinvestment Plan Fees                                                                   $0



ANNUAL FUND EXPENSES (as a percentage of net assets attributable to common shares)                As of 04/30/2003

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

                                                                                               
Management Fees                                                                                   1.88%
Administration Fees                                                                               0.28%
Other Expenses                                                                                    0.34%
Total Annual Fund Expense                                                                         2.50%



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

                                                                                                       
You would pay the following expenses on a $1,000 investment          $25.34          $77.96          $133.26       $284.21
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. 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.

As stated above,  the Independent  Directors  conditioned  their approval of the
Offering on the Advisers  agreeing to waive  one-half of any advisory fees which
would be charged  against the proceeds from the Offering  until such time as 50%
or more of the sum of (i) the proceeds of the Offering and (ii) any cash or cash
equivalents held by the Fund on April 22, 2003  (approximately $22 million) have
been invested in common stock equities in accordance with the Fund's  investment
objective.  The Advisers agreed to this condition,  although it is not reflected
in the foregoing table and example.



                              FINANCIAL HIGHLIGHTS


The table below sets forth  selected  financial data for a share of Common Stock
outstanding throughout the period presented. The per share operating performance
and ratios for the years ended November 30, 2001 and 2002,  were audited by KPMG
LLP,  the  Fund's  independent  auditors,  as  stated in their  report  which is
incorporated by reference into the SAI. The per share operating  performance and
ratios for the year ended November 30, 2000 and prior years, were audited by the
Fund's previous independent  auditors.  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. Interim financial information for the period
ending  May 30,  2003 will be sent to  shareholders  in the  Fund's  semi-annual
report.  The  Fund's  semi-annual  report  may be  obtained  without  charge  by
contacting the Fund's co-administrator (PFPC Inc.) at (800) 331-1710.




                              Financial Highlights



                                        -------------------------------------------------------------------------------------------
                                                                          Year Ended November 30
                                        -------------------------------------------------------------------------------------------
                                        -------------------------------------------------------------------------------------------
                                        2002      2001      2000     1999     1998     1997     1996     1995     1994     1993***
                                        -------------------------------------------------------------------------------------------
OPERATING PERFORMANCE:
                                                                                             

Net asset value, beginning of year      $17.36    $14.81    $13.32   $16.06   16.33    $15.31   $14.54   $12.22   $14.36   $13.95
                                        -------------------------------------------------------------------------------------------
Net investment income
                                        0.49      0.63      0.75     1.29     1.33     1.36     1.41     1.39     1.40     0.83
Net realized and unrealized
 gain/(loss) on investments             (2.51)    2.35      1.50     (1.93)   0.13     1.10     0.72     2.46     (1.94)   0.54
                                        -------------------------------------------------------------------------------------------
Total from investment operations        (2.02)    2.98      2.25     (0.64)   1.46     2.46     2.13     3.85     (0.54)   1.37
                                        -------------------------------------------------------------------------------------------
Offering costs and MMP* underwriting
  commissions charged to paid in
  capital                               -         -         -        -        -        -        -        -        -        (0.22)

DISTRIBUTIONS: PREFERRED STOCK

Dividends Paid from net investment
  income to MMP* Shareholders           -         -         (0.42)   (0.35)   (0.25)   (0.26)   (0.34)   (0.36)   (0.28)   (0.09)
Distributions paid from net realized
  capital gains to MMP*Shareholders     -         -         -        (0.03)   (0.14)   (0.06)   (0.02)   -        -        (0.01)
Dividends paid from net investment
  income to AMP** Shareholders          (0.16)    (0.40)    (0.13)   -        -        -        -        -        -        -
Change in accumulated undeclared
  dividends on MMP*/AMP** Shareholders  -         0.02      0.04     (0.06)+  0.02     (0.02)   0.02     (0.02)   0.01     (0.03)
                                       -------------------------------------------------------------------------------------------
Net Increase/Decrease from operations
applicable to common shares             (2.18)    2.60      1.74     (1.08)   1.09     2.12     1.79     3.47     (0.81)   1.02
                                       -------------------------------------------------------------------------------------------
DISTRIBUTIONS: COMMON SHARES
Dividends paid from net investment
  income to Common Shareholders         (0.14)    (0.05)    (0.19)   (1.02)   (1.07)   (1.05)   (1.02)   (1.15)   (1.09)   (0.61)
Distributions paid from net realized
  capital gains to Common Shareholders  -         -         -        (0.64)   (0.29)   (0.05)   -        -        (0.24)   -
                                       -------------------------------------------------------------------------------------------
Net Increase/Decrease in Common Net
  Asset Value                           (2.32)    2.55      1.55     (2.74)   (0.27)   1.02     0.77     2.32     (2.14)   0.41
                                       -------------------------------------------------------------------------------------------

Costs of AMP** Stock issued             -         -         (0.06)   -        -        -        -        -        -        -
                                        ------------------------------------------------------------------------------------------

Net asset value, end of year            $15.04    $17.36    $14.81   $13.32+  $16.06   $16.33   $15.31   $14.54   $12.22   $14.36
                                        ===========================================================================================
Market value, end of year               $12.79    $16.05    $12.00   $10.19   $13.63   $15.63   $14.63   $13.13   $11.13   $14.25

                                        ===========================================================================================
Total investment return based on net
  asset value(a)                        (12.62)%  17.68%    13.27%   (5.17)%  7.65%    14.66%   13.89%   30.38%   (5.79)%  7.40%
                                        ===========================================================================================
Total investment return based on
  market value(a)                       (19.62)%  34.27%    20.00%   (14.51)% (4.55)%  14.84%   20.50%   29.28%   (13.55)% (0.89)%
                                        ===========================================================================================
RATIOS TO AVERAGE NET ASSETS AVAILABLE
  TO COMMON STOCK SHAREHOLDERS
       Operating expenses               2.42%     2.47%     2.55%    1.97%    1.83%    1.60%    1.84%    1.89%    1.91%    1.66%(c)
       Net investment income (b         1.85%     1.52%     1.82%    6.08%    5.92%    6.51%    7.44%    7.81%    8.35%    6.59%(c)

PREFERRED STOCK:
Liquidation Value, end of period (in
  000s)                                 $77,500   $77,500   $77,500  $77,500  $77,500  $77,500  $77,500  $77,500  $77,500  $77,500
Total Shares Outstanding                775       775       775      775      775      775      775      775      775      775
Asset Coverage                          283%      311%      280%     263%     295%     299%     286%     275%     249%     274%
Liquidation preference per  share       $100,000  $100,000  $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Average Market Value per share          $100,000  $100,000  $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000

SUPPLEMENTAL DATA:
       Portfolio turnover rate          38%       16%       85%      69%      86%      77%      98%      93%      110%     135%

       Net assets, end of year          $219,211  $241,120  $217,310 $203,609 $228,829 $231,572 $221,840 $212,827 $192,795 $212,577
       (in 000's)

Ratio of operating expenses to Total
  Average Net Assets including
  MMP*/AMP** (a)                        1.65%     1.66%     1.57%    1.26%    1.22%    1.05%    1.17%    1.16%    1.18%    1.15%(c)



*    Money Market Cumulative Preferred(TM) Stock

**   Taxable Auction Market Preferred Stock.

***  The Fund commenced operations on February 19, 1993.

(a)  Assumes  reinvestment of  distributions at the price obtained by the Fund's
     Dividend Reinvestment Plan.

(b)  The net investment  income ratios reflect income net of operating  expenses
     and payments and change in undeclared dividends to MMP*/AMP** Shareholders.

(c)  Annualized.

+    Includes effect of additional  distribution  available to MMP* Shareholders
     (.04 per Common share).





                         INFORMATION REGARDING THE FUND


Boulder  Total  Return  Fund,  Inc.  is  a  closed-end,  diversified  management
investment  company.  The Fund's investment  objective is total return. The Fund
seeks to achieve its  objective  by  investing  in common  stocks for  long-term
capital appreciation.  These stocks may or may not pay a dividend.  The Fund may
also invest in income producing securities, namely dividend paying common stocks
(e.g., REITs,  utilities and other RICs), as well as corporate bonds,  corporate
preferred stock, government securities, or other income producing securities, to
achieve  current income  consistent  with  preservation  of capital.  The income
component is secondary  to the  long-term  capital  appreciation  component.  No
assurance can be given that the Fund will achieve its investment  objective.  As
of June 13, 2003,  the Fund had 9,416,743  shares of Common Stock and 775 shares
of AMPS (the Fund's Taxable Auction Market  Preferred  Stock)  outstanding.  The
Fund's  common shares are traded on the NYSE under the symbol "BTF." The average
weekly  trading  volume of the Common  Stock on the NYSE  during the period from
June 1, 2002 through May 30, 2003 was 52,600 shares. As of June 13, 2003 the net
assets of the Fund  available to Common  Stock  shareholders  was  approximately
$154,435,000.  Also see "Capital Stock and Other Matters" below and  "Management
of the Fund" in the SAI.



                     RISK FACTORS AND SPECIAL CONSIDERATIONS

Following  is a summary of some of the matters that you should  consider  before
investing in the Fund through the Offering:

DILUTION.  Shareholders who do not exercise their Rights should expect that they
will, at the completion of the Offering,  own a smaller proportional interest in
the Fund than if they  exercised  their Rights.  As a result of the Offering you
may  experience  an  immediate  dilution,  which  could be  substantial,  of the
aggregate net asset value of your shares. This is because the Subscription Price
per share (and thus the net  proceeds  to the Fund for each new share sold) will
be less than the Fund's net asset value per share on the  Expiration  Date.  The
Fund cannot state precisely the extent of this dilution at this time because the
Fund does not know what the net asset value per share will be when the  Offering
expires  or what  proportion  of the  Rights  will be  exercised.  For  example,
assuming that all Rights are exercised and the Subscription Price is $13.12 (95%
of the Fund's average  volume-weighted  sale price on June 13, 2003), the Fund's
NAV per  share  (after  payment  of  solicitation  fees and  estimated  offering
expenses) would be $15.57,  representing a reduction (dilution) of approximately
$0.83 per share (or 5.08%) from the NAV prior to the Offering of $16.40.  If you
do not wish to exercise your Rights, you should consider selling these Rights as
set forth in this Prospectus. Any cash you receive from selling your Rights will
partially  offset any possible  dilution of your interest in the Fund.  The Fund
cannot give any assurance, however, that a market for the Rights will develop or
that the Rights will have any marketable value. The comparative  dilutive effect
of the Offering is shown in Table 1 below.





                                                          Table 1
                Dilutive Effect for Non-Exercising Shareholders in Dollars and Percent Based on 100 Shares

   Col A        Col B         Col C
               Volume
              Weighted                                    Expenses of
 Discount      Average     Subscription   Shareholder's     Rights                         Dilutive Effect      Dilutive
 from NAV      Market     Price (95% of       NAV         Offering -     Fund's NAV Post    in Dollars on      Effect in
                Price         Col B)      Pre-Offering   Post Offering       Offering         100 Shares        Percent
                                                                                             
    5%         $15.58         $14.80         $16.40        ($0.014)           $15.99           ($41.15)          -2.51%
    10%        $14.76         $14.02         $16.40        ($0.014)           $15.79           ($60.67)          -3.70%
    15%        $13.94         $13.24         $16.40        ($0.014)           $15.60           ($80.20)          -4.89%
    20%        $13.12         $12.46         $16.40        ($0.014)           $15.40           ($99.73)          -6.08%
    25%        $12.30         $11.69         $16.40        ($0.014)           $15.21          ($119.25)          -7.27%




DISCOUNT FROM NET ASSET VALUE.  Shares of closed-end funds frequently trade at a
market price that is less than the value of the net assets attributable to those
shares.  This is commonly referred to as "trading at a discount from NAV" and is
referred to in this Prospectus as a "Discount".  The possibility that the Fund's
shares will trade at a Discount is a risk  separate and  distinct  from the risk
that the Fund's net asset value 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.



Based on an analysis of Herzfeld, the Discount of a fund typically widens during
a rights  offering and sometimes even before the offering  begins.  The Discount
that may occur after the  completion of a rights  offering (or in particular the
Offering) is difficult to analyze  because there are so many other factors aside
from  merely  conducting  a rights  offering  that  could  influence  the Fund's
Discount.  Based on its research,  Herzfeld  suggests that there is no reason to
expect a long-term widening of the Discount as a result of the Offering and that
the Discount should "normalize" shortly after the Offering, although there is no
way to predict  with any degree of  certainty  what will happen to the  Discount
after the Offering.  Nonetheless,  there is no evidence that discounts  widen or
become persistent simply because a rights offering was conducted.  For reference
we have provided data about the Fund's Discount. See "Market Price and Net Asset
Value Information" below.

REPURCHASE  AND  CHARTER  PROVISIONS.  You may sell your shares on the NYSE but,
because the Fund is a closed-end  fund, you do not have the right to redeem your
shares.  The Fund is authorized to repurchase its shares on the open market when
the shares are trading at a discount  from net asset value as  determined by the
Board from time to time. In addition,  certain  provisions of the Fund's charter
(the "Charter") and by-laws (the  "By-Laws") may be regarded as  "anti-takeover"
provisions.   The  overall   effect  of  these   provisions  is  to  render  the
accomplishment  of a  merger  or  the  assumption  of  control  by  a  principal
shareholder  more difficult.  These  provisions may have the effect of depriving
you of an  opportunity  to sell your  shares at a premium  above the  prevailing
market price. See "Anti-Takeover Provisions of the Charter and By-Laws."

DIVERSIFIED STATUS. The Fund operates as a "diversified"  management  investment
company, as defined in the Investment Company Act of 1940, as amended (the "1940
Act").  Under this  definition,  at least 75% of the value of the  Fund's  total
assets  must,  at the  time of  investment,  consist  of  cash  and  cash  items
(including  receivables),  U.S.  Government  securities,   securities  of  other
investment companies,  and other securities limited in respect of any one issuer
to an amount  not  greater  in value  than 5% of the value of the  Fund's  total
assets and to not more than 10% of the  voting  securities  of a single  issuer.
This limit does not apply,  however,  to 25% of the Fund's assets,  which may be
invested in a single issuer.  See discussion  regarding the Fund's investment in
Berkshire Hathaway, Inc. in "Industry Risks and Risks Associated with the Fund's
Investments" below.  Notwithstanding its diversified status, 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  "diversified"  fund. As a
result, the Fund is subject to a greater risk of loss than an investment company
that diversifies its investments  more broadly.  Taking larger positions is also
likely to  increase  the  volatility  of the Fund's net asset  value  reflecting
fluctuation in the value of its large holdings.

INDUSTRY RISKS AND RISKS ASSOCIATED WITH THE FUND'S  INVESTMENTS.  The Fund from
time to time  invests a  significant  portion of its assets in a narrow range of
companies and industries.  The Fund's most notable and largest  investment is in
Berkshire Hathaway,  Inc. As of May 30, 2003 approximately  32.90% of the Fund's
total  assets  were  invested  in this  single  company.  The  Fund  also  has a
significant  investment  in the real  estate  industry  indirectly  through  its
investments  in  real  estate  investment  trusts  or  "REITs".  At the  time of
investment,  the  percentage  investment  in REITs was less than 25%,  but since
then,  due  to  both  appreciation  in  the  REITs  and  depreciation  of  other
investments in the Fund, the Fund's investment in REITs was 25.20% as of May 30,
2003.  Because the Fund does not have a fundamental  policy of  concentrating in
REITs  (i.e.  requiring  the Fund to  invest  more  than 25% in that  particular
industry),  it is precluded from making any further  investments in REITs.  As a
result of its  existing  investments,  and with  respect to future  concentrated
investments,  the value of the Fund's shares may be more  susceptible to factors
affecting  the  particular  industry  (e.g.,  the REIT industry or industries in
which Berkshire Hathaway  participates such as insurance),  including government
regulation,  greater price volatility for the overall market, rapid obsolescence
of products and services,  intense  competition  and strong market  reactions to
technological  developments.  See "Risks Associated with the Fund's Investments"
below.

FOREIGN  SECURITIES.  There is no limitation on the amount of foreign securities
in which the Fund may invest, although the Fund has no present intention to make
any  significant  investment in foreign  securities.  Investing in securities of
foreign  companies and foreign  governments,  which generally are denominated in
foreign currencies,  may involve certain risk and opportunity considerations not
typically  associated  with investing in domestic  companies and could cause the
Fund to be affected  favorably or  unfavorably  by changes in currency  exchange
rates and  revaluations of currencies.  See "Investment  Objective and Policies"
below and "Risk Factors and Special Considerations."

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.



LEVERAGING.  The Fund is  currently  leveraged  through  its  issuance  of $77.5
million  par value of the AMPS.  Use of  leverage  may have a number of  adverse
effects on the Fund and its  shareholders  including:  (i)  leverage may magnify
market   fluctuations  in  the  Fund's   underlying   holdings  thus  causing  a
disproportionate  change in the Fund's net asset value;  (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  shareholders   and  generally   making  the  Fund's  total  return  to  such
shareholders  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 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;  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.

The  Offering  will have a  "de-leveraging"  effect  with  respect to the Common
Stock.  Since the proceeds of the  Offering  will add assets to the Fund with no
proportional or corresponding increase in leverage, it necessarily will decrease
the  Fund's  leverage-to-equity  ratio.  This  de-leveraging  has the  effect of
decreasing  risk to  shareholders  of the Common  Stock based on the simple fact
that more highly  leveraged  instruments are riskier (i.e., the higher the ratio
of leverage to equity, the greater the magnification of market fluctuations). Or
on the other hand, while decreasing the Fund's leverage will result in less risk
and  volatility,  it similarly  decreases the  beneficial  effects that leverage
might  otherwise  have on the Fund.  So long as the Fund is able to  invest  the
leverage in  securities  that  provide a higher net return than the then current
dividends paid on the AMPS and related expenses, the effect of the leverage will
be to cause the Common  Stock  shareholders  to realize a higher  rate of return
than if the Fund were not  leveraged.  That impact will be reduced if the amount
of leverage is  reduced.  Nonetheless,  Management  believes  that this  reduced
amount of leverage  is  appropriate  given that the Fund  invests  primarily  in
equity  securities  and that equity funds tend to be less  leveraged  than funds
that  invest  primarily  in bonds and  other  income-producing  securities.  See
"Capital Stock and Other Matters" below and "AMPS Leverage" and "Risk Associated
with Leverage" in the SAI.

You should carefully  consider your ability to assume the foregoing risks before
making an  investment  in the Fund.  An  investment in shares of the Fund is not
appropriate for all investors.



                                  THE OFFERING


TERMS OF THE OFFERING.  The Fund is issuing to  shareholders  on the Record Date
("Record Date Shareholders") Rights to subscribe for shares of the Common Stock.
Each Record Date  Shareholder is being issued one  transferable  Right for every
share of Common Stock owned on the Record Date. The Rights entitle the holder to
acquire  one share of Common  Stock at the  Subscription  Price for every  three
Rights  held.  Fractional  shares  will not be issued  upon the  exercise of the
Rights.  Accordingly,  shares may be purchased  only pursuant to the exercise of
Rights in  integral  multiples  of  three.  The  number  of  Rights  issued to a
shareholder  on the  Record  Date will be rounded  up to the  nearest  number of
Rights evenly  divisible by three. In the case of shares of common stock held of
record by a Nominee  (e.g.,  Cede & Co.  ("Cede") as nominee for the  Depository
Trust Company ("DTC"), or any other depository or nominee), the number of Rights
issued to the Nominee  will be  adjusted  to permit  rounding up (to the nearest
number of Rights  evenly  divisible  by three) of the Rights to be  received  by
beneficial  owners  for whom the  Nominee  is the  holder of record  only if the
Nominee  provides to the Fund on or before the close of business on July 3, 2003
a written  representation  of the number of Rights  required for such  rounding.
Rights may be exercised at any time during the period which commences on Friday,
June 20, 2003,  and ends at 5:00 p.m.,  New York time, on Friday,  July 11, 2003
(the  "Subscription  Period"),  unless  extended by the Fund to a date not later
than Monday,  July 21, 2003, at 5:00 p.m., New York time. See "Expiration of the
Offering." The Right to acquire one  additional  share of Common Stock for every
three Rights held during the Subscription  Period at the  Subscription  Price is
hereinafter referred to as the "Primary Subscription."

In  addition,  any  Record  Date  Shareholder  who fully  exercises  all  Rights
initially  issued to such  shareholder is entitled to subscribe for shares which
were not otherwise  subscribed  for by others in the Primary  Subscription  (the
"Over-Subscription  Privilege").  For purposes of determining the maximum number
of shares a Record  Date  Shareholder  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.
Shares  acquired  pursuant  to the  Over-Subscription  Privilege  are subject to
allotment,   which  is  more  fully  discussed  below  under  "Over-Subscription
Privilege."

     The  following  Table  2  sets  forth  certain  information  regarding  the
ownership  of the Fund's  Common  Stock as of May 30, 2003 by each person who is
known by the Fund to beneficially own 5% or more of the Fund's Common Stock.





                                     TABLE 2

                            Ownership of Fund Shares



                      Name of Owner                          Number of      Percentage
                                                              Shares        Ownership
---------------------------------------------------------- -------------- ---------------
                                                                      
Badlands Trust Company                                          12,735          0.14%
Ernest Horejsi Trust  No. 1B                                 2,462,353         26.15%
Lola Brown Trust No. 1B                                      1,027,886         10.92%
Evergreen Atlantic LLC                                         257,811          2.74%
Stewart West Indies Trust                                       78,470          0.83%
Susan L. Ciciora Trust                                          54,132          0.57%
John S. Horejsi Trust                                           27,075          0.29%
Evergreen Trust                                                 19,273          0.20%
Aggregate  Shares  Owned by Horejsi  Affiliates  (defined    3,939,735         41.84%
below)

Alter Asset Management, Inc.(1)                              1,616,745         17.17%



(1)  Alter Asset Management is not an affiliate of the Horejsi Affiliates. This
     information was obtained from a Schedule 13G filed with the Securities and
     Exchange Commission on December 31, 2002.



Evergreen Atlantic, LLC ("EALLC"),  The Evergreen Trust (the "Evergreen Trust"),
John S. Horejsi Trust ("John  Trust"),  Susan L. Ciciora Trust ("Susan  Trust"),
Stewart West Indies Trust ("SWI Trust"), the Lola Brown Trust No. 1B (the "Brown
Trust"),  the  Ernest  Horejsi  Trust No. 1B (the "EH  Trust"),  Badlands  Trust
Company ("Badlands") and Stewart R. Horejsi are, as a group,  considered to be a
"control  person" of the Fund (as that term is defined in Section 2(a)(9) of the
1940 Act). EALLC, the Evergreen Trust,  John Trust,  Susan Trust, SWI Trust, the
Brown Trust, the EH Trust and Badlands (collectively,  the "Horejsi Affiliates")
directly own the shares  indicated for such entity in the table above,  totaling
3,939,735  (41.84%).  The EH Trust, a South Dakota grantor trust  established by
Stewart R. Horejsi's father, is the Fund's largest  shareholder,  holding 26.15%
of the Fund's common stock.  For further  information  regarding Fund ownership,
see "Security  Ownership by Certain  Beneficial  Owners" in the SAI.  Stewart R.
Horejsi,  the Fund's primary investment manager (see "Information  Regarding the
Advisers and  Co-Administrator"  below),  is a beneficiary under the EH Trust as
well as under various other trusts  comprising  part of the Horejsi  Affiliates.
Mr.  Horejsi  is also the  primary  investment  manager  for all of the  Horejsi
Affiliates.

The  Horejsi  Affiliates  may  or  may  not  exercise  their   Over-Subscription
Privilege.  If the Horejsi  Affiliates  fully exercise  their  Over-Subscription
Privilege,  under certain circumstances (e.g., low shareholder  participation in
both the Offering and the Over-Subscription  Privilege),  the Horejsi Affiliates
could  substantially  increase  their  percentage  ownership  in the  Fund at an
advantageous price. For example, with Horejsi Affiliates presently owning 41.84%
of the Fund's  shares,  if  shareholder  participation  was such that 30% of the
shares in the Offering  were  unsubscribed  or the Rights were not traded,  thus
permitting  the  Affiliates  as  well as  other  participating  shareholders  to
over-subscribe  in  proportion  to their  ownership  in the  Fund,  the  Horejsi
Affiliates  could increase their  ownership  position in the Fund from 41.84% to
44.98% (or possibly more if shareholder  participation in the  over-subscription
privilege was low) at an advantageous price.

Any shares acquired in the Offering by the Horejsi Affiliates as "affiliates" of
the Fund as that term is defined  under the  Securities  Act of 1933, as amended
(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, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then  outstanding  shares of Common  Stock 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 so acquired, if the shares are held for a period of less than six months,
will be returned to the Fund.

Rights will be  evidenced  by  Subscription  Certificates.  The number of Rights
issued to each holder 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.  See  "Payment for Shares"  below.  Shares  issued
pursuant to an exercise of Rights will be listed on the NYSE.

The Rights are transferable until the Expiration Date and have been admitted for
trading on the NYSE.  Assuming a market exists for the Rights, the Rights may be
purchased  and sold  through  usual  brokerage  channels  and sold  through  the
Subscription  Agent.  Although no  assurance  can be given that a market for the
Rights will develop, trading in the Rights on the NYSE will begin three Business
Days before the Record Date and may be  conducted  until the close of trading on
the last NYSE trading day prior to the Expiration Date. Trading of the Rights on
the NYSE will be conducted on a when issued basis until and  including  the date
on which the Subscription  Certificates  are mailed to Record Date  Shareholders
and thereafter  will be conducted on a regular way basis until and including the
last  Exchange  trading day prior to the  Expiration  Date.  The method by which
Rights may be transferred is set forth below in "Method of Transferring Rights."
The  underlying  shares will also be  admitted  for trading on the NYSE and will
begin trading ex-Rights two Business Days prior to the Record Date.



PURPOSE OF THE OFFERING.  The Fund has  determined  that it would be in the best
interests  of the Fund and the  shareholders  to increase the assets of the Fund
primarily for the following reasons:

     o    The  increase  in assets  will  result  in the  Fund's  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.

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

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

     o    Since the Offering will  increase the Fund's  outstanding  shares,  it
          will likely  increase the number of beneficial  owners of Fund shares,
          which could increase the level of market interest in and visibility of
          the Fund and improve the trading liquidity of the Fund's shares on the
          NYSE.

     o    By increasing  the Fund's total  assets,  the Offering will reduce the
          Fund's leverage as a percentage of assets from 33.4% to  approximately
          28.4%  (assuming  the  Offering  is  fully  subscribed).  The  Fund is
          currently leveraged with $77.5 million of 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 Offering seeks to reward  existing  shareholders by giving them the right to
purchase  additional shares at a price that may be below market and/or net asset
value without incurring any commission  charge. The distribution to shareholders
of transferable  Rights,  which themselves may have intrinsic  value,  will also
afford  non-subscribing  shareholders  the potential of receiving a cash payment
upon sale of such Rights, receipt of which may be viewed as partial compensation
for the  possible  dilution of their  interests  in the Fund.  See  "Reasons for
Conducting the Offering" below.

REASONS FOR CONDUCTING THE OFFERING. Although there are numerous reasons for the
Fund's  conducting a rights  Offering,  Management has  emphasized  four primary
reasons:

     1.   INCREASING ASSET COVERAGE OF THE FUND. As of June 13, 2003, the Fund's
          total  assets  were  $231,935,000  (based on an NAV of  $16.40).  This
          consists of $154,435,000 of Common Stock equity,  and $77.5 million of
          leverage.  As  a  percentage  of  total  assets,   leverage  currently
          represents  33.4%,  and  shareholders'  equity is 66.6%.  Assuming the
          Offering is fully subscribed, the Fund will issue approximately $41.19
          million of new equity,  and the leverage  amount will remain the same.
          Therefore,  after the Offering, the AMPS leverage will represent about
          28.4%  of  total  assets  and  shareholders'  equity  will  be  71.6%.
          Furthermore, under its Articles Supplementary, 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 the AMPS,  in part or in
          full.  Additionally,  failure  to meet the  foregoing  asset  coverage
          requirements  would  restrict the Fund's  ability to pay  dividends to
          Common  Stock  shareholders  and  could  lead to  sales  of  portfolio
          securities  at  inopportune  times.  With the  decline in the  overall
          markets  over the last 12  months,  the Fund's  total net assets  have
          declined thus causing the AMPS leverage to increase as a percentage of
          total  assets  and  causing  the  coverage  ratio  required  under the
          Articles  Supplementary  to similarly  decrease.  The  Offering  would
          substantially  increase the Fund's  "eligible  assets"  (i.e.,  assets
          which the  Articles  Supplementary  count  when  calculating  the AMPS
          coverage  ratios)  and thus  provide  substantially  more  cushion and
          comfort  vis-a-vis  these coverage  obligations  in the future.  It is
          impossible to predict with any meaningful accuracy the effect that the
          Offering will have on the coverage  ratio  required under the Articles
          Supplementary  since  its  calculation  is  dependent  on the  type of
          security  purchased  and  held by the Fund  and the  various  discount
          factors applied to each security by the rating agencies.  However, the
          1940  Act  requires  the Fund to meet  similar  coverage  ratios,  but
          without the variable discount factors.  Assuming the Offering is fully
          subscribed,  the 1940 Act leverage  ratio will increase from 2.99-to-1
          to 3.52-to-1 (the minimum required coverage is 2.0-to-1 or 200%) based
          on market data as of June 13, 2003. The Fund has  determined  that the
          AMPS have  benefited  the  Common  Stock  shareholders.  Notably,  the
          current dividend rate paid by the Fund for its AMPS leverage is 1.242%
          as of the auction held on June 17, 2003. Because the AMPS leverage has
          been a profitable  investment  technique  in the past,  and because it
          would result in  considerable  expense to reissue once  redeemed,  the
          Fund  has  determined  that  raising  additional  assets  through  the
          Offering  (and thus  increasing  eligible  assets) is  warranted.  The
          increase  in asset  coverage  will  give the Fund  greater  investment
          flexibility to own and hold investments  without violating  applicable
          asset coverage requirements.




     2.   TAKING ADVANTAGE OF INVESTMENT OPPORTUNITIES. The decline in the stock
          market over the last 2 years has resulted, in some instances, in lower
          equity prices on good companies  which have not been available  during
          the recent past. The Offering would provide additional cash permitting
          the  Fund  to take  advantage  of such  opportunities  if they  arise,
          without  necessarily  having to liquidate Fund holdings to raise cash.
          In addition, by avoiding the necessity of selling investments,  Common
          Stock  shareholders defer tax consequences which might otherwise arise
          from such sales.  When Management sees an opportunity,  it wants to be
          able  to  take   advantage  of  it  quickly  and  make  a  significant
          investment,  without  having to sell current  holdings in the process.
          Having the cash resources to accomplish this is very important.

     3.   SPREADING  EXPENSES  ACROSS MORE ASSETS.  As a closed-end  mutual fund
          gets smaller,  its expense ratio (i.e.,  the ratio of expenses to fund
          assets) necessarily increases.  This is because all funds have certain
          fixed costs (e.g.,  director fees,  travel  expenses,  fidelity bonds,
          insurance,  legal,  accounting and printing costs, etc.) which are not
          charged in  proportion  to the fund's  size.  As a fund gets  smaller,
          these fixed costs get spread over fewer  assets,  thus  resulting in a
          higher expense ratio. The opposite occurs as a fund's assets increase,
          that is, the fixed  costs are spread  across a larger  asset base thus
          resulting in a lower expense  ratio.  The current actual expense ratio
          ("Current  Actual  Expense  Ratio") is estimated by  Management  to be
          2.50% on an annualized  basis based on current net assets available to
          Common Stock shareholders of approximately $154,435,000 as of June 13,
          2003,  of which 2.16%  consists of advisory  and  administration  fees
          charged as a percentage of  assets.[Endnote  1] The expense  ratios in
          this section are  calculated  based on the Fund's "net assets"  (total
          assets minus leverage and expenses). Since advisory and administrative
          fees are charged  against  "total net assets"  (i.e.,  net assets plus
          leverage  less  liabilities),  their  ratio  as a  percentage  of "net
          assets"  appears  higher than the  contracted  fee. For  example,  the
          contracted advisory and administrative fees are 1.44% in the aggregate
          and are  applied  against the Fund's  total  assets  (i.e.,  including
          leverage). These same fees equal 2.16% of the Fund's "net assets". The
          remaining  component of the Current Actual Expense Ratio (i.e., 0.34%)
          consists primarily of expenses charged as a fixed-dollar amount (e.g.,
          director  fees,  legal fees,  customary  proxy related  expenses,  and
          insurance).  These  expenses  are not charged on  percentage-of-assets
          basis, so they do not tend to be  significantly  affected by increases
          or  decreases  in the Fund's  net  assets.  Using the actual  expenses
          incurred by the Fund during fiscal year ending  November 30, 2002, the
          fixed-dollar  expenses totaled $450,022 or 0.30% of the Fund's current
          net assets. It is this  fixed-dollar  amount that would be spread over
          the larger  asset base from the Offering and thus result in a decrease
          in the Current Actual Expense Ratio.

          Assuming that (i) the  Subscription  Price is $13.12 (i.e., 95% of the
          lower of the Fund's NAV or average 5-day volume-weighted sale price on
          June 13, 2003), and (ii) the Offering is fully subscribed,  the Fund's
          estimated expense ratio would be 2.27%. This compares favorably to the
          Current  Actual  Expense  Ratio of 2.50% - a  difference  of 0.23% per
          annum - representing a significant  increase in operating  efficiency.
          When the  expense  ratio is  calculated  as a  function  of total  net
          assets, the difference is 0.03%.

     4.   INCREASED  GROSS INCOME.  The Offering would permit the Fund to invest
          in  additional  dividend-paying  securities  which would  increase the
          Fund's gross investment  income and perhaps its net investment  income
          available to Common Stock  shareholders,  depending on the  underlying
          yield. The Fund's objective of total return may include a component of
          income.  While the Advisers do not believe high current income to be a
          tax-efficient  means of return for  shareholders,  current  income can
          still be an effective  means of achieving a high total return relative
          to  the   performance   of  the  overall   market,   especially   when
          non-dividend-paying equities are declining in value or remaining flat.
          It is likely that the  Advisers  will use a portion of the proceeds to
          invest in such income producing securities.

Other reasons supporting the Offering include the following:

     INCREASING  LIQUIDITY.  By conducting  the  Offering,  the liquidity of the
     Fund's  shares in the market  may  increase  based  solely on the fact that
     there would be more shares outstanding.  In addition,  by making the Rights
     transferable,  there  is  a  good  probability  that  the  number  of  Fund
     shareholders  will increase  after the Offering,  which would also increase
     the likelihood of greater liquidity in the Fund's shares.

     REDUCED TRANSACTION COSTS. A rights offering rewards existing  shareholders
     with an  opportunity  to purchase  additional  shares of Common  Stock at a
     price  that  is  below  market  value  and  net  asset  value  without  the
     transaction  costs that would be associated with  open-market  purchases or
     initial public  offerings  (e.g.,  brokerage  commissions and  underwriting
     fees).

     MORE INFLUENCE.  A rights offering permits a fund to grow, and as it grows,
     a fund can  exert  more  influence  in  effecting  changes  (or  preventing
     changes) within the companies in which it invests.

     INVESTING  FOR  CONTROL.  Although  investing  for control is not a primary
     strategy of the Fund, at those times when  Management  sees an  opportunity
     and sees it being in the best interest of  shareholders,  it wants the Fund
     to be big  enough  and  thus  have  the  financial  wherewithal  to buy the
     requisite controlling shares.



     BETTER  TREATMENT FROM BROKERS.  Larger funds can buy "in quantity" and can
     sometimes  receive  better  execution  and lower  commissions  from brokers
     because of their size.

     IMPROVING ANALYST COVERAGE. Increasing the Fund's size may increase analyst
     coverage  which may in turn  stimulate  investor  interest  in the Fund and
     ultimately result in narrowing and maintaining a narrow discount.



THE SUBSCRIPTION PRICE. The Subscription Price for the shares to be issued under
the  Offering  will be equal to 95% of the lesser of (a) the NAV on the  Pricing
Date or (b) the  average  volume-weighted  sale  price of a share of the  Common
Stock on the NYSE on the Pricing Date and the four immediately preceding trading
days (the "Average Closing Price"). For example, if the Offering were held using
a pricing  date of June 13, 2003,  at which time the NAV was $16.40,  the market
price on such date was $13.74,  the discount was 16.22%, and the Average Closing
Price for the week was $13.81,  then the Subscription  Price would be $13.12 per
share.

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
Shareholders  who have exercised all the Rights initially issued to them and who
wish to acquire  more than the  number of shares for which the Rights  issued to
them are  exercisable.  Record Date  Shareholders  who  exercise  all the Rights
initially  issued  to  them  will  have  the  opportunity  to  indicate  on  the
Subscription Certificate how many shares they are willing to acquire pursuant to
the Over-Subscription  Privilege.  If sufficient shares remain after the Primary
Subscriptions  have been exercised,  all  over-subscriptions  will be honored in
full.  If sufficient  shares are not available to honor all  over-subscriptions,
the available shares will be allocated among those who  over-subscribe  based on
the number of Rights  originally  issued to them by the Fund.  The percentage of
remaining shares each  over-subscribing  shareholder may acquire will be rounded
down to result in delivery of whole shares. The allocation process may involve a
series  of  allocations  in order to  assure  that the  total  number  of shares
available for over-subscriptions is distributed on a pro rata basis.

The method by which shares will be  distributed  and  allocated  pursuant to the
Over-Subscription Privilege is as follows. Shares will be available for purchase
pursuant to the Over-Subscription  Privilege only to the extent that the maximum
number of shares is not  subscribed  for  through  the  exercise  of the Primary
Subscription  by the  Expiration  Date.  If the  shares  so  available  ("Excess
Shares")  are not  sufficient  to  satisfy  all  subscriptions  pursuant  to the
Over-Subscription  Privilege,  the  Excess  Shares  will be  allocated  pro rata
(subject to the elimination of fractional  shares) among those holders of Rights
exercising the Over-Subscription  Privilege, in proportion, not to the number of
shares requested pursuant to the Over-Subscription  Privilege, but to the number
of shares  held on the Record  Date;  provided,  however,  that if this pro rata
allocation  results in any holder  being  allocated  a greater  number of Excess
Shares than the holder  subscribed for pursuant to the exercise of such holder's
Over-Subscription Privilege, then such holder will be allocated only such number
of Excess Shares as such holder  subscribed for and the remaining  Excess Shares
will  be  allocated  among  all  other  holders   exercising   Over-Subscription
Privileges.  The  formula  to be used in  allocating  the  Excess  Shares  is as
follows:


            Holder's Record Date Position       x     Excess Shares Remaining
      --------------------------------------
         Total Record Date Position by All
                 Over-Subscribers


The Fund will not offer or sell any shares  which are not  subscribed  for under
the Primary Subscription or the Over-Subscription Privilege.

EXPIRATION  OF THE  OFFERING.  The Offering  will expire at 5:00 p.m.,  New York
time, on the Expiration  Date (Friday,  July 11, 2003),  unless  extended by the
Fund to a date not later than Monday,  July 21, 2003 at 5:00 p.m., New York 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.

SALES BY SUBSCRIPTION  AGENT.  Holders of Rights who do not wish to exercise any
or all of  their  Rights  may  instruct  the  Subscription  Agent  to  sell  any
unexercised Rights. The Subscription  Certificates representing the Rights to be
sold by the Subscription Agent must be received on or before the Expiration Date
(unless extended).  Upon the timely receipt of appropriate  instructions to sell
Rights,  the  Subscription  Agent will use its best efforts to complete the sale
and will remit the proceeds of sale, net of commissions, if any, to the holders.
If the  Rights  can be sold,  sales of the  Rights  will be  deemed to have been
effected at the weighted average price received by the Subscription Agent on the
day such Rights are sold.  The  selling  Rights  holder  will pay all  brokerage
commissions  incurred by the  Subscription  Agent on a prorata  basis with other
selling Rights holders.  These sales may be effected by the  Subscription  Agent
through  independent  registered  broker-dealers.  The  Subscription  Agent will
attempt to sell all Rights that  remain  unclaimed  as a result of  Subscription
Certificates being returned by the postal authorities as undeliverable as of the
fourth Business Day prior to the Expiration  Date.  These sales will be made net
of commissions on behalf of the non-claiming  shareholders.  Proceeds from those
sales  will  be  held by  Eastern  Bank  for  the  account  of the  non-claiming
shareholder  until the proceeds are either  claimed or escheat.  There can be no
assurance that the  Subscription  Agent will be able to complete the sale of any
of these Rights and neither the Fund nor the  Subscription  Agent has guaranteed
any minimum sales price for the Rights.  All of these Rights will be sold at the
market price, if any, on the NYSE.



METHOD OF TRANSFERRING  RIGHTS.  The Rights  evidenced by a single  Subscription
Certificate   may  be  transferred  in  whole  by  endorsing  the   Subscription
Certificate for transfer in accordance  with the  accompanying  instructions.  A
portion of the Rights  evidenced by a single  Subscription  Certificate (but not
fractional  Rights) may be transferred by delivering to the Subscription Agent a
Subscription  Certificate  properly endorsed for transfer,  with instructions to
register  the  portion  of the  Rights  evidenced  thereby  in the  name  of the
transferee  (and  to  issue a new  Subscription  Certificate  to the  transferee
evidencing  the  transferred   Rights).   In  this  event,  a  new  Subscription
Certificate  evidencing  the  balance of the Rights will be issued to the Rights
holder or, if the Rights holder so instructs, to an additional transferee.

Holders wishing to transfer all or a portion of their Rights (but not fractional
Rights) should allow at least three  Business Days prior to the Expiration  Date
for  (i)  the  transfer  instructions  to  be  received  and  processed  by  the
Subscription  Agent,  (ii)  a new  Subscription  Certificate  to be  issued  and
transmitted to the transferee or transferees with respect to transferred Rights,
and to the  transferor  with respect to retained  rights,  if any, and (iii) the
Rights evidenced by the new Subscription Certificates to be exercised or sold by
the recipients  thereof.  Neither the Fund nor the Subscription Agent shall have
any  liability  to  a  transferee  or  transferor  of  Rights  if   Subscription
Certificates  are not  received  in time  for  exercise  or  sale  prior  to the
Expiration Date.

Except for the fees charged by the Subscription Agent (which will be paid by the
Fund as described below),  all commissions,  fees and other expenses  (including
brokerage  commissions  and  transfer  taxes)  incurred in  connection  with the
purchase,  sale or exercise of Rights will be for the account of the  transferor
of the Rights, and none of these  commissions,  fees or expenses will be paid by
the Fund or the Subscription Agent.

The Fund anticipates that the Rights will be eligible for transfer through,  and
that the  exercise  of the Primary  Subscription  and  Over-Subscription  may be
effected  through,  the  facilities  of DTC.  Rights  exercised  through DTC are
referred to as "DTC Exercised Rights".

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 time, on 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              Securities Transfer & Reporting Services,             Colbent Corporation
          Attn: Corporate Actions                               Inc.                             Attn: Corporate Actions
              P.O. Box 859208                         c/o Colbent Corporation                       161 Bay State Road
         Braintree, MA 02185-9208                     Attn: Corporate Actions                      Braintree, MA 02184
                                                    100 William Street, Galleria
                                                      New York, New York 10038





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 $25,000, 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 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 $13.12 per share times the sum of (i) the number
of Rights held and intended to be exercised  in the Primary  Subscription,  plus
(ii)  the  number  of  additional  shares  for  which a  shareholder  wishes  to
over-subscribe  under  the  Over-Subscription   Privilege.  For  example,  if  a
shareholder  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 $13.12 x 100 ($1,312.00)
plus  $13.12 x 50  ($656.00).  Holders of Rights  who wish to acquire  shares on
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 time, on 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 $13.12 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 time, on the third (3rd)  Business
          Day after the Expiration Date (the "Protect Period").




     2.   Alternatively, a shareholder 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 $13.12
          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 time, on 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
additional shares to the extent that there remain sufficient unsubscribed shares
available after the Primary and Over-Subscription  allocations are completed. To
the extent that sufficient unsubscribed shares are not available to apply all of
the excess payment toward the purchase of additional  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 you 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 shareholder (or, if
the Fund's 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  shareholder  to the Fund (e.g.,  if the
Estimated Subscription Price was less than the Subscription Price on the Pricing
Date) or any excess to be refunded by the Fund to such shareholder (e.g., if the
Estimated Subscription Price was more than the Subscription Price on the Pricing
Date).  Any additional  payment  required from a shareholder must be received by
the  Subscription  Agent prior to 5:00 p.m.,  New York time, on the tenth (10th)
Business Day after the Confirmation  Date, and any excess payment to be refunded
by the Fund to such shareholder will be mailed by the Subscription  Agent within
ten  (10)  Business  Days  after  the  Confirmation  Date.  All  payments  by  a
shareholder  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.

   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 holder of Rights 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 purchased by the holder in the open market, and apply the proceeds to
the amounts  owed;  and (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 of Common  Stock 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.



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
time, on the Expiration Date.  Because  uncertified  personal checks may take at
least five business days to clear, you are 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.
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.

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 effected.

FOREIGN  RESTRICTIONS.  Subscription  Certificates will only be mailed to Record
Date  Shareholders  whose  addresses are within the United States (other than an
APO or FPO address).  Record Date  Shareholders  whose addresses are outside the
United States or who have an APO or FPO address and who wish to subscribe to the
Offering  either  in part or in  full  should  contact  the  Subscription  Agent
(Colbent Corporation), by written instruction or recorded telephone conversation
at  781-843-1833  ext 203,  no later than three (3)  Business  Days prior to the
Expiration Date. The Fund will determine whether the Offering may be made to any
such shareholder.  If the Subscription  Agent has received no instruction by the
third business day prior to the Expiration  Date or the Fund has determined that
the Offering may not be made to a particular shareholder, the Subscription Agent
will  attempt  to sell  all of  such  shareholder's  Rights  and  remit  the net
proceeds,  if any,  to such  shareholders.  If the Rights can be sold,  sales of
these Rights will be deemed to have been effected at the weighted  average price
received  by the  Subscription  Agent on the day the Rights  are sold,  less any
applicable brokerage commissions, taxes and other expenses.

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 Shareholder and a subsequent lapse,  exercise
or sale of such Rights.  The discussion also addresses the  significant  federal
income tax consequences to a holder that purchases Rights in a  secondary-market
transaction  (e.g.,  on the  NYSE).  The  discussion  is based  upon  applicable
provisions of the Internal  Revenue Code of 1986,  as amended (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. The discussion assumes, as is expected,  that the fair market value of
the Rights  distributed to all of the Record Date Shareholders will be less than
15% of the total fair market  value of all of the Fund's  Common Stock as of the
Record Date.

For  purposes of the  following  discussion,  the term "Old Share"  shall mean a
currently  outstanding  share of the Fund's Common Stock with respect to which a
Right is issued and the term "New Share"  shall mean a newly issued share of the
Fund's Common Stock that is received upon the exercise of their Rights.

FOR ALL RECORD DATE SHAREHOLDERS.

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

     If a Record  Date  Shareholder  makes a  Section  307(b)(2)  Election,  the
     shareholder's  federal income tax basis in any Right  received  pursuant to
     the  Offering  will be equal to a  portion  of the  shareholder'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 Shareholder.  A Section 307(b)(2) Election is made by attaching
     a statement to the Record Date Shareholder's  federal income tax return for
     the taxable year which includes the Record Date.  Record Date  Shareholders
     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 SHAREHOLDERS MAKING A SECTION 307(b)(2) ELECTION.

     LAPSE OF RIGHTS.  If a Record Date  Shareholder  makes a Section  307(b)(2)
     Election,  no taxable loss will be realized for federal income tax purposes
     if the shareholder 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 an electing  Record  Date  Shareholder  exercises a
     Right, the  shareholder'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 shareholder's basis in his Old Share). Upon such
     exercise  of the  shareholder's  Rights,  the New  Shares  received  by the
     shareholder  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  shareholder  by his broker,  bank or
     trust  company and other  similar  costs).  If the Record Date  Shareholder
     subsequently sells such New Shares (and holds such shares as capital assets
     at the time of their sale),  the shareholder  will recognize a capital gain
     or loss equal to the difference  between the amount  received from the sale
     of the New Shares and the shareholder'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 Shareholder.

     SALE OF RIGHTS.  If an electing Record Date  Shareholder  sells a Right, he
     will  recognize a gain or loss equal to the  difference  between the amount
     received  for such  Right  and the  federal  income  tax basis of the Right
     computed as set forth above under  "Exercise  of Rights".  Any such gain or
     loss will be capital gain or loss (if the Right is held as a capital  asset
     at the time of its sale) and the Record Date  Shareholder's  holding period
     for the Right will include the shareholder's holding period for the related
     Old Share.  Any such capital  gain or loss will thus be  long-term  capital
     gain or loss if the  related  Old Share has been  held by the  Record  Date
     Shareholder for more than one year at the time the Right is sold.


FOR RECORD DATE SHAREHOLDERS NOT MAKING A SECTION 307(b)(2) ELECTION

     LAPSE OF  RIGHTS.  If a Record  Date  Shareholder  does not make a  Section
     307(b)(2) Election, no taxable loss will be realized for federal income tax
     purposes if the shareholder  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 Shareholder 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  shareholder  by his  broker,  bank or trust
     company  and  other  similar  costs).   If  the  Record  Date   Shareholder
     subsequently sells such New Shares (and holds such shares as capital assets
     at the time of their sale),  the shareholder  will recognize a capital gain
     or loss equal to the difference  between the amount  received from the sale
     of the New Shares and the shareholder'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 Shareholder acquires the New Shares.

     SALE OF RIGHTS. If a non-electing Record Date Shareholder sells a Right, he
     will  recognize a gain equal to the entire amount  received for such Right.
     Any such  gain  will be a  capital  gain (if the Right is held as a capital
     asset at the time of its sale) and the Record  Date  Shareholder's  holding
     period for the Right will include the shareholder's  holding period for the
     related Old Share.  Any such capital  gain will thus be  long-term  capital
     gain if the  related  Old Share has been held for more than one year at the
     time the Right is sold. In addition,  the Record Date Shareholder's federal
     income tax basis in the related Old Share will remain unchanged.

FOR SECONDARY-MARKET PURCHASERS OF RIGHTS. The exercise of Rights by a purchaser
who acquires such Rights on the NYSE or in another secondary-market  transaction
will not result in taxable income to such purchaser.

          LAPSE OF RIGHTS.  A taxable  loss will be realized by a purchaser  who
          allows his Rights to expire without  exercise.  Such taxable loss will
          be equal to the  purchaser's  cost for the Rights (as increased by any
          brokerage  costs and similar  costs) and will be a short-term  capital
          loss if the purchaser  holds the Rights as capital  assets at the time
          of their lapse.

          EXERCISE OF RIGHTS.  A purchaser's  basis for determining gain or loss
          upon the sale of a New Share  acquired  through  the  exercise  of his
          Rights will be equal to the sum of the Subscription  Price for the New
          Share plus the  purchase  price of the Rights that were  exercised  in
          order to  acquire  such New Share  (with such  Subscription  Price and
          purchase price each being  increased by any applicable  servicing fees
          charged to the  purchaser  by his  broker,  bank or trust  company and
          other similar  costs).  A purchaser's  holding  period for a New Share
          acquired  upon exercise of a Right begins with the date of exercise of
          the Right.  A taxable gain or loss  recognized  by a purchaser  upon a
          sale of a New Share will be a capital gain or loss  (assuming  the New
          Share is held as a capital  asset at the time of its sale) and will be
          a long-term capital gain or loss if the New Share has been held at the
          time of its sale for more than one year.



          SALE OF RIGHTS.  A taxable gain or loss recognized by a purchaser upon
          a sale of a Right  will be a  short-term  capital  gain or loss if the
          Right is held as a capital asset at the time of its sale.

EMPLOYEE  PLAN  CONSIDERATIONS.  Shareholders  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.



                                 USE OF PROCEEDS


INVESTMENT OPPORTUNITIES.  Management estimates the net proceeds of the Offering
to be approximately  $41.19 million based on an Estimated  Subscription Price of
$13.12 per share,  assuming  the Offering is fully  subscribed  and the expenses
related to the Offering are approximately  $140,000. The foregoing estimates are
based on the closing price of the Fund's  shares on June 13, 2003.  Accordingly,
the  assumptions  and  projections  contained in this  Prospectus are subject to
change  significantly  depending on changes in market  conditions for the Fund's
shares and performance of the Fund's portfolio.

As of the date of this  Prospectus,  the Fund is invested in accordance with its
investment  objective.  As of June 13,  2003,  87.47% of the  Fund's  assets are
invested in common stocks or fixed income securities  consistent with the Fund's
objective.  The Advisers have  indicated  that, at the present time,  the market
offers some attractive  investment  opportunities that, in some instances,  have
not existed for years and which,  if taken  advantage  of, could yield  positive
results to shareholders over the long term. The Advisers have indicated that, if
the Offering is implemented as contemplated by this Prospectus,  there should be
ample  opportunities  in which to invest the proceeds of the  Offering  within 6
months of receipt. As a condition to conducting the Offering,  the Advisers have
agreed to waive one-half of any advisory fees which would be charged against the
proceeds from the Offering  until such time as 50% or more of the sum of (i) the
proceeds of the Offering and (ii) any cash or cash  equivalents held by the Fund
on April 22, 2003,  have been  invested in common stock  equities in  accordance
with the  Fund's  investment  objective  (which  include  shares  of  REITs  and
investment companies).

BENEFIT TO THE  ADVISERS  AND  CO-ADMINISTRATOR.  The  Advisers and FAS (defined
below)  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 which will
fluctuate  in value.  However,  if all Rights  are  exercised  at the  Estimated
Subscription  Price of $13.12 (i.e., the estimated  subscription  price based on
the Fund's NAV and share price on June 13, 2003), the annual  compensation to be
received by the Advisers and FAS would be increased by  approximately  $556,000.
This does not reflect the impact of the initial fee waiver by the Advisers  (see
"Board  Considerations" and "Use of Proceeds - Investment  Opportunities"  above
and "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. One of these  Directors,  Susan L.  Ciciora,
could benefit indirectly from the Offering because of her beneficial interest in
the   Advisers   and  FAS.   See   "Information   Regarding   the  Advisers  and
Co-Administrator"  below.  While it was cognizant of the benefit to the Advisers
and FAS and indirect benefit to Ms. Ciciora,  the Board  nevertheless  concluded
that the Offering was in the best interest of shareholders.




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  shareholder  approval.
The staff of the SEC has interpreted  the 1940 Act as not requiring  shareholder
approval of a rights  Offering at a price below the then current net asset value
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 existing  shareholders.  Such future  Offerings would  similarly  benefit the
Advisers and FAS.

EXPENSES OF THE FUND.  The Fund will pay all of its expenses,  including fees of
the directors not affiliated with the Advisers and board meeting expenses;  fees
of the  Advisers,  FAS and PFPC;  interest  charges;  franchise and other taxes;
organizational  expenses;  charges and expenses of the Fund's legal  counsel and
independent  accountants;  expenses of repurchasing shares;  expenses of issuing
any  preferred  shares or  indebtedness;  expenses of printing and mailing share
certificates,  stockholder  reports,  notices,  proxy  statements and reports to
governmental offices; brokerage and other expenses connected with the execution,
recording and settlement of portfolio security transactions;  expenses connected
with negotiating,  effecting  purchase or sale, or registering  privately issued
portfolio securities; expenses of calculating and publishing the net asset value
of the Fund's shares; expenses of membership in investment company associations;
expenses of fidelity bonding and other insurance  expenses  including  insurance
premiums;  expenses of shareholders  meetings;  SEC and state registration fees;
New  York  Stock  Exchange  listing  fees;  and  fees  payable  to the  National
Association  of Securities  Dealers,  Inc. in connection  with this Offering and
fees of any rating agencies  retained to rate any preferred shares issued by the
Fund.



                           INFORMATION ABOUT THE FUND

The Fund is a closed-end,  diversified management investment company. The Fund's
investment objective is total return. The Fund seeks to achieve its objective by
investing in common stocks for long-term capital appreciation.  These stocks may
or may not pay a  dividend.  The  Fund  may  also  invest  in  income  producing
securities,  namely  dividend paying common stocks (e.g.,  REITs,  utilities and
other RICs), as well as corporate bonds,  corporate preferred stock,  government
securities,  or other income  producing  securities,  to achieve  current income
consistent with  preservation of capital.  The income  component is secondary to
the long-term capital appreciation component. No assurance can be given that the
Fund will  achieve  its  investment  objective.  The Fund  typically  invests in
securities of U.S.-based companies, though it is not limited to investing in the
U.S. stock market.  The Fund anticipates a low turnover rate in its portfolio of
common stocks and,  with respect to common stocks held for capital  appreciation
rather than income, seeks to invest in stocks that have a proven track record of
earnings and the prospect of increased  future value through  growth in revenues
and profits.  The Fund has the  flexibility  to invest in companies of any size;
however,  it is  expected  that it will  not  make  significant  investments  in
start-up companies, initial public offerings, non-public companies, or companies
with little or no operating  history.  See "Investment  Objectives and Policies"
below. The address of the Fund is 1680 38th Street, Suite 800, Boulder, Colorado
80301 and its telephone number is (303) 444-5483.

The Fund commenced investment  operations on February 19, 1993, upon the closing
of the  initial  public  offering of  8,000,000  of its common  shares.  The net
proceeds of such offering were  approximately  $111.6 million.  Prior to August,
1999, the Fund's  investment  objective was "high current income consistent with
preservation of capital". On August 27, 1999, a special shareholders meeting was
held at which the Fund's shareholders approved,  among other things, a change in
the Fund's  investment  objective  from "high  current  income  consistent  with
preservation of capital" to "total return".  The Fund has outstanding 775 shares
of Taxable Auction Market Preferred Stock (previously  defined as the AMPS). The
AMPS were issued  with a  liquidation  preference  per share of  $100,000,  plus
accumulated and unpaid  dividends.  The AMPS will remain  outstanding  after the
Offering. See "Capital Stock and Other Matters" below.



                             MANAGEMENT OF THE FUND

BOARD OF  DIRECTORS.  The  Board of  Directors  of the Fund is  responsible  for
overseeing  the overall  management and operations of the Fund. The SAI contains
additional  information  about the  Fund's  directors.  Subject  to the  general
supervision of the Board of Directors, the Advisers manage the Fund's portfolio,
make  decisions  with respect to and place orders for all purchases and sales of
the Fund's  securities,  and maintain  records  relating to such  purchases  and
sales. Stewart R. Horejsi and Carl D. Johns have been primarily  responsible for
the  day-to-day  management  of the Fund's  portfolio  since March of 1999.  See
"Information Regarding the Advisers and Co-Administrator" below.




INFORMATION REGARDING THE ADVISERS AND CO-ADMINISTRATOR.  The Fund is co-advised
by Boulder Investment  Advisers,  L.L.C. ("BIA") and Stewart Investment Advisers
("SIA"). BIA and SIA are collectively referred to as the "Advisers". Since March
of 1999,  the Advisers have been  providing  advisory  services to the Fund and,
since January of 2002, to the Boulder  Growth & Income Fund,  Inc. As of May 30,
2003,  the Advisers had a total of $324.70  million in assets under  management.
One of the Fund's  co-administrators is Fund Administrative Services, LLC ("FAS"
or the "Co-Administrator"). Following is a summary of the Advisers and FAS:

     BOULDER INVESTMENT  ADVISERS,  L.L.C. 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. 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 Horejsi
     Affiliates  and other family  interests.  The members of BIA are  Evergreen
     Atlantic,  LLC,  whose  address is 1680 38th  Street,  Suite 800,  Boulder,
     Colorado  80301 and the Lola Brown  Trust No. 1B,  whose  address is PO Box
     801, Yankton,  South Dakota 57078 (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).  Both Mr. Horejsi and Susan Ciciora,
     Mr. Horejsi's daughter and one of the Fund's  "interested"  directors,  are
     discretionary  beneficiaries  under the Lola Brown  Trust No. 1B as well as
     under other Horejsi family affiliated trusts which own Evergreen  Atlantic,
     LLC.  Accordingly,  as a result of this relationship,  both Mr. Horejsi and
     Ms.  Ciciora  may  directly or  indirectly  benefit  from the  relationship
     between the Fund and BIA.

     STEWART INVESTMENT  ADVISERS.  SIA (or Stewart West Indies Trading Company,
     Ltd.  d/b/a  Stewart  Investment  Advisers)  is  a  Barbados  international
     business company, incorporated on November 12, 1996, and is wholly owned by
     the  Stewart  West  Indies  Trust,  an  irrevocable   South  Dakota  trust,
     established  by Mr.  Horejsi in 1996  primarily  to benefit  his issue (the
     "West Indies Trust"),  whose address is PO Box 801,  Yankton,  South Dakota
     57078.  Mr.  Horejsi  is not a  beneficiary  under the West  Indies  Trust.
     However,  Susan  Ciciora,  Mr.  Horejsi's  daughter  and one of the  Fund's
     "interested" directors, as well as members of her family, 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  (i.e.,  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 an employee of both BIA and SIA.
     He is the primary  investment manager and, together with Carl D. Johns (see
     below),  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 was a director of the Fund until
     November,  2001; General Manager, Brown Welding Supply, LLC (sold in 1999),
     since April 1994; Director, Sunflower Bank (resigned); and the President or
     Manager of various  subsidiaries of the Horejsi Affiliates since June 1986.
     Mr. Horejsi has been the investment  adviser for various Horejsi Affiliates
     since 1982.  Mr. Horejsi has been the Director and President of the Horejsi
     Charitable  Foundation,  Inc. since 1997.  Mr.  Horejsi  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  the  Fund's  portfolio  and  BIA's  day-to-day   advisory
     activities. 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.  He worked at  Flaherty & 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
     (the Fund's former name).  Since 1999, he has been Chief Financial Officer,
     Chief  Accounting  Officer,  Vice  President and Treasurer of the Fund and,
     since January of 2002,  has held the same positions with the Boulder Growth
     & Income Fund, Inc.

     FUND  ADMINISTRATIVE  SERVICES,  LLC. FAS (formerly Boulder  Administrative
     Services,  L.L.C.) is a Colorado limited  liability company whose principal
     place of business is 1680 38th Street, Suite 800, Boulder,  Colorado 80301.
     The  members  of FAS are  Lola  Brown  Trust  No.  1B (50%)  and  Evergreen
     Atlantic, L.L.C. (50%) (the "Members").  The officers of FAS are Stephen C.
     Miller,   manager;  Carl  Johns,   assistant  manager;  Laura  Rhodenbaugh,
     secretary/treasurer; and Stephanie Kelley, assistant secretary. Since March
     of 1999,  FAS has  been  providing  certain  administrative  and  executive
     management  services to the Fund and, since January of 2002, to the Boulder
     Growth & Income Fund, Inc.



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 (e.g.,  the AMPS)).  As a  condition  to
conducting  the  Offering,  the  Advisers  have agreed to waive  one-half of any
advisory  fees which would be charged  against the  proceeds  from the  Offering
until such time as 50% or more of the sum of (i) the proceeds  from the Offering
and (ii) any cash or cash  equivalents  held by the Fund on April 22, 2003, have
been invested in common stock equities in accordance with the Fund's  investment
objective  (which include shares of REITs and investment  companies).  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.

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 SEC or any rule or provision of the
1940 Act, all 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).

CO-ADMINISTRATION  AGREEMENT.  The Fund and FAS (Fund  Administrative  Services,
LLC)  (also   referred   to  as  the   "Co-Administrator")   are  parties  to  a
Co-Administration   Agreement  dated  March  22,  1999  (the  "Co-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. FAS is headquartered at 200 S. Santa Fe, #4, PO Box 6043, Salina, KS
67401 and has  offices in  Colorado  at 1680 38th  Street,  Suite 800,  Boulder,
Colorado 80301. As previously  mentioned,  both Mr. Horejsi and Ms. Ciciora, one
of 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 who own
Evergreen Atlantic, LLC, the other Member of FAS.

Under the Co-Administration  Agreement, FAS provides administrative,  accounting
oversight,   executive  management  and  certain  other  services  to  the  Fund
including:  providing  the Fund's  principal  offices in Colorado and  executive
officers,  overseeing the operations of the Fund,  overseeing and  administering
all contracted service providers,  making recommendations to the Board regarding
policies of the Fund, conducting shareholder relations, authorizing expenses and
other tasks.  Pursuant to the Co-Administration  Agreement,  the Fund pays FAS a
monthly  fee,  calculated  at an annual rate of 0.10% of the value of the Fund's
average   monthly   total  net  assets.   PFPC  Inc.   ("PFPC"),   an  indirect,
majority-owned  subsidiary of The PNC Financial  Services Group Inc.,  serves as
the Fund's  co-administrator  and  transfer  agent.  As  co-administrator,  PFPC
calculates the net asset value of the Fund's shares and generally assists in all
aspects of the Fund's administration and operation.  The Fund pays PFPC a fee on
a monthly  basis  based on average  total net  assets.  PFPC Trust  Company,  an
indirect  subsidiary of The PNC Financial  Services  Group,  Inc.  serves as the
Fund's  custodian.  As  compensation  to PFPC Trust Company,  the Fund pays PFPC
Trust  Company  a monthly  fee based on the  Fund's  average  monthly  total net
assets.  PFPC also serves as the Fund's common stock  servicing  agent (transfer
agent),  dividend-paying  agent and registrar,  and 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, a wholly-owned subsidiary of Deutsche Bank
AG  ("Auction  Agent")  serves as the Fund's  AMPs  transfer  agent,  registrar,
dividend disbursing agent and redemption agent.



                        INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT  OBJECTIVE.  The Fund's  investment  objective is total  return.  The
Fund's  investment  objective  is total  return.  The Fund seeks to achieve  its
objective by  investing in common  stocks for  long-term  capital  appreciation.
These  stocks may or may not pay a dividend.  The Fund may also invest in income
producing  securities,  namely  dividend  paying  common  stocks  (e.g.,  REITs,
utilities  and other RICs),  as well as  corporate  bonds,  corporate  preferred
stock, government securities,  or other income producing securities,  to achieve
current income consistent with preservation of capital.  The income component is
secondary to the long-term capital appreciation  component.  No assurance can be
given that the Fund will achieve its  investment  objective.  The Fund typically
invests in  securities  of  U.S.-based  companies,  though it is not  limited to
investing in the U.S. stock market.  The Fund anticipates a low turnover rate in
its  portfolio  of common  stocks and,  with  respect to common  stocks held for
capital  appreciation rather than income,  seeks to invest in stocks that have a
proven  track  record of earnings  and the  prospect of  increased  future value
through growth in revenues and profits.  The Fund has the  flexibility to invest
in  companies  of any  size;  however,  it is  expected  that it will  not  make
significant  investments  in  start-up  companies,   initial  public  offerings,
non-public companies, or companies with little or no operating history.

DIVERSIFICATION.  The Fund  operates as a  "diversified"  management  investment
company, as defined in the 1940 Act. Under this definition,  at least 75% of the
value of the Fund's total assets must at the time of investment  consist of cash
and cash items (including receivables),  U.S. Government securities,  securities
of other investment  companies,  and other securities  limited in respect of any
one issuer to an amount not  greater in value than 5% of the value of the Fund's
total  assets  and to not more  than 10% of the  voting  securities  of a single
issuer. This limit does not apply,  however, to 25% of the Fund's assets,  which
may be invested in a single issuer.  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 "diversified"  fund. As a result, the Fund is subject to
a  greater  risk of loss  than a fund  that  diversifies  its  investments  more
broadly.  Taking larger  positions is also likely to increase the  volatility of
the  Fund's net asset  value  reflecting  fluctuation  in the value of its large
holdings.

INVESTMENT POLICIES. Under normal market conditions,  the Fund intends to invest
in a portfolio of common stocks and income securities. The portion of the Fund's
assets  invested  in each can vary  depending  on  market  conditions.  The term
"common stocks" includes both stocks acquired  primarily for their  appreciation
potential   and  stocks   acquired   for  their   income   potential,   such  as
dividend-paying  RICs and REITs.  The term "income  securities"  includes bonds,
U.S.  Government  securities,   notes,  bills,  debentures,   preferred  stocks,
convertible  securities,  bank  debt  obligations,   repurchase  agreements  and
short-term money market obligations.

As of May 30, 2003 the Fund's  portfolio is invested  primarily in common stocks
(87.4%)  (including 25.2% invested in REITs) and cash equivalents  (12.6%).  The
Fund  currently  intends  to  invest  in RICs and  REITs  primarily  in order to
generate  sufficient  income to pay  interest  on the AMPS when due and pay Fund
expenses.  Under the 1940 Act,  the Fund must  limit to 10% the  portion  of its
assets  invested  in RICs  and,  absent  an  amendment  to the  Fund's  industry
concentration  policy,  must limit to 25% the portion of its assets  invested in
REITs.  Each of  these  percentage  limitations  are  calculated  at the time of
investment  and the Fund will not be  required  to dispose of assets if holdings
increase above these levels due to appreciation. Depending on market conditions,
it is expected  that the Fund will have  investments  in REITs close to such 25%
limitation as long as the AMPS or other leverage is outstanding.

The  volatility  of common  stock  prices has  historically  been  greater  than
fixed-income  securities,  and as the Fund has shifted a greater  portion of its
assets into common stocks, the volatility of the Fund's net asset value may also
have increased.  The time horizon for the Fund to achieve its objective of total
return will likely be longer than for a fund that invests solely for income.

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 short-term (less than twelve months to maturity) U.S. Government  securities,
certificates of deposit and other bank  obligations,  investment grade corporate
bonds and other debt instruments, and repurchase agreements. Under normal market
circumstances,  the Fund will not have  more than 20% of its  assets in cash and
cash equivalents.

Except for the Fund's investment objective and the Fund's industry concentration
and issuer diversification policies described above, the percentage limitations
and investment policies set forth in this Prospectus can be changed by the Board
without shareholder approval.

A number of the Fund's investment policies are "fundamental"  policies,  none of
which may be changed  without  approval  by the vote of a majority of the Fund's
outstanding voting  securities,  voting as a single class, and a majority of the
Fund's  outstanding  shares of preferred stock,  voting as a separate class. See
"Capital Stock and Other Matters" below and the SAI under "Investment  Objective
and Policies - Investment Restrictions".

OTHER INVESTMENT TECHNIQUES. The Fund may engage in other types of transactions,
including,  but not limited to investment in restricted and illiquid securities,
other  closed-end   investment  companies  or  REITs,   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" in the SAI.



RISKS ASSOCIATED WITH THE FUND'S INVESTMENTS. Risk is inherent in all investing.
Investing in any investment  company security involves risk,  including the risk
that you may receive little or no return on your investment or that you may lose
part or all of your investment.  Therefore, before investing you should consider
carefully  the  following  risks  that you  assume  when you  invest in the Fund
through the Offering.

     INVESTMENTS  IN COMMON  STOCKS.  The Fund  expects to invest,  under normal
     market conditions, in excess of 80% of its assets in publicly traded common
     stocks.  Common  stocks  generally  have greater  risk  exposure and reward
     potential over time than bonds or preferred stock. The volatility of common
     stock prices has historically  been greater than bonds and preferred stock,
     and as the Fund invests  primarily in common  stocks,  the Fund's net asset
     value 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.

     The Fund  presently has invested a significant  percentage of its portfolio
     in  low-dividend  or  non-dividend  paying  common stocks such as Berkshire
     Hathaway,  Inc. As of May 30, 2003,  the Fund held 750 Berkshire  Hathaway,
     Inc.  "A"  shares  and 9,010 "B"  shares.  At the time of  investment,  the
     aggregate of the Berkshire Hathaway shares represented less than 25% of the
     Fund's assets. However,  primarily because of appreciation of the Berkshire
     Hathaway stock and  depreciation of other assets in the Fund, as of May 30,
     2003, these positions represented 32.90% of the Fund's assets. The Advisers
     do not currently  intend to liquidate any portion of the Fund's position in
     Berkshire  Hathaway.  Though not an  insurance  company  itself,  Berkshire
     Hathaway  owns Geico  Insurance  and General Re  Insurance  companies,  and
     therefore derives a significant  portion of its income, and its value, from
     these two 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 Hathaway 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 net
     asset value, (ii) may result in a proportionate decline in the market price
     of the Fund's  common  shares,  and (iii) may  result in  greater  risk and
     market fluctuation than a fund that has a more diversified portfolio.

     INVESTMENTS  IN REAL  ESTATE  INVESTMENT  TRUSTS.  REITs,  or  Real  Estate
     Investment  Trusts,   are  companies   dedicated  to  owning,  and  usually
     operating,  income producing real estate, or to financing real estate.  The
     Fund  may  invest  up to 25% of its  assets  in REIT  securities.  The Fund
     intends to invest in REIT  securities  primarily for income.  As of May 30,
     2003, the Fund had 25.20% of its assets invested in REITs.  There are risks
     associated  with  investing  in  REITs.  Property  values  may  fall due to
     increasing  vacancies or declining  rents  resulting from economic,  legal,
     cultural or technological  developments.  REIT 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.  Furthermore,  the dividend income paid
     out by the REIT may be reduced or eliminated.

     INVESTMENTS IN OTHER REGISTERED INVESTMENT  COMPANIES.  The Fund may invest
     up to 10% of its assets in other investment  companies registered under the
     1940 Act. The Fund may, from time to time,  invest in other closed-end RICs
     when market conditions seem appropriate to the Advisers.  Although the Fund
     has invested in and held RICs in the past, as of May 30, 2003, the Fund had
     0.00% of its assets  invested in RICs.  The Fund  normally  would invest in
     RICs that pay dividends, although it is not limited to such RICs. There are
     risks  associated  with  investments  in RICs,  including the risk that the
     dividend paid by the RIC could be reduced or  eliminated.  As a shareholder
     in  another  fund,  the Fund will  bear its  ratable  share of that  fund's
     expenses,  including management fees, and will remain subject to the Fund's
     advisory and administrative fees with respect to the assets so invested.

     INVESTMENTS  IN  PREFERRED  STOCKS AND BONDS.  The Fund  currently  owns no
     positions in  preferred  stocks or corporate  bonds.  Preferred  stocks and
     corporate bonds may be substantially less liquid than many other securities
     such as common stocks or U.S. Government securities. In addition, preferred
     stocks and bonds  purchased by the Fund may be subject to risk with respect
     to the  issuing  entity and to market  fluctuations.  In  particular,  such
     preferred stocks and bonds may be subject to "credit risk", which refers to
     an issuer's ability to make timely payments of interest and principal.  The
     Fund does not expect to make substantial investments in preferred stocks or
     bonds in the future.



     AMPS AND AMPS AUCTION  RISK.  The Fund is leveraged  with the AMPS and thus
     its ability to maximize its total return  objective is in part dependent on
     the continued  success and  performance of its AMPS auctions.  The dividend
     rate for the AMPS  normally  is set  through  an  auction  process.  In the
     auction,  holders of AMPS indicate the dividend rate at which they would be
     willing  to  hold or  sell  their  AMPS or  purchase  additional  AMPS  and
     potential  investors  indicate  the rate at which  they would be willing to
     purchase  AMPS. As the dividend rate for the AMPS is set on a 28-day cycle,
     the dividend rate, and thus the Fund's  variable  expenses  associated with
     the AMPS  are  subject  to  substantial  change,  possibly  resulting  in a
     diminished total return to Common Stock  shareholders.  Also, if an auction
     fails (e.g.,  because  there are more AMPS for sale than there are buyers),
     the Fund may be required to,  among other  things,  pay a punitive  default
     rate of  interest  on its AMPS until such time as a  subsequent  successful
     auction  occurs.  Also,  under  its  Articles  Supplementary,  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 the AMPS,  in part or in full,
     in which case they cannot be  reissued.  Additionally,  failure to meet the
     foregoing asset coverage  requirements could restrict the Fund's ability to
     pay  dividends  to Common  Stock  shareholders  and could  lead to sales of
     portfolio  securities at  inopportune  times.  See "Capital Stock and Other
     Matters" below.

INVESTMENT  PHILOSOPHY.  Following  is a  brief  description  of the  investment
philosophy  of the Fund and its  Advisers.  See also  "Investment  Policies  and
Techniques" in the SAI.

     COMMON  STOCKS.  With  respect to the 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 its securities  selection process, the Advisers put
     primary emphasis on analysis of balance sheets,  cash flows, the quality of
     management  and their  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.

     CASH AND CASH EQUIVALENTS. As of May 30, 2003, the Fund had a cash position
     equal  to  12.6%  of  assets,   including   investments  in  U.S.  Treasury
     securities.  Under normal market conditions,  the Fund's cash position will
     typically be less than 20% of the Fund's total assets.

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

DIVIDENDS AND DISTRIBUTIONS.  Dividends from net investment income, if any, will
be declared and paid  annually.  Shares issued in  connection  with the Offering
will  receive  dividends  in the same manner and same  proportions  as any other
shares  of  the  Fund.  Any  net  realized  short-term  capital  gains  will  be
distributed  to  shareholders  at least  annually.  Any net  realized  long-term
capital gains may be  distributed  to  shareholders  at least annually or may be
retained by the Fund as determined by the Board.  Capital gains  retained by the
Fund  are  subject  to  tax at the  corporate  tax  rate.  Subject  to the  Fund
qualifying  as a registered  investment  company,  any taxes paid by the Fund on
such net realized  long-term  gains may be used by the Fund's  shareholders as a
credit against their own tax liabilities.

The Fund  qualified  during its last  taxable  year as a  "regulated  investment
company"  under the Internal  Revenue Code of 1986,  as amended (the "Code") and
intends to continue  to so  qualify.  This  qualification  relieves  the Fund of
liability  for  federal  income  taxes to the  extent the  Fund's  earnings  are
distributed in accordance with the Code. Qualification as a regulated investment
company under the Code for a taxable year requires, among other things, that the
Fund  distribute  to its  shareholders  an  amount  equal to at least 90% of its
investment  company  taxable  income for such taxable  year (before  taking into
account the deduction for such distributions). In general, the Fund's investment
company taxable income will be its taxable income, including dividends, interest
and the  excess,  if any,  of net  short-term  capital  gain over net  long-term
capital loss, subject to certain adjustments,  and excluding the excess, if any,
of net long-term  capital gain for the taxable year over net short-term  capital
loss.


Distributions by the Fund are taxable to the shareholders to the extent paid out
of the Fund's current or accumulated earnings and profits, regardless of whether
such  distributions  are received in cash or reinvested in additional  shares of
Common Stock. Such distributions constitute ordinary income (potentially taxable
at long-term  capital gains rates, see "Taxation of Shareholders"  below) to the
shareholders except to the extent they are designated as capital gain dividends,
as discussed  below.  Any  distributions  by the Fund,  if any, in excess of its
current and  accumulated  earnings  and profits  would  constitute  a nontaxable
return of capital to shareholders to the extent of each  shareholder's tax basis
in his or her shares (causing a reduction of such basis), and thereafter, to the
extent of any excess over such  basis,  capital  gain.  The  dividends  received
deduction for  corporations  which own shares in the Fund will apply to ordinary
income  distributions from the Fund to the extent of such shareholders'  ratable
share of the total  qualifying  dividends  received  by the Fund  from  domestic
corporations for the taxable year. The Fund intends to designate as capital gain
dividends any  distributions by the Fund of the excess of net long-term  capital
gain over net  short-term  capital  loss.  Such capital gain  dividends  will be
taxable to  shareholders as long-term  capital gain,  regardless of how long the
shareholder has held the shares and whether such  distributions  are received in
cash or reinvested in additional shares of common stock. Such  distributions are
not eligible for the dividends received deduction for corporations.




To the extent that the Fund distributes  amounts in a given year that exceed the
Fund's  investment  company  taxable income and excess of net long-term  capital
gain over net  short-term  capital loss (after taking into account  capital loss
carryovers),  such excess  distributions may nonetheless  cause  shareholders to
recognize  taxable  income  under the federal  income tax  principles  described
above.

Shareholders  will be advised at least  annually  as to the  federal  income tax
consequences  of  distributions  made each year.  Dividends  declared during any
month of any year payable to  shareholders  of record as of a specified  date in
such month will be deemed to have been received by shareholders  and paid by the
Fund on  December 31 of such year if such  dividends  are  actually  paid during
January of the following year.

Prior to purchasing  shares, a purchaser should carefully consider the impact of
distributions which are expected to be declared or have been declared,  but have
not been paid. Any such  distributions,  although in effect a return of capital,
are subject to tax as discussed above.

A taxable gain or loss may be recognized  by a shareholder  upon his or her sale
of shares of the Fund  depending  upon the tax basis and their price at the time
of sale. Generally,  a shareholder may include brokerage costs incurred upon the
purchase  and/or sale of Fund shares in his or her tax basis for such shares for
the  purpose  of  determining  gain or loss on a sale of such  shares.  Any such
capital  gain  or  loss  will  be  long-term  or  short-term  depending  on  the
shareholder's  holding  period  for  the  shares  sold,  except  that  any  loss
recognized  with  respect  to shares  held six months or less will be treated as
long-term  capital loss to the extent of any capital gain dividends  received on
those shares.

The  foregoing   discussion   summarizes  some  of  the  important  federal  tax
considerations  generally  affecting the Fund and its  shareholders who are U.S.
citizens  or  residents  or  domestic  corporations,  and is not  intended  as a
substitute for careful tax planning.  Accordingly,  investors in the Fund should
consult their tax advisors with specific  reference to their own tax situations.
Shareholders are also advised to consult their tax advisors concerning state and
local taxes, which may differ from the federal income taxes described above.

DIVIDEND  REINVESTMENT  PLAN.  In 2002,  the Board  determined  to eliminate the
Fund's Automatic Dividend Reinvestment Plan.

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  shareholders,  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  shareholders,  and  such  distributions  will be  taxable  to
shareholders  as  ordinary  dividends  to the extent of the Fund's  current  and
accumulated earnings and profits.

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

Under a recently enacted law, however,  special rules apply to regular dividends
paid to individuals. Such a dividend, with respect to taxable years ending on or
before  December  31,  2008,  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 you 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 you,  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 you.  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%.
Distributions  by the Fund of long-term  capital  gains  recognized  by the Fund
before May 6, 2003  are not  eligible  for the 15% rate,  and  instead  will be
subject to tax at a maximum rate of 20%.

Dividends  and other taxable  distributions  are taxable to you 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 shareholders 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 you 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
you may be refunded or credited  against your 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  shareholders.  These  provisions  are  subject  to  change  by
legislative or  administrative  action,  and any such change may be retroactive.
Shareholders  are  urged  to  consult  their  tax  advisers  regarding  specific
questions as to U.S. federal, foreign, state, local income or other taxes.

STATE AND LOCAL TAX  MATTERS.  You should  consult  with your tax advisor  about
state and local tax matters.




                        DETERMINATION OF NET ASSET VALUE

The net asset value of Common Stock of the Fund is computed based upon the value
of the Fund's portfolio  securities and other assets. Net asset value per common
share of the Fund is determined as of the close of the regular  trading  session
on the NYSE no less  frequently  than Friday of each week and the last  business
day of each  month,  provided,  however,  that if any such day is a  holiday  or
determination  of net asset  value on such day is  impracticable,  the net asset
value is  calculated on such earlier or later day as determined by the Advisers.
The Fund  calculates net asset value per common share of the Fund 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  common  shares  of  the  Fund
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.



                         CAPITAL STOCK AND OTHER MATTERS


CAPITALIZATION.  The  Fund  was  incorporated  under  the  laws of the  State of
Maryland on December  21,  1992.  The Charter  authorizes  the Fund to issue two
hundred fifty million  (250,000,000)  shares,  of which  240,000,000  shares are
classified as common stock,  par value one cent ($.01) per share, and l0,000,000
shares are classified as preferred  stock,  par value one cent ($.01) per share.
The aggregate par value of all shares of all classes that the Fund is authorized
to issue is $2,500,000. As of May 30, 2003 there were 9,416,743 shares of Common
Stock issued and  outstanding.  In the Offering,  the Fund will offer  3,150,000
additional shares and, if the Offering is fully  subscribed,  after the Offering
there will be 12,566,743 shares of Common Stock issued and outstanding.

The Fund has no present  intention of offering any  additional  shares of common
stock other than shares described herein. Any additional  offerings of shares of
capital  stock,  if made,  will require  approval by the Board.  Any  additional
offering of common  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 net asset
value (exclusive of underwriting discounts and commissions) except in connection
with an offering to existing  stockholders  or with the consent of a majority of
the Fund's common shareholders.

The Common Stock was traded on the NYSE from between  February of 1993 to August
30,  1999,  under the symbol  "PFM".  From August 30, 1999 to the  present,  the
Common  Stock has traded on the NYSE under the symbol  "BTF".  On June 13, 2003,
there were 9,416,743  common shares of the Fund issued and  outstanding  and the
net asset  value per common  share was $16.40 and the  closing  price per common
share on the NYSE was $13.74.

As of May 30, 2003, the Fund's issued and outstanding shares were as follows:





                                                                 Amount Held by Fund
       Title and Class               Amount Authorized           or for Its Account           Amount Outstanding

                                                                                          
Common Stock                            240,000,000                       0                        9,416,743
Preferred Stock                         10,000,000                        0                              775



MARKET  PRICE  AND NET ASSET  VALUE  INFORMATION.  The  Fund's  Common  Stock is
publicly  held and is listed and traded on the NYSE.  The  following  Table sets
forth, for the periods indicated,  the high and low closing sales prices for the
shares on the NYSE, the net asset values per share that immediately preceded the
high and low closing sales  prices,  and the discount or premium that each sales
price represented as a percentage of the preceding net asset value:




                                          NAV of Fund                                          NAV of Fund
                       High Closing     Preceding High     Discount as %      Low Closing     Preceding Low   Discount as %
   Quarter Ended     Sales Price (1)      Sales Price         of NAV        Sales Price (1)    Sales Price        of NAV
-------------------- ----------------- ------------------ ---------------- ------------------ --------------- ---------------
-------------------- ----------------- ------------------ ---------------- ------------------ --------------- ---------------
                                                                                               
    03/31/2003            $13.02            $15.01            -13.26%           $11.05            $13.22         -16.41%
    12/31/2002            $13.40            $14.18            -5.50%            $12.15            $14.73         -17.52%
     9/30/2002            $15.75            $17.52            -10.10%           $13.23            $15.37         -13.92%
     6/30/2002            $18.55            $20.38            -8.98%            $15.95            $18.34         -13.03%
     3/31/2002            $16.80            $19.98            -15.92%           $15.63            $18.83         -16.99%
    12/31/2001            $16.24            $18.29            -11.21%           $14.96            $16.34          -8.45%
     9/30/2001            $16.70            $17.57            -4.95%            $13.25            $17.05         -22.29%
     6/30/2001            $16.05            $18.07            -11.18%           $13.60            $16.17         -15.89%
     3/31/2001            $14.93            $17.40            -14.20%           $12.63            $15.95         -20.85%
    12/31/2000           $12.875            $15.94            -19.23%           $10.75            $14.02         -23.32%


(1) As reported by the NYSE.







PREFERRED  STOCK.  The Charter  authorizes the issuance of 10,000,000  shares of
preferred stock,  par value $0.01 per share  ("Preferred  Stock").  The Board is
also  authorized to set or change the  preferences,  conversion or other rights,
voting  powers,  restrictions,  limitations as to dividends,  qualifications  or
terms or  conditions  of  redemption  of such shares of stock.  Exercise of such
authority may  materially  limit and/or qualify the rights of the holders of the
Common Stock. 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 Common Stock and  outstanding  Preferred Stock have no
preemptive  right to purchase any preferred  shares that might be issued.  As of
May 30, 2003, the Fund has outstanding 775 shares Auction Market Preferred Stock
(previously defined herein as the AMPS) which are senior securities of the Fund.
The AMPS were issued on August 14, 2000 and will normally have a dividend period
consisting of twenty-eight (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 6.57% and the first auction was held on
August  15,  2000.  The  current  dividend  rate  paid by the  Fund for its AMPS
leverage is 1.35% as of the auction held on May 20, 2003.

It was a condition  to their  issuance  that the AMPS be issued with a rating of
"aa1" from Moody's Investor Services,  Inc. ("Moody's") and "AA" from Standard &
Poors Ratings Group ("S&P"). 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
S&P 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 S&P 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 the  AMPS
shareholders 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 Stock  shareholders.  The Fund may not pay any ordinary
dividend to Common Stock  shareholders  until after all dividends have been paid
due to the AMPS  shareholders.  The following table is designed to assist you in
understanding  the  effects of  leverage  on your  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 Expenses)             -10%         -5%           0%            5%           10%
Corresponding  Actual Returns to Common Stock  Shareholders      -17.9%       -10.2%        -2.5%         5.2%         12.9%
Under Current Capital Structure (i.e.,  prior to Offering)
Corresponding    Expected    Returns   to   Common    Stock      -16.6%       -9.4%         -2.3%         4.8%         11.9%
Shareholders Post Offering


The following  factors  associated with leveraging could increase the investment
risk  and  volatility  of  the  price  of  the  Fund's  shares:  (1)  leveraging
exaggerates any increase or decrease in the value of the Fund's 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 net asset value 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) to the Fund;  (4) a
decline in net asset value  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 shareholders 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  80% 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.  The  affirmative  vote of a majority  of the votes
entitled  to be cast by  holders of the AMPS,  voting as a  separate  class with
holders  of  other  preferred  stock  entitled  to vote on the  matter,  will be
required to approve certain other matters which, under the Charter,  require the
approval of a majority of the votes entitled to be cast by  stockholders  if 80%
of the "Continuing  Directors" (defined as a Director who (1) is not a person or
affiliate of a person who enters or proposes to enter a Business Combination (as
defined in the Articles) with the Fund (such person or affiliate, an "Interested
Party"),  (2) has been a member  of the  Board of  Directors  for a period of at
least  12  months  or  (3)  is a  successor  to a  Continuing  Director  who  is
unaffiliated with an Interested Party and is recommended to succeed a Continuing
Director by a majority  of  Continuing  Directors  then on the Board) or certain
other requirements  specified in the Charter are met. Unless a higher percentage
is provided for in the Charter,  the affirmative vote of a majority of the votes
entitled to be cast by holders of the AMPS (as determined in accordance with 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 of Common Stock 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.

REPURCHASE OF COMMON SHARES.  Shares of closed-end  investment  companies  often
trade at a discount to their net asset values, and the Fund's common shares have
in the past and may in the future  trade at a discount to their net asset value.
The market price of the Fund's  common  shares is  determined by such factors as
relative  demand for and supply of such common shares in the market,  the Fund's
net asset value, general market and economic conditions and other factors beyond
the control of the Fund. Although the Fund's common shareholders do not have the
right to have the Fund redeem  their  common  shares,  the Fund may take action,
from time to time, to repurchase common shares in the open market or make tender
offers for its common  shares at their net asset  value.  This may, but will not
necessarily,  have the effect of  reducing  any market  discount  from net asset
value. See "Repurchase of Common Stock" in the SAI.

RIGHTS WITH REGARD TO DIVIDENDS, VOTING AND LIQUIDATION.  When issued, shares of
Common  Stock are fully  paid and  non-assessable.  The  Fund's  shares  have no
pre-emptive,  conversion,  exchange or redemption  rights.  Each share of Common
Stock 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 and, in such event,  the holders
of the remaining shares will not be able to elect any directors.

ANTI-TAKEOVER  PROVISIONS  OF THE CHARTER AND BY-LAWS.  The Fund  presently  has
provisions in its Charter and By-laws (commonly  referred to as  "anti-takeover"
provisions)  which may 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:

     o    A  director  elected by the  holders  of the  common  shares or by the
          holders of AMPS and any other  preferred  shares  may be removed  from
          office  with or without  cause only by vote of the holders of at least
          80% of the shares of common stock or preferred shares, as the case may
          be,  of the Fund  entitled  to be voted in an  election  to fill  that
          directorship.

     o    The  affirmative  vote of at  least  80% of the  directors  and of the
          holders  of at least 80% of the  Fund's  outstanding  shares of common
          stock and preferred  shares  (including the AMPS) entitled to be voted
          on the matter,  voting as a single class,  and the affirmative vote of
          80% of the outstanding preferred shares (including the AMPS) voting as
          a separate class,  will be required to authorize the Fund's conversion
          from a closed-end to an open-end investment company,  which conversion
          would result in delisting  of the common  shares from the NYSE.  If an
          amendment  providing  for the  conversion  of the  Fund to an open end
          investment  company has been  previously  approved by a vote of 80% of
          the  Continuing  Directors  of the Fund,  only a majority of the votes
          entitled  to be cast by the  holders of  outstanding  shares of common
          stock and preferred  shares  (including the AMPS),  voting as a single
          class,  and a majority of the votes entitled to be cast by the holders
          of outstanding shares of preferred stock (including the AMPS),  voting
          as a separate  class,  would be required  to approve  the  conversion.
          Conversion to an open end investment  company would require redemption
          of all outstanding Preferred Stock.

     o    The Board is classified into three classes,  each with a term of three
          years,  with only one class of directors  standing for election in any
          year. Such classification may prevent replacement of a majority of the
          directors  for up to a two year  period.  The  affirmative  vote of at
          least 80% of the Fund's  outstanding  shares of capital stock entitled
          to be  voted  on  the  matter,  voting  as a  single  class,  and  the
          affirmative  vote of at least  80% of  outstanding  AMPS,  voting as a
          separate class, will be required to amend the Charter to change any of
          the provisions in this subparagraph.  If, however,  any such action is
          authorized  by at  least  80% of the  Continuing  Directors,  the vote
          required to approve such action is a majority of the votes entitled to
          be cast by the holders of the Fund's common stock and preferred  stock
          to be voted on the matter,  voting as a single class, unless otherwise
          provided in the Charter or applicable law.

     o    Subject to certain  limited  exceptions  provided in the Charter,  the
          Charter  also  require  the  favorable  vote  of at  least  80% of the
          directors and at least 80% of the votes entitled to be cast by holders
          of common stock and any outstanding preferred stock voting as a single
          class, and at least 80% of the votes entitled to be cast by holders of
          any  outstanding  preferred  stock  (including the AMPS),  voting as a
          separate class, to approve, adopt or authorize the following:

          1.   merger,  consolidation or share exchange of the Fund with or into
               any other person;



          2.   issuance  or  transfer  by  the  Fund  (in  one  or a  series  of
               transactions  in any 12 month  period) of any  securities  of the
               Fund to any other person or entity for cash,  securities or other
               property (or combination thereof) having an aggregate fair market
               value of $1,000,000 or more excluding  sales of securities of the
               Fund in connection with a public  offering or private  placement,
               issuances  of  securities  of the  Fund  pursuant  to a  dividend
               reinvestment  and  cash  purchase  plan  adopted  by the Fund and
               issuances  of  securities  of the Fund upon the  exercise  of any
               stock subscription rights distributed by the Fund;

          3.   sale,  lease,  exchange,  mortgage,  pledge,  transfer  or  other
               disposition  by the Fund (in one or a series of  transactions  in
               any 12 month  period)  to or with any person of any assets of the
               Fund having an aggregate  fair market value of $1,000,000 or more
               except for  portfolio  transactions  effected  by the Fund in the
               ordinary  course of its business  ((1),  (2) and (3) each being a
               "Business Combination");

          4.   any proposal as to the voluntary  liquidation  or  dissolution of
               the  Fund  or any  amendment  to the  Charter  to  terminate  its
               existence; and

          5.   any shareholder proposal as to specific investment decisions made
               or to be made with respect to the Fund's assets.

          However,  separate  80% votes of the holders of shares of Common Stock
          and any outstanding Preferred Stock (including shares of AMPS), voting
          as a  single  class,  and  of  the  holders  of  any  Preferred  Stock
          (including  shares of AMPS)  outstanding,  voting as a separate class,
          will not be required with respect to the transactions described in (1)
          through  (4) above (A) if they are  approved by a vote of at least 80%
          of the Continuing Directors or (B) if certain conditions regarding the
          consideration  paid by the person entering into, or proposing to enter
          into,  a  Business   Combination  with  the  Fund  and  various  other
          requirements are satisfied,  in which case (x) the affirmative vote of
          a majority of the votes entitled to be cast by  shareholders  shall be
          required to approve a transaction  within (1), (3) (if the transfer or
          other  disposition  constitutes a transfer of all or substantially all
          of the assets of the Fund with respect to which a shareholder  vote is
          required  under  applicable  state law) or (4) above unless  otherwise
          required  by the  Charter  or  otherwise  required  by law  and (y) no
          shareholder vote is required to approve a transaction within (2) above
          or any other transaction within (3) above unless otherwise provided in
          the Charter or required by law. The Fund's Bylaws  contain  provisions
          the effect of which is to prevent  matters,  including  nominations of
          Directors,  from being considered at shareholders'  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 in the 1940 Act, will make more
difficult a change in the Fund's  business or management and may 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 they
are in the best interests of shareholders.

OTHER SERVICE PROVIDERS.

     CUSTODIAN.  The  Fund's  securities  and cash are  held  under a  Custodial
     Agreement  with PFPC  Trust  Company  (the  "Custodian"),  located  at 8800
     Tinicum  Blvd.,  Suite 200,  Philadelphia  PA 19153,  pursuant to which the
     Custodian  holds the Fund's assets in compliance with the 1940 Act. For its
     services,  the Custodian  will receive a monthly fee based upon the average
     weekly  value of the total  assets of the Fund,  plus  certain  charges for
     securities transactions.

     TRANSFER AGENT. The transfer agent, dividend disbursing agent and registrar
     for the common shares of the Fund is PFPC,  Inc. All customary  fees of the
     transfer agent are paid by the Fund.

     INDEPENDENT  AUDITORS.  The data in the "Financial  Highlights"  section of
     this  Prospectus  are based upon  financial  statements  for the year ended
     November  30,  2002,  that  have  been  audited  by KPMG  LLP,  independent
     auditors,  located at 99 High  Street,  Boston,  MA 02110,  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.  The per share  operating  performance  and ratios for the
     years ended  November  30,  2001 and 2002,  were  audited by KPMG LLP,  the
     Fund's   independent   auditors,   as  stated  in  their  report  which  is
     incorporated by reference into the SAI.

     LEGAL  MATTERS.  Certain  legal matters will be passed on by Willkie Farr &
     Gallagher,  New York, New York,  counsel to the Fund in connection with the
     Offering.

REPORTS TO SHAREHOLDERS. The Fund sends unaudited semiannual reports and audited
annual reports, including a list of investments held, to shareholders.

AVAILABLE INFORMATION.  The Fund is subject to the informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act and in accordance therewith
is required to file reports,  proxy  statements and other  information  with the
SEC. Any such reports,  proxy statements and other  information can be inspected
and copied at the public reference  facilities of the SEC,  Judiciary Plaza, 450
Fifth Street,  N.W.,  Washington,  D.C.  20549,  and the SEC's New York Regional
Office at 233 Broadway, New York, New York 10279 and its Chicago Regional Office
at Suite 1400,  Northwestern  Atrium Center,  500 West Madison Street,  Chicago,
Illinois 60661. 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 such shares filed by the Fund with the SEC. 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
SEC's  principal  office  in  Washington,  D.C.,  and  copies of all or any part
thereof may be obtained from the SEC upon the payment of certain fees prescribed
by the SEC. The SEC maintains a web site  (http://www.sec.gov) that contains the
Registration  Statement,  other documents  incorporated by reference,  and other
information  the Fund has filed  electronically  with the SEC,  including  proxy
statements and reports filed under the Securities Exchange Act of 1934.

NO  DEALER,  SALESPERSON  OR  OTHER  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  MUST 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.

STATEMENT  OF  ADDITIONAL  INFORMATION;  SAI -  TABLE  OF  CONTENTS.  Additional
information   about  the  Fund  is  contained  in  a  Statement  of   Additional
Information,  which is available  upon request  without charge by contacting the
Information Agent at (800) 965-5212.  Following is the Table of Contents for the
Statement of Additional Information:



                                                                                                 

                THE FUND                                                                             1
                INVESTMENT OBJECTIVE AND POLICIES                                                    1
                INVESTMENT POLICIES AND TECHNIQUES                                                   3
                MANAGEMENT OF THE FUND                                                               6
                SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                                      8
                OWNERSHIP OF THE FUND BY DIRECTORS                                                   10
                DIRECTOR COMPENSATION                                                                10
                COMMITTEES OF THE BOARD OF DIRECTORS                                                 11
                CODES OF ETHICS                                                                      12
                BROKERAGE ALLOCATION AND OTHER PRACTICES                                             12
                REPURCHASE OF COMMON STOCK                                                           13
                TAX STATUS                                                                           14
                FINANCIAL STATEMENTS                                                                 15
                ADDITIONAL INFORMATION                                                               15






                         BOULDER TOTAL RETURN FUND, INC.

                       STATEMENT OF ADDITIONAL INFORMATION


Boulder  Total  Return Fund,  Inc.  (the  "Fund") is a  closed-end,  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 June 20,  2003 (the  "Prospectus").  This Statement of
Additional  Information  does not include  all  information  that a  prospective
investor should consider before  participating in 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  Information
Agent at  (800) 965-5212.  You may also obtain a copy of the  Prospectus  on the
Securities and Exchange Commission's web site (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 June 20, 2003.







                                TABLE OF CONTENTS

                                                                                                

                  THE FUND                                                                         1
                  INVESTMENT OBJECTIVE AND POLICIES                                                1
                  INVESTMENT POLICIES AND TECHNIQUES                                               3
                  MANAGEMENT OF THE FUND                                                           6
                  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                                  8
                  OWNERSHIP OF THE FUND BY DIRECTORS                                               10
                  DIRECTOR COMPENSATION                                                            10
                  COMMITTEES OF THE BOARD OF DIRECTORS                                             11
                  CODES OF ETHICS                                                                  12
                  BROKERAGE ALLOCATION AND OTHER PRACTICES                                         12
                  REPURCHASE OF COMMON STOCK                                                       12
                  TAX STATUS                                                                       14
                  FINANCIAL STATEMENTS                                                             15
                  ADDITIONAL INFORMATION                                                           15






                                    THE FUND

The Fund is a diversified,  closed-end management investment company. The Fund's
investment  objective is total return.  The Fund seeks to produce both long-term
capital  appreciation  through  investment in common stocks and income from both
dividend  paying common stocks and fixed income  securities.  The Fund typically
invests in securities of U.S.-based  companies.  See  "Investment  Objective and
Policies".  At its  inception  in 1993,  the Fund was managed to provide "a high
level of current income consistent with preservation of capital".  However, at a
special shareholder meeting held August 27, 1999, shareholders approved a change
in the Fund's investment  objective to "total return" as well as the elimination
or  amendment  of certain of the Fund's  fundamental  investment  policies.  See
"Investment Restrictions" below.




                        INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE.  The Fund's investment objective is total return. The Fund
seeks to achieve its  objective  by  investing  in common  stocks for  long-term
capital appreciation.  These stocks may or may not pay a dividend.  The Fund may
also invest in income producing securities, namely dividend paying common stocks
(e.g., real estate  investment trusts ("REITs"),  utilities and other registered
investment companies ("RICs")),  as well as corporate bonds, corporate preferred
stock, government securities,  or other income producing securities,  to achieve
current income consistent with preservation of capital.  The income component is
secondary to the long-term capital appreciation  component.  No assurance can be
given that the Fund will achieve its  investment  objective.  The Fund typically
invests  in  securities  of  U.S.-based  companies,  though  it  may  invest  in
securities of non-U.S.  companies.  The Fund  anticipates a low turnover rate in
its  portfolio  of common  stocks and,  with  respect to common  stocks held for
capital  appreciation rather than income,  seeks to invest in stocks that have a
proven  track  record of earnings  and the  prospect of  increased  future value
through growth in revenues and profits.  The Fund has the  flexibility to invest
in companies of any size;  however, it generally does not investment in start-up
companies,  initial public offerings,  non-public  companies,  or companies with
little or no operating history.

The Fund  operates  as a  "diversified"  investment  company,  as defined in the
Investment  Company  Act of 1940,  as  amended  (the  "1940  Act").  Under  this
definition,  the Fund must limit to 5% the portion of its assets invested in the
securities of a single issuer. This limit does not apply, however, to 25% of the
Fund's  assets,  which may be invested in a single  issuer.  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  "diversified"  fund. As a
result,  the  Fund  is  subject  to a  greater  risk of  loss  than a fund  that
diversifies its investments more broadly. Taking larger positions is also likely
to increase the volatility of the Fund's net asset value reflecting  fluctuation
in the value of its large holdings.

Under  normal  market  conditions,  the Fund intends to invest in a portfolio of
common stocks and income  securities.  The portion of the Fund's assets invested
in each can vary  depending  on  market  conditions.  The term  "common  stocks"
includes both stocks  acquired  primarily for their  appreciation  potential and
stocks acquired for their income  potential,  such as  dividend-paying  RICs and
REITs.  The term "income  securities"  includes  bonds,  Government  Securities,
notes, bills, debentures,  preferred stocks,  convertible securities,  bank debt
obligations, repurchase agreements and short-term money market obligations.

INVESTMENT  RESTRICTIONS.  A  number  of  the  Fund's  investment  policies  are
"fundamental"  policies ("Fundamental  Policies").  No Fundamental Policy may be
changed  without  approval by the vote of a majority  of the Fund's  outstanding
voting  securities,  voting as a single  class,  and a  majority  of the  Fund's
outstanding  shares of preferred stock,  voting as a separate class. A "majority
of the Fund's  outstanding  voting securities" for this purpose means the lesser
of (1) 67% or more of the shares of common stock and shares of  preferred  stock
present at a meeting of  shareholders,  voting as a single class, if the holders
of more than 50% of such  shares  are  present  or  represented  by proxy at the
meeting,  or (2) more than 50% of the  outstanding  shares  of common  stock and
shares of the  preferred  stock,  voting as a single  class.  A majority  of the
Fund's outstanding shares of preferred stock for this purpose is determined in a
similar manner,  by applying the percentages in the previous  sentence to shares
of  preferred  stock.  With the  exception of the  Fundamental  Policies and the
Fund's  investment  objective,  all  other  policies,   statements,   terms  and
conditions may be changed by the Fund's Board of Directors  without  shareholder
approval, unless provided to the contrary in the Fund's Charter. The Fundamental
Policies are as follows:

     1.   The  Fund  may  not  purchase   securities   (other  than   Government
          Securities)  of any issuer if as a result of the purchase more than 5%
          of the value of the  Fund's  total  assets  would be  invested  in the
          securities  of that issuer,  except that up to 25% of the value of the
          Fund's  total  assets  may be  invested  without  regard  to  this  5%
          limitation.

     2.   The Fund may not purchase  more than 10% of the voting  securities  of
          any one issuer, or more than 10% of the securities of any class of any
          one issuer,  except that (i) this  limitation is not applicable to the
          Fund's investments in government  securities and (ii) up to 25% of the
          value of the Fund's  total  assets may be invested  without  regard to
          this 10% limitation.

     3.   The Fund may not borrow except as permitted by law;  provided that, as
          long as the Fund's  preferred stock is  outstanding,  the Fund may not
          borrow  except (1) (a) for  temporary or emergency  purposes or (b) in
          connection  with  repurchases  of its shares or (c) for  clearance  of
          transactions,  and then only in amounts not exceeding 10% of its total
          assets (not including the amount borrowed) and as otherwise  described
          in the  Prospectus  or (2) for the  purpose  of  redeeming  all of the
          outstanding  preferred stock of the Fund.  When the Fund's  borrowings
          under (1)(a),  (b) and (c) exceed 5% of the value of its total assets,
          the Fund will not make any additional investments.

     4.   The Fund may not sell  securities  short  or  purchase  securities  on
          margin,  except for such  short-term  credits as are necessary for the
          clearance of  transactions,  but the Fund may make margin  deposits in
          connection with transactions in futures contracts,  options on futures
          contracts and options on securities  and securities  indices,  and may
          make short sales of securities "against the box."

     5.   The Fund may not  underwrite  any issue of  securities,  except to the
          extent that the sale of  portfolio  securities  may be deemed to be an
          underwriting.

     6.   The Fund may not purchase,  hold or deal in real estate or oil and gas
          interests,  except that the Fund may invest in  securities  secured by
          real estate or interests in real estate.



     7.   The Fund may not invest in commodities, except that the Fund may enter
          into  futures  contracts,  including  interest  rate and  stock  index
          futures contracts,  and may purchase options and write covered options
          on futures  contracts,  securities and stock indices,  as described in
          the Prospectus.

     8.   The  Fund may not lend any  funds  or  other  assets,  except  through
          purchasing debt securities,  lending portfolio securities and entering
          into  repurchase  agreements  consistent  with the  Fund's  investment
          objective.

     9.   The Fund may not issue senior securities other than preferred stock or
          as permitted by the Fund's borrowing limitation.

     10.  The Fund may not  invest  more  than 25% of its  total  assets  in the
          securities  of  issuers  in any  single  industry,  except  that  this
          limitation  will  not be  applicable  to the  purchase  of  Government
          Securities.

Although  certain  investment  techniques are permitted by the  restrictions set
forth above,  the Fund's ability to engage in them may nonetheless be limited or
prohibited by the Fund's Charter or guidelines of organizations rating the AMPS.



                       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  invests
primarily  in a  balanced  portfolio  of  common  stocks  and  income  producing
securities such as utilities, REITs (defined below), RICs (defined below), 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  shareholder  or class  of  shareholders,  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 after all other claims are paid.

In selecting  common stocks for investment,  the Fund expects to focus primarily
on domestic United States companies, although the Fund is permitted to invest in
companies  outside the U.S.  subject to the  restriction  stated above (i.e., no
more than 20% of the  Fund's  assets  may be  invested  in  foreign  companies).
Generally,  target companies will have a consistent high return on equity, while
using  modest  amounts of debt  relative to their  industry.  The Fund will seek
investments in businesses the Advisers  (defined below)  understand,  which have
fairly  predictable and improving future  earnings,  and most  importantly,  are
priced reasonably  relative to the business'  earnings and anticipated growth in
earnings.  The Fund will not  necessarily  focus its investments in "large-cap",
"mid-cap" or  "small-cap"  companies  since  Boulder  Investment  Advisers,  LLC
("BIA") and Stewart Investment Advisers ("SIA")  (collectively,  the "Advisers")
believe it would be unwise to impose such investment limitations.  When the Fund
makes an  investment  in a  common  stock,  it will  likely  make a  significant
investment  and  typically  hold onto it for a long period of time.  In the long
run, the Fund believes that  value-type  investing will produce the best overall
total return.

INVESTMENTS IN REAL ESTATE INVESTMENT  TRUSTS  ("REITs").  REITs, or Real Estate
Investment  Trusts,  are companies  dedicating to owning, and usually operating,
income producing real estate or to financing real estate.  Most REITs are trusts
under  Sections  856  through  860 of the  Internal  Revenue  Code of 1986  (the
"Code").  The Fund may invest up to 25% of its assets in REITs. The Fund intends
to invest in REITs primarily for income. As of May 30, 2003, the Fund had 25.20%
of its assets  invested in REITs.  There are risks  associated with investing in
REITs, including the potential for loss of value because of the decline in value
of the underlying properties in which the REIT invests.  Property valuations may
rise and fall with either the  condition  of the local  economy or the  national
economy. Furthermore, the dividend income paid out by the REIT may be reduced or
eliminated,  depending on the income produced by the underlying properties owned
by the REITs. In the normal course of business, REITs face risks that are either
non-financial or  non-quantifiable.  These risks principally include credit risk
as well as legal and  environmental  risk.  Because  most  REITs  are  typically
financed with debt instruments, they are also interest rate sensitive.





INVESTMENTS IN OTHER  REGISTERED  INVESTMENT  COMPANIES  ("RICs") . The Fund may
invest up to 10% of its assets in other  investment  companies  registered under
the 1940 Act. The Fund may, from time to time,  invest in other  closed-end RICs
when they are trading at a discount, and when market conditions seem appropriate
to the Advisers.  As of May 30, 2003, the Fund had 0.00% of its assets  invested
in RICs. There are risks associated with investments in RICs, including the risk
that the  dividend  paid by the RIC could be  reduced  or  eliminated.  Dividend
paying  closed-end  RICs can also trade at  substantial  discounts  to their net
asset value. Such RICs typically own interest rate sensitive  securities,  which
tend to increase in value when  interest  rates  decline,  and decrease in value
when interest rates increase. RICs also have expenses associated with management
of the fund.  To the  extent  that the Fund  invests in other  RICs,  the Fund's
shareholders  will  indirectly  be incurring  expenses for both the Fund and for
that  portion of the Fund's  assets  invested  in other RICs.  However,  in this
regard it should be noted that operating  companies also incur expenses in their
daily  operations.  Profits  are  reported  net of (among  other  things)  these
expenses,  and RICs are no  different  in that  respect.  RICs  fall  under  the
auspices of the 1940 Act, which requires  disclosure of expenses and calculation
of net asset value ("NAV") net of expenses.

PREFERRED  STOCKS.  Prior to August 27, 1999, the Company was called  "Preferred
Income  Management  Fund" and was virtually  100% invested in preferred  stocks.
However,  as of May 30,  2003,  the Fund held 0.00% of its  assets in  preferred
stocks and,  although the Fund is  authorized  to do so, the Fund has no present
intention of investing in preferred stocks.  Generally,  preferred  stockholders
receive dividends prior to distributions with respect to common stock and have a
priority  of claim  over  common  stockholders  if the  issuer  of the  stock is
liquidated.  Unlike common stock,  preferred stock does not usually carry voting
rights; preferred stock, in some instances, is convertible into common stock.

MONEY MARKET INSTRUMENTS Under normal conditions, the Fund may hold up to 10% of
its assets in cash or money  market  instruments.  The Fund intends to invest in
money  market  instruments  to help  defray  operating  expenses,  to  serve  as
collateral  in  connection  with  certain  investment  techniques,  to hold as a
reserve  pending the payment of dividends to investors and to meet the liquidity
requirements  of  Moody's,  S&P or other  rating  agencies  that rate the Fund's
outstanding AMPS. 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 are those securities rated in
the highest  short-term rating category by 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:
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  established.  The
Advisers  will  monitor  the  continued   creditworthiness  of  these  qualified
institutions.  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 government 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.  Also
included  among  the  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).

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  Although it has no present  intention of doing so, the Fund reserves
the right to borrow funds to the extent permitted as described under the caption
"Investment  Objective and  Policies--Investment  Restrictions" on Page 1 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.
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,  although it has no current
intention of doing so. Loans of the Fund's securities, if and when made, may not
exceed  33-1/3%  of the  Fund's  assets  taken at  value.  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.  From time to time,  the Fund may pay a part of the interest
earned from the investment of collateral  received for securities  loaned to the
borrower  and/or a third  party that is  unaffiliated  with the Fund and that is
acting as a "finder."

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
only  reasonable  custodian  fees in connection  with the loan;  and (vi) 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.



AMPS lEVERAGE.  The Fund is leveraged with 775 shares of Taxable  Auction Market
Preferred Stock ("AMPS"). The AMPS are senior to the Common Stock and results in
the financial  leveraging  of the common stock.  Dividends on shares of 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 $100,000 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  shareholders
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 Stock  shareholders'  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  shareholders,  including:  (i)
Leverage may magnify market  fluctuations in the Fund's underlying holdings thus
causing a disproportionate change in the Fund's net asset value; (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  shareholders  and  generally  making the Fund's  total return to such
shareholders  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 has focused 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  creates an opportunity for
increased   return  but,  at  the  same  time,   will   involve   special   risk
considerations. Leveraging resulting from the AMPS 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 will be 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 cost of
borrowing, 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
shareholders as dividends will be reduced.

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.



                             MANAGEMENT OF THE FUND

The Fund's  board of  directors  (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"  (as  defined  in the 1940  Act).  The names and  business
addresses  of the  directors  and  officers  of the  Fund  and  their  principal
occupations and other  affiliations  during the past five years are set forth in
the tables below.







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

Disinterested Directors
------------------------------ ------------------------ ---------------------------------------------- ------------------

                                                                                                      
Alfred G. Aldridge, Jr.        Director of the Fund     Retired;  from 1982-2002, Sales Manager of             2
Brig. Gen. (Retired)           since 1999.  Current     Shamrock Foods Company; Director of the Fiesta
Cal. Air National Guard        term expires at the      Bowl, Tempe, AZ since 1997;  Director,
Age: 65                        2006 Annual Meeting      Boulder Growth & Income Fund, Inc., since 2002.

Richard I. Barr                Director of the Fund     Retired; from 1963-2001, Manager of                    2
Age:  64                       since 1999.  Current     Advantage Sales and Marketing, Inc.;
                               term expires at the      Director, Boulder Growth & Income Fund,
                               2005 Annual Meeting      Inc., since 2002; Director, First Financial
                                                        Fund, Inc., since 2001.

Joel W. Looney                 Director of the Fund     Partner, Financial Management Group, LLC               2
Age:  41                       since January, 2001.     since July 1999; CFO, Bethany College from
                               Current term expires     1995-1999; Director, Boulder Growth & Income
                               at the 2004 Annual       Fund, Inc., since January 2002.
                               Meeting
Interested Directors**
------------------------------ ------------------------ ---------------------------------------------- ------------------

Susan L. Ciciora               Director of the Fund     Owner, Superior Interiors (interior design             2
Age: 39                        since November 2001.     for custom homes) since 1995; Corporate
                               Current term expires     Secretary, Ciciora Custom Builders, LLC
                               at  the 2004 Annual      since 1995;  Trustee of the Brown Trust and
                               Meeting                  the EH Trust;  Director, Boulder Growth &
                                                        Income Fund, Inc., since January 2002.

Stephen C. Miller              Director and Chairman    President of and General Counsel for                   2
Age:  50                       of the Board since       Boulder Investment Advisers, LLC ("BIA");
                               1999. President of       Manager, Fund Administrative Services, LLC
                               the Fund. Current        ("FAS"); Vice President of Stewart
                               term expires at the      Investment Advisers ("SIA"); Director,
                               2005 Annual Meeting      Chairman of the Board and President of
                                                        Boulder Growth & Income Fund, Inc., since
                                                        2002. President and General Counsel,
                                                        Horejsi, Inc. (liquidated in 1999); General
                                                        Counsel, Brown Welding Supply, LLC (sold in
                                                        1999); Of  Counsel, Krassa & Miller, LLC
                                                        since 1991.


* Unless  otherwise  specified,  the  Directors'  respective  addresses  are c/o
Boulder Total Return Fund, Inc., 1680 38th Street, Suite 800, Boulder,  Colorado
80301.

** Mr. Miller is an "interested person" because he is an officer of BIA and SIA,
the Fund's investment advisers. Ms. Ciciora is an "interested person" because of
the  extent of her  beneficial  ownership  of Fund  shares  and by virtue of her
indirect beneficial ownership of BIA and FAS. See "Security Ownership of Certain
Beneficial Owners" below.




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

From the late  1980's  until  January,  2001,  Mr.  Looney had  served,  without
compensation,  as  one of  three  trustees  of the  Mildred  Horejsi  Trust,  an
affiliate of the EH Trust.

The names of the executive  officers of the Fund (other than Mr. Miller,  who is
described  above) are listed in the table  below.  Each  officer  was elected to
office by the Board at a meeting held on April 22,  2003.  This table also shows
certain  additional  information.  Each  officer  will hold such office  until a
successor has been elected by the Board.







------------------------------ -------------------------- ----------------------------------------------------------
                                  Position, Length of
     Name, Address, Age        Term Served, and Term of     Principal Occupation(s) and Other Directorships held
                                        Office                           During the Past Five Years
------------------------------ -------------------------- ----------------------------------------------------------
------------------------------ -------------------------- ----------------------------------------------------------
                                                    
Carl D. Johns                  Chief Financial Officer,   Vice President and Treasurer of BIA and Assistant
1680 38th Street,              Chief Accounting           Manager of FAS, since April, 1999; Vice President, Chief
Suite 800                      Officer, Vice President    Financial Officer and Chief Accounting Officer, Boulder
Boulder, CO 80301              and Treasurer since        Growth & Income Fund, Inc., since 2002; Employee of
Age: 40                        1999.  Appointed           Flaherty & Crumrine Incorporated prior to December 31,
                               annually.                  1998; Assistant Treasurer of Preferred Income Management Fund
                                                          Incorporated, Preferred Income Fund Incorporated and
                                                          Preferred Income Opportunity Fund Incorporated prior to
                                                          December 31, 1998.

Stephanie Kelley               Secretary since 2000.      Secretary, Boulder Growth & Income Fund, Inc., since
1680 38th Street,              Appointed annually.        2002; Assistant Secretary and Assistant Treasurer of
Suite 800                                                 various Horejsi Affiliates (defined below); employee of
Boulder, CO 80301                                         FAS since March 1999.
Age:  46





Compensation to the Advisers and Administrators.  Information is provided in 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:





                                                                                    Fees Paid
                                                              -------------------------------------------------------
                                                                                -------------------------------------
Name of Entity                                                       2000              2001              2002
---------------------------------------------------------------------------------------------------------------------
                                                                                             
Boulder Investment Advisers, LLC                                    $313,182          $847,182          $840,967

Stewart  Investment  Advisers (aka Stewart West Indies Trading    $1,252,729        $1,811,141        $2,214,168
Company, Ltd.)

Fund Administrative Services, LLC                                   $201,992          $234,721          $244,411

PFPC Inc.                                                           $262,589          $214,389          $206,646






                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS


The following  table sets forth  certain  information  regarding the  beneficial
ownership of the Fund's  shares as of May 30, 2003,  by each person who is known
by the Fund to  beneficially  own 5% or more of the Fund's Common Stock.  To the
Fund's knowledge, there are no 5% or greater beneficial owners of the AMPs.



                                                       Number of
                 Name of Owner*                         Shares               Number of Shares
                                                       Directly                Beneficially             Percentage
                                                       Owned (1)                 Owned (2)           Beneficially Owned
------------------------------------------- ------------------------ -------------------------- ----------------------
------------------------------------------- ------------------------ -------------------------- ----------------------
                                                                                                
         Badlands Trust Company  (1)(3)              12,735                   3,939,735                  41.84%
         Stewart R. Horejsi Trust No. 2 (4)          0                        3,939,735                  41.84%
         Ernest Horejsi Trust  No. 1B (1)            2,462,353                2,462,353                  26.15%
         Lola Brown Trust No. 1B (1)                 1,027,886                1,027,886                  10.92%
         Evergreen Atlantic LLC (1)                  257,811                  257,811                    2.74%
         Stewart West Indies Trust (1)(2)            78,470                   191,907                    2.04%
         Susan L. Ciciora Trust (1)(2)               54,132                   131,475                    1.40%
         John S. Horejsi Trust (1)(2)                27,075                   65,747                     0.70%
         Evergreen Trust (1)(2)                      19,273                   47,632                     0.51%

                                            ------------------------ -------------------------- ----------------------
         Aggregate Shares Owned by                   3,939,735                3,939,735                  41.84%
         Horejsi Affiliates (defined below) **

------------------------------------------- ------------------------ -------------------------- ----------------------
         Alter Asset Management, Inc.***             1,616,745                1,616,745                  17.20%



     *    The address of Evergreen Atlantic LLC is 1680 38th Street,  Suite 800,
          Boulder, Colorado 80301. The address of each other listed owner is c/o
          Badlands Trust Company, POB 801, 614 Broadway,  Yankton,  South Dakota
          57078.

     **   Aggregate number and percentage are less than the sum total of amounts
          shown  for  each  owner   because   the  same  shares  may  be  deemed
          beneficially owned by more than one party (see Footnotes 1 through 4).

     ***  As stated in a Schedule  13G filed with the  Securities  and  Exchange
          Commission on December 31, 2002.

     (1)  Direct Ownership.  Evergreen  Atlantic,  LLC ("EALLC"),  The Evergreen
          Trust (the "Evergreen  Trust"),  John S. Horejsi Trust ("John Trust"),
          Susan L.  Ciciora  Trust  ("Susan  Trust"),  Stewart West Indies Trust
          ("SWI Trust"),  the Lola Brown Trust No. 1B (the "Brown  Trust"),  the
          Ernest  Horejsi Trust No. 1B (the "EH Trust"),  Badlands Trust Company
          ("Badlands"), the Stewart R. Horejsi Trust No. 2 (the "SRH Trust") and
          Stewart  R.  Horejsi  are,  as a group,  considered  to be a  "control
          person" of the Fund (as that term is defined in the 1940 Act).  EALLC,
          the Evergreen  Trust,  John Trust,  Susan Trust,  SWI Trust, the Brown
          Trust,  the  EH  Trust  and  Badlands   (collectively,   the  "Horejsi
          Affiliates")  directly own the shares indicated for such entity in the
          table above, totaling 3,939,735 (41.84%).  However, these entities and
          other trusts or companies with  interlocking  management and/or common
          ownership  may be deemed to  indirectly  own  additional  Fund shares,
          which are included in the table above.

     (2)  Indirect  Ownership Through EALLC.  Numbers shown in the table include
          shares  held  directly  (see  Footnote  No. 1) and shares  that may be
          deemed to be beneficially owned indirectly through ownership of EALLC.
          The  outstanding  membership  interests  in  EALLC  are  owned  by the
          Evergreen  Trust, the Susan Trust, the John Trust and the SWI Trust in
          the following  percentages:  11%, 30%, 15% and 44%  respectively.  The
          Trustees of the  Evergreen  Trust are Stephen C. Miller,  Larry Dunlap
          and  Badlands.  Badlands  is the sole  trustee  for each of the  Susan
          Trust,  the John  Trust and the SWI  Trust.  Stewart  Horejsi is not a
          beneficiary  under  any of the  foregoing  trusts.  Badlands  has sole
          discretion  with respect to the Susan Trust,  John Trust and SWI Trust
          while any action by the  Evergreen  Trust  requires a majority vote of
          the trustees.  Consequently, both the trusts and each trustee disclaim
          beneficial  ownership of shares owned by EALLC. Stewart Horejsi is the
          manager of EALLC.

     (3)  Ownership by Badlands.  The number shown in the table includes  shares
          held  directly by Badlands (see Footnote No. 1) and shares that may be
          deemed to be beneficially  owned indirectly by Badlands through direct
          or  indirect  ownership  by the  Brown  Trust,  the EH  Trust,  EALLC,
          Evergreen  Trust,  the Susan Trust,  the John Trust and the SWI Trust.
          Badlands is the sole  trustee of the Susan  Trust,  the John Trust and
          the SWI Trust,  which together with the Evergreen  Trust control EALLC
          (see Footnote No. 2), the other two trustees of Evergreen  Trust being
          Stephen C.  Miller and Larry  Dunlap.  Badlands,  together  with Larry
          Dunlap and Susan Ciciora (Stewart Horejsi's daughter), is one of three
          trustees of both the Brown Trust and the EH Trust. Badlands is a trust
          company  organized  under  the laws of South  Dakota,  which is wholly
          owned by the SRH Trust,  an  irrevocable  trust  organized  by Stewart
          Horejsi for the benefit of his issue.  The  directors  of Badlands are
          Larry Dunlap, Stephen C. Miller, Robert Ciciora, who is the brother of
          Stewart Horejsi's son-in-law (John Ciciora), Gail G. Gubbels and Marty
          Jans.  Badlands and its  directors  disclaim  beneficial  ownership of
          shares owned  directly by the EALLC,  the Evergreen  Trust,  the Susan
          Trust,  the John  Trust,  the SWI  Trust,  the Brown  Trust and the EH
          Trust.



     (4)  Indirect  Ownership  by SRH  Trust.  The  number  shown  in the  table
          reflects shares that may be deemed to be beneficially owned indirectly
          through  ownership  of  Badlands.  The  trustees  of the SRH Trust are
          Badlands,  Robert  Ciciora  and  Brian  Sippy.  Both the Trust and its
          trustees disclaim  beneficial  ownership of shares  beneficially owned
          directly or indirectly by Badlands.



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

     Information  as to  beneficial  ownership  in the above table and  previous
footnotes 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 May 30, 2003,  Cede & Co., a nominee  partnership  of the  Depository
Trust Company,  held of record, but not beneficially,  9,337,951 shares or 99.2%
of Common Stock  outstanding  and 775 shares or 100% of AMPs  outstanding of the
Fund.

     As of May 30, 2003, the executive  officers and directors of the Fund, as a
group,  owned  3,962,191  shares of the Common Stock (this  amount  includes the
aggregate  shares of Common  Stock  owned by the  Horejsi  Affiliates  set forth
above) and 0 shares of AMPs of the Fund, representing 42.08% of the Common Stock
and 0.0% of AMPs.




                       OWNERSHIP OF THE FUND BY DIRECTORS


     Set forth in the following  table are the  Directors of the Fund,  together
with the dollar range of equity securities  beneficially  owned by each Director
or nominee in the Fund as of May 30, 2003, as well as the aggregate dollar range
of equity  securities  in all funds  overseen  or to be  overseen in a family of
investment companies (i.e., funds managed by the Advisers).






       Directors and Nominees              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 and Nominee
-------------------------------------- -------------------------------- ---------------------------------
                                                                         
Alfred G. Aldridge, Jr.                      $10,001 to $50,000                $10,001 to $50,000
Richard I. Barr                              Over $100,000                     Over $100,000
Joel W. Looney                               $10,001 to $50,000                $10,001 to $50,000

Interested Directors
-------------------------------------- -------------------------------- ---------------------------------

Susan L. Ciciora                               Over $100,000+                    Over $100,000
Stephen C. Miller                              Over $100,000++                   Over $100,000



     +    2,462,353, 257,811 and 1,027,886 Shares of the Fund are held by the EH
          Trust,  EALLC, and Lola Brown Trust,  respectively.  Accordingly,  Ms.
          Ciciora may be deemed to have  indirect  beneficial  ownership of such
          Shares.  Ms.  Ciciora  disclaims all such  beneficial  ownership.  Ms.
          Ciciora directly owns 4,700 shares of the Fund.

     ++   Mr.Miller  indirectly  owns and  controls  2,000  shares  of the Funds
          through his  membership in Erma Miller,  LLC. Mr. Miller is also a (i)
          trustee of Evergreen  Trust and (ii)  director and officer of Badlands
          Trust  Company.  By virtue of such  relationships,  Mr.  Miller may be
          deemed to share the indirect power to vote and direct the  disposition
          of the Shares  directly and  beneficially  held by Evergreen Trust and
          Badlands Trust Company.  Mr. Miller disclaims  beneficial ownership of
          such Shares.




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

     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 COMPENSATION

The following table sets forth certain information regarding the compensation of
the Fund's  Directors  for the fiscal year ended  November 30, 2002.  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
executive  officers of the Fund do not receive  pension or  retirement  benefits
from the Fund.  Directors  receive  reimbursement  for  travel  and other out of
pocket expenses incurred in connection with Board meetings.







                                             Aggregate Compensation
         Name of Person and             from the Fund Paid to Directors
        Position with the Fund             Fiscal Year Ending 6/30/02       Total Compensation from the Fund
                                                                            and Fund Complex Paid to Director
--------------------------------------- ---------------------------------- ---------------------------------


                                                                            
Alfred G. Aldridge, Jr., Director                    $23,500                      $37,000 (2 funds)

Richard I. Barr, Director                            $23,500                      $36,500 (2 funds)

Joel W. Looney, Director                             $23,500                      $37,000 (2 funds)

Susan L. Ciciora, Director                             $0                                 $0

Stephen C. Miller, President of the                    $0                                 $0
Fund, Chairman of the Board and
Director





Prior to January  28,  2002,  each  Director of the Fund who was not a Director,
officer or employee of one of the Advisers, or any of their affiliates, received
a fee of $6,000 per annum plus $4,000 for each in-person meeting, and $1,000 for
each telephonic  meeting. As of January 28, 2002, the Board of Directors reduced
the fee for telephonic  meetings to $500 for each meeting.  Each Director of the
Fund is  reimbursed  for  travel  and  out-of-pocket  expenses  associated  with
attending Board and committee meetings.  The Board held five meetings during the
fiscal year ended  November 30, 2002.  Each Director  currently  serving in such
capacity 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, 2002 amounted
to $70,500.



                      COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT  COMMITTEE;  REPORT OF AUDIT  COMMITTEE.  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 adopted a written
charter  for the  Audit  Committee  on  January  21,  2000.  A copy of the Audit
Committee  Charter  was  incorporated  in the  proxy  statement  filed  for  the
shareholder  meeting held April 27, 2001.  The Audit  Committee  met three times
during the fiscal year ended November 30, 2002.

In connection with the audited financial statements as of and for the year ended
November  30,  2002  included  in the  Fund's  Annual  Report for the year ended
November 30, 2002 (the "Annual Report"),  at a meeting held on January 21, 2003,
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
independent accountants their independence.

The  members  of the  Audit  Committee  are not  professionally  engaged  in the
practice  of  auditing  or  accounting  and are not  employed  by the  Fund  for
accounting,  financial  management  or  internal  control.  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  does not  provide an  independent  basis for
determining 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 has a Nominating Committee consisting of Messrs.
Looney,  Aldridge and Barr which is responsible for  considering  candidates for
election  to the  Board in the event a  position  is  vacated  or  created.  The
Nominating Committee would consider recommendations by shareholders if a vacancy
were to exist. Such recommendations  should be forwarded to the Secretary of the
Fund. The  Nominating  Committee of the Fund did not meet during the fiscal year
ended November 30, 2002. The Fund does not have a compensation committee.



                                 CODES OF ETHICS

The Fund and the Advisers  have adopted  codes of ethics  pursuant to Rule 17j-1
under the 1940 Act that permits investment personnel subject to their particular
codes of  ethics  to  invest in  securities,  including  securities  that may be
purchased or held by the Fund,  for their own accounts.  The codes of ethics are
on public  file with,  and are  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  and  these  codes of  ethics  are  available  on the EDGAR
database on the Commission internet site at http://www.sec.gov.  Copies of these
codes of ethics may be obtained,  after paying a duplicating  fee, by electronic
request at the following  e-mail address:  publicinfo@sec.gov  or by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102.



                    BROKERAGE ALLOCATION AND OTHER PRACTICES

The Advisers are  responsible  for decisions to buy and sell  securities for the
Fund,  the selection of brokers and dealers to effect the  transactions  and the
negotiation  of 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.  From May 1, 2002 through April 30, 2003, the
Fund paid $91,200.28 in brokerage commissions.

The Advisers are responsible for effecting  securities  transactions of the Fund
and will do so in a manner  deemed fair and  reasonable to  shareholders  of the
Fund and not according to any formula.  The primary  considerations in selecting
the  manner of  executing  securities  transactions  for the Fund will be prompt
execution of orders,  the size and breadth of the market for the  security,  the
reliability,  integrity and financial condition and execution  capability of the
firm,  the amount of difficulty in executing the order,  and the best net price.
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 supplying  research and other services
in addition to execution services,  although the Fund does not typically rely on
such  research.  Consideration  may also be given to the sale of  shares  of the
Fund.  However,   it  is  not  the  policy  of  the  Advisers,   absent  special
circumstances,  to pay higher commissions to a firm because it has supplied such
research or other services.

The  Advisers  are able to fulfill  their  obligations  to furnish a  continuous
investment  program to the Fund  without  receiving  research  from  brokers and
normally  does not rely on  broker  research.  However,  from  time to time,  it
considers  access to such  information  as an element of  financial  management.
Although such information is considered  useful,  its value is not determinable,
as it must be reviewed and assimilated by the Advisers,  and does not reduce the
Advisers' normal research activities in rendering investment advice.

Currently,  the  Advisers  manage  two  investment  companies:  the Fund and the
Boulder Growth & Income Fund,  Inc. The Advisers also manage one private account
and may manage other  investment  companies and other private accounts from time
to time in the future. In managing the Fund and such other accounts,  investment
decisions  for the Fund  would be made  independently  from  those of such other
accounts; however, from time to time, the same investment decision might be made
for more than one company or account.  If two or more  accounts  were to seek to
purchase or sell the same securities,  the securities actually purchased or sold
would be allocated among the companies and accounts on an equitable basis by the
Advisers in good faith in their  discretion  in  accordance  with the  accounts'
various investment  objectives.  In some cases, this system may adversely affect
the  price or size of the  position  obtainable  for the Fund.  In other  cases,
however,  the  ability of the Fund to  participate  in volume  transactions  may
produce better execution for the Fund.

Although  the  investment  co-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.  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, 2001 and November 30, 2002,  the Fund's  portfolio  turnover
rates were 16% and 38%. See "Financial Highlights" in the Prospectus.




                           REPURCHASE OF COMMON STOCK

The Fund is a closed-end  investment company and as such its common shareholders
do not have the right to cause the Fund to redeem  their  shares.  Instead,  the
Common Stock trades on the New York Stock Exchange ("NYSE") at a price that is a
function of several  factors,  including  net asset value,  dividend  stability,
relative demand for and supply of such shares in the market,  general market and
economic  conditions,  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 net asset value (a "Discount"),  the Board
may consider  actions  that might be taken to reduce or  eliminate  any material
Discount in respect of the Common  Stock,  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 net asset value,  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.

Because the Fund has issued AMPS, its 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 Moody's and S&P
as a condition to rating the AMPS. 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 net  asset  value.  The Fund is
permitted under its Fundamental Policies to 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 net asset value 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
shareholders.

Subject  to its  investment  limitations,  the Fund may  borrow to  finance  the
repurchase  of the  Common  Stock 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  Securities  Exchange Act of
1934 and the 1940 Act and the rules and regulations under each of those acts.

The Fund has given  notice to  shareholders  by  publishing  in its  annual  and
semi-annual  reports that it may from time to time  repurchase  shares of Common
Stock in the open  market at the  option of the Board and upon such terms as the
Board shall determine.

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 at any time by the Board,  not to authorize  repurchases of
the Common Stock or a tender offer for such shares if (1) such transactions,  if
consummated,  would (a) result in the  delisting  of the  Common  Stock from the
NYSE,  or (b) impair the Fund's status as a regulated  investment  company under
the Internal  Revenue 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  shareholders  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 United States 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  shareholders  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 Stock at prices below net asset value
would  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 Common Stock trading at a
price  equal to their net asset  value.  Nevertheless,  the fact that the Fund's
shares may be the subject of repurchase or tender offers at net asset value 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 net asset value that
might otherwise exist.

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



Before deciding  whether to take any action if the Common Stock trades below net
asset value, 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  shareholders  and
market considerations.  Based on these considerations, even if the Fund's shares
should trade at a Discount for any given period of time, the Board may determine
that,  in the  interest of the Fund and its  shareholders,  no action  should be
taken.



                                   TAX STATUS

The Fund has  qualified and elected,  and intends to continue to qualify,  under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), as a
regulated  investment  company.  To qualify  for tax  treatment  as a  regulated
investment  company,  the Fund must,  among other things:  (a) distribute to its
shareholders  at  least  an  amount  equal  to the  sum of  (i)  90% of its  net
investment  income (which is its investment  company taxable income as that term
is  defined  in the Code but  determined  without  regard to the  deduction  for
dividends  paid)  and (ii) 90% of its net  tax-exempt  interest  income  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 assets is represented by
cash, cash items, U.S.  government  securities and securities of other regulated
investment companies, and other securities, with these other securities limited,
with respect to any one issuer, to an amount not greater in value than 5% 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  assets is invested in the  securities of any one issuer (other than U.S.
government  securities or 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.  In meeting  these  requirements,  the Fund may be restricted in the
utilization of certain of the investment  techniques  described above and in the
Prospectus.  If in any year the Fund should fail to qualify for tax treatment as
a regulated investment company, the Fund would incur a regular Federal corporate
income tax upon its  taxable  income for that year  without  any  deduction  for
distributions  paid to its  shareholders,  and distributions to its shareholders
would be taxable to such holders as ordinary  income to the extent of the Fund's
earnings and profits.  A regulated  investment company that fails to distribute,
by the close of each  calendar  year, at least an amount equal to the sum of 98%
of its  ordinary  taxable  income for such year and 98% of its capital  gain net
income  for the  one-year  period  ending  October  31 in such  year,  plus  any
shortfalls  from the prior  year's  required  distribution,  is liable  for a 4%
excise tax on the  portion of the  undistributed  amount of such  income that is
less than the required amount for such distributions. To avoid the imposition of
this excise tax,  the Fund  generally  makes the required  distributions  of its
ordinary taxable income,  if any, and its capital gain net income, to the extent
possible, by the close of each calendar year.

Certain of the Fund's investment  practices are subject to special provisions of
the Code that,  among other things,  may defer the use of certain  deductions or
losses of the Fund, affect the holding period of securities held by the Fund and
alter  the  character  of the  gains  or  losses  realized  by the  Fund.  These
provisions  may  also  require  the Fund to  recognize  income  or gain  without
receiving  cash with which to make  distributions  in the amounts  necessary  to
satisfy the requirements for maintaining regulated investment company status and
for avoiding income and excise taxes. The Fund will monitor its transactions and
may make  certain tax  elections  in order to mitigate the effect of these rules
and prevent disqualification of the Fund as a regulated investment company.

Distributions  to  shareholders  derived from the Fund's ordinary income and net
short-term  capital  gains,  if any,  will be  taxable  to its  shareholders  as
ordinary income ("regular dividends").  Distributions by the Fund of net capital
gain  (which is the excess of net  long-term  capital  gain over net  short-term
capital loss), if any, are taxable as long-term capital gain,  regardless of the
length  of  time  the   shareholder   has  owned  the  Common   Stock  or  AMPS.
Distributions,  if any, in excess of the Fund's  earnings and profits will first
reduce the adjusted tax basis of a  shareholder's  shares and,  after that basis
has been  reduced  to zero,  will  constitute  capital  gain to the  shareholder
(assuming the shares are held as a capital asset).

Under a recently enacted law, however,  special rules apply to regular dividends
paid to individuals. Such a dividend, with respect to taxable years ending on or
before  December  31,  2008,  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.

The sale or other  disposition  of the  Common  Stock  will  normally  result in
capital gain or loss to  shareholders if such shares are held as capital assets.
Present law taxes both long-term and short-term capital gains of corporations at
the rates  applicable to ordinary  income.  For individual  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
generally are  currently  taxed at a maximum rate of 15%.  Losses  realized by a
shareholder on the sale or exchange of shares of the Fund held for six months or
less  are  disallowed  to the  extent  of any  distribution  of  exempt-interest
dividends  received with respect to such shares,  and, if not  disallowed,  such
losses are treated as long-term capital losses to the extent of any distribution
of net capital  gain  received  with  respect to such  shares.  A  shareholder's
holding period is suspended for any periods during which the shareholder's  risk
of loss is  diminished  as a result of holding  one or more other  positions  in
substantially  similar or related property,  or through certain options or short
sales.  Any loss  realized  on a sale or  exchange of shares of the Fund will be
disallowed  to the extent  those shares of the Fund are replaced by other shares
within a period of 61 days beginning 30 days before and ending 30 days after the
date of  disposition  of the  original  shares.  This is known as the "wash sale
rule". In that event,  the basis of the  replacement  shares of the Fund will be
adjusted to reflect the disallowed loss.




Nonresident  alien  individuals  and  certain  foreign  corporations  and  other
entities ("foreign  investors") generally are subject to U.S. withholding tax at
the rate of 30% (or possibly a lower rate provided by an applicable  tax treaty)
on distributions of net investment income (which includes net short-term capital
gain).  Different tax consequences may result if the owner is engaged in a trade
or business in the United States or, in the case of an individual, is present in
the United States for 183 or more days during a taxable year.

The Fund is required in certain  circumstances to backup withhold 28% of taxable
dividends and certain other payments paid to non-corporate registered holders of
the  Fund's  shares  who do not  furnish  to the  Fund  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 a  shareholder  may be refunded or credited  against such  shareholder's
United States federal income tax liability,  if any,  provided that the required
information is furnished to the IRS.

The foregoing is a general summary of the provisions of the Code and regulations
thereunder  presently in effect as they directly govern the taxation of the Fund
and its  shareholders.  These provisions are subject to change by legislative or
administrative  action,  and any such change may be retroactive.  Moreover,  the
foregoing  does not address  many of the factors  that may be  determinative  of
whether an investor  will be liable for the  federal  alternative  minimum  tax.
Shareholders  are advised to consult  their own tax advisers  for more  detailed
information  concerning  the  federal  income tax  consequences  of  purchasing,
holding and disposing of Fund shares,  as well as any related  state,  local and
foreign tax consequences.



                              FINANCIAL STATEMENTS


INDEPENDENT AUDITORS.  KPMG LLP ("KPMG"),  at 99 High Street,  Boston, MA 02110,
has served as independent auditors for the Fund since January 2001, and has been
selected to serve in such capacity for the Fund's fiscal year ended November 30,
2003. The financial  statement and independent  auditors report  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 KPMG given on their  authority  as
experts in auditing and accounting.


INCORPORATION BY REFERENCE. The Fund's Portfolio of Investments,  dated November
30, 2002 (audited); Statement of Assets and Liabilities, dated November 30, 2002
(audited);  Statement  of  Operations  for the  year  ended  November  30,  2002
(audited); Statement of Changes in Net Investment Assets for the two years ended
November 30, 2002 (audited) and the independent  auditors report included in the
Fund's  Annual  Report  for the fiscal  year  ended  November  30,  2002,  which
accompany this statement of additional  information,  are incorporated herein by
reference.  The Fund will furnish,  without charge,  a copy of the Annual Report
upon  written  request to PFPC Inc.,  P.O. Box 43027,  Providence,  Rhode Island
02940-3027 or by calling 1-800-331-1710.



                             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.


ENDNOTE:
--------

1    Paid to the Advisers and FAS (defined below), both Horejsi Affiliates,  and
     to PFPC Inc. the Fund's co-administrator.