SCHEDULE 14A INFORMATION


Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
                                (Amendment No. 3)


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

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
    Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

                          FIRST OPPORTUNITY FUND, INC.
                (Name of Registrant as Specified In Its Charter)


                               Stephen C. Miller
                          2344 Spruce Street, Suite A
                            Boulder, Colorado 80302
                                 (303) 442-2156
                   (Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[  ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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     2)   Aggregate number of securities to which transaction applies:

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          pursuant to Exchange  Act Rule 0-11 (Set forth the amount on which the
          filing fee is calculated and state how it was determined):

     4)   Proposed maximum aggregate value of transaction:

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[  ] Fee paid previously with preliminary materials.

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     Rule  0-11(a)(2)  and identity the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
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          1) Amount Previously Paid:

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          3) Filing Party:

          4) Date Filed:





                                                              2344 Spruce Street
[GRAPHIC OMITTED]                                                        Suite A
First Opportunity Fund, Inc.                            Boulder, Colorado  80302
                                                    www.firstopportunityfund.com

_____________, 2010

Dear Fellow Stockholder,

You are  invited to attend the 2010  Annual  Meeting  of  Stockholders  of First
Opportunity Fund, Inc. (the "Fund"),  which will be held on _____ , 2010 at 9:00
a.m.  _________  Standard Time (local time),  at  _____________________________.
Details of the  business  to be  presented  at the  meeting  can be found in the
accompanying  Notice  of Annual  Meeting  and  Proxy  Statement.  This is a very
important meeting at which the Fund's board of directors (the "Board") is asking
you to approve significant, and we believe, positive changes to the Fund.

Since  the  Fund's  inception  in  1986,   Wellington  Management  Company,  LLP
("Wellington  Management") has served as the Fund's investment  adviser.  During
this time,  the Board believes that the Fund has delivered a strong track record
of  performance  relative to its peer groups and the relevant  indices.  At past
meetings,  members of the Board have  discussed  various ways of increasing  the
potential  future returns of the Fund including  investing in hedge funds.  As a
consequence  of  these   discussions,   ultimately  the  Board   concluded  that
stockholder  value could be enhanced by investing a  significant  portion of the
Fund's  assets in hedge  funds,  in  particular,  some hedge funds  sponsored by
Wellington Hedge Management, LLC ("WHM") (an indirect wholly owned subsidiary of
Wellington  Management)  and advised by  Wellington  Management  (the "WHM Hedge
Funds"). In order to accommodate  investing in any WHM Hedge Fund, the Fund must
change its  investment  adviser to an entity or entities that are not affiliated
with the current investment adviser, Wellington Management.

Accordingly,  you are being asked to approve new investment  advisory agreements
for the Fund. The Proxy Statement contains proposals for new advisory agreements
whereby Rocky Mountain Advisers,  L.L.C. ("RMA") and Stewart Investment Advisers
("SIA")  (together,  the "New Advisers") would serve as the Fund's  co-advisers,
and a new sub-advisory  agreement proposal for Wellington Management to serve as
a temporary investment  sub-adviser.  Under the new structure,  the New Advisers
would be  permitted  to invest  significant  assets of the Fund in hedge  funds,
including WHM Hedge Funds.  However,  in the near term,  the New Advisers do not
anticipate  investing in any hedge funds other than the WHM Hedge  Funds.  Under
the Fund's present advisory structure,  because of affiliate  prohibitions under
the  Investment  Company Act, the Fund cannot  invest in a hedge fund managed by
Wellington  Management  or its  affiliates.  We believe this new  structure,  if
approved  by  you,  will  provide  greater  advantages  in  terms  of  enhancing
investment opportunity and flexibility by permitting investments in hedge funds,
in particular  the WHM Hedge Funds,  and  leveraging the talent pools of the New
Advisers and Wellington Management.

As part of the restructuring,  and to provide additional  flexibility to the New
Advisers,   the  Board  also   recommends   removing   the  Fund's   fundamental
concentration  policy  of  investing  at least 65% of its  assets  in  financial
services companies.


And  finally,  the Proxy  Statement  includes a proposal for the election of the
members of the Board.  The enclosed  Proxy  Statement  gives  details about each
proposal  which  requires  your  approval  and  should  be  carefully  read  and
considered before you vote.


As Chairman of the Board, I encourage you to support all of the proposals. After
careful  and  extensive  review,  the  members  of  the  Board,   including  the
independent directors, unanimously approved and recommended to stockholders that
they approve all of the  proposals as detailed in the Proxy  Statement.  We hope
you plan to attend the Annual  Meeting.  Your vote is important.  Whether or not
you are able to attend,  it is important  that your shares be represented at the
Annual Meeting.  Accordingly,  we ask that you please sign, date, and return the
enclosed  Proxy Card or vote via  telephone  or the  Internet  at your  earliest
convenience.

On behalf of the Board and the  management of First  Opportunity  Fund,  Inc., I
extend our appreciation for your continued support.

Sincerely,

/s/Joel W. Looney

Joel W. Looney

Chairman of the Board





                                                              2344 Spruce Street
[GRAPHIC OMITTED]                                                        Suite A
First Opportunity Fund, Inc.                            Boulder, Colorado  80302
                                                    www.firstopportunityfund.com


                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                          To Be Held on ________, 2010


To the Stockholders:

The Annual Meeting of Stockholders  (the "Meeting") of First  Opportunity  Fund,
Inc., a Maryland  corporation  (the "Fund"),  will be held on _________  2010 at
9:00     a.m.      ________      Standard     Time     (local     time),      at
_______________________________,   to  consider   and  vote  on  the   following
proposals,  all of which are more  fully  described  in the  accompanying  Proxy
Statement:

     1.   To approve or disapprove the proposed  investment  advisory  agreement
          with Rocky Mountain Advisers, L.L.C. ("RMA") (Proposal 1);

     2.   To approve or disapprove the proposed  investment  advisory  agreement
          with Stewart Investment Advisers ("SIA") (Proposal 2);

     3.   To  approve  or  disapprove  the  proposed   investment   sub-advisory
          agreement  with  Wellington  Management  Company,  LLP  ("Wellington")
          (Proposal 3);

     4.   To approve or disapprove  eliminating the Fund's fundamental policy of
          investing at least 65% of its assets in financial  services  companies
          (the "Concentration Policy") (Proposal 4);

     5.   To approve or disapprove  amending the Concentration  Policy to reduce
          the Fund's  minimum  threshold  for  investing in  financial  services
          companies to 25% (Proposal 5);


     6.   The election of directors of the Fund (Proposal 6); and

     7.   To  transact  such other  business  as may  properly  come  before the
          Meeting or any adjournments and postponements thereof.


The Board of  Directors of the Fund has fixed the close of business on ________,
2010 as the  record  date  for the  determination  of  stockholders  of the Fund
entitled  to  notice  of and to vote at the  Meeting  and any  postponements  or
adjournments  thereof. The Proxy Statement,  Notice of Annual Meeting, and proxy
card are first being mailed to stockholders on or about _____________, 2010.

                                       By Order of the Board of Directors,

                                       /s/Stephanie Kelley

                                       STEPHANIE KELLEY

                                       Secretary

 _____, 2010




--------------------------------------------------------------------------------
EVEN IF YOU PLAN TO  ATTEND  THE  MEETING,  STOCKHOLDERS  ARE  URGED TO SIGN THE
ENCLOSED PROXY CARD (UNLESS AUTHORIZING THEIR PROXY VIA TOUCH-TONE  TELEPHONE OR
THROUGH THE  INTERNET)  AND MAIL IT IN THE  ENCLOSED  ENVELOPE SO AS TO ENSURE A
QUORUM AT THE MEETING. THIS IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
--------------------------------------------------------------------------------



                      INSTRUCTIONS FOR SIGNING PROXY CARDS



     The following general rules for signing proxy cards may be of assistance to
you and may avoid the time and expense to the Fund involved in  validating  your
vote if you fail to sign your proxy card properly.

     1.  Individual  Accounts:  Sign  your name  exactly  as it  appears  in the
registration on the proxy card.

     2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.

     3. All Other  Accounts:  The capacity of the  individual  signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:




Registration                                        Valid Signature
------------                                        ---------------
                                                 
Corporate Accounts
(1)  ABC Corp.                                      ABC Corp.
(2)  ABC Corp.                                      John Doe, Treasurer
(3)  ABC Corp., c/o John Doe Treasurer              John Doe
(4)  ABC Corp. Profit Sharing Plan                  John Doe, Trustee


Trust Accounts
(1)  ABC Trust                                      Jane B. Doe, Trustee
(2)  Jane B. Doe, Trustee, u/t/d 12/28/78           Jane B. Doe


Custodian or Estate Accounts
(1)  John B. Smith, Cust.,                          John B. Smith
     f/b/o John B. Smith, Jr. UGMA
(2)  John B. Smith                                  John B. Smith, Jr., Executor






                                                              2344 Spruce Street
[GRAPHIC OMITTED]                                                        Suite A
First Opportunity Fund, Inc.                            Boulder, Colorado  80302
                                                    www.firstopportunityfund.com


             QUESTIONS & ANSWERS REGARDING THE MEETING AND PROPOSALS


Question 1: What changes are being proposed?


Answer:     In addition to electing the Fund's board of directors (the "Board"),
stockholders are being asked to vote on other significant  proposals:  approving
new investment co-advisory  agreements,  approving a new investment sub-advisory
agreement and  eliminating the Fund's  fundamental  policy of investing at least
65%  of  its   assets   in   financial   services   companies   (together,   the
"Restructuring").


Question 2: How does the Board recommend I vote on the Proposals?

Answer:     The Board, including  all of the directors  who are not  "interested
persons"  of the Fund (as  defined in the  Investment  Company  Act of 1940,  as
amended  (the  "1940  Act"))  (the  "Independent  Directors"),  has  unanimously
recommended that stockholders vote FOR all of the Proposals.  If no instructions
are indicated on your proxy,  the  representatives  holding proxies will vote in
accordance with the recommendations of the Board.

Question 3: Who are the Fund's proposed new investment co-advisers?

Answer:   The Board, including all of the Independent Directors, has unanimously
approved and recommends that stockholders approve investment advisory agreements
(the "Advisory  Agreements") with Rocky Mountain  Advisers,  L.L.C.  ("RMA") and
Stewart  Investment  Advisers  ("SIA")  (together  the "New  Advisers").  If the
Advisory  Agreements are approved by stockholders,  the New Advisers will act as
co-advisers to the Fund. Both New Advisers are controlled by trusts and entities
affiliated  with the  family of  Stewart  R.  Horejsi  (together,  the  "Horejsi
Affiliates"). The Horejsi Affiliates own 35.51% of the Fund's outstanding common
stock.  SIA and  Boulder  Investment  Advisers,  LLC ("BIA")  currently  provide
investment  advisory  services to three other closed-end  investment  companies:
Boulder Total Return Fund, Inc.  (NYSE:BTF),  Boulder Growth & Income Fund, Inc.
(NYSE:BIF),  and The Denali Fund Inc.  (NYSE:DNY)  (collectively,  the  "Boulder
Funds"). BIA is an affiliate of the New Advisers and the management and staffing
of RMA is substantially the same as that of BIA.

Question 4: Why are there two co-advisers?

Answer:     The Restructuring contemplates  RMA  and SIA  acting  as  investment
co-advisers to the Fund. This arrangement is similar to that currently  existing
between BIA and SIA (collectively, the "Boulder Advisers") in their relationship
with the  Boulder  Funds  whereby a single  advisory  fee is paid to,  but split
between, the co-advisers.  Mr. Horejsi is the primary investment manager for the
New Advisers and BIA and,  together with Carl Johns, will be responsible for the
day-to-day  management of the Fund's assets and  primarily  responsible  for the
Fund's asset allocation.  The reason for two advisers is that Mr. Horejsi spends
a  substantial  portion of his time  residing in  Barbados,  during  which he is
employed exclusively by SIA, which is a resident Barbados international business
company.  If the  Restructuring  is approved by  stockholders,  when Mr. Horejsi
resides in the U.S., he will be employed  exclusively by the "on-shore"  adviser
(i.e.,  RMA) with respect to his efforts on behalf of the Fund.  From the Fund's
point of view, the economics and  practicalities of the co-advisory  arrangement
are no different than they would be if Mr. Horejsi  worked  exclusively  for RMA
under a single  advisory  contract  (i.e.,  the Fund  would  still  pay the same
advisory fee (discussed  below in Question 10: ) but only to a single  adviser).
See "Proposals 1 and 2 - The Advisory Agreements" below.


Question 5: Who is the Fund's proposed investment sub-adviser?

Answer:   The Board, including all of the Independent Directors, has unanimously
approved  and  recommends  that  stockholders  approve a  temporary  and limited
investment  sub-advisory  agreement  with  Wellington  Management  Company,  LLP
("Wellington Management") (the "Sub-Advisory Agreement").  Wellington Management
presently acts as the Fund's sole  investment  adviser and has done so since the
Fund's inception. Under the Sub-Advisory Agreement,  Wellington Management would
be responsible for managing a discrete portion of the Fund's current assets with
respect to which it has  experience  and  familiarity  (the "Legacy  Holdings").
Wellington  Management  will act in a sub-advisory  capacity for a period of two
years after the effective  date of the  Restructuring  (i.e.,  the date on which
stockholders  approve the Advisory  Agreements and Sub-Advisory  Agreement) (the
"Effective  Date").  Under the terms of the Sub-Advisory  Agreement,  Wellington
Management  would be  responsible  for managing the Legacy  Holdings with a view
towards  continuing to hold the  securities,  selling them in its discretion and
assisting the New Advisers in gaining familiarity with the Legacy Holdings.

Question 6: Why does the Board think it is necessary to restructure the Fund?

Answer: Since the current Board was seated in 2004, it has annually reviewed the
performance  of  Wellington  Management  as the Fund's  adviser.  As part of the
annual  contract  renewal  process  and upon  the  Board's  request,  Wellington
Management  presents  current and historic fee and performance data with respect
to other private  long/short funds that it manages that invest  substantially in
the financial services sector. In particular, Wellington Management had provided
at the Board's request  performance  information  regarding  several hedge funds
sponsored  by an indirect  wholly-owned  subsidiary  of  Wellington  Management,
Wellington Hedge Management  ("WHM") (the "WHM Hedge Funds").  Even though these
hedge  funds  have  investment  objectives  similar  to  the  Fund's  investment
objective, these private funds employ different investment strategies, including
short selling, and they have at times outperformed the Fund. This was especially
the case during the most recent market  downturn  when the Fund,  having a "long
only"  investment  approach,  was not able to take  advantage  of the many short
selling opportunities in the financial sector.

Wellington  Management  does not  engage in short  selling  in  portfolios  that
require public disclosure of its short positions. The Fund cannot take advantage
of short  selling and retain  Wellington  Management as the  investment  adviser
under its current  structure.  In  addition,  the Fund is subject to  regulatory
constraints that limit its investment flexibility as compared with private funds
like the WHM Hedge Funds. As a result of  restrictions  imposed by the 1940 Act,
registered  investment  companies  are more  limited in their  flexibility  than
private funds and with respect to the use of certain investment  techniques,  in
particular the use of leverage (which effectively limits a registered investment
company's ability to acquire derivative securities and engage in short selling),
and the speed with which investment  techniques may be implemented compared with
private funds. The greater  flexibility to engage in a wider array of investment
strategies may also present a higher degree of risk than a portfolio pursuing an
unleveraged "long-only" strategy.

Over the last several years,  the Board has reviewed and implemented a number of
options  intended  to allow the Fund to take  greater  advantage  of the broader
array of investment strategies and techniques available to Wellington Management
and its investment  personnel,  thus  attempting to bolster the Fund's long term
performance.  In particular,  the Board approved eliminating or revising certain
of the Fund's  investment  restrictions  and policies,  changing the name of the
Fund to eliminate the term "Financial", changing the Fund's investment objective
to "total return", changing the Fund from a "diversified" to a "non-diversified"
investment  company,  and  reclassifying  the  Fund's  investment  objective  as
non-fundamental.

Beginning  in late  2008,  in  evaluating  the Fund's  alternatives  to employ a
broader  array of investment  strategies  and retain the  investment  management
services of Wellington  Management,  the Board considered the feasibility of the
Fund  investing  directly in the WHM Hedge Funds which would,  on a look-through
basis,  give the Fund,  at least with  respect to a  significant  portion of its
portfolio,  the same  flexibility  as the WHM Hedge  Funds.  However,  under the
Fund's current  structure with  Wellington  Management as the sole adviser,  the
Fund is  prohibited  by  provisions  of the 1940 Act from  investing  any of its
assets in a hedge  fund  managed  by any  affiliate  of  Wellington  Management.
Appointing  the New  Advisers as the Fund's  primary  investment  advisers,  and
segregating the Fund's assets temporarily into two portions - one managed by the
New  Advisers  and the other,  the Legacy  Holdings,  that would be  temporarily
managed by Wellington  Management with the investment discretion to only hold or
sell such  holdings-  would permit the New Advisers,  independent  of Wellington
Management's  influence or control,  to invest  significantly  in private  funds
including the WHM Hedge Funds.

The New  Advisers  anticipate,  in the near  term and  based on  current  market
conditions and the number of WHM Hedge Funds currently available for investment,
that they would invest as much as 50% of the Fund's  assets in certain WHM Hedge

Funds,  several of which emphasize  investments in the financial services sector
and are managed in whole or part by the Fund's current portfolio  manager.  This
percentage  could  increase or decrease  over time.  The Board and New  Advisers
believe that investments in the WHM Hedge Funds offer the Fund the potential for
superior  risk-adjusted  returns arising from the added  flexibility and broader
investment options available to the WHM Hedge Funds.

Question 7: Will the New Advisers invest in hedge funds other than the WHM Hedge
            Funds.

Answer:  The New Advisers do not anticipate, at least in the foreseeable future,
investing in any hedge funds other than the WHM Hedge Funds. It has taken nearly
8 years  for  the  New  Advisers  to  develop  the  requisite  familiarity  with
Wellington  Management to fully trust its abilities as a private fund manager in
which the New Advisers would invest. It is highly unlikely that the New Advisers
would  seek out and  invest in other  private  funds  without  first  spending a
similar  amount  of time  and  energy  evaluating  the  manager's  organization,
performance and ethical underpinnings.

Question 8: Why is there a need  for  Wellington  Management  to  continue  in a
            sub-advisory capacity?

Answer:     The Fund is presently  invested primarily  in securities  which were
analyzed,  purchased,  and are overseen by Wellington  Management in its current
capacity  as the  Fund's  sole  adviser.  The  New  Advisers  may  have  limited
familiarity with these securities.  It is anticipated that under the guidance of
the New  Advisers,  the  Fund  will  contribute  a number  of  these  securities
"in-kind"  in exchange for  interests  in several WHM Hedge Funds,  although the
extent to which an "in-kind"  contribution will occur cannot be determined until
after the Effective  Date. In addition,  on the Effective Date, the New Advisers
will assume  responsibility for all of the Fund's cash or cash equivalent assets
as well as  certain  of the  Fund's  large  cap  equity  holdings  familiar  and
acceptable to the New Advisers. All of the Fund's remaining assets for which the
New Advisers do not assume  responsibility  - anticipated to be fair-valued  and
other  securities  with less  market  liquidity  described  above as the  Legacy
Holdings - will be managed  by  Wellington  Management  in  accordance  with the
Fund's investment objective but with a view solely towards holding,  liquidating
the assets to generate cash for the New Advisers to invest, and/or familiarizing
the New Advisers with the Legacy Holdings.  After the Effective Date, Wellington
Management  will not be responsible  for purchasing any new securities  directly
for the  Fund.  Although  there  is no set  time  frame  for  accomplishing  its
objectives,  by its terms, the proposed  sub-advisory  agreement with Wellington
Management  would terminate in two years,  and the New Advisers would assume all
responsibility for managing any remaining Legacy Holdings at that time.

Question 9: How will the co-adviser and sub-adviser  arrangement work? Will they
            work together?

Answer:   Under the terms of the Advisory Agreements, RMA and SIA would serve as
co-advisers  to the Fund and would be  jointly  and  severally  responsible  for
making  investment  decisions with respect to the Fund's holdings other than the
Legacy  Holdings,  including  any  decision  to invest  in the WHM Hedge  Funds,
supplying  investment  research  and  portfolio  management  services,   placing
purchase and sale orders for  portfolio  transactions,  making asset  allocation
decisions for the Fund and determining the extent, nature and application of the
Fund's  leverage,  if  any.  Under  the  terms  of the  Sub-Advisory  Agreement,
Wellington  Management  would serve as sub-adviser and be responsible for making
investment  decisions solely with respect to the Legacy Holdings,  although once
liquidated, the proceeds from selling the Legacy Holdings will be transferred to
the New Advisers for investment.

Because the New Advisers could decide to invest assets in WHM Hedge Funds at any
time,  the New  Advisers and  Wellington  Management  will not work  together or
collaborate on their respective portfolios. Wellington Management will have sole
investment  discretion  with  respect  only to  whether to  continue  to hold or
liquidate  the Legacy  Holdings and the New Advisers  will have sole  investment
discretion  with respect to the remaining  assets,  including the WHM Hedge Fund
investments  and any proceeds from the sale of Legacy  Holdings.  However,  as a
sub-adviser  to the Fund,  Wellington  Management  will be  subject  to  general
oversight and monitoring by RMA and SIA as the Fund's co-advisers.

Question 10: Will the Fund's expenses be affected by the Advisory Agreements and
             the Sub-Advisory Agreement?

Answer:    Yes. The Fund currently pays Wellington Management an advisory fee of
1.125% on the Fund's net assets up to and including  $150 million;  1.00% on net
assets between $150 million and $300 million; and 0.875% on net assets exceeding
$300  million  (the  "Current  Fee").  As  proposed,   the  Advisory  Agreements
contemplate  the New Advisers being paid an investment  advisory fee of 1.25% on
the Fund's net assets,  including  leverage,  although the Fund currently has no
leverage.  However, under the Advisory Agreements,  the New Advisers would waive

(i) up to 1.00% on the  "look-through"  advisory  fees (but not the  performance
fees) paid to WHM with  respect to any  investment  by the Fund in any WHM Hedge
Fund and (ii) all fees paid by the Fund to  Wellington  under  the  Sub-Advisory
Agreement.  WHM  charges  an  asset-based  fee of 1.00% to the WHM  Hedge  Funds
presently  under  consideration  for  investment by the New Advisers.  Under the
Sub-Advisory  Agreement,  Wellington Management would receive fees from the Fund
based on the Current Fee  schedule,  as applied  only with respect to the assets
represented by the Legacy Holdings.

Based on current  assets under  management,  and the New  Advisers'  anticipated
investment of  approximately  50% of the Fund's  assets in WHM Hedge Funds,  the
advisory fees paid directly by the Fund would decrease by approximately $725,000
annually  versus the  Current Fee ($2.34  million  based on net assets of $215.1
million as of December 31,  2009).  However,  on a  "look-through"  basis (i.e.,
taking into  consideration  the fees  charged by WHM in  managing  the WHM Hedge
Funds), if the WHM Hedge Funds achieve an investment return of 10% (and are thus
paid a  concomitant  performance  based  fee),  advisory-related  expenses  will
increase by approximately $2.5 million annually. On such a "look-through" basis,
the overall  expense  ratio would  increase  from 1.65% to  approximately  2.84%
(assuming the 10% investment  return and impact of the  performance  fee paid to
WHM). This expense ratio may or may not fluctuate depending on fixed expenses as
well as the size of the Fund. See the "Fees and Expenses" Table under Proposal 1
and 2 below and the example in the paragraph immediately below.

Hedge fund managers,  including WHM,  typically are paid a 20%  performance  fee
with respect to annual gains  generated  in their hedge funds.  Thus,  under the
Restructuring, the advisory-related fees could increase significantly when there
are  significant  net  gains in the  hedge  fund.  Since  performance  fees will
necessarily  vary  from  year to year,  they can  only be  estimated  based on a
normalized market return. For the sake of comparison, if the Fund invests 50% of
its  current  assets in WHM Hedge  Funds,  and  during  the first year after the
Effective  Date the value of WHM Hedge Funds increase by 10%, and all the Fund's
other assets remain unchanged,  on a "look-through" basis, the Fund would pay an
additional  $2.5  million in advisory  related  fees.  The Board  believes  that
because  the  WHM  Hedge  Funds  offer  more  investment   flexibility  and  the
possibility of superior risk adjusted returns, the likelihood that the Fund will
pay higher look-through advisory-related fees is an acceptable tradeoff.

Question 11: Will the Restructuring  affect the Fund's  investment  objective or
             any fundamental policies?

Answer:     The Restructuring will not affect the Fund's investment objective of
"total return". However, as part of the Restructuring, stockholders are asked to
remove the Fund's  fundamental policy of investing at least 65% of its assets in
financial services companies (the  "Concentration  Policy").  The Board believes
that the 65% minimum  investment  requirement  in financial  services  companies
places a  disproportionate  industry risk on the Fund and  stockholders.  If the
Restructuring  is approved  and the  Concentration  Policy  eliminated,  the New
Advisers  will be  required  to reduce  the  Fund's  exposure  to the  financial
services industry to comply with this change.

The Fund will  continue  to have the  flexibility  to invest in a wide  range of
investments, which could include, among others, common stocks, debt instruments,
preferred stocks,  securities convertible into common stocks,  interest rate and
credit  default  swaps,  and  cash  and  cash  equivalents.   In  addition,  the
Restructuring  is  intended  to provide  the Fund with the  ability to invest in
hedge  funds,  in  particular  the WHM Hedge  Funds,  which carry a set of risks
particular  to  investing  in hedge  funds and which are  discussed  below.  The
Restructuring  and,  in  particular,  removal of the  Concentration  Policy,  is
intended to give the Fund and New Advisers  additional  flexibility in investing
the Fund's assets.

If the  Concentration  Policy is eliminated,  going  forward,  the Fund would be
precluded from  investing more than 25% of its assets in the financial  services
or any other  industry.  However,  the Fund would likely be  concentrated in the
securities of financial services  companies  immediately  following  stockholder
approval as a result of the current  effectiveness of the Concentration  Policy.
The New Advisers would seek to reduce the Fund's holdings in financial  services
companies to below 25% of the Fund's assets in a prudent manner  consistent with
elimination of the Concentration  Policy. As discussed under Proposals 1 through
3 below, if the  Restructuring  Proposals are approved by stockholders,  the New
Advisers expect to invest significantly in the WHM Hedge Funds, several of which
have significant  exposure to the financial services sector.  However,  the Fund
will not "look  through" its  investments  in the WHM Hedge Funds to  underlying
portfolio holdings in financial  services  companies in determining  whether the
Fund exceeds the 25% maximum concentration threshold if the Concentration Policy
is  eliminated.  The Fund could  therefore  become  indirectly  concentrated  in
financial services companies or other industries by virtue of the investments by
the WHM Hedge Funds in such investments.

Question 12: Why are there two  proposals  (Proposals  4 and 5) dealing with the
             Concentration Policy?

Answer:      As discussed above, Proposal  4 contemplates  the  removal  of  the
Concentration  Policy in its entirety as part of the  Restructuring  so that the
New Advisers will have additional  flexibility when investing the Fund's assets.

Proposal 5 is a  precautionary  proposal  which would become  effective  only if
stockholders  do not approve the  Restructuring  (i.e.,  Proposals 1 through 4).
Proposal 5 would  amend the  Concentration  Policy to reduce the Fund's  minimum
holdings in financial  services companies from 65% to 25% (subject to the Fund's
ability to take  defensive  measures to preserve  value).  Regardless of whether
Wellington  Management or the New Advisers are the primary advisers to the Fund,
the Board  believes that the 65% investment  requirement  in financial  services
companies places a  disproportionate  industry risk on the Fund and stockholders
and needs to be eliminated or at the very least significantly reduced.

Question 13: Are the separate  proposals  of the  Restructuring  conditioned  on
             stockholder approval of the other proposals (e.g., approval of the
             Advisory Agreements and Sub-Advisory Agreement)?

Answer:   Passage of Proposals 1 and 2 (approval of the Advisory Agreements) and
Proposal 3 (approval of the Sub-Advisory  Agreement) are conditioned on all such
Proposals  being  approved  by  stockholders  (i.e.,  if one  fails  to  achieve
stockholder  approval,  all  three  fail).  However,  the  Board  believes  that
eliminating  or  amending  the  Concentration  Policy is a change that should be
implemented  regardless  of whether  Proposals 1 through 3 are  approved.  Thus,
stockholders  are  presented  with  two  alternative   proposals  regarding  the
Concentration  Policy,  and passage of Proposal 4 (eliminating the Concentration
Policy) will be conditioned on stockholder approval of Proposals 1 through 4. In
other words, if stockholders  approve  Proposal 4 but not Proposals 1 through 3,
Proposal 4 will not become  effective.  Proposal 5 (amending  the  Concentration
Policy) will be conditioned  upon  stockholder  approval of Proposal 5 and their
failure to approve  Proposals 1 through 3. Thus,  if  stockholders  approve both
Proposals  4 and 5 and  Proposals  1  through  3 pass,  Proposal  4 will  become
effective  and  Proposal  5 will not.  However,  if  stockholders  approve  both
Proposals 4 and 5, but Proposals 1 through 3 do not pass, Proposal 5 will become
effective  and  Proposal  4  will  not.  Ultimately,  the  Board  believes  that
eliminating or significantly reducing the minimum threshold of the Concentration
Policy  will  mitigate  industry  risk and provide  the Fund's  adviser(s)  with
additional  flexibility and ease the Fund's future administrative  burdens going
forward.  If  the  Restructuring   Proposals  are  not  adopted  and  Wellington
Management  stays on as investment  adviser to the Fund,  Wellington  Management
intends to retain its primary focus on  investments  in the  financial  services
industry.  Proposal 5 would give Wellington Management additional flexibility to
invest outside of the financial  services  sector,  including  during periods of
market turmoil.

Question 14:  Describe  any other  anticipated  change to the Fund's  investment
              strategies or operations and explain the  anticipated  benefits to
              the Fund and its stockholders of any such change.

Answer:    The primary impetus for the Restructuring is to provide the Fund with
more  flexibility  and  increased  access  to hedge  funds,  including  the less
constrained and broader  investment tools of Wellington  Management,  the Fund's
current  adviser,  by making  investments  in certain WHM Hedge Funds  including
those that  emphasize  investments  in the financial  services  sector.  The New
Advisers are considering making a significant allocation  (approximately 50%) of
the  Fund's  assets  to  WHM  Hedge  Funds,  once  the  Restructuring  is  fully
implemented.  This would  represent an obvious change in investment  approach as
compared to the Fund's  historical  universe of investments.  The Board believes
that  giving the Fund the ability to invest  significantly  in hedge  funds,  in
particular the WHM Hedge Funds,  ultimately  offers more investment  flexibility
and the potential for superior risk adjusted returns.

Question 15:  Will  the  risk  profile  of the Fund  change  as a result  of the
              Restructuring and, in particular, as a result of investing
              significantly in hedge funds?

Answer:      Yes. Because the New Advisers anticipate investing substantially in
hedge funds,  in particular  the WHM Hedge Funds,  the Fund could be exposed to,
among other things,  the increased leverage and consequent risks (with potential
for increased  returns)  resulting  from hedge funds' use of certain  investment
strategies not currently  used by the Fund.  Therefore,  stockholders  should be
aware of the general  risks and  concerns  associated  with  investing  in hedge
funds:

     |X|  Hedge funds are  unregistered  private  investment funds or pools that
          invest and trade in many different markets,  investment strategies and
          instruments (including securities, non-securities and derivatives) and
          are NOT subject to the same  regulatory and oversight  requirements as
          investment companies that are registered under the 1940 Act.

     |X|  Hedge fund offering  documents are not reviewed or approved by federal
          or state regulators.

     |X|  Hedge funds may be leveraged  and their  performance  may be volatile.
          Employing  leverage  amplifies the potential gain of an investment but
          also amplifies the potential loss. In addition, a hedge fund's cost of

          leverage (e.g.,  interest  expense) may be subject to increase and may
          be higher than the fund's investment returns.

     |X|  A hedge fund's manager  generally has absolute trading  authority over
          the hedge fund.

     |X|  Some hedge funds may involve  structures or strategies  that may cause
          delays in the receipt by their investors of important tax information.

     |X|  Hedge  funds   typically   provide  limited   transparency   regarding
          underlying  investments.  Hedge  funds in which the New  Advisers  may
          invest  will  generally  permit  the  Fund  to  publish  only  limited
          financial  information  about the  holdings and  performance  of those
          hedge funds.

     |X|  Hedge  funds may  execute a  substantial  portion of trades on foreign
          exchanges  which could mean higher  risk  because  they are subject to
          less  regulation  than  U.S.  exchanges  and are  subject  to  adverse
          political or economic events in their respective markets.

     |X|  When the Fund values its securities,  market prices may not be readily
          available for a substantial portion of its investments. Securities for
          which market  prices are not readily  available  (as is expected to be
          the case  with  respect  to the  Fund's  investments  in the WHM Hedge
          Funds) will be valued by the Fund at fair value as  determined in good
          faith in accordance with procedures  approved by the Board. As the New
          Adviser  and the  Board  anticipate  that  market  prices  will not be
          readily  available for the hedge funds in which the Fund might invest,
          the Fund's  valuation  procedures  provide  that the fair value of the
          Fund's  investments  in  hedge  funds  ordinarily  will  be the  value
          determined  for each such fund in  accordance  with  that  fund's  own
          valuation   policies.   Although  the  Fund  will   receive   periodic
          information from each hedge fund regarding its investment  performance
          and investment  strategy,  the New Adviser may have little or no means
          of independently verifying valuation information.  Investors should be
          aware  that  situations  involving  uncertainties  as to the  value of
          portfolio  positions  could have an  adverse  effect on the Fund's net
          assets if the  judgments of the Board,  the New Advisers or investment
          advisers  to hedge  funds  in which  the  Fund  invests  should  prove
          incorrect.  Also, investment advisers to hedge funds typically provide
          determinations  of the net asset  value on a monthly  basis,  in which
          event,  the Fund's weekly reporting of net asset value may be based on
          information that is not current and could fluctuate significantly when
          the Fund updates its portfolio  valuations to reflect  updated  values
          for its hedge fund investments. See "Net Asset Valuation."

     |X|  The Fund's investment in a hedge fund may be illiquid and there may be
          significant restrictions on liquidating or transferring interests in a
          hedge fund.

     |X|  There are no secondary  markets for the Fund's investment in any hedge
          fund and none are expected to develop.

     |X|  A hedge fund's ongoing  advisory and performance fees and expenses may
          be substantial regardless of positive trading profits.

     |X|  Hedge funds may invest in startup,  small cap and distressed companies
          all of which may have limited  liquidity and volatile  market dynamics
          which may result in volatile performance by the hedge funds.

     |X|  Hedge  funds may engage in  investment  techniques  that are viewed as
          speculative  such as short selling and investing in futures  contracts
          and may  invest  in  certain  securities  such as  options,  warrants,
          convertible securities and non-U.S. securities.  Certain short selling
          and futures  contracts  expose  hedge funds to  potentially  unlimited
          losses.

     |X|  Hedge funds may invest in interest  rate and credit  default swaps and
          other derivative  instruments.  Derivative instruments can be volatile
          and involve various  degrees of risk depending on the  characteristics
          of the particular  derivative and the characteristics of the investing
          hedge fund's portfolio.

     |X|  Hedge funds may invest in securities denominated in foreign currencies
          thus exposing their investors to foreign currency risk.

This  summary is not a complete  list of the risks  involved in  investing  in a
hedge fund.  Stockholders  should review the section entitled "Risks and Special
Considerations  Associated with the  Restructuring  Proposals - Risks Associated
with Investments by Hedge Funds" under Proposal 1 and 2 which contains a more in
depth discussion of the risks and considerations identified above.


Question 16:  Describe the manner in which the current  investment  portfolio of
              the Fund would be modified in connection with the Restructuring
              and whether there will be any associated adverse costs or tax
              consequences.

Answer:    Initially the New Advisers are considering investing up to 50% of the
Fund's assets in at least three WHM Hedge Funds (up to approximately  17% of the
Fund's  assets in each WHM Hedge  Fund).  In  addition,  the New Advisers may in
their  discretion make  additional  investments of up to 5% of the Fund's assets
(at the time of  investment)  in other hedge funds,  including  WHM Hedge Funds.
Also as discussed above,  removing the  Concentration  Policy will allow the New
Advisers  more  flexibility  in investing in hedge funds and managing the Fund's
remaining portfolio,  allowing the New Advisers to invest the Fund's assets in a
more diversified array of industries and investments,  both domestic and abroad.
Due to the recent market  volatility and the credit  crisis,  it is difficult to
predict where or in what industries the New Advisers will focus.

As discussed  above,  Wellington  Management,  in its capacity as a  sub-adviser
after  the  Restructuring,  will be  charged  with  the task of  holding  and/or
liquidating the Legacy Holdings in a timely and prudent manner,  generating cash
for the New  Advisers to invest  opportunistically.  With  respect to the Legacy
Holdings,  an adviser  normally would be concerned  about the tax consequence of
aggressively  liquidating  a large  portion  of the Fund's  portfolio.  However,
because the Fund has  significant  net  unrealized  capital  losses  (i.e.,  $40
million as of September 30, 2009) and capital loss carry forwards  (i.e.,  $25.8
million expiring March 31, 2017), the sale of existing  portfolio  securities is
not  expected to trigger net  capital  gains.  Also,  it is  anticipated  that a
portion of the Fund's  current  portfolio may be able to be exchanged  "in-kind"
for an interest in the WHM Hedge Funds without the  expectation of immediate tax
consequences.  In these  circumstances,  the Fund would retain its cost basis in
the  "in-kind"  securities  and would realize a gain or loss only when the hedge
fund  sells  the  respective  in-kind  securities.  The  extent  of any  in-kind
contribution, however, cannot be determined until after the Effective Date.

Question 17:  Will  stockholders  have access to the  financial  data of the WHM
              Hedge Funds or other hedge funds in which the Fund invests?

Answer: No. Managers of hedge funds generally do not permit public disclosure of
their  hedge  funds'  investment  strategies,  investment  portfolios  or  other
proprietary financial information.  Consequently,  unlike the publicly available
financial  information on the Fund's investments in  publicly-traded  companies,
stockholders  will not have public  access to research and analysis on the hedge
funds in which the Fund invests.

The staff of the Securities and Exchange  Commission (the "SEC Staff") has taken
the informal  position  that an  investment  company,  such as the Fund,  should
provide its stockholders  with audited  financial  statements on an annual basis
for a private company in which the investment  company invests,  including hedge
funds, if the value of such investment  exceeds 25% of the investment  company's
net asset value (measured as of the last day of each calendar quarter) (the "25%
Threshold").  In the SEC Staff's  view,  the 25%  Threshold  is absolute and the
financial  statement  delivery  requirement will apply regardless of whether the
25%  Threshold  is  exceeded  as a  result  of the  initial  investment  amount,
subsequent fluctuations in the market value of the private company investment or
the investment company's other portfolio investments, or otherwise. As discussed
above,  since hedge fund managers generally will not permit public disclosure of
the financial  statements of the hedge funds they manage,  the Fund likely would
be unable to satisfy the financial statement delivery  requirement if the Fund's
investment in any single hedge fund exceeds the 25% Threshold.  Accordingly,  to
avoid the  possibility  that the Fund would exceed the 25%  Threshold but not be
able to  provide  the  underlying  financial  statements,  the Fund has  adopted
policies and procedures to ensure that the New Advisers continuously monitor the
percentage  the Fund has invested in each of its hedge fund  investments.  Under
these procedures,  the New Advisers will limit the Fund's initial  investment in
any single hedge fund to approximately  17% of the Fund's net asset value at the
time of investment and will begin taking  affirmative steps to reduce the Fund's
investment in any hedge fund when the value of any such  investment  exceeds 22%
of the Fund's net asset value.

Although the New Advisers believe that Fund's  investments in hedge funds can be
managed so as not to exceed the 25% Threshold, if the value of one of the Fund's
hedge fund investments increases precipitously while the remainder of the Fund's
investments decreases, given the redemption notice period required by most hedge
fund advisers, the Fund may not be able to reduce its position quickly enough to
avoid  exceeding the 25% Threshold  prior to the measuring  date at the end of a
calendar  quarter.  Moreover,  because most hedge funds (including the WHM Hedge
Funds) impose a "lock up" period on new investors  (i.e.,  new investors  cannot
make redemption  requests for a specified period,  typically one year), the Fund
may be unable to redeem its  interest  in a hedge fund  quickly  enough to avoid
exceeding the 25% Threshold despite the Fund's policies and procedures.


Question 18: Do the  investment  activities  contemplated  by the  Restructuring
             violate any New York Stock Exchange ("NYSE") listing standards?

Answer:      No.  Presently, there are no NYSE listing  standards affecting NYSE
members  that  invest in hedge  funds.  However,  in 2008,  the  American  Stock
Exchange  ("AMEX") filed a proposed rule change with the Securities and Exchange
Commission  concerning a "generic"  listing  standard for closed-end  management
investment companies of hedge funds (the "AMEX Standard"). As proposed, the AMEX
Standard would have imposed  significant  obligations  on member  companies that
make  investments of any size in any private  investment  vehicle  (e.g.,  hedge
funds, private equity funds, pooled investment vehicles, etc.). As proposed, the
AMEX Standard would require, as a condition of listing, that a member closed-end
investment  company  (i) invest only in hedge  funds that  independently  report
their  net  asset  values  weekly,  and  (ii)  publicly  disclose  all  material
information  that an investee hedge fund makes available to its investors (e.g.,
financial  statements  and  holdings).  As  discussed  above,  neither  of these
conditions is likely to be feasible under the  Restructuring.  The AMEX Standard
was not adopted prior to the  acquisition  of the AMEX by the NYSE,  and has not
subsequently  been  adopted  by the NYSE.  However,  officials  at the NYSE have
informed  the Fund  that  the SEC is  encouraging  the  NYSE to adopt a  listing
standard  substantially  similar to the AMEX Standard.  Such a listing  standard
would be subject to the NYSE normal rulemaking  procedures  (i.e.,  publication,
public comment,  adoption,  etc.) and could take some time.  However,  if such a
listing  standard is  eventually  adopted and the  Restructuring  is approved by
stockholders  and implemented by the New Advisers (i.e., a portion of the Fund's
assets is  invested  in the WHM  Hedge  Funds or any  other  private  investment
vehicle), the Fund likely would not be able to satisfy the newly-adopted listing
standard and thus could become subject to de-listing by the NYSE unless the Fund
receives an exemption  from the NYSE.  In this event,  the Fund may seek to list
its  shares on  another  domestic  exchange  (e.g.,  NASDAQ or OTCBB) or foreign
exchange (e.g., Toronto Stock Exchange, London Stock Exchange or AIM).

If the Fund is required to de-list from the NYSE,  the market  liquidity for the
Fund's common shares would likely be negatively affected, which may make it more
difficult for  stockholders to sell their  securities in the open market and may
negatively  affect the market price of the Fund's common shares and/or  increase
the  discount  between  the Fund's net asset  value and the market  price of its
common  shares.  Even if the Fund is successful in listing its shares on another
domestic  exchange  or  a  foreign  exchange,   stockholders   could  experience
inconvenience and higher costs in trading their shares in the Fund, particularly
if the shares are listed on a foreign  exchange.  If the Fund elects to list its
shares on a foreign exchange, the Fund may be subject to higher listing fees and
other operating costs than those to which it is currently subject.  In addition,
the  Fund  may  become  subject  to  corporate  governance  standards  that  are
potentially  more  restrictive  and costly  than the NYSE  corporate  governance
standards. The Fund is currently exempt from state securities regulation because
of its NYSE listing. Upon de-listing, if the Fund issues new securities it would
be required to make state notice  filings and pay state blue sky fees if it does
not list its shares on another exchange that continues this exemption.

Question 19:  What are the  characteristics  of the hedge funds in which the New
              Advisers anticipate investing?

Answer:  Presently, the New Advisers are considering several WHM Hedge Funds for
investment.  The two WHM Hedge  Funds in which the Fund is most likely to invest
if the Restructuring is approved have the following characteristics:

     -    The  first  fund  takes  aggressive,  long  positions  in  undervalued
          companies  in the  financial  services  and related  sectors  that the
          fund's manager  believes offer  attractive  investment  opportunities.
          Such opportunities may be created by market  fragmentation,  the trend
          toward  consolidation in the financial  services sector,  the relative
          obscurity  of  smaller  companies,  or  investor  misunderstanding  of
          fundamental  financial  characteristics.  The fund may also take short
          positions in financial  services  companies  and related  sectors as a
          hedge  against  specific  long  positions  and to  take  advantage  of
          specific  opportunities created by market  disequilibrium.  Securities
          for the portfolio are selected  primarily on the basis of  fundamental
          value. The fund's manager focuses on companies with strong fundamental
          characteristics  that are  undervalued  relative  to  their  long-term
          potential, specifically analyzing the relationship between a company's
          underlying   earnings  power  and  the  market  price  of  the  stock.
          Attractive   valuations  are  often  found  in  securities  issued  by
          institutions  that are not widely followed by  institutional  research
          analysts.  The key objective of the fund is to achieve  superior total
          returns on an absolute  basis. In order to achieve this goal, the fund
          makes investments  throughout the capital  structure (e.g.,  preferred
          stock, convertible securities, fixed income securities) and invests in
          companies with solid  fundamentals  and attractive  valuations,  while
          shorting securities in those companies with unsustainable  valuations.
          The fund may also utilize leverage and  derivatives,  including listed
          and unlisted index and stock options,  to hedge  positions and enhance
          returns.



     -    The second fund seeks capital appreciation through investments in both
          long and short  positions in the financial  services sector as well as
          through the use of leverage.  The fund is managed by four  experienced
          investment  managers  as a team.  The  investment  team  takes a broad
          approach  to the  global  finance  sector  and  invests  in  insurance
          companies,    securities   brokers,    asset   management   companies,
          thrifts/building  societies,  banks,  and  companies  that  serve  the
          finance sector. Portfolio concentration in a sub-sector or sub-sectors
          is  determined  by the number and  risk/reward  profiles of  available
          opportunities  as well as  general  market  conditions.  The  managers
          employ a strict bottom-up approach and make investment decisions based
          upon market valuations relative to company fundamentals. The objective
          of the fund is to seek capital  appreciation  over the long-term.  The
          fund's manager uses allocation of capital,  leverage,  and the ability
          to  short  sell  securities  as  its  primary  tools  in  implementing
          investment conclusions as to the relative attractiveness of individual
          securities.  The fund may also utilize  derivatives,  including listed
          and unlisted index and stock options,  to hedge  positions and enhance
          returns.  It is expected that the fund's  portfolio  will generally be
          net long.

Question 20: What will be the investment approach of the New Advisers?

Answer:  In the near term, in addition to the anticipated investments in the WHM
Hedge Funds,  the New  Advisers  expect to invest  primarily  in common  stocks,
including dividend paying common stocks such as those issued by utilities,  real
estate investment trusts ("REITs") and regulated  investment companies under the
Code (as  defined  below)  ("RICs").  The Fund may also  invest in fixed  income
securities  such as U.S.  government  securities,  preferred  stocks  and bonds.
Although  the Fund  expects to invest  primarily  in  securities  of  U.S.-based
companies,  it may invest without  limitation in foreign  equity  securities and
sovereign debt, in each case denominated in foreign currency.


The New Advisers  intend to focus on  securities  issued by  companies  across a
broad  range of  industries.  The Fund will not  necessarily  be a  "large-cap",
"mid-cap" or "anything-cap"  fund since the New Advisers believe it is unwise to
restrict  investments  to any  particular  size company.  When the Fund makes an
investment in a common stock,  it may take large  positions  consistent with its
status as a  "non-diversified"  investment company. It is also likely to hold on
to its investments for a long time, allowing the investments to do what they are
expected to do - earn money and grow. The New Advisers  believe such an approach
is in the long-term best interest of  stockholders  as, the longer  stockholders
hold their investment without selling, the longer they defer paying taxes on any
gains.  Since the Horejsi Affiliates own such a large stake in the Fund, the New
Advisers are not likely to invest in anything the Horejsi  Affiliates  would not
buy for themselves. In the long run, the New Advisers think that flexibility and
value-type investing will produce the best overall total return.



Question 21:  How do the  Fund's  largest  stockholders  intend to vote on these
              Proposals?


Answer:  The  Fund's  largest  stockholders  (described  above  as the  "Horejsi
Affiliates")  intend  to vote in  favor  of the  Restructuring  and  each of the
Proposals.



                                                              2344 Spruce Street
[GRAPHIC OMITTED]                                                        Suite A
First Opportunity Fund, Inc.                            Boulder, Colorado  80302
                                                    www.firstopportunityfund.com


                         ANNUAL MEETING OF STOCKHOLDERS

                                 ________, 2010

                                 PROXY STATEMENT

This proxy statement  ("Proxy  Statement") for First  Opportunity  Fund, Inc., a
Maryland   corporation  (the  "Fund"),  is  furnished  in  connection  with  the
solicitation  of proxies by the Fund's  board of  directors  (collectively,  the
"Board" and  individually,  the  "Directors")  for use at the Annual  Meeting of
Stockholders  of the  Fund to be  held on  ____________  at  9:00  a.m.  Pacific
Standard Time (local time), at  ___________________  and at any adjournments and
postponements   thereof  (the   "Meeting").   A  Notice  of  Annual  Meeting  of
Stockholders and proxy card for the Fund accompany this Proxy  Statement.  Proxy
solicitations  will be made,  beginning  on or about _____,  2010,  primarily by
mail, but proxy solicitations may also be made by telephone,  by Internet on the
Fund's  website,  or through email  communications  with  stockholders  who have
enrolled in the Fund's electronic duplicate communications service+/-, telegraph
or    personal    interviews    conducted    by    officers    of   the    Fund,
_______________________,  the Fund's proxy  solicitor  and  Computershare  Trust
Company,  N.A., the transfer agent of the Fund. The costs of proxy  solicitation
are expected to be approximately $________.  Proxy solicitation expenses as well
as expenses  incurred in connection with the preparation of this Proxy Statement
and its  enclosures  will be paid by the  Fund.  The Fund  also  will  reimburse
brokerage  firms  and  others  for their  expenses  in  forwarding  solicitation
material to the beneficial  owners of its shares.  The Board has fixed the close
of business on  __________,  2010 as the record date (the "Record Date") for the
determination  of stockholders  entitled to notice of and to vote at the Meeting
and any postponements or adjournments thereof.

The Annual Report of the Fund,  including audited  financial  statements for the
fiscal year ended March 31, 2009,  has been mailed to  stockholders.  Additional
copies of the Fund's most  recent  Annual  Report are  available  upon  request,
without charge,  by writing to First Opportunity Fund, Inc., 2344 Spruce Street,
Suite A, Boulder,  Colorado  80302 or by calling (877)  561-7914.  The report is
also viewable online at the Fund's website at www.firstopportunityfund.com.  The
Annual Report is not to be regarded as proxy solicitation material.

One Proxy  Statement  is being  delivered  to multiple  stockholders  sharing an
address,  unless the Fund has received contrary instructions from one or more of
the stockholders.  The Fund will undertake to deliver promptly,  upon written or
oral request,  a separate  copy of the proxy  statement to any  stockholder  who
contacts  the  Fund  in  writing,  or by  phone,  as  stated  above.  Similarly,
stockholders  sharing an address can  request  single  copies of a future  proxy
statement or annual  report by  contacting  the Fund in writing or by contacting
the Fund's transfer agent.

--------------------------
+/-  Stockholders  can receive  timely  information  about the Fund  quickly and
conveniently!  The Fund offers the option for  electronic  delivery of DUPLICATE
copies of all  stockholder  communications.  You can choose the  timeliness  and
convenience  of receiving  and  reviewing  stockholder  communications,  such as
annual  reports and proxy  statements,  online in addition  to, but more quickly
than, the hard copies you currently  receive in the mail. If you sign up for the
option, you will receive an e-mail notification when stockholder  communications
are  available,  containing  a link to  those  communications  on the  Internet.
HOWEVER,  presently  you will not be able to vote your shares  using these links
and will have to wait to vote using the hard  copies you  receive in the mail or
electronically  from your broker, the transfer agent or proxyvote.com.  For more
information, please visit the Fund's website at www.firstopportunityfund.com.



An electronic  copy of the Notice of Annual Meeting of  Stockholders,  the Proxy
Statement,  and a proxy  card  for the  Fund for  your  vote at the  Meeting  is
available online at www.firstopportunityfund.com.

Wellington Management Company, LLP ("Wellington Management") at 75 State Street,
Boston,  Massachusetts 02109,  currently serves as the investment adviser to the
Fund. Fund Administrative Services, L.L.C. ("FAS"), 2344 Spruce Street, Suite A,
Boulder,  Colorado 80302,  and ALPS Fund Services,  Inc.,  1290 Broadway,  Suite
1100,  Denver,   Colorado  80203,  serve  as   co-administrators  to  the  Fund.
Computershare Trust Company,  N.A. acts as the transfer agent to the Fund and is
located at 250 Royall Street, Canton, Massachusetts 02021.

If the enclosed proxy is properly executed and returned by ______________, 2010,
in time to be voted at the Meeting,  the Shares (as defined  below)  represented
thereby will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon,  a proxy will be voted FOR each
of the  Proposals  and, in the  discretion  of the proxy  holders,  on any other
matters that may properly come before the Meeting. Any stockholder who has given
a proxy has the right to revoke it at any time prior to its  exercise  either by
attending  the Meeting and casting his or her votes in person or by submitting a
letter of revocation or a later-dated proxy to the Fund's secretary at the above
address prior to the date of the Meeting.

A quorum of the Fund's  stockholders  is required for the conduct of business at
the  Meeting.  Under  the  bylaws  of the  Fund  (the  "Bylaws"),  a  quorum  is
constituted  by the  presence in person or by proxy of the holders of a majority
of the outstanding shares of the Fund as of the Record Date. In the event that a
quorum is not present at the Meeting,  the persons  named as proxies may propose
and vote for one or more adjournments of the Meeting. An adjournment for lack of
a quorum  requires  the  affirmative  vote of the  holders of a majority  of the
shares entitled to vote at the Meeting and present in person or by proxy. In the
event  that a quorum is present  but  sufficient  votes to  approve  one or more
Proposals  are not  received,  the persons named as proxies may propose and vote
for one or more  adjournments  of the Meeting to permit further  solicitation of
proxies with respect to any  Proposal  that did not receive the votes  necessary
for its passage.  With respect to those Proposals for which there is represented
a  sufficient  number of votes in favor,  actions  taken at the Meeting  will be
approved and implemented  irrespective of any  adjournments  with respect to any
other  Proposals.  Any such  adjournment  will require the affirmative vote of a
majority of votes cast on the matter at the Meeting. If a quorum is present, the
persons named as proxies will vote those proxies which they are entitled to vote
FOR any  Proposal in favor of such an  adjournment  and will vote those  proxies
required to be voted AGAINST any Proposal against any such adjournment.

The Fund has one class of stock:  common stock,  par value $0.001 per share (the
"Common  Stock" or the  "Shares").  On the Record  Date,  there were  28,739,389
Shares issued and outstanding. Each Share is entitled to one vote at the Meeting
and fractional Shares are entitled to proportionate shares of one vote.

SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table sets forth
certain information  regarding the beneficial  ownership of the Shares as of the
Record  Date by each person who is known by the Fund to  beneficially  own 5% or
more of the Common Stock.




              Name of Owner                   Number of Shares          Number of Shares            Percentage
                                             Directly Owned (1)        Beneficially Owned       Beneficially Owned
------------------------------------------ ----------------------- --------------------------- ----------------------
                                                                                               
Stewart R. Horejsi Trust No. 2 (1)*                 2,169,602              2,169,602                    7.55%
Lola Brown Trust No. 1B (1)*                        4,272,118              4,272,118                   14.87%
Mildred B. Horejsi Trust (1)*                       2,025,122              2,025,122                    7.05%
Susan L. Ciciora Trust (1)*                         1,737,573              1,737,573                    6.05%
                                           ----------------------- --------------------------- ----------------------
Aggregate Shares Owned by Horejsi                  10,204,415             10,204,415                   35.51%
Affiliates (defined below)
------------------------------------------ ----------------------- --------------------------- ----------------------

T. Rowe Price Associates, Inc.**                    2,064,331              2,064,331                    7.18%



*    The address of each listed owner is c/o The Alaska Trust Company, LLC, 1029
     West Third Avenue, Ste 400 Anchorage, AK 99501.


**   These  securities  are  owned  by  various   individual  and  institutional
     investors for which T. Rowe Price  Associates,  Inc.  ("Price  Associates")
     serves as investment  adviser with power to direct  investments and/or sole
     power to vote the securities. For purposes of the reporting requirements of
     the Securities and Exchange Act of 1934, Price Associates is deemed to be a
     beneficial owner of such securities;  however,  Price Associates  expressly
     disclaims  that it is, in fact, the  beneficial  owner of such  securities.

     Shares  stated are as reported in a Schedule 13G Amendment No. 1 filed with
     the Securities and Exchange Commission on February 12, 2010.


(1)  Direct Ownership.  The Susan L. Ciciora Trust (the "Susan Trust"),  Mildred
     B. Horejsi Trust (the "Mildred Trust"), Lola Brown Trust No. 1B (the "Brown
     Trust"),  and Stewart R. Horejsi Trust No. 2 ("SRH Trust") directly own the
     shares  indicated for such entity in the table above,  totaling  10,204,415
     (35.51%).  These  trusts (the  "Trusts")  along with Alaska  Trust  Company
     ("ATC") 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
     Investment  Company Act of 1940,  as  amended).  These  entities  and other
     trusts or companies with interlocking trusteeship, management and/or common
     ownership may be deemed to indirectly own additional Fund shares, which are
     included  in the  table  above.  ATC is (i) the sole  trustee  of the Susan
     Trust;  (ii)  together  with Brian Sippy and Susan  Ciciora (Mr.  Horejsi's
     daughter),  one of three trustees of the Mildred Trust;  and (iii) together
     with  Larry  Dunlap and Ms.  Ciciora,  one of three  trustees  of the Brown
     Trust.  ATC is a  commercial  trust  company  organized  under  the laws of
     Alaska,  of which 98% of the outstanding and voting securities are owned by
     the Stewart West Indies Trust ("West Indies Trust"). Douglas J. Blattmachr,
     President of ATC, owns 2% of the  outstanding  shares of ATC. The Directors
     and officers of ATC are Larry L. Dunlap (Director), Stephen C. Miller (Vice
     President and Director),  Mr. Blattmachr (President and Director),  Brandon
     Cintula   (Vice   President   and   Director),    and   Richard    Thwaites
     (Secretary/Treasurer  and  Director).  ATC, its officers and its  directors
     disclaim beneficial ownership of shares owned directly by the Trusts.



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

Solely for ease of reference,  the Susan Trust, Mildred Trust, Brown Trust, ATC,
SRH Trust,  as well as other  trusts and  entities  associated  with the Horejsi
family  are  collectively  referred  to  herein  as  the  "Horejsi  Affiliates".
Information  as  to  beneficial   ownership  above  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 the Record Date, Cede & Co., a nominee partnership of the Depository Trust
Company, held of record, but not beneficially, __________ shares or ________% of
Common Stock outstanding of the Fund.

As of the Record Date, the Trusts, executive officers and directors of the Fund,
as a group,  owned  10,254,741  shares of Common Stock (this amount includes the
aggregate  shares of Common  Stock  owned by the  Horejsi  Affiliates  set forth
above), representing 35.68% of Common Stock.


                              OVERVIEW OF PROPOSALS


This Proxy Statement  describes six proposals  (together the  "Proposals").  The
first four Proposals (the "Restructuring  Proposals"), if approved, will provide
enhanced  investment  flexibility to the New Advisers (defined below) and expand
the universe of investments in which the Fund may invest.  Proposals 1 and 2 ask
stockholders  to approve new  advisory  agreements  between the Fund and the New
Advisers (the "Advisory Agreements") and Proposal 3 asks stockholders to approve
a new sub-advisory agreement between Wellington Management, the New Advisers and
the Fund (the "Sub-Advisory Agreement").  Proposal 4 asks stockholders to remove
the  Fund's  fundamental  policy  of  investing  at least  65% of its  assets in
financial  services  companies  (the  "Concentration  Policy").  Proposal 5 is a
precautionary proposal which, if the Restructuring  Proposals fail to pass, will
amend  the  Concentration  Policy  such  that the  threshold  for  investing  in
financial  services  companies will be reduced to 25% from its current threshold
of 65%. And finally,  Proposal 6 is for the  election of  Directors.  The Board,
including the Directors who are not "interested  persons" of the Fund within the
meaning of Section  2(a)(19) of the  Investment  Company Act of 1940, as amended
(the "1940 Act") (the "Independent Directors"),  unanimously recommends that you
vote "FOR" all the Proposals.  The Horejsi Affiliates,  which hold approximately
35.51% of the Fund's outstanding Common Stock, have informed the Board that they
will vote their Shares FOR all the Proposals.



                                PROPOSALS 1 AND 2

   TO APPROVE OR DISAPPROVE THE PROPOSED INVESTMENT ADVISORY AGREEMENTS WITH
                                  RMA AND SIA

Background of the  Proposals.  Wellington  Management has managed the Fund since
its inception in 1986. Over this term of management,  the Fund has significantly
outperformed its peer groups and the relevant  indices.  During the past several
years, in response to material changes in the financial  services industry since
the Fund was initially  launched,  the Board has reviewed a number of options to
seek to  improve  the  risk-adjusted  return of the Fund by  initially  removing
certain  investment  restrictions.  In 2008, the Board encouraged  management to
identify unnecessary investment  restrictions and streamline the Fund to provide
Wellington Management with additional  investment  flexibility to take advantage

of investment opportunities. In April 2008, Fund management, in conjunction with
Wellington  Management,  conducted  a  comprehensive  survey  of the  investment
restrictions  imposed on the Fund, and Fund management  recommended  fundamental
changes to the Fund's  diversification  status and investment  policies.  In May
2008,  the Board  held a special  meeting  to  consider  a set of  proposals  to
eliminate or revise the Fund's  investment  restrictions  and policies,  some of
which would be submitted to stockholders for consideration at the annual meeting
in July 2008. In  particular,  management  recommended  changing the name of the
Fund to eliminate the term  "Financial",  changing the  investment  objective to
"total return" and changing the Fund from a "diversified" to a "non-diversified"
investment company,  the latter two requiring a vote of a majority of the Fund's
outstanding  shares.  In July 2008,  stockholders  approved  changing the Fund's
investment   objective  to  "total  return"  and  reclassifying  the  investment
objective as non-fundamental.  In addition,  stockholders  approved changing the
Fund's  classification  and  related  fundamental   investment   restriction  to
"non-diversified" and approved elimination of the Fund's fundamental  investment
restriction  regarding  the ability to hold greater than 5% in a single  issuer.
Although  these  changes  provided  Wellington  Management   significantly  more
investment latitude, they still fell short of providing the flexibility utilized
by the WHM Hedge Funds.

In the past,  at the Board's  request in  conjunction  with the  Board's  annual
consideration  of  Wellington   Management's   investment   advisory   contract,
Wellington Management has provided the investment returns of certain hedge funds
sponsored by an affiliate of Wellington Management,  Wellington Hedge Management
LLC ("WHM") (the "WHM Hedge Funds") and managed by Wellington Management and the
Fund's current portfolio manager.  Even though these hedge funds have investment
objectives  similar  to  the  Fund's,   these  private  funds  employ  different
investment  strategies,  including short selling and have at times  outperformed
the Fund.  This was especially  the case during the most recent market  downturn
when the Fund,  having a "long only" investment  approach,  was not able to take
advantage  of the many short  selling  opportunities  offered  by the  financial
industry.  Wellington  Management does not engage in short selling in portfolios
that require  public  disclosure of its short  positions.  Thus, the Fund cannot
take  advantage  of  short  selling  and  retain  Wellington  Management  as the
investment  adviser  under its  current  structure.  In  addition,  compared  to
registered investment companies,  hedge funds have fewer regulatory  constraints
which permits them greater flexibility to engage in a broader array of, and less
constrained, investment strategies, such as the use of short sales, leverage and
derivatives.  The Board then asked management to review options that would allow
the Fund to take greater  advantage of the talents of Wellington  Management and
its  investment  personnel,  and the  broader  array of,  and less  constrained,
investment  strategies  that  hedge  funds may  offer,  to seek to  improve  the
risk-adjusted return of the Fund for the benefit of stockholders.

In October 2008,  representatives  of the Fund and Wellington  Management met to
discuss  the  feasibility,  and  technical,  operational  and  legal  issues  in
connection  with a direct  investment by the Fund in the WHM Hedge Funds. It was
quickly  determined that,  because of the affiliate  restrictions under the 1940
Act,  the Fund could not invest in any  Wellington  Management-affiliated  hedge
funds while  Wellington  Management  was the primary  adviser to the Fund. As an
alternative,  the parties  discussed the  possibility  of Wellington  Management
being  replaced by the Board with the New Advisers as  investment  adviser,  and
then the New Advisers making the investment  decision to invest in the WHM Hedge
Funds. The Board believed this structure would indirectly  provide  stockholders
with better access to the unrestricted investment tools of Wellington Management
and  its  investment  personnel.  A set of  issues  arose  out  of  the  October
discussions  that Fund  management  and counsel for the Fund had to research and
consider and, if feasible, present to the Board their recommendation at the next
regular meeting in February 2009.

At  the  February  2009  meeting,  the  Board  reviewed  memoranda  prepared  by
management  and counsel  addressing a number of technical,  legal and tax issues
identified during the preceding months. In particular, these memoranda addressed
the threshold question of whether the Fund could make meaningful  investments in
WHM Hedge Funds. It was determined that, under the proposed restructuring (i.e.,
the Board replacing  Wellington  Management with the New Advisers as the primary
advisers),  the Fund would be able to make  significant  investments  in the WHM
Hedge Funds. Over the next three months,  management and counsel continued their
analysis of a potential  restructuring  and, at the Board's next regular meeting
in April  2009,  management  presented  a  formal  proposal  which  contemplated
Wellington  Management being replaced as the Fund's primary adviser, and the New
Advisers  being  appointed  to  that  role,  Wellington  Management  becoming  a
sub-adviser to the Fund,  and removing the  Concentration  Policy  (together the
"Restructuring").  The Board also considered a memorandum prepared by Wellington
Management  regarding issues to consider  regarding the proposed  Restructuring.
The Board  considered  the  Restructuring  at a special  meeting of the Board on
April 16, 2009, and again at its regularly  scheduled meetings on April 24, 2009
and July 24,  2009.  At the  meeting  held on April  24,  2009,  the  Board,  by
unanimous  vote  (including  a  separate  vote  of the  Independent  Directors),
approved  the  Advisory  Agreements,  Sub-Advisory  Agreement  and  removing the
Concentration  Policy and  recommended  they be  submitted to  stockholders  for

approval.  At the meeting held on July 24, 2009, the Board  considered SEC Staff
comments to the Fund's  preliminary  proxy  statement  concerning  the extent to
which the Fund could  invest in WHM Hedge  Funds or other  hedge  funds  without
having to provide  disclosure  with  respect to  investee  hedge fund  financial
statements. In response to comments received by the SEC Staff, the Board adopted
policies and procedures  that would limit the Fund's  initial  investment in any
single hedge fund to approximately 17% of the Fund's net asset value at the time
of  investment  and  would  require  affirmative  steps  to  reduce  the  Fund's
investment in any hedge fund when the value of any such  investment  exceeds 22%
of the Fund's net asset value.

Summary of the Restructuring Proposals.

The Restructuring Proposals include three distinct proposals:

     1.   Approval of new co-advisory agreements (i.e., the Advisory Agreements)
          between  the Fund and Rocky  Mountain  Advisers,  L.L.C.  ("RMA")  and
          Stewart Investment Advisers ("SIA") (together, the "New Advisers");

     2.   Approval  of a new  sub-advisory  agreement  (i.e.,  the  Sub-Advisory
          Agreement)  between  the  Fund  and  Wellington  Management,   whereby
          Wellington  Management will manage a discrete  portfolio of securities
          (defined  below as the  "Legacy  Holdings")  for a period of two years
          after the effective date of the Restructuring (i.e., the date on which
          stockholders  approve the  Restructuring  Proposals)  (the  "Effective
          Date"); and

     3.   Removing the Concentration Policy.

The Restructuring was conceived primarily to give the Fund significant access to
the WHM Hedge  Funds.  In order to  accomplish  this and to comply with  federal
securities laws, the  Restructuring  contemplates  segregating the Fund's assets
into two discrete portfolios:

     1.   The first portfolio, which would include any investment in a WHM Hedge
          Fund,  would be  determined  and managed by the New  Advisers in their
          sole discretion. Because the WHM Hedge Funds and the Fund hold many of
          the same or similar  securities,  it is anticipated that the Fund will
          contribute  "in-kind" some portion of its current  holdings to the WHM
          Hedge Funds in exchange for an equity interest in the WHM Hedge Funds,
          although the extent of any in-kind  contribution  cannot be determined
          until after the Effective  Date. In addition,  the New Advisers  would
          assume  responsibility for all cash or cash equivalent assets, as well
          as certain of the Fund's large cap equity holdings familiar to the New
          Advisers.  Finally, as Legacy Holdings (defined below) are liquidated,
          proceeds  will be turned  over to the New  Advisers  to be invested in
          accordance with the Fund's investment objective.

     2.   The second  portfolio,  which would  include all the Fund's  remaining
          assets not assumed by the New Advisers,  anticipated to be fair-valued
          and other  liquidity-challenged  securities  (the "Legacy  Holdings"),
          would be managed  by  Wellington  Management  in  accordance  with the
          Fund's  investment  objective but with a view toward  liquidating  the
          assets to generate  cash for the New  Advisers  to invest.  Wellington
          Management's  role would be limited  solely to  continuing  to hold or
          selling the Legacy  Holdings,  and/or  familiarizing  the New Advisers
          with the  Legacy  Holdings.  Any  proceeds  realized  from the sale of
          Legacy  Holdings  would be turned over to the New  Advisers to manage.
          After  the  Effective  Date,   Wellington  Management  would  have  no
          authority  to directly  purchase any  security or  investment  for the
          Fund. The Restructuring  contemplates  Wellington  Management managing
          the Legacy  Holdings  for a period  not to exceed two years  after the
          Effective  Date, at which time any Legacy  Holdings  still held by the
          Fund would be turned  over to the New  Advisers  and the  Sub-Advisory
          Agreement would terminate.

The  Board  believes  it is  important  to  engage  Wellington  Management  as a
temporary  sub-adviser  because  the Fund is  presently  invested  primarily  in
securities issued by smaller financial  services companies which were chosen and
are overseen by Wellington Management in its current capacity as the Fund's sole
adviser and with respect to which the New Advisers have limited familiarity. The
two-year time limit is designed to give the New Advisers a chance to familiarize
themselves with the remaining Legacy Holdings.

Reasons  for the  Restructuring  Proposals.  The Board and New  Advisers  firmly
believe  that  increasing  investment   flexibility  is  crucial  to  maximizing
stockholder value and that giving the Fund the capabilities to invest in the WHM
Hedge Funds gives stockholders maximum  flexibility.  The Board and New Advisers
also believe that restructuring the Fund so that it can invest  significantly in
the WHM Hedge Funds will  provide the  opportunity  for  superior  risk-adjusted
returns.  Finally,  the Board and the New Advisers  believe  that recent  market
events  including  the  sub-prime  fiasco and the banking,  credit and liquidity

crisis,  have  disproportionately  impacted  the Fund  under  its  Concentration
Policy,  and that the continuation of the Concentration  Policy could expose the
Fund to considerable risk and volatility should the financial  services industry
take a farther downturn.

Risks and Special  Considerations  Associated with the Restructuring  Proposals.
The Restructuring Proposals will necessarily change the risk profile of the Fund
and stockholders should consider the following risks and special  considerations
in  determining  whether  to vote in favor  of the  Restructuring  Proposals  or
whether their investment in the Fund is suitable.

     Risks Related to Types of Investments and Investment Strategies. Hedge fund
     investments selected by the New Advisers (collectively,  "Hedge Funds") may
     invest and trade in a wide range of  instruments  and markets and thus give
     rise to the wide  range of  risks  associated  with  such  instruments  and
     markets. For example:

          o    Hedge Funds may invest in all types of  securities  and financial
               instruments,  including but not limited to equities, fixed income
               investments,  options,  futures,  swaps and other  derivatives or
               derivative transactions ("Derivatives").  Such investments may be
               illiquid and highly leveraged, or subject to extreme volatility.

          o    Hedge Funds may use a wide range of investment  techniques,  some
               of  which  may  subject   investors  to  heightened  risk  (e.g.,
               leveraging, selling securities short, etc.).

          o    Hedge  Funds are  generally  not  limited in the markets in which
               they are expected to invest,  or the investment  discipline  that
               their  managers may employ,  such as value or growth or bottom-up
               or top-down analysis.

          o    Hedge Funds may use various investment techniques for hedging and
               non-hedging  purposes,  some of which may  subject  investors  to
               heightened risk (e.g.,  selling securities short,  purchasing and
               selling options contracts and entering into other Derivatives).

     Investment in a particular  "type" of investment or the use of a particular
     technique may be an integral part of a Hedge Fund's investment strategy and
     may involve certain risks and result in significant  losses. The above risk
     factors   and   considerations,   as  well  as  other  risk   factors   and
     considerations  associated with investing in Hedge Funds,  are discussed in
     greater  detail under the  subheading  "Investments  by Hedge Funds" below.
     There  can be no  assurance  that WHM or  other  managers  of  Hedge  Funds
     selected by the New Advisers will succeed in any of these  investment types
     or techniques.

     Hedge Fund Strategy  Risk.  The Fund will be subject to Hedge Fund strategy
     risk. Strategy risk refers to the failure or deterioration of investment or
     trading techniques employed within or across strategies,  such that some or
     all managers employing such techniques may suffer significant losses.

          o    Losses  associated  with strategy risk may result from  excessive
               concentration by multiple managers in the same or similar trading
               positions.

          o    Broad   events  or  market   dislocations,   particularly   those
               accompanied by illiquidity,  may adversely affect a wide range of
               Hedge Funds in certain strategies.

          o    Many of the trading or  investment  strategies  employed by Hedge
               Funds are speculative  and involve  substantial  risks.  Specific
               strategy risks  relating to Hedge Fund  strategies  include,  for
               example,  strategies  utilized by managers in the general  hedged
               equity,  event  driven,  distressed  securities,   short-selling,
               opportunistic/macro  and  international/emerging  markets trading
               sectors.

     The application of a particular strategy may be an integral part of a Hedge
     Fund's  investment  approach  and may involve  certain  risks and result in
     significant losses. The above risk factors and  considerations,  as well as
     other risk factors and  considerations  associated  with investing in Hedge
     Funds, are discussed in greater detail under the subheading "Investments by
     Hedge Funds" below. There can be no assurance that WHM or other managers of
     Hedge  Funds  selected  by the New  Advisers  will  succeed in any of these
     strategies.

     Non-Diversified  Status. As a non-diversified  investment company, the Fund
     is not  subject to  percentage  limitations  imposed by the 1940 Act on the
     portion of its assets  that may be invested  in the  securities  of any one
     issuer.  Also,  there  are no  requirements  under  the  1940  Act that the
     investments of the Hedge Funds be  diversified  and the Hedge Funds may, in
     some cases,  concentrate their investments in a single industry or group of
     related  industries.  As a result,  the Fund's investment  portfolio may be

     subject  to  greater  risk and  volatility  than if it were  subject to the
     diversification  requirements  under the 1940 Act. Presently under the 1940
     Act, there are no percentage  limitations regarding the level of investment
     the Fund can make in Hedge  Funds,  although  new laws or  regulations  may
     change this at any time.

     The Fund is, however, subject to certain asset diversification requirements
     relating  to its tax  status as a  regulated  investment  company (a "RIC")
     under the Internal  Revenue Code (the "Code").  Management of the Fund will
     seek  to  satisfy  these  asset  diversification  requirements  on a  "look
     through" basis with respect to the Fund's  investments in Hedge Funds, such
     that the Fund  considers  the  underlying  holdings of those Hedge Funds in
     measuring the Fund's  diversification for this purpose. Hedge funds are not
     generally  required  to  provide  current  complete  holdings   information
     regarding their investments to their investors  (including the Fund). Thus,
     the  Fund  may  not be  able  to  determine  whether  such  diversification
     requirements have been met on a "look-through" basis.

     Lack of Liquidity.  The Fund's  interests in the Hedge Funds will generally
     be illiquid.  The Fund may make  investments  in, or withdrawals  from, the
     Hedge Funds only at certain times  specified in the governing  documents of
     the Hedge Funds.  The Fund will  typically be able to dispose of Hedge Fund
     interests  that it has  purchased  only on a  periodic  basis,  subject  to
     advance notice  requirements.  In addition,  Hedge Funds may impose certain
     restrictions  on  withdrawals,  such as lock-ups,  gates, or suspensions of
     withdrawal rights under certain  circumstances,  during which time the Fund
     may not  withdraw  all or part of its  interest in the Hedge  Fund,  or may
     withdraw only by paying a penalty. There may be times when the New Advisers
     intend to  withdraw  all or a portion of the Fund's  investment  in a Hedge
     Fund but cannot  immediately  do so even when other  investors in the Hedge
     Fund are able to withdraw.

     Fluctuations  in  Value.  Since  the  New  Advisers  anticipate   initially
     investing 50% of the Fund's assets in Hedge Funds,  the value of the Fund's
     net assets will  fluctuate  significantly  based on the  fluctuation in the
     value  of the  Hedge  Funds in which it  invests.  To the  extent  that the
     portfolio of a Hedge Fund is  concentrated in securities of a single issuer
     or  issuers  in a  single  industry  or  market,  the  risk  of the  Fund's
     investment  in that Hedge Fund will be  increased.  Hedge Funds may be more
     likely  than other types of funds to engage in the use of  leverage,  short
     sales and Derivatives. A Hedge Fund's use of such transactions is likely to
     cause the value of the Fund's  portfolio to  appreciate  or depreciate at a
     greater  rate  than  if such  techniques  were  not  used.  The  investment
     environment  in which the Hedge Funds  invest may be  influenced  by, among
     other things, interest rates, inflation,  politics,  fiscal policy, current
     events, competition, productivity, technological and regulatory change.

     Multiple Fees and Expenses. As discussed below under "Advisory Agreements",
     the New Advisers will be paid an  asset-based  fee (i.e.,  the Proposed Fee
     (described  below)) on the Managed Assets  (described  below) including any
     investments in Hedge Funds. In addition,  Hedge Fund managers typically are
     paid an  asset-based  fee in the  range of 1.00% to 2.00% of total  assets.
     Moreover,  Hedge Fund managers typically are paid performance-based fees in
     the range of 20% of profits with respect to annual gains generated in their
     Hedge Funds.  Thus,  under the  Restructuring,  there is the  potential for
     multiple  advisory fees to be paid and consequently  advisory-related  fees
     could be significantly  higher,  especially when there are net gains in the
     Hedge Fund.  However,  as described  below, the New Advisers have agreed to
     waive  their fees in an amount  equal to up to 1.00% of the  Fund's  assets
     invested  in a WHM  Fund  to  offset  any  asset-based  fees  (but  not any
     performance-based  fees) paid to WHM with respect to the Fund's assets. WHM
     charges an asset-based  fee of 1.00% to the WHM Hedge Funds presently under
     consideration for investment by the New Advisers. In any event, an investor
     in the Fund may be subject to higher  operating  expenses than otherwise if
     invested in another closed-end fund with a different investment focus.

     The receipt of a  performance-based  fee by a Hedge Fund manager may create
     an incentive for the manager to make  investments  that are riskier or more
     speculative  than those  that  might have been made in the  absence of such
     fees. Further, because a performance-based fee will generally be calculated
     on a basis that includes unrealized appreciation of the Fund's assets, such
     fee may be  greater  than if it were based  solely on  realized  gains.  In
     addition,  a Hedge Fund manager will receive any  performance-based  fee to
     which it is entitled,  irrespective  of the  performance of the other Hedge
     Funds in the Fund  generally.  Thus,  a Hedge Fund  manager  with  positive
     performance  may  receive  compensation  from the Fund  even if the  Fund's
     overall returns are negative.

     Concentration.  If stockholders  approve Proposal 4, which would remove the
     Concentration Policy, the Fund would not concentrate, or invest 25% or more
     of the  value of its  total  assets  in the  securities  (other  than  U.S.
     Government  securities) of issuers engaged in a single industry or group of

     related  industries  (but the Fund may and intends to invest 25% or more of
     the value of its total assets in Hedge  Funds).  Hedge Funds  generally are
     not  subject  to  similar  industry  concentration  restrictions  on  their
     investments  and,  in some  cases,  may  invest 25% or more of the value of
     their total assets in a single industry or group of related industries.  It
     is possible that, at any given time, the assets of Hedge Funds in which the
     Fund has invested will have  investments  in a single  industry or group of
     related  industries that when combined with the direct holdings of the Fund
     in the same industry or group of industries might constitute 25% or more of
     the value of the Fund's  total  assets.  Because  these  circumstances  may
     arise, the Fund is subject to greater  investment risk to the extent that a
     significant  portion of its assets may at some times be invested,  directly
     or indirectly,  through Hedge Funds in which it invests,  in the securities
     of issuers engaged in similar  businesses that are likely to be affected by
     the same market conditions and other  industry-specific risk factors. Hedge
     Funds are not generally required to provide current  information  regarding
     their investments to their investors  (including the Fund).  Thus, the Fund
     and the New Advisers may not be able to determine at any given time whether
     or the extent to which Hedge Funds, in the aggregate,  have invested 25% or
     more of  their  combined  assets  in any  particular  industry  or group of
     related industries.

     If stockholders  approve the Restructuring,  including Proposal 4, the Fund
     would  likely be  concentrated  in the  securities  of  financial  services
     companies  immediately  following  the  Effective  Date, as a result of the
     current  effectiveness  of  the  Concentration  Policy.  However,  the  New
     Advisers  would seek to reduce the Fund's  holdings in  financial  services
     companies to below 25% of the Fund's assets in as prompt and prudent manner
     possible.

     Duplicative  Transaction  Costs.  Hedge Fund managers  make the  investment
     decisions of their Hedge Funds  independently of each other.  Consequently,
     at any particular  time,  one Hedge Fund may be purchasing  interests in an
     issuer  that at the  same  time  are  being  sold by  another  Hedge  Fund.
     Investing  by the  Hedge  Funds  in this  manner  will  cause  the  Fund to
     indirectly incur certain  transaction  costs without  accomplishing any net
     investment result.  Similarly,  Wellington Management, in its management of
     the  Legacy  Holdings  or the  New  Advisers  in  managing  non-Hedge  Fund
     investments,  may be selling  interests  in an issuer that at the same time
     are being  purchased  by another  Hedge  Fund,  again  causing  the Fund to
     indirectly incur certain  transaction  costs without  accomplishing any net
     investment results.

     Hedge  Funds  Not  Registered.  The  Hedge  Funds  generally  will  not  be
     registered as investment  companies  under the 1940 Act and the Fund, as an
     investor in these Hedge Funds, will not have the benefit of the protections
     afforded by the 1940 Act to investors in registered  investment  companies.
     The  1940  Act  provides  certain  protections  to  investors  such  as  an
     independent  board of directors  and imposes  certain  investor  protection
     restrictions on registered investment companies and their affiliates. These
     protections include: (i) the requirement that an investment company have an
     independent  board of directors with fiduciary  duties to  shareholders  to
     oversee,  among other things,  the  activities of the  investment  advisor,
     including  approval  of  management  fees and the  ability  to  remove  the
     investment advisor; (ii) prohibitions on affiliated transactions; (iii) the
     requirement  of a code of ethics;  (iv) custody and  safekeeping of assets;
     (v) disclosure and continuous reporting  requirements;  (vi) record keeping
     requirements;  and (vii) general protections against wrongdoing.  including
     requirements  to provide  investors  with  periodic  reporting  and certain
     standardized pricing and valuation  information.  Although the New Advisers
     will  periodically  receive  information from each Hedge Fund regarding its
     investment  performance and investment strategy,  the New Advisers may have
     little or no means of independently verifying this information. Hedge Funds
     are not  contractually  or otherwise  obligated to inform their  investors,
     including  the  Fund,  of  details   surrounding   proprietary   investment
     strategies. In addition, the Fund and the New Advisers will have no control
     over  the  Hedge  Funds'  investment   management,   brokerage,   custodial
     arrangements  or operations  and must rely on the experience and competency
     of each Hedge Fund manager in these areas.

     Special  Tax  Risks.  The Fund has  elected  to,  and  intends  to meet the
     requirements  necessary to, qualify as a "regulated  investment company" or
     "RIC" under Subchapter M of the Code. As such, the Fund must satisfy, among
     other requirements, certain ongoing asset diversification, source-of-income
     and annual distribution  requirements.  Each of these ongoing  requirements
     for  qualification  for  the  favorable  tax  treatment  available  to RICs
     requires that the Fund obtain information from the Hedge Funds in which the
     Fund is  invested.  Management  of the Fund will seek to satisfy  the asset
     diversification  requirements on a "look through" basis with respect to the
     Fund's  investments  in Hedge  Funds,  such  that the  Fund  considers  the
     underlying   holdings  of  those  Hedge  Funds  in  measuring   the  Fund's
     diversification for this purpose.


     If before the end of any quarter of its  taxable  year,  the Fund  believes
     that it may fail the asset diversification  requirement,  the Fund may seek
     to take  certain  actions  to  avert  such a  failure.  The Fund may try to
     acquire additional interests in Hedge Funds to bring itself into compliance
     with the asset  diversification  test. However, the action frequently taken
     by RICs to avert such a failure, the disposition of non-diversified assets,
     may be  difficult  for the Fund to pursue  because  the Fund may redeem its
     interest in a Hedge Fund only at certain  times  specified by the governing
     documents of each  respective  Hedge Fund.  While relevant  provisions also
     afford the Fund a 30-day  period after the end of the  relevant  quarter in
     which to cure a  diversification  failure by disposing  of  non-diversified
     assets, the constraints on the Fund's ability to effect a redemption from a
     Hedge Fund referred to above may limit utilization of this cure period.

     If the  Fund  fails to  satisfy  the  asset  diversification  or other  RIC
     requirements, it may lose its status as a RIC under the Code. In that case,
     all of its taxable  income would be subject to U.S.  federal  income tax at
     regular  corporate  rates without any deduction  for  distributions  to the
     Fund's   stockholders.    In   addition,   all   distributions   (including
     distributions  of net capital  gain) would be taxed to their  recipients as
     dividend  income  to the  extent  of the  Fund's  current  and  accumulated
     earnings and profits.  Accordingly,  disqualification as a RIC would have a
     material adverse effect on the value of the Fund's shares and the amount of
     the Fund's distributions.

     Risks Associated with Investments by Hedge Funds.

          Equity  Securities.  Hedge Funds may hold long and short  positions in
          common stocks, preferred stocks and convertible securities of U.S. and
          non-U.S.  issuers.  Hedge Funds also may invest in depositary receipts
          or shares relating to non-U.S. securities. Equity securities fluctuate
          in value, often based on factors unrelated to the fundamental economic
          condition of the issuer of the securities,  including general economic
          and market conditions, and these fluctuations can be pronounced. Hedge
          Funds may purchase  securities  in all  available  securities  trading
          markets and may invest in equity securities without  restriction as to
          market capitalization.

          Leverage.  Some or all of the Hedge Funds may make margin purchases of
          securities and, in connection with these purchases,  borrow money from
          brokers and banks for investment  purposes.  This  practice,  which is
          known as  "leverage,"  is  speculative  and  involves  certain  risks.
          Although the New Advisers do not  currently  anticipate  that the Fund
          will engage  directly in  leveraging,  the Fund is permitted to deploy
          leverage  and  other  investment  companies  managed  by  the  Boulder
          Advisers are leveraged.  So, it is likely that,  eventually,  the Fund
          will deploy  leverage,  but only to the extent  permitted  by the 1940
          Act.

          Trading  equity   securities  on  margin   involves  an  initial  cash
          requirement  representing  at  least a  percentage  of the  underlying
          security's  value.   Borrowings  to  purchase  equity  securities  are
          typically secured by the pledge of those  securities.  Hedge Funds may
          also  finance   securities   purchases  through  the  use  of  reverse
          repurchase   agreements  with  banks,   brokers  and  other  financial
          institutions.  Although leverage will increase investment returns if a
          Hedge Fund earns a greater  return on the  investments  purchased with
          borrowed  funds  than it pays for the use of those  funds,  the use of
          leverage  will  decrease  the return on a Hedge Fund if the Hedge Fund
          fails to earn as much on investments  purchased with borrowed funds as
          it pays for the use of those funds.  The use of leverage  will in this
          way magnify the volatility of changes in the value of an investment in
          the Hedge  Funds.  In the  event  that a Hedge  Fund's  equity or debt
          instruments  decline  in value,  the Hedge  Fund could be subject to a
          "margin  call" or  "collateral  call," under which the Hedge Fund must
          either  deposit  additional  collateral  with  the  lender  or  suffer
          mandatory  liquidation of the pledged securities to compensate for the
          decline in value. In the event of a sudden,  precipitous drop in value
          of a  Hedge  Fund's  assets,  the  Hedge  Fund  might  not be  able to
          liquidate  assets  quickly  enough  to pay  off its  borrowing.  Money
          borrowed for leveraging  will be subject to interest costs that may or
          may not be  recovered  by return on the  securities  purchased.  Hedge
          Funds  may  be  required  to  maintain  minimum  average  balances  in
          connection  with its borrowings or to pay a commitment or other fee to
          maintain a line of credit; either of these requirements would increase
          the cost of borrowing over the stated interest rate.

          Section 18 of the 1940 Act  requires a registered  investment  company
          such as the  Fund  to  satisfy  certain  asset  coverage  requirements
          relative to its  indebtedness.  This limit is not expected to apply to
          any of the Hedge  Funds in which the Fund  intends to  invest,  so the
          Fund's  portfolio  may be  exposed  to the  risk of  highly  leveraged
          investment  programs  of certain  Hedge  Funds and thus  increase  the
          volatility of the Fund's  investment.  In seeking  "leveraged"  market
          exposure in certain  investments and in attempting to increase overall
          returns,  a Hedge  Fund  may  purchase  options  and  other  synthetic
          instruments that do not constitute  "indebtedness" for purposes of the
          1940 Act but may nevertheless  involve  significant  economic leverage
          and may, in some cases, involve significant risks of loss.



          Short  Sales.  A Hedge  Fund may  attempt to limit its  exposure  to a
          possible  market  decline  in the  value of its  portfolio  securities
          through short sales of securities  that its manager  believes  possess
          volatility characteristics similar to those being hedged. A Hedge Fund
          may also use  short  sales for  non-hedging  purposes  to  pursue  its
          investment  objectives  if, in the  manager's  view,  the  security is
          over-valued in relation to the issuer's prospects for earnings growth.
          Short selling is speculative in nature and, in certain  circumstances,
          can substantially  increase the effect of adverse price movements on a
          Hedge Fund's  portfolio.  A short sale of a security involves the risk
          of an unlimited  increase in the market price of the security that can
          in turn  result in an  inability  to cover the  short  position  and a
          theoretically   unlimited  loss.   There  can  be  no  assurance  that
          securities  necessary to cover a Hedge Fund's short  position  will be
          available for purchase.

          A Hedge Fund may make "short sales  against-the-box," in which it will
          sell  short  securities  it owns or has the  right to  obtain  without
          payment  of  additional  consideration.  If a Hedge Fund makes a short
          sale  against-the-box,  it will be  required  to set aside  securities
          equivalent  in kind  and  amount  to the  securities  sold  short  (or
          securities convertible or exchangeable into those securities) and will
          be  required  to  hold  those  securities  while  the  short  sale  is
          outstanding.  A Hedge Fund will  incur  transaction  costs,  including
          interest  expenses,  in connection  with  initiating,  maintaining and
          closing out short sales against-the-box.

          Special Investment Instruments and Techniques. Hedge Funds may utilize
          a variety of special investment  instruments and techniques  described
          below to hedge the  portfolios  of the  Hedge  Funds  against  various
          risks,  such as changes in interest rates or other factors that affect
          security values,  or for non-hedging  purposes in seeking to achieve a
          Hedge Fund's investment objective.  The New Advisers, on behalf of the
          Fund, may also use these special investment instruments and techniques
          for either hedging or non-hedging  purposes.  These  strategies may be
          executed through Derivatives.  The instruments used and the particular
          manner in which they are used may change over time as new  instruments
          and techniques are developed or regulatory  changes occur.  Certain of
          these special  investment  instruments  and techniques are speculative
          and  involve a high  degree of risk,  particularly  in the  context of
          non-hedging transactions.

     o    Derivatives.  Hedge Funds may invest in, or enter  into,  Derivatives.
          Derivatives are financial  instruments that derive their  performance,
          at least in part, from the performance of an underlying  asset,  index
          or  interest  rate.  Derivatives  entered  into by a Hedge Fund can be
          volatile and involve various types and degrees of risk, depending upon
          the  characteristics  of a particular  Derivative and the portfolio of
          the Hedge Fund as a whole. Derivatives permit a manager to increase or
          decrease the level of risk of an investment  portfolio,  or change the
          character of the risk, to which an investment  portfolio is exposed in
          much the same way as the manager can increase or decrease the level of
          risk, or change the character of the risk, of an investment  portfolio
          by making investments in specific  securities.  Derivatives may entail
          investment  exposures  that are greater than their cost would suggest,
          meaning  that a small  investment  in  Derivatives  could have a large
          potential  effect on  performance  of a Hedge  Fund.  The  Hedge  Fund
          manager's use of Derivatives  may include total return swaps,  options
          and futures  designed to  replicate  the  performance  of a particular
          Hedge  Fund or to adjust  market  or risk  exposure.  If a Hedge  Fund
          invests in  Derivatives at  inopportune  times or  incorrectly  judges
          market  conditions,  the investments may lower the return of the Hedge
          Fund or result in a loss. A Hedge Fund also could experience losses if
          Derivatives are poorly  correlated with its other  investments,  or if
          the Hedge  Fund is unable to  liquidate  the  position  because  of an
          illiquid  secondary  market.  The market for many  Derivatives  is, or
          suddenly  can become,  illiquid.  Changes in  liquidity  may result in
          significant,  rapid  and  unpredictable  changes  in  the  prices  for
          Derivatives.

     o    Options  and  Futures.  Hedge  Funds may  utilize  options and futures
          contracts  and  so-called  "synthetic"  options  or other  Derivatives
          written   by   broker-dealers    or   other   permissible    financial
          intermediaries.  Options  transactions  may be effected on  securities
          exchanges  or  in  the  over-the-counter   market.  When  options  are
          purchased over-the-counter,  the Hedge Fund's portfolio bears the risk
          that  the  counterparty  that  wrote  the  option  will be  unable  or
          unwilling  to  perform  its  obligations  under the  option  contract.
          Options  may also be illiquid  and, in such cases,  the Hedge Fund may
          have  difficulty  closing out its position.  Over-the-counter  options
          also may  include  options on baskets of  specific  securities.  Hedge
          Funds may purchase  call and put options on specific  securities,  and
          may write and sell  covered  or  uncovered  call and put  options  for
          hedging  purposes in pursuing the  investment  objectives of the Hedge
          Funds.  A put option  gives the  purchaser  of the option the right to
          sell,  and obligates the writer to buy, the  underlying  security at a
          stated exercise  price,  typically at any time prior to the expiration
          of the option.  A call option  gives the  purchaser  of the option the
          right  to buy,  and  obligates  the  writer  to sell,  the  underlying
          security at a stated  exercise  price,  typically at any time prior to
          the  expiration of the option.  A covered call option is a call option

          with  respect to which the seller of the  option  owns the  underlying
          security.  The sale of such an option  exposes  the seller  during the
          term  of the  option  to  possible  loss  of  opportunity  to  realize
          appreciation  in the market  price of the  underlying  security  or to
          possible  continued  holding of a security that might  otherwise  have
          been sold to protect  against  depreciation in the market price of the
          security.  A covered put option is a put option with  respect to which
          cash or liquid securities have been placed in a segregated  account on
          the books of or with a custodian to fulfill the obligation undertaken.
          The sale of such an option  exposes the seller  during the term of the
          option  to a  decline  in  price  of  the  underlying  security  while
          depriving  the  seller of the  opportunity  to invest  the  segregated
          assets.

          A Hedge  Fund may  close  out a  position  when  writing  an option by
          purchasing an option on the same security with the same exercise price
          and expiration  date as the option that it has  previously  written on
          the security.  In such a case, the Hedge Fund will realize a profit or
          loss if the amount paid to purchase an option is less or more than the
          amount received from the sale of the option.

          Hedge Funds may enter into  futures  contracts  in U.S.  markets or on
          exchanges  located  outside the United  States.  Non-U.S.  markets may
          offer   advantages   such  as  trading   opportunities   or  arbitrage
          possibilities not available in the U.S..  Non-U.S.  markets,  however,
          may have greater risk potential than U.S. markets.  For example,  some
          non-U.S.  exchanges are principal  markets in which no common clearing
          facility  exists  and an  investor  may look  only to the  broker  for
          performance of the contract.  In addition,  any profits realized could
          be eliminated by adverse changes in the exchange rate, and the Fund or
          a Hedge  Fund  could  incur  losses  as a  result  of  those  changes.
          Transactions on non-U.S.  exchanges may include both  commodities that
          are traded on U.S. exchanges and those that are not. Unlike trading on
          U.S. commodity exchanges,  trading on non-U.S.  commodity exchanges is
          not regulated by the U.S. Commodity Futures Trading Commission.

          Engaging in transactions in futures contracts involves risk of loss to
          the Fund or the Hedge  Fund that could  adversely  affect the value of
          the Hedge Fund's and the Fund's net assets.  There can be no assurance
          that a liquid market will exist for any particular futures contract at
          any particular time. Many futures  exchanges and boards of trade limit
          the amount of fluctuation  permitted in futures contract prices during
          a single  trading  day.  Once the daily  limit has been  reached  in a
          particular contract,  no trades may be made that day at a price beyond
          that limit or trading may be suspended  for specified  periods  during
          the trading day.  Futures  contract prices could move to the limit for
          several consecutive trading days with little or no trading, preventing
          prompt liquidation of futures positions and potentially subjecting the
          Fund or the  Hedge  Funds to  substantial  losses.  Successful  use of
          futures also is subject to the New Advisers' or a Hedge Fund manager's
          ability  to  correctly  predict  movements  in  the  direction  of the
          relevant  market,  and, to the extent the  transaction is entered into
          for hedging purposes, to determine the appropriate correlation between
          the  transaction  being hedged and the price  movements of the futures
          contract.

          Positions of the SEC and its staff may require the Hedge Fund managers
          to  segregate  permissible  liquid  assets in  connection  with  their
          options and commodities transactions in amounts generally equal to the
          value of the underlying option or commodity.  The segregation of these
          assets  will have the  effect of  limiting  the  manager's  ability to
          otherwise  invest  those  assets.  While the Hedge Funds may engage in
          transactions  involving  options  and  commodities,  the Fund will not
          directly engage in, nor will it segregate  assets in connection  with,
          such transactions.

     o    Call and Put Options on Securities  Indices.  Hedge Funds may purchase
          and sell call and put  options  on stock  indices  listed on  national
          securities  exchanges  or traded in the  over-the-counter  market  for
          hedging  purposes and  non-hedging  purposes in seeking to achieve the
          investment  objectives  of the Hedge Funds.  A stock index  fluctuates
          with changes in the market values of the stocks included in the index.
          Successful  use of  options  on stock  indices  will be subject to the
          Hedge Fund  manager's  ability to correctly  predict  movements in the
          direction of the stock market generally or of a particular industry or
          market segment,  which requires  different  skills and techniques from
          those  involved  in  predicting  changes  in the  price of  individual
          stocks.

     o    Warrants  and Rights.  Hedge Funds may invest in warrants  and rights.
          Warrants and rights may be purchased  separately or may be received as
          part of a unit or  attached  to  securities  purchased.  Warrants  are
          Derivatives  that  permit,  but  do not  obligate,  their  holders  to
          subscribe for other  securities or commodities.  Rights are similar to
          warrants,  but  normally  have  shorter  durations  and are offered or
          distributed to stockholders  of a company.  Warrants and rights do not
          carry with them the right to dividends  or voting  rights with respect
          to the securities  that they entitle the holder to purchase,  and they
          do not  represent  any  interest  in the  assets of the  issuer.  As a

          result, warrants and rights may be more speculative than certain other
          types of equity-like  securities.  In addition, the values of warrants
          and rights do not necessarily change with the values of the underlying
          securities or commodities and these instruments cease to have value if
          they are not exercised prior to their expiration dates.

     o    Swap  Agreements.  Hedge Funds may enter into equity,  interest  rate,
          index  and  currency  rate  swap  agreements  in  order  to  obtain  a
          particular  return when it is desirable to do so,  possibly at a lower
          cost than if the Hedge Fund had  invested  directly  in the asset that
          yielded the desired return.  Swap  agreements are two-party  contracts
          entered into primarily by institutional  investors for periods ranging
          from a few weeks to more than a year. In a standard swap  transaction,
          two parties agree to exchange the returns (or  differentials  in rates
          of return) earned or realized on particular predetermined  investments
          or  instruments,  which may be adjusted  for an interest  factor.  The
          gross  returns to be exchanged  or  "swapped"  between the parties are
          generally calculated with respect to a "notional amount," that is, the
          return on or increase in value of a particular  dollar amount invested
          at a particular interest rate, in a particular non-U.S.  currency,  or
          in a "basket" of securities representing a particular index. Most swap
          agreements  entered into by a Hedge Fund would require the calculation
          of the  obligations of the parties to the agreements on a "net basis."
          Consequently,  current  obligations (or rights) under a swap agreement
          generally  will be equal only to the net amount to be paid or received
          under the agreement based on the relative values of the positions held
          by each party to the agreement  (the "net  amount").  The risk of loss
          with  respect  to swaps  is  limited  to the net  amount  of  interest
          payments  that the Hedge Fund is  contractually  obligated to make. If
          the other  party to a swap  defaults,  the Hedge  Fund's  risk of loss
          consists  of  the  net  amount  of   payments   that  the  Hedge  Fund
          contractually is entitled to receive.

     o    Lending Portfolio Securities. Hedge Funds may lend their securities to
          brokers,  dealers and other financial  institutions  seeking to borrow
          securities to complete  certain  transactions.  The lending Hedge Fund
          remains  entitled  to  payments  in  amounts  equal  to the  interest,
          dividends  or other  distributions  payable  in  respect of the loaned
          securities,  which  affords  the  Hedge  Fund an  opportunity  to earn
          interest  on the  amount  of the  loan and on the  loaned  securities'
          collateral.  In connection with any such  transaction,  the Hedge Fund
          will receive collateral consisting of cash, U.S. Government securities
          or irrevocable  letters of credit that will be maintained at all times
          in an amount equal to at least 100% of the current market value of the
          loaned securities. A Hedge Fund may experience loss if the institution
          with which the Hedge Fund has engaged in a portfolio loan  transaction
          breaches its agreement with the Hedge Fund.

     o    When-Issued  and  Forward  Commitment  Securities.   Hedge  Funds  may
          purchase  securities on a "when-issued" basis and may purchase or sell
          securities on a "forward  commitment"  basis in order to hedge against
          anticipated  changes in interest rates and prices.  These transactions
          involve a commitment by a Hedge Fund to purchase or sell securities at
          a future date  (ordinarily one or two months later).  The price of the
          underlying securities, which is generally expressed in terms of yield,
          is fixed at the time the  commitment is made, but delivery and payment
          for the  securities  takes place at a later date. No income accrues on
          securities that have been purchased  pursuant to a forward  commitment
          or on a  when-issued  basis  prior  to  delivery  to the  Hedge  Fund.
          When-issued  securities and forward  commitments  may be sold prior to
          the settlement  date. If a Hedge Fund disposes of the right to acquire
          a when-issued  security  prior to its  acquisition  or disposes of its
          right to deliver or receive against a forward commitment, it may incur
          a gain or  loss.  The  risk  exists  that  securities  purchased  on a
          when-issued  basis  may not be  delivered  and that the  purchaser  of
          securities  sold by a Hedge Fund on a forward basis will not honor its
          purchase obligation. In such cases, a Hedge Fund may incur a loss.

     o    Restricted and Illiquid Investments. A Hedge Fund may invest a portion
          of the value of its total assets in  restricted  securities  and other
          investments  that  are  illiquid.  The  Fund  may  likewise,   without
          limitation, invest in such securities and investments. The Hedge Funds
          in which the Fund  invests  will  themselves  generally  be  illiquid.
          Restricted  securities  are  securities  that  may  not be sold to the
          public  without  an  effective   registration   statement   under  the
          Securities Act of 1933 (the "Securities Act") or that may be sold only
          in a privately negotiated transaction or pursuant to an exemption from
          registration.  When  registration  is required  to sell a security,  a
          Hedge  Fund may be  obligated  to pay all or part of the  registration
          expenses, and a considerable period may elapse between the decision to
          sell and the time the Hedge Fund may be  permitted  to sell a security
          under  an  effective   registration   statement.   If  adverse  market
          conditions  were to develop  during  this  period,  a Hedge Fund might
          obtain a less  favorable  price than the price that prevailed when the
          Hedge  Fund  decided  to  sell.  Hedge  Funds  may be  unable  to sell

          restricted and other illiquid  securities at the most opportune  times
          or at prices  approximating  the  value at which  they  purchased  the
          securities.

     o    Counterparty  Credit Risk. The markets in which the Hedge Funds effect
          their transactions may be "over-the-counter" or "interdealer" markets.
          The  participants in these markets are typically not subject to credit
          evaluation and regulatory oversight as are members of "exchange based"
          markets.  To the extent a Hedge Fund invests in swaps,  Derivatives or
          synthetic instruments, or other over-the-counter transactions in these
          markets,  the Hedge Fund may take a credit risk with regard to parties
          with which it trades and also may bear the risk of settlement default.
          These   risks  may   differ   materially   from  those   involved   in
          exchange-traded  transactions,  which generally are  characterized  by
          clearing   organization   guarantees,   daily   marking-to-market  and
          settlement,   and  segregation   and  minimum   capital   requirements
          applicable  to  intermediaries.  Transactions  entered  into  directly
          between  two  counterparties  generally  do  not  benefit  from  these
          protections, which in turn may subject the Hedge Fund to the risk that
          a counterparty  will not settle a transaction  in accordance  with its
          terms  and  conditions  because  of a  dispute  over the  terms of the
          contract  or  because  of  a  credit  or   liquidity   problem.   Such
          "counterparty  risk" is increased for contracts with longer maturities
          when events may  intervene to prevent  settlement.  The ability of the
          Hedge  Funds  to  transact  business  with  any one or any  number  of
          counterparties,   the  lack  of  any  independent  evaluation  of  the
          counterparties or their financial  capabilities,  and the absence of a
          regulated market to facilitate settlement,  may increase the potential
          for losses by the Fund.

     o    Control   Positions.   Hedge  Funds  may  take  control  positions  in
          companies.  The exercise of control over a company imposes  additional
          risks of liability for environmental damage, product defects,  failure
          to  supervise  and  other  types  of  liability  related  to  business
          operations.  In  addition,  the act of taking a control  position,  or
          seeking to take such a  position,  may itself  subject a Hedge Fund to
          litigation  by parties  interested  in  blocking  it from  taking that
          position.  If those liabilities were to arise, or such litigation were
          to be resolved  adverse to the Hedge Funds,  the investing Hedge Funds
          likely would suffer losses on their investments.

     o    Foreign  Securities.  Hedge Funds may invest in  securities of foreign
          issuers  and in  depositary  receipts,  such  as  American  Depositary
          Receipts ("ADRs"),  that represent indirect interests in securities of
          foreign  issuers.  Investing in foreign  securities  involves  special
          risks and  considerations  not typically  associated with investing in
          U.S.  securities.  Foreign  securities  in which the  Hedge  Funds may
          invest  may be listed on  foreign  securities  exchanges  or traded in
          foreign over-the-counter markets. Foreign securities markets generally
          are  not  as  developed  or  efficient  or as  strictly  regulated  as
          securities  markets in the United  States.  Securities of some foreign
          issuers  are  less  liquid  and  more  volatile  than   securities  of
          comparable  U.S.  issuers.  Similarly,  volume and  liquidity  in most
          foreign securities markets are lower than in the United States and, at
          times,  volatility of prices can be greater than in the United States.
          The Fund will be subject to risks of possible  adverse  political  and
          economic developments, seizure or nationalization of foreign deposits,
          or adoption of governmental  restrictions  that might adversely affect
          or  restrict  the  payment  of  principal   and  interest  on  foreign
          securities  to  investors  located  outside the country of the issuer,
          whether from currency blockage or otherwise.  Since foreign securities
          often  are  purchased  with  and  payable  in  currencies  of  foreign
          countries,  their value may be affected  favorably or  unfavorably  by
          changes in currency rates and exchange control regulations.

          To the extent that Hedge Funds  invest in emerging  market  countries,
          the  political,  regulatory,  and  economic  risks  inherent  in  such
          investments are significant and may differ in kind and degree from the
          risks  presented  by  investments  in  major  securities   markets  in
          developed  countries.  Additional risks of emerging markets  countries
          may include:  greater social,  economic, and political uncertainty and
          instability; more substantial governmental involvement in the economy;
          less  governmental  supervision  and  regulation;   unavailability  of
          certain  currency  hedging   techniques;   companies  that  are  newly
          organized and small;  differences in auditing and financial  reporting
          standards,  which may result in unavailability of material information
          about issuers; and less developed legal systems.

     o    Foreign  Currency  Transactions.  Hedge  Funds may  engage in  foreign
          currency  transactions  for a variety of purposes,  including to "lock
          in"  the  U.S.  dollar  price  of  the  security,  between  trade  and
          settlement  date,  the value of a  security a Hedge Fund has agreed to
          buy or sell, or to hedge the U.S. dollar value of securities the Hedge
          Fund  already  owns.  Hedge Funds may also engage in foreign  currency
          transactions  for non-hedging  purposes to generate  returns.  Foreign
          currency  transactions  may  involve,  for  example,  the  purchase of

          foreign  currencies  for  U.S.  dollars  or the  maintenance  of short
          positions in foreign  currencies.  Foreign  currency  transactions may
          involve a Hedge Fund  agreeing  to exchange an amount of a currency it
          does not currently own for another  currency at a future date. A Hedge
          Fund would typically engage in such a transaction in anticipation of a
          decline in the value of the currency it sells relative to the currency
          that it has  contracted  to receive  in the  exchange.  An  investment
          adviser's success in these transactions will depend principally on its
          ability  to  predict  accurately  the future  exchange  rates  between
          foreign currencies and the U.S. dollar.

     o    Purchasing   Initial  Public  Offerings.   Hedge  Funds  may  purchase
          securities  of  companies  in  initial  public  offerings  or  shortly
          thereafter. Special risks associated with these securities may include
          a limited number of shares available for trading,  unseasoned trading,
          lack of  investor  knowledge  of the  issuer,  and  limited  operating
          history.  These factors may contribute to substantial price volatility
          for the  shares of these  companies.  Such  volatility  can affect the
          value of the Fund's  investment  in Hedge  Funds  that  invest in such
          shares.  The limited  number of shares  available  for trading in some
          initial  public  offerings may make it more difficult for a Hedge Fund
          to buy or  sell  significant  amounts  of  shares  without  having  an
          unfavorable  impact on prevailing  market  prices.  In addition,  some
          companies in initial  public  offerings are involved in relatively new
          industries or lines of business, which may not be widely understood by
          investors. Some of these companies may be undercapitalized or regarded
          as  developmental  stage  companies,  without  revenues  or  operating
          income, or the near-term prospects of achieving them.

     Risks of Fund of Hedge Funds Structure.  Since, under the Restructuring,  a
     substantial   portion  of  the  Fund  will  be  invested  in  Hedge  Funds,
     stockholders  should be aware of the  principal  risks  that  relate to the
     "fund of hedge funds" investment approach:

     o    Hedge  Funds Not  Registered.  The Hedge Funds  generally  will not be
          registered as investment companies under the 1940 Act. The Fund, as an
          investor  in these  Hedge  Funds,  will not  have the  benefit  of the
          protections  afforded  by the  1940  Act to  investors  in  registered
          investment  companies.  The 1940 Act provides  certain  protections to
          investors  such as an  independent  board  of  directors  and  imposes
          certain  investor  protection  restrictions  on registered  investment
          companies and their  affiliates.  These protections  include:  (i) the
          requirement  that an investment  company have an independent  board of
          directors  with fiduciary  duties to  shareholders  to oversee,  among
          other things,  the  activities of the  investment  advisor,  including
          approval of management  fees and the ability to remove the  investment
          advisor;  (ii)  prohibitions  on  affiliated  transactions;  (iii) the
          requirement  of a code of ethics;  (iv)  custody  and  safekeeping  of
          assets;  (v) disclosure and continuous  reporting  requirements;  (vi)
          record keeping  requirements;  and (vii) general  protections  against
          wrongdoing.  including requirements to provide investors with periodic
          reporting and certain standardized pricing and valuation  information.
          Although the New Advisers  will  receive  information  from each Hedge
          Fund regarding its  investment  performance  and investment  strategy,
          they may have  little  or no means  of  independently  verifying  this
          information.  A Hedge Fund may use proprietary  investment  strategies
          that are not fully  disclosed to the New  Advisers,  which may involve
          risks under some market conditions that are not anticipated by the New
          Advisers.  The  performance  of the Fund depends on the success of the
          New Advisers in selecting  Hedge Funds for  investment by the Fund and
          the allocation and reallocation of Fund assets among those funds.

     o    Availability  of  Information.  For  the  Fund  to  complete  its  tax
          reporting  requirements  and for the Fund to provide an audited annual
          report to its  stockholders,  it must receive timely  information from
          the Hedge Funds.  A Hedge Fund's delay in providing  this  information
          could delay the Fund's  preparation of tax  information for investors.
          The  lack of  available  information  also  could  impact  the  Fund's
          compliance  monitoring  abilities with respect to, among other things,
          industry  concentration,  valuation of Hedge  Fund's  interest and tax
          diversification requirements.

     o    Multiple Levels of Fees and Expenses;  Duplicative  Transaction Costs.
          An investor in the Fund meeting the eligibility  conditions imposed by
          the Hedge Funds may be able to invest  directly in the Hedge Funds. By
          investing in the Hedge Funds indirectly  through the Fund, an investor
          bears a portion of the Proposed Fee, administration and other expenses
          at the Fund level. This layering of fees often occurs in fund-of-funds
          or fund-of-hedge-funds structures.

          Each Hedge Fund  manager will  receive any  performance-based  fees to
          which it is  entitled  irrespective  of the  performance  of the other
          Hedge Fund  managers and the Fund  generally.  As a result,  a manager
          with  positive  performance  may receive  compensation  from the Hedge
          Fund, and thus indirectly from the Fund and its stockholders,  even if

          the Fund's overall returns are negative.  Generally,  asset-based fees
          payable  to  Hedge  Fund  managers  will  range  from  1.00%  to 2.00%
          (annualized)  of the net asset value of the Fund's  investment  in the
          Hedge Fund, and  performance-based  fees will generally range from 10%
          to 25% of the  Fund's  share of the net  profits  earned  by the Hedge
          Fund. In addition,  Hedge Fund managers make investment  decisions for
          the Hedge Funds independently of each other so that, at any particular
          time,  one Hedge  Fund may be  purchasing  shares  of an issuer  whose
          shares  are  being  sold at the  same  time  by  another  Hedge  Fund.
          Investing  by  Hedge  Funds  in this  manner  will  cause  the Fund to
          indirectly incur certain  transaction costs without  accomplishing any
          net investment result.

     o    Hedge Fund Interests Generally Illiquid. The Fund may make investments
          in,  or  withdrawals  from,  the Hedge  Funds  only at  certain  times
          specified in the governing documents of the Hedge Funds. The Fund will
          typically  be able to  dispose  of Hedge  Fund  interests  that it has
          purchased  only  on a  periodic  basis  such  as  monthly,  quarterly,
          semi-annually  or over longer  periods with  specified  advance notice
          requirements  and, if adverse market conditions were to develop during
          any period in which the Fund is unable to sell  Hedge Fund  interests,
          the Fund might obtain a less favorable price than that which prevailed
          when it decided to buy or sell.  In  addition,  Hedge Funds may impose
          certain  restrictions  on  withdrawals,  such as lock-ups,  gates,  or
          suspensions of withdrawal rights under certain  circumstances,  during
          which time the Fund may not  withdraw  all or part of its  interest in
          the Hedge Fund, or may withdraw only by paying a penalty.

          Some of the Hedge  Funds may hold  portions of their  investments,  in
          particular  investments  that are  illiquid,  in so-called  designated
          investments or "side pockets".  Side pockets are sub-funds  within the
          Hedge Funds that create a structure  to invest in illiquid  securities
          and are valued  independently from the general portfolio with distinct
          allocation,  distribution  and  redemption  terms.  Their  liquidation
          generally occurs over a much longer period than that applicable to the
          Hedge Funds' general portfolio. Were the Fund to seek to liquidate its
          investment in a Hedge Fund which  maintains some of its investments in
          a side  pocket,  the Fund  might  not be able to fully  liquidate  its
          investment  without  delay,  which could be  considerable.  During the
          period until the Fund fully liquidated its interest in the Hedge Fund,
          the value of its investment would fluctuate.

          There may be times when the New  Advisers  intend to withdraw all or a
          portion  of  the  Fund's   investment  in  a  Hedge  Fund  but  cannot
          immediately do so even when other investors in the Hedge Fund are able
          to withdraw.

     o    In-Kind  Distributions by Hedge Funds. Hedge Funds may be permitted by
          their  governing  documents  to  distribute   securities  in  kind  to
          investors,  including the Fund.  The Fund expects that in the event of
          an in-kind distribution, it will typically receive securities that are
          illiquid  or  difficult  to  value.  In  such  circumstances,  the New
          Advisers would seek to dispose of these securities in a manner that is
          in the best interest of the Fund. However, the New Advisers may not be
          able to dispose of these  securities  at  favorable  prices or at all,
          which would have an adverse  effect on the Fund's  performance,  or at
          favorable times, which may adversely affect the Fund's ability to make
          other investments.

     o    Involuntary  Redemptions  by Hedge  Funds.  Hedge Funds are  generally
          permitted  by  their  governing  documents  to force a  redemption  by
          investors  for  different  reasons,  including to maintain a statutory
          exemption  or comply  with  regulatory  requirements.  If a Hedge Fund
          forces a  redemption  of all or a part of the  Fund's  investment,  it
          could trigger  adverse tax  consequences,  and additional  transaction
          costs to reposition the Fund's portfolio.

     o    Valuation.  Certain securities in which the Hedge Funds invest may not
          have  readily  ascertainable  market  prices and will be valued by the
          Hedge Fund  managers.  Although  the New  Advisers  will conduct a due
          diligence  review of the valuation  methodology  utilized by the Hedge
          Funds and will  monitor  all Hedge  Funds and  compare  their  monthly
          results  with  those  of peer  hedge  fund  managers,  the  valuations
          provided  generally will be conclusive with respect to the Fund unless
          the Fund has a clearly discernible reason not to trust the accuracy of
          such valuations.  Reliance upon such valuations will occur even though
          a Hedge Fund  manager  may face a conflict  of interest in valuing the
          securities, as their value will affect the manager's compensation. The
          New  Advisers  are  required  to  consider  all  relevant  information
          available at the time the Fund values its portfolio.  However, in most
          cases,  the New Advisers  will have limited  ability to  independently
          confirm the  accuracy  of the  valuations  received  from a Hedge Fund
          because the  advisers do not  generally  have access to all  necessary
          financial,   underlying   portfolio  holdings  and  valuation  of  the
          underlying holdings, and other information relating to the Hedge Funds
          to  determine  independently  the Hedge  Funds' net asset  values.  In
          addition,  Hedge Fund  performance  and  valuation  data are available

          typically  only on a monthly basis.  Thus, a significant  component of
          the Fund's  portfolio  will not be valued on a weekly  basis as it has
          been historically. This could result in potentially volatile swings in
          the Fund's  month-to-month  calculation  of net asset value.  See "Net
          Asset Valuation" below.

     o    Securities   Believed  to  Be  Undervalued   or  Incorrectly   Valued.
          Securities  that a  Hedge  Fund  manager  believes  are  fundamentally
          undervalued or incorrectly  valued may not ultimately be valued in the
          capital  markets at prices  and/or  within the time frame the  manager
          anticipates.

     o    Dilution.  If a Hedge Fund  manager  limits the amount of capital that
          may be  contributed  to a Hedge  Fund  from the  Fund,  or if the Fund
          declines to purchase additional  interests in a Hedge Fund,  continued
          sales of  interests in the Hedge Fund to others may dilute the returns
          for the Fund from the Hedge Fund.

     o    Investments  in  Non-Voting  Stock.  The  Fund  may  elect to hold its
          interest in a Hedge Fund in non-voting  form.  Additionally,  the Fund
          may  choose to limit the amount of voting  securities  it holds in any
          particular Hedge Fund and may, as a result,  hold substantial  amounts
          of non-voting securities in a particular Hedge Fund. To the extent the
          Fund holds non-voting  securities of a Hedge Fund, it will not be able
          to vote on matters that  require the approval of the  investors in the
          Hedge Fund. This restriction  could diminish the influence of the Fund
          in a Hedge Fund and adversely affect its investment in the Hedge Fund,
          which could result in unpredictable and potentially adverse effects on
          the Fund and stockholders.

     o    Hedge Funds' Turnover  Rates.  The Hedge Funds may invest on the basis
          of  short-term  market  considerations.  The turnover  rate within the
          Hedge  Funds may be  significant,  potentially  involving  substantial
          brokerage  commissions  and fees.  The Fund has no  control  over this
          turnover. As a result, it is anticipated that a significant portion of
          the Fund's  income and gains,  if any,  may be derived  from  ordinary
          income and short-term  capital gains.  In addition,  the redemption by
          the Fund of its interest in a Hedge Fund could involve expenses to the
          Fund under the terms of the Fund's investment with that Hedge Fund.

     o    Misconduct  by Managers.  There is a risk of  misconduct by Hedge Fund
          managers.  When the New Advisers invest the Fund's assets with a Hedge
          Fund manager,  the Fund does not have custody of the assets or control
          over their  investment.  Therefore,  there is always the risk that the
          manager  could  divert or abscond  with the  assets,  inaccurately  or
          fraudulently report the Hedge Fund's value, fail to follow agreed upon
          investment strategies,  provide false reports of operations, or engage
          in  other  misconduct.  The  Hedge  Fund  managers  with  whom the New
          Advisers  invest the Fund's assets are generally  private and have not
          registered  their  securities  under federal or state securities laws.
          This  lack of  registration,  with the  attendant  lack of  regulatory
          oversight,  may enhance the risk of misconduct by Hedge Fund managers.
          There also is a risk that  governmental or other  authorities may take
          regulatory  actions  against  Hedge  Fund  managers,  which may expose
          investors  such as the  Fund,  which  have  placed  assets  with  such
          managers, to losses.

     o    Custody Risk.  Custody of the Fund's assets will be held in accordance
          with the  requirements  of Section 17(f) of the 1940 Act and the rules
          thereunder,  which  require,  among other things,  that such assets be
          held by certain  qualified  banks or companies and in compliance  with
          certain  specified  conditions.  However,  the  Hedge  Funds  are  not
          required to, and may not,  hold custody of their assets in  accordance
          with  those  requirements.   As  a  result,  bankruptcy  or  fraud  at
          institutions, such as brokerage firms, banks, or administrators,  into
          whose  custody those Hedge Funds have placed their assets could impair
          the  operational  capabilities  or the  capital  position of the Hedge
          Funds and may, in turn, have an adverse impact on the Fund.

     o    Litigation and Enforcement  Risk. Hedge Fund managers might accumulate
          substantial  positions  in the  securities  of a specific  company and
          engage in a proxy fight,  become  involved in litigation or attempt to
          gain  control  of  a  company.  Under  such  circumstances,  the  Fund
          conceivably  could be named as a defendant in a lawsuit or  regulatory
          action.  There  have  been a number of widely  reported  instances  of
          violations  of  securities  laws  through  the misuse of  confidential
          information,  diverting or absconding with Hedge Fund assets,  falsely
          reporting Hedge Fund values and  performance,  and other violations of
          the  securities  laws.  Such  violations  may  result  in  substantial
          liabilities  for damages  caused to others,  for the  disgorgement  of
          profits  realized and for penalties.  Investigations  and  enforcement
          proceedings  are  ongoing,  and it is  possible  that the  hedge  fund
          managers may be charged with involvement in such  violations.  If that
          were the case with respect to the Hedge Fund managers, the performance
          records  of the  managers  would be  misleading.  Furthermore,  if the
          entity in which the Fund invested engaged in such violations, the Fund
          could be exposed to losses.



     o    Regulatory Change. The regulation of the U.S. and non-U.S.  securities
          and futures markets and Hedge Funds and investment  companies like the
          Fund has undergone  substantial  change in the recent years,  and such
          change  is  expected  to  continue  for the  foreseeable  future.  For
          example,  the regulatory and tax  environment for Derivatives in which
          Hedge Funds may participate is evolving, and changes in the regulation
          or taxation of Derivatives may materially  adversely  affect the value
          of the  Derivatives  held by the Hedge  Funds and the  ability  of the
          Hedge  Funds  to  pursue  their  trading  strategies.  Similarly,  the
          regulatory  environment  for  leveraged  investors and for hedge funds
          generally is evolving,  and potential regulatory  constraints on short
          selling may occur. The effect of regulatory  change on the Fund, while
          impossible to predict, could be substantial and adverse.

     o    Lack of Transparency. Hedge Funds may, consistent with applicable law,
          not  disclose  the  contents  of  their   portfolios.   This  lack  of
          transparency  may cause the Fund to be unable to determine  the levels
          of ownership in certain asset classes in the Hedge Funds. In addition,
          managers of Hedge Funds also generally do not permit public disclosure
          of their  hedge  funds'  investment  strategies  or other  proprietary
          financial  information.  Consequently,  unlike the publicly  available
          financial  information on the Fund's  investments  in  publicly-traded
          companies,  stockholders  will not have public  access to research and
          analysis on the Hedge Funds in which the Fund invests.

          The staff of the Securities and Exchange  Commission (the "SEC Staff")
          has taken the informal  position that an investment  company,  such as
          the Fund,  should  provide its  stockholders  with  audited  financial
          statements  on an  annual  basis for a  private  company  in which the
          investment  company  invests,  including  Hedge Funds, if the value of
          such  investment  exceeds 25% of the  investment  company's  net asset
          value (measured as of the last day of each calendar quarter) (the "25%
          Threshold").  In the SEC Staff's  view,  the 25% Threshold is absolute
          and the financial statement delivery requirement will apply regardless
          of whether  the 25%  Threshold  is exceeded as a result of the initial
          investment amount,  subsequent fluctuations in the market value of the
          private company investment or the investment company's other portfolio
          investments,  or  otherwise.  As  discussed  above,  since  Hedge Fund
          managers  generally will not permit public disclosure of the financial
          statements  of the Hedge Funds they  manage,  the Fund likely would be
          unable to satisfy the financial statement delivery  requirement if the
          Fund's  investment in any single hedge fund exceeds the 25% Threshold.
          Accordingly,  to avoid the possibility  that the Fund would exceed the
          25%  Threshold  but not be able to provide  the  underlying  financial
          statements,  the Fund has adopted  policies and  procedures  to ensure
          that the New Advisers continuously monitor the percentage the Fund has
          invested  in  each  of  its  Hedge  Fund   investments.   Under  these
          procedures,  the New Advisers will limit the Fund's initial investment
          in any single Hedge Fund to approximately  17% of the Fund's net asset
          value at the time of  investment  and will  begin  taking  affirmative
          steps to reduce the Fund's investment in any Hedge Fund when the value
          of any such investment exceeds 22% of the Fund's net asset value.

          Although the New Advisers  believe  that Fund's  investments  in Hedge
          Funds can be  managed so as not to exceed  the 25%  Threshold,  if the
          value  of  one  of  the  Fund's  Hedge  Fund   investments   increases
          precipitously while the remainder of the Fund's investments decreases,
          given  the  redemption  notice  period  required  by most  hedge  fund
          advisers,  the Fund may not be able to  reduce  its  position  quickly
          enough to avoid  exceeding  the 25%  Threshold  prior to the measuring
          date at the end of a calendar  quarter.  Moreover,  because most Hedge
          Funds (including the WHM Hedge Funds) impose a "lock up" period on new
          investors (i.e.,  new investors cannot make redemption  requests for a
          specified  period,  typically  one  year),  the Fund may be  unable to
          redeem its interest in a Hedge Fund quickly enough to avoid  exceeding
          the 25% Threshold despite the Fund's policies and procedures.

     o    Indemnification  of  Hedge  Funds.  The Fund  may  agree to  indemnify
          certain of the Hedge Funds and investment advisers of Hedge Funds from
          any  liability,  damage,  cost or expense  arising out of, among other
          things,  certain  acts or  omissions  relating to the offer or sale of
          interests/units  in the Hedge Funds.  The  investment  advisers of the
          Hedge   Funds  often  have  broad   limitations   on   liability   and
          indemnification rights.

     o    Hedge Funds Organized or Investing  Outside United States.  Some Hedge
          Funds may be organized  outside the United States.  Investments by the
          Hedge  Funds  in  foreign  financial  markets,  including  markets  in
          developing  countries,  present  political,  regulatory,  and economic
          risks that are significant and that may differ in kind and degree from
          risks presented by investments in the United States.  For example,  it
          may be more difficult for the Fund to enforce its rights  offshore and
          the  regulations   applicable  to  those  jurisdictions  may  be  less
          stringent.



     o    Concentration and Non-Diversified  Portfolios.  Hedge Funds may target
          or concentrate their investments in particular  markets,  sectors,  or
          industries.  Hedge Funds also may be considered to be  non-diversified
          and invest without limit in a single  issuer.  As a result of any such
          concentration  of  investments  or  non-diversified   portfolios,  the
          portfolios of such Hedge Funds are subject to greater  volatility than
          if they had non-concentrated and diversified  portfolios.  Those Hedge
          Funds that  concentrate  in  specific  industries  or target  specific
          sectors  will  also be  subject  to the risks of those  industries  or
          sectors,  which may include, but not be limited to, rapid obsolescence
          of technology,  sensitivity to regulatory changes, minimal barriers to
          entry, and sensitivity to overall market swings.

Net Asset  Valuation.  The net asset value ("NAV") of the Fund's common stock is
computed based on the value of the Fund's portfolio securities and other assets.
NAV per share is  determined as of the close of the regular  trading  session on
the NYSE no less  frequently  than the last business day of each week and month,
provided,  however, that if any such day is a holiday or determination of NAV on
such day is impracticable, the NAV is calculated on such earlier or later day as
determined by the New Advisers.  The NAV per share is determined by dividing the
value of the Fund's net assets  attributable to common stock by the total number
of common shares outstanding. The value of the Fund's net assets attributable to
common  stock is deemed to equal the value of the Fund's  total  assets less (i)
the Fund's liabilities  (including  accrued expenses,  dividends payable and any
borrowings  of the  Fund)  and  (ii)  the  aggregate  liquidation  value  of any
outstanding preferred stock.  Securities for which market quotations are readily
available  (including  securities  listed on national  securities  exchanges and
those traded  over-the-counter) are valued at the last quoted sales price on the
valuation  date on which the  security is traded.  If such  securities  were not
traded on the valuation date, but market quotations are readily available,  they
are valued at the most  recently  quoted bid price  provided  by an  independent
pricing service or by principal market makers.  Securities  traded on NASDAQ are
valued at the NASDAQ  Official  Closing Price  ("NOCP").  Short-term  securities
which  mature in more  than 60 days are  valued at  current  market  quotations.
Short-term  securities  which  mature in 60 days or less are valued at amortized
cost, which approximates market value.

Investments for which current market  quotations are not readily available or do
not otherwise accurately reflect the fair value of the investment, are valued at
fair value as determined in good faith by or under the direction of the Board of
Directors  of the  Fund.  In this  regard,  the  Fund  has  adopted  fair  value
procedures   pursuant  to  which  "fair  value  securities"  are  valued  (i.e.,
securities  owned  by the Fund  for  which  market  quotations  are not  readily
available or current market  quotations may be  unreliable,  including,  but not
limited to, illiquid  securities) (the "Fair Value Procedures").  Under the Fair
Value Procedures,  the Board has established a pricing  committee  consisting of
any two of a group consisting of the Fund's president and Independent  Directors
(the "Pricing Committee"). Generally, the Fund's investment advisers are charged
with  identifying  and reporting to the Pricing  Committee  securities  that may
require fair value determination.  The Pricing Committee's valuation of any fair
value  security is a subjective  process the accuracy of which will be dependent
of a number of factors and circumstances  existing at the time of the valuation.
Consequently,  the  ultimate  price for which a fair value  security is sold may
differ  significantly  from the price  determined  in good faith by the  Pricing
Committee,  which difference could adversely affect the Fund's NAV per share and
its  stockholders.  The  valuation  techniques  used by the Fund to measure fair
value will attempt to maximize the use of observable inputs and minimize the use
of unobservable inputs.

In general,  fair value  represents  a good faith  approximation  of the current
value of an asset and will be used when there is no public market or possibly no
market at all for the asset.  The fair  values of one or more  assets may not be
the prices at which those assets are  ultimately  sold. In cases where a partial
sale of a fair valued security  occurs,  the Pricing  Committee and/or the Board
may  reevaluate the Fund's fair value  methodology  to determine,  what, if any,
adjustments should be made to the methodology.

The Fair Value  Procedures  address how the Fund values its investments in Hedge
Funds.  In accordance with these  procedures,  a Hedge Fund's fair value will be
the value  determined  by  management  of the Hedge Fund  (typically  as of each
calendar month-end) in accordance with each Hedge Fund's own valuation policies.
As a general matter,  the fair value of the Fund's interest in a Hedge Fund will
represent the amount that the Fund could  reasonably  expect to receive from the
Hedge Fund if the Fund's interest were redeemed at the time of valuation,  based
on information  reasonably  available at the time the valuation is made and that
the Fund believes to be reliable. In the event that a Hedge Fund does not report
a month-end  value to the Fund on a timely basis,  the Fund would  determine the
fair value of such Hedge Fund based on the most  recent  value  reported  by the
Hedge Fund,  as well any other  relevant  information  available at the time the
Fund values its portfolio.



Prior to  investing  in any Hedge  Fund,  the New  Advisers  will  conduct a due
diligence review of the valuation  methodology utilized by the Hedge Fund, which
as a general  matter will utilize  market values when  available,  and otherwise
utilize principles of fair value that the New Advisers  reasonably believe to be
consistent with those used by the Fund for valuing its own investments. Although
the  Fair  Value  Procedures  provide  that the New  Advisers  will  review  the
valuations provided by the investment  advisers to the Hedge Funds,  neither the
New Advisers nor the Board will be able to confirm independently the accuracy of
valuations provided by such investment  advisers (which are unaudited).  The New
Advisers  are not  required  to  adhere to the  valuations  as  provided  by the
investment  advisers to the Hedge Funds which may result in valuations  that are
greater or lesser  than those  reported  by the Hedge Funds and which may impact
the per share valuation of the Fund's NAV.

The Fund's  valuation  procedures  require  the New  Advisers  to  consider  all
relevant  information  available  at the  time the Fund  values  its  portfolio.
Although  redemptions  of interests in Hedge Funds are subject to advance notice
requirements,  Hedge  Funds  will  typically  make  available  net  asset  value
information  to holders  which will  represent  the price at which,  even in the
absence of redemption activity,  the Hedge Fund would have effected a redemption
if any such requests had been timely made or if, in accordance with the terms of
the  Hedge  Fund's  governing  documents,  it would  be  necessary  to  effect a
mandatory  redemption.  Following  the Fair  Value  Procedures,  the Fund  would
consider whether it was appropriate, in light of all relevant circumstances,  to
value  such a  position  at its net  asset  value  as  reported  at the  time of
valuation,  or whether to adjust  such value to reflect a premium or discount to
net asset  value.  In other cases,  as when a Hedge Fund  imposes  extraordinary
restrictions  on  redemptions,  the Fund may determine that it is appropriate to
apply a discount  to the net asset value of the Hedge  Fund.  Any such  decision
would be made in good faith,  and subject to the review and  supervision  of the
Board.

The initial valuations reported by the investment advisers of Hedge Funds, which
the Fund may rely upon to calculate  its week-end and  month-end  NAV per share,
may be subject to later adjustment based on information  reasonably available at
that time.  For example,  fiscal  year-end net asset value  calculations  of the
Hedge Funds are audited by those funds' independent  auditors and may be revised
either up or down as a result of such audits.  Other  adjustments may occur from
time to time. Such  adjustments or revisions,  whether  increasing or decreasing
the NAV of the Fund at the time they occur,  because they relate to  information
available  only at the time of the  adjustment  or  revision,  are not likely to
retroactively  affect  the  amount  of the  repurchase  proceeds  of  the  Fund;
accordingly,  proceeds  received by Hedge Fund members who have their Hedge Fund
units/interests  ("Units")  repurchased  and receive their  repurchase  proceeds
prior to such  adjustments  are not  likely to be  affected  by NAV  adjustments
occurring subsequent to the receipt of their repurchase  proceeds.  As a result,
to the extent that  subsequently  adjusted  valuations  adversely affect a Hedge
Fund's NAV,  outstanding Units may be adversely affected by prior repurchases to
the benefit of other Hedge Fund members who had their interests repurchased at a
NAV per Unit higher than the adjusted  amount.  Conversely,  any  increases in a
Hedge Fund's NAV resulting  from such  subsequently  adjusted  valuations may be
entirely for the benefit of outstanding Units and to the detriment of Hedge Fund
members who previously  had Units  repurchased at an NAV per Unit lower than the
adjusted  amount.  The same principles apply to the purchase of Units (i.e., new
Hedge Fund members may be affected in a similar way.

The Fair Value  Procedures  provide that,  where deemed  appropriate  by the New
Advisers and  consistent  with the 1940 Act,  investments  in Hedge Funds may be
valued  at cost.  Cost  would  be used  only  when  cost is  determined  to best
approximate the fair value of the particular security under  consideration.  The
Board will be responsible for ensuring that the valuation  policies  utilized by
the  Pricing  Committee  are  fair to the Fund and  consistent  with  applicable
regulatory guidelines.

The  books  and  records  of the  Fund are  maintained  in US  dollars.  Foreign
currencies,  investments and other assets and liabilities denominated in foreign
currencies will be translated into U.S.  dollars at the exchange rate prevailing
on the valuation date. Purchases and sales of investment securities,  income and
expenses  denominated in foreign  currencies are translated at the exchange rate
on the dates of such  transactions.  On occasion,  the values of securities  and
exchange rates may be affected by events occurring  between the time as of which
determination of such values or exchange rates are made and the time as of which
the net  asset  value of the Fund is  determined.  When such  events  materially
affect  the  values  of  securities  held by the Fund or its  liabilities,  such
securities  and  liabilities  may be valued at fair value as  determined in good
faith in accordance with the Fair Value Procedures.

Expenses  of the  Fund,  including  the  New  Advisers'  and  any  sub-advisers'
investment  management fees and the costs of any  borrowings,  are accrued daily
and taken into account for the purpose of determining NAV.



Investors in the Fund should be aware that situations involving uncertainties as
to the value of portfolio  positions  could have an adverse effect on the Fund's
net assets if the judgments of the Board, the New Advisers,  any sub-advisers or
investment  advisers to the Hedge Funds, or any independent  publicly registered
accountants to any of the foregoing,  should prove incorrect.  Also,  investment
advisers to the Hedge Funds will only provide valuation information on a monthly
basis,  in which event the Fund's  calculation of its NAV on a weekly basis will
often be based on "stale"  valuations of its underlying Hedge Fund  investments.
Accordingly,  the Fund's NAV could be subject to significant change when updated
Hedge Fund valuations become available.

Risks Associated With De-listing From the NYSE

Presently,  there are no NYSE  listing  standards  affecting  NYSE  members that
invest in hedge funds.  However,  in 2008, the American Stock Exchange  ("AMEX")
filed a  proposed  rule  change  with the  Securities  and  Exchange  Commission
concerning a "generic"  listing  standard for closed-end  management  investment
companies of hedge funds (the "AMEX Standard").  As proposed,  the AMEX Standard
would  have  imposed  significant  obligations  on  member  companies  that make
investments of any size in any private  investment  vehicle (e.g.,  hedge funds,
private equity funds, pooled investment vehicles,  etc.). As proposed,  the AMEX
Standard  would  require,  as a condition of listing,  that a member  closed-end
investment  company  (i) invest only in hedge  funds that  independently  report
their  net  asset  values  weekly,  and  (ii)  publicly  disclose  all  material
information  that an investee hedge fund makes available to its investors (e.g.,
financial  statements  and  holdings).  As  discussed  above,  neither  of these
conditions is likely to be feasible under the  Restructuring.  The AMEX Standard
was not adopted prior to the  acquisition  of the AMEX by the NYSE,  and has not
subsequently  been  adopted  by the NYSE.  However,  officials  at the NYSE have
informed  the Fund  that  the SEC is  encouraging  the  NYSE to adopt a  listing
standard  substantially  similar to the AMEX Standard.  Such a listing  standard
would be subject to the NYSE normal rulemaking  procedures  (i.e.,  publication,
public comment,  adoption,  etc.) and could take some time.  However,  if such a
listing  standard is  eventually  adopted and the  Restructuring  is approved by
stockholders  and implemented by the New Advisers (i.e., a portion of the Fund's
assets is  invested  in the WHM  Hedge  Funds or any  other  private  investment
vehicle), the Fund likely would not be able to satisfy the newly-adopted listing
standard and thus could become subject to de-listing by the NYSE unless the Fund
receives an exemption  from the NYSE.  In this event,  the Fund may seek to list
its  shares on  another  domestic  exchange  (e.g.,  NASDAQ or OTCBB) or foreign
exchange (e.g., Toronto Stock Exchange, London Stock Exchange or AIM).

If the Fund is required to de-list from the NYSE,  the market  liquidity for the
Fund's common shares would likely be negatively affected, which may make it more
difficult for  stockholders to sell their  securities in the open market and may
negatively  affect the market price of the Fund's common shares and/or  increase
the  discount  between  the Fund's net asset  value and the market  price of its
common  shares.  Even if the Fund is successful in listing its shares on another
domestic  exchange  or  a  foreign  exchange,   stockholders   could  experience
inconvenience and higher costs in trading their shares in the Fund, particularly
if the shares are listed on a foreign  exchange.  If the Fund elects to list its
shares on a foreign exchange, the Fund may be subject to higher listing fees and
other operating costs than those to which it is currently subject.  In addition,
the  Fund  may  become  subject  to  corporate  governance  standards  that  are
potentially  more  restrictive  and costly  than the NYSE  corporate  governance
standards. The Fund is currently exempt from state securities regulation because
of its NYSE listing.  Upon de-listing,  if the Fund issues new securities it may
be required to make state notice  filings and pay state blue sky fees if it does
not list its shares on another exchange that continues this exemption.

The New Advisers.

Rocky Mountain Advisers, L.L.C. RMA was formed on September 5, 2008 as an Alaska
single-member  limited  liability  company  owned by the Susan  Trust (a Horejsi
Affiliate and private family trust domiciled in Alaska). RMA is registered as an
investment  adviser  under the  Investment  Advisers Act of 1940 (the  "Advisers
Act").  Although  RMA is a newly formed LLC with no  operating  history,  it has
identical  principals,  officers,  staff,  and  portfolio  managers as BIA.  BIA
currently  provides  investment  advisory  services  to three  other  closed-end
investment companies: Boulder Total Return Fund, Inc. (NYSE:BTF), Boulder Growth
& Income Fund, Inc. (NYSE:BIF),  and The Denali Fund Inc. (NYSE:DNY)  (together,
the "Boulder Funds"). RMA's principal offices are located at 2344 Spruce Street,
Suite A, Boulder,  Colorado 80302. The Susan Trust is an "affiliated  person" of
the Fund (as that term is defined in the 1940 Act).  The  executive  officers of
RMA and the principal occupation of each are set forth in the table below:





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

           Name and Position with RMA                               Principal Occupation

================================================= ===========================================================
                                               
Stephen C. Miller - President, General Counsel    President  (since 1999), BIA;  Manager (since 1999), FAS;
and Chief Executive Officer                       Vice President (since 1996), SIA; President (since 2002),
                                                  BIF; President (since 1999), BTF; President (since 2003),
                                                  the Fund;  President (since 2007), DNY;  Chief Compliance
                                                  Officer (2004-2007), BTF, BIF, the Fund, FAS, BIA, and SIA;
                                                  President and General Counsel, Horejsi, Inc. (liquidated in
                                                  1999);  General Counsel, Brown Welding Supply, LLC (sold in
                                                  1999);  Of Counsel (since 1991)  to  Krassa  & Miller, LLC;
                                                  Manager and  President,  Badlands  Trust  Company,  LLC
                                                  (dissolved in 2008); Vice President and Director (since
                                                  2008), Alaska Trust Company.
------------------------------------------------- -----------------------------------------------------------
Carl D. Johns - Investment Manager, Vice          Vice   President  and  Treasurer   (since  1999),   BIA;
President and Treasurer                           Assistant  Manager (since 1999),  FAS;  Chief  Financial
                                                  Officer,  Chief Accounting  Officer,  Vice President and
                                                  Treasurer, BTF, BIF, FF, and DNY.
------------------------------------------------- -----------------------------------------------------------
Laura Rhodenbaugh - Secretary                     Secretary/Treasurer (since 1999), FAS; Treasurer (since
                                                  1996), SIA;  Secretary  and Treasurer,  various Horejsi
                                                  Affiliates.
------------------------------------------------- -----------------------------------------------------------
Stewart R. Horejsi - Senior Investment Manager    Senior investment manager, RMA, BIA and SIA.

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


Carl D. Johns,  the Vice  President and Treasurer of RMA, is also  presently the
Fund's Chief Financial  Officer,  Chief Accounting  Officer,  Vice President and
Treasurer.  Together with Stewart R. Horejsi,  Mr. Johns will be responsible for
the  Fund's  portfolio  and RMA's  day-to-day  advisory  activities.  Mr.  Johns
received a Bachelor's  degree in mechanical  engineering  from the University of
Colorado  in 1985,  and a Master's  degree in  finance  from the  University  of
Colorado in 1991.  He was  employed by 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.  Since  1999,  he has  been  Chief
Financial  Officer,  Chief Accounting  Officer,  Vice President and Treasurer of
BTF, of BIF since 2002, of DNY since 2007, and of the Fund since 2003.

Stewart Investment  Advisers.  SIA or Stewart Investment Advisers (also known as
Stewart West Indies Trading Company,  Ltd.) is a Barbados international business
company,  incorporated  on November  12,  1996,  and is wholly owned by the West
Indies  Trust.  Stewart R.  Horejsi is not a  beneficiary  under the West Indies
Trust.  However,  Susan L.  Ciciora  (Stewart  Horejsi's  daughter)  and John S.
Horejsi (Stewart Horejsi's son), who are the Fund's only "interested" directors,
are discretionary  beneficiaries  under the West Indies Trust. As a result,  Ms.
Ciciora and Mr. John Horejsi may directly or indirectly benefit from the outcome
of  Proposals 1 and 2. SIA is  registered  as an  investment  adviser  under the
Advisers Act.

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,  SIA has appointed the Fund's Secretary at its offices at 2344 Spruce
Street,  Suite A, Boulder Colorado 80302, 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.


Stewart  R.  Horejsi  is an  employee  of RMA,  BIA and SIA.  He is the  primary
investment  manager and,  together with Mr. Johns,  will be responsible  for the
day-to-day  management  of the Fund's  assets  (other  than the Legacy  Holdings
managed by  Wellington  Management)  and will be primarily  responsible  for the
Fund's asset allocation. Mr. Horejsi was a director of BTF until November, 2001;
General Manager, Brown Welding Supply, LLC (sold in 1999),  Director,  Sunflower
Bank  (resigned);  and the President or Manager of various  subsidiaries  of the
Horejsi  Affiliates  since June 1986.  Mr.  Horejsi has  managed the  investment
portfolios  of the various  Horejsi  Affiliates  since 1982.  As of December 31,
2009, the size of these trusts' common stock portfolio was approximately  $626.2
million.  Mr.  Horejsi  has been  the  Director  and  President  of the  Horejsi
Charitable  Foundation, Inc. since 1997.  Mr. Horejsi received a Master's Degree

in Economics from Indiana University in 1961 and a Bachelor of Science Degree in
Industrial Management from the University of Kansas in 1959.


The executive officers of SIA and the principal occupation of each are set forth
below:



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

           Name and Position with SIA                                Principal Occupation

================================================== =========================================================
                                                
Glade Christensen - President and Resident         Office manager (since 1998) for SIA.
Managing Director
-------------------------------------------------- ---------------------------------------------------------
Stephen C. Miller - Director, Vice President and   See description in table above.
Secretary
-------------------------------------------------- ---------------------------------------------------------
Stewart R. Horejsi - Investment Manager            Senior investment manager (since 1999) for BIA and SIA.

-------------------------------------------------- ---------------------------------------------------------
Laura Rhodenbaugh - Treasurer                      Secretary  (since 1999),  FAS;  Secretary  (since 1999),
                                                   BIA;   Secretary   and   Treasurer,    various   Horejsi
                                                   Affiliates.
-------------------------------------------------- ---------------------------------------------------------


The  Advisory  Agreements.  Copies of the Advisory  Agreements  are set forth as
Exhibit  A-1  and  Exhibit  A-2  to  this  Proxy   Statement.   If  approved  by
stockholders,  the Advisory Agreements will become effective on the date of such
approval  and  continue  initially  for  a  two-year  period  and  continue  for
successive annual periods  thereafter,  provided such continuance is approved at
least annually by (a) a majority of the Independent  Directors and a majority of
the full Board or (b) a majority of the  outstanding  voting  securities  of the
Fund. As used in this Proxy  Statement,  a "majority of the  outstanding  voting
securities"  of the Fund shall have the  meaning for such phrase as set forth in
the 1940 Act, that is, the affirmative  vote of the lesser of (a) 67% or more of
the Shares  present or  represented by proxy at the Meeting or (b) more than 50%
of the  outstanding  Shares.  This voting  standard is referred to in this Proxy
Statement as a "1940 Act Majority Vote". The Advisory Agreements are terminable,
without  penalty,  on 60 days'  written  notice by the  Board or by  either  New
Adviser,  as the case may be,  upon  written  notice to the  other  party to the
Agreement.  The Advisory Agreements will terminate automatically upon assignment
(as defined in the 1940 Act).

Under the Advisory  Agreements,  the New Advisers  are jointly  responsible  for
making  investment  decisions,   supplying  investment  research  and  portfolio
management   services,   placing   purchase   and  sale  orders  for   portfolio
transactions, making asset allocation decisions for the Fund and determining the
extent and nature of the Fund's leverage.  The Advisory  Agreements also provide
that the  respective  New Adviser will bear all expenses in connection  with its
performance,  including fees that it might pay to  consultants,  except that the
Fund is  responsible  for  reimbursing  the New Advisers for  reasonable  travel
expenses  associated  with attending  regular and special board and  stockholder
meetings.

Under the  Advisory  Agreements,  the New  Advisers  will receive an annual fee,
payable  monthly,  in an aggregate  amount  calculated at a rate of 1.25% of the
Fund's total assets,  less  liabilities  other than the  aggregate  indebtedness
entered into for purposes of leverage  ("Managed  Assets").  However,  under the
Advisory  Agreements,  the New Advisers  would waive (i) their fees in an amount
equal to up to 1.00% of the Fund's assets invested in a WHM Hedge Fund to offset
any  asset-based  fees  (but not any  performance-based  fees)  paid to WHM with
respect to the Fund's  assets,  and (ii) all fees paid to Wellington  Management
under the  Sub-Advisory  Agreement  (i.e.,  the fee currently paid to Wellington
Management as applied to the Legacy  Holdings) (the foregoing fee arrangement is
referred to as the "Proposed  Fee").  WHM charges an asset-based fee of 1.00% to
the WHM Hedge Funds  presently  under  consideration  for  investment by the New
Advisers.  The Proposed Fee will be split between the New  Advisers,  25% to RMA
and 75% to SIA.  This  percentage  split may be changed from time to time by the
Board without stockholder approval so long as the gross advisory fee paid by the
Fund is not increased. The New Advisers agreed to a waiver of advisory fees such
that, in the future, the advisory fees would be calculated at the annual rate of
1.25% on Managed  Assets up to $400  million,  1.10% on Managed  Assets  between
$400-$600 million; and 1.00% on Managed Assets exceeding $600 million.  This fee
waiver agreement has a one-year term and is renewable annually.

The Fund currently pays  Wellington  Management an advisory fee of 1.125% on the
Fund's net assets up to and including $150 million;  1.00% on net assets between
$150 million and $300 million,  and 0.875% on net assets  exceeding $300 million
(together the "Current  Fee").  Based on $215.1  million of current assets under

management, and the New Advisers' anticipated investment of approximately 50% of
the Fund's  assets in WHM Hedge Funds,  the advisory  fees paid  directly by the
Fund would decrease by  approximately  $725,000  annually versus the Current Fee
($2.34  million  based on net assets as of December  31,  2009).  However,  on a
"look-through" basis (i.e., taking into consideration the fees charged by WHM in
managing  the WHM Hedge  Funds),  if the WHM Hedge Funds  achieve an  investment
return  of  10%  (and  are  thus  paid a  concomitant  performance  based  fee),
advisory-related  expenses will increase by approximately $2.5 million annually.
On such a  "look-through"  basis, the expense ratio would increase from 1.65% to
approximately  2.84%  (assuming  the 10%  investment  return  and  impact of the
performance fee paid to WHM).The 10% investment  return is used for illustration
purposes only. Actual performance (and any related performance fee) may be lower
or higher than this amount depending on the actual performance of each WHM Hedge
Fund.

Hedge fund managers,  including WHM,  typically are paid a 20%  performance  fee
with respect to annual gains  generated  in their hedge funds.  Thus,  under the
Restructuring,   the   increase   in   advisory-related   fees  could   increase
significantly  when there are  significant  net gains in the hedge  fund.  Since
performance  fees will  necessarily  vary  from  year to year,  they can only be
estimated based on a normalized  market return.  For the sake of comparison,  if
the Fund invests 50% of its current  assets in WHM Hedge  Funds,  and during the
first year after the Effective  Date the value of the WHM Hedge Funds  increases
by 10%, and all the Fund's other assets remain  unchanged,  on a  "look-through"
basis,  the Fund would pay an additional $2.5 million in advisory  related fees.
The Board  believes that the WHM Hedge Funds offer more  investment  flexibility
and superior risk adjusted  returns and thus the  likelihood  that the Fund will
pay higher look-through advisory-related fees is an acceptable tradeoff.

The Advisory Agreements provide that the New Advisers will be indemnified by the
Fund for losses,  claims and  expenses not caused by the New  Advisers'  willful
misfeasance,  bad faith or negligence in the performance of their duties or from
reckless disregard by the New Advisers of their obligations and duties under the
agreement.

Fees and Expenses.  The following table shows the Fund's expenses as of December
31, 2009 (as  adjusted),  and pro forma  expenses  giving effect to the Advisory
Agreements and Sub-Advisory Agreement.


                                     TABLE 1

                  Fees and Expenses - Historical and Pro Forma

                   Based on Net Assets as of December 31, 2009


------------------------------------------ ----------------- -------------- --------------------
                                                Current        Pro Forma*    Increase/(Decrease)
------------------------------------------ ----------------- -------------- --------------------
                                                                            
Investment advisory fee+                         $2,338,927     $1,613,570           $(725,357)
------------------------------------------ ----------------- -------------- --------------------
Administration and co-administration fees          $555,589       $555,589                 $ --
------------------------------------------ ----------------- -------------- --------------------
Custody fees++                                      $69,454        $45,484            $(23,970)
------------------------------------------ ----------------- -------------- --------------------
Acquired Fund Fees and Operating                        $--     $3,302,441           $3,302,441
Expenses+++
------------------------------------------ ----------------- -------------- --------------------
Other Expenses (e.g. legal, audit,                 $589,756       $589,756                 $ --
directors, transfer agent, miscellaneous)
------------------------------------------ ----------------- -------------- --------------------
        Total Expenses                           $3,553,727     $6,106,841           $2,553,114


* The pro forma  information  shown  assumes that  Proposals 1 through 3 in this
Proxy  have been  approved  by  stockholders.  The  "Other  Expenses"  have been
estimated based on information  available as of the 6 months ended September 30,
2009.

+ Investment advisory fees are calculated based on net assets as of December 31,
2009.  The Current Fee is  calculated at the annual rate of 1.125% of the Fund's
average  net assets up to and  including  $150  million;  1.00% on net assets in
excess of $150 million and up to and including  $300 million;  and 0.875% on net
assets in excess of $300  million.  The Pro Forma  Proposed Fee is calculated at
the rate of 1.25% of the Fund's Managed  Assets,  with the New Advisers  waiving
their fees in an amount  equal to up to 1.00% of the Fund's  assets  invested in
WHM Hedge Funds  (approximately 50%) to offset any asset-based fees (but not any
performance-based  fees) paid to WHM with  respect to that portion of the Fund's
assets invested in any WHM Hedge Funds.  WHM charges an asset-based fee of 1.00%
to the WHM Hedge Funds presently under  consideration  for investment by the New
Advisers.

++  Custody  fees  are  asset-based  fees  plus  certain  transaction  expenses.
Transaction  related  custody fees are  expected to decline  under the Pro Forma
estimate as a result of approximately 50% of the Fund's assets being invested in
WHM Hedge Funds.

+++"Acquired  Fund  Fees  and  Operating  Expenses"  are the  advisory  fees and
operating expenses associated with the WHM Hedge Funds in which the New Advisers
expect to invest. They include asset-based fees of 1.00%, approximately 0.07% of

other operating  expenses and a  performance-based  fee of 20% applied against a
hypothetical 10% annual  investment  return from the WHM Hedge Funds (comprising
50% of the  Fund's  assets).  The  foregoing  operating  expenses  (but  not the
performance-based   fees)  are  based  on  selected  WHM  Hedge  Fund  financial
statements for calendar year 2008.  Hypothetical or past performance of the Fund
or the WHM Hedge Funds is not indicative of future performance.




Board Considerations  Regarding the Proposed Advisory  Agreements.  The 1940 Act
requires  that the Board,  including  a majority of the  Independent  Directors,
approve the terms of the Advisory Agreements. At a special meeting held on April
16, 2009, and at their regularly  scheduled meeting on April 24, 2009, the Board
considered the Restructuring and, in particular, the Advisory Agreements and, by
a unanimous  vote  (including  a separate  vote of the  Independent  Directors),
approved  the  Advisory   Agreements  and  recommended   they  be  submitted  to
stockholders for approval.

Factors  Considered.  Generally,  the Board  considered  a number of  factors in
approving the Advisory Agreements including, among other things, (i) the nature,
extent and quality of services to be  furnished by the New Advisers to the Fund;
(ii) the  investment  performance  of the Boulder  Funds (i.e.,  the three other
closed-end  investment  companies managed by BIA and SIA),  compared to relevant
market  indices  and the  performance  of peer groups of  closed-end  investment
companies  pursuing  similar  strategies;  (iii)  the  advisory  fees and  other
expenses to be paid by the Fund compared to the Current Fee (i.e.,  the fee paid
to Wellington Management) and those of similar funds managed by other investment
advisers;  (iv)  the  profitability  to the New  Advisers  of  their  investment
advisory  relationship with the Fund; (v) the extent to which economies of scale
would be realized as the Fund grows and whether fee levels reflect any economies
of scale; (vi) support of the New Advisers by the Fund's principal stockholders;
and (vii) the relationship between the New Advisers and FAS, a Horejsi Affiliate
and the Fund's co-administrator.  The Board also reviewed the ability of the New
Advisers to provide investment  management and supervision services to the Fund,
including  the  background,  education  and  experience  of  the  key  portfolio
management   and   operational   personnel,   the   investment   philosophy  and
decision-making  process  of  those  professionals,  and the  ethical  standards
maintained by the New Advisers.

Deliberative  Process.  To assist the Board in its  evaluation of the quality of
the New Advisers' services and the reasonableness of the Proposed Fee, the Board
reviewed  a  memorandum  from  independent  legal  counsel  to the  Fund and the
Independent  Directors  discussing the factors generally regarded as appropriate
to consider in evaluating  investment  advisory  arrangements  and the duties of
directors in approving such arrangements. In connection with its evaluation, the
Board  also  requested  and  received  various  materials  relating  to the  New
Advisers'  investment  services under the Advisory  Agreements.  These materials
included reports and presentations  from the New Advisers that described,  among
other things, the New Advisers'  financial  condition,  pro forma  profitability
from their  anticipated  relationship  with the Fund, soft dollar commission and
trade allocation policies,  organizational structure and compliance policies and
procedures.  The Board also  considered  information  received  from SIA and BIA
throughout  the year with  respect  to their  oversight  of the  Boulder  Funds,
including  investment  performance  and  expense  ratio  reports for the Boulder
Funds.  The Board  held  additional  discussions  at both April  meetings  which
included  an  executive  session  among  the  Independent  Directors  and  their
independent  legal counsel at which no employees or  representatives  of the New
Advisers or Wellington Management were present. The information below summarizes
the Board's  considerations  in  connection  with its  approval of the  Advisory
Agreements.  In deciding to approve the Advisory  Agreements,  the Board did not
identify a single factor as  controlling  and this summary does not describe all
of the matters considered. However, the Board concluded that each of the various
factors referred to below favored such approval.

     Nature,  Extent and Quality of the  Services  Provided;  Ability to Provide
     Services.  The Board received and considered  various data and  information
     regarding the nature,  extent and quality of services to be provided to the
     Fund by the New Advisers under the Advisory Agreements.  Each New Adviser's
     most recent investment adviser  registration form on the SEC's Form ADV was
     provided  to the  Board,  as were  the  responses  of the New  Advisers  to
     information  requests submitted by the Independent  Directors through their
     independent  legal counsel.  The Board reviewed and analyzed the materials,
     which included  information about the background,  education and experience
     of the New Advisers' key portfolio management and operational personnel and
     the amount of  attention  to be  devoted  to the Fund by the New  Advisers'
     portfolio management  personnel.  In this regard, it was noted that BIA and
     SIA's only clients are the three Boulder Funds (presently RMA does not have
     clients).  Accordingly,  the Board  was  satisfied  that the New  Advisers'
     investment  personnel,  including  Stewart R.  Horejsi,  the New  Advisers'
     principal  portfolio manager,  would devote a significant  portion of their

     time and attention to the success of the Fund and its investment  strategy.
     The Board also  considered  the New Advisers'  policies and  procedures for
     ensuring  compliance  with applicable  laws and  regulations.  Based on the
     above factors, the Board concluded that it was generally satisfied with the
     nature,  extent  and  quality of the  investment  advisory  services  to be
     provided  to the  Fund by the  New  Advisers,  and  that  the New  Advisers
     possessed the ability to continuously provide these services to the Fund in
     the  future.  The  Board  was  satisfied  that  the New  Advisers  have the
     experience and personnel to manage the Fund's  portfolio both as it existed
     on April 24,  2009 (the date of the Board  meeting),  and as it would exist
     under the  Restructuring  (i.e.,  with substantial  investment in WHM Hedge
     Funds). In reaching this conclusion,  the Board noted that BIA and SIA have
     satisfactorily  managed the Boulder  Funds,  with  respect to which all the
     Independent Directors also act as independent board members.

     Investment Performance.  The Board considered the investment performance of
     BTF since 1999, BIF since 2002,  and DNY since 2007,  when BIA and SIA took
     over  management  of those funds.  The Board noted that the  personnel  and
     structure of BIA and RMA are  essentially  the same and thus the structure,
     personnel and  performance of BIA could be used as a proxy for that of RMA.
     The Board  observed  that the  long-term  performance  of the Boulder Funds
     (i.e.,  performance  since BIA and SIA began managing the respective funds'
     portfolios)  outperformed  the  Standard & Poor's 500  Index,  each  fund's
     primary relevant benchmark, and the Dow Jones Industrial Average and Nasdaq
     Composite,  each fund's secondary benchmarks.  In addition,  the Board took
     into   consideration   that  BIF  received  2008  Performance   Achievement
     Certificates  from  Lipper  Analytical  Services  for the 1-year and 5-year
     periods ended  December 31, 2008,  in Lipper's Core Funds  category and DNY
     received 2008 Performance  Achievement  Certificates from Lipper Analytical
     Services for the 1-year and 5-year  periods  ended  December  31, 2008,  in
     Lipper's  Real  Estate Fund  category.  Based on these  factors,  the Board
     concluded  that  the  overall  performance  results  of the  Boulder  Funds
     supported approval of the Advisory  Agreements.  In their  consideration of
     the New Advisers'  performance,  the Board noted that there are significant
     differences  between the  investment  focus of the  Boulder  Funds and that
     traditionally  held  by  the  Fund,  that  the  Boulder  Funds  have  large
     concentrations  in  Berkshire  Hathaway  (NYSE:BRK),  and that  none of the
     Boulder Funds  concentrate  on financial  services  companies to the extent
     concentrated by the Fund.

     Costs of Services  Provided and Profits  Realized by the New  Advisers.  In
     evaluating  the costs of the services to be provided to the Fund by the New
     Advisers,  the Board received  statistical and other information  regarding
     the  Fund's  total  expense  ratio and its  various  components.  The Board
     acknowledged  that the Proposed Fee is at the higher end of the spectrum of
     fees charged by similarly situated investment advisers of closed-end funds,
     although  it is the  same as  that  charged  by BIA and SIA to the  Boulder
     Funds,  who are  BIA's  and  SIA's  only  other  clients.  The  Board  also
     considered that the New Advisers have a policy of not  participating in (or
     neutralizing the indirect cost to their clients of) soft dollar or directed
     brokerage  transactions,  and that instead,  the New Advisers directly bear
     the cost of third-party  research utilized by them,  increasing the cost to
     the New Advisers of providing investment  management services to their fund
     clients and decreasing their clients' transaction expenses.  The Board also
     obtained detailed  information  regarding the overall  profitability of the
     New Advisers and the combined  profitability  of the New Advisers,  BIA and
     FAS,   which  acts  as   co-administrator   for  the  Fund.   The  combined
     profitability  information  was obtained to assist the Board in determining
     the overall  benefits to the New Advisers  from their  relationship  to the
     Fund.  In  particular,  the  Board  reviewed  the costs  anticipated  to be
     incurred by the New  Advisers  and FAS in  providing  services to the Fund.
     Based on its analysis of this  information,  the Board  determined that the
     level of profits  expected to be earned by the New Advisers  from  managing
     the Fund bear a  reasonable  relationship  to the  services  rendered,  and
     concluded  that the fee under the Advisory  Agreements  was  reasonable and
     fair in light of the nature and quality of the services provided by the New
     Advisers.  The Board  recognized that the Proposed Fee, on a "look-through"
     basis,  represents  a modest  increase  compared  to the  cost of  advisory
     services currently provided to the Fund by Wellington Management.  However,
     the Board believed that the higher fee is justified  primarily  because the
     New Advisers will have the added  responsibility  of overseeing  the Fund's
     hedge fund  investments and Wellington  Management as sub-adviser,  each of
     which will require an increased  expenditure of resources,  and determining
     the  Fund's  asset  allocation  across the entire  universe  of  investment
     possibilities.

     The Board took into consideration  that, with respect to the Boulder Funds,
     BIA and  SIA  have  advocated  removal  of  investment  restrictions  which
     ultimately benefited  stockholders,  but that the Fund will require the New
     Advisers to analyze a much broader  universe of  investments  than those of
     the Boulder Funds.  The Board  observed that in contrast,  under the Fund's
     present Concentration  Policy,  Wellington Management analyzed a relatively
     narrow  asset class  (i.e.,  financial  services  companies)  having  fewer
     investment   prospects.   Moreover,   the  Board   noted   that  under  the
     Concentration   Policy,   Wellington   Management  is  mandated  to  remain

     substantially  invested in financial  services companies whether or not the
     financial  services  industry is in or out of favor, and thus does not have
     the  burden  of  determining   when  and  whether   reducing  the  industry
     concentration is appropriate and in the best interests of the stockholders.
     The Board believed that the New Advisers will necessarily expend more time,
     energy and resources in determining the most appropriate asset class at the
     most  appropriate  time  and  thus are  entitled  to a higher  fee than the
     Current Fee.

     Economies of Scale. The Board considered  whether  economies of scale might
     occur with respect to the  management  of the Fund,  whether the Fund could
     appropriately benefit from any economies of scale, and whether the Proposed
     Fee is  reasonable  in relation to the Fund's  assets and any  economies of
     scale that may exist.  Based on the relatively  small size of the Fund, the
     Board  determined  that no meaningful  economies of scale would be realized
     until the Fund achieved  significantly  higher asset levels. The Board also
     noted  that  SIA's  and  BIA's  internal  costs  of  providing   investment
     management  services to the Boulder Funds had increased  over time, in part
     due to administrative  burdens and expenses  resulting from legislative and
     regulatory actions, and that the New Advisers might need to hire additional
     personnel as their  assets under  management  increase.  Nevertheless,  the
     Board  determined that  breakpoints  should be added to the Fund's advisory
     fee  schedule to reduce the  advisory  fees in the event the Fund's  assets
     increase  over  current  levels.  After some  discussion,  the New Advisers
     agreed to a waiver of advisory  fees such that the  advisory  fees would be
     calculated  at the annual rate of 1.25% on asset levels up to $400 million,
     1.10% on assets between  $400-$600  million;  and 1.00% on assets exceeding
     $600  million.  This fee waiver  agreement  has a  one-year  term after the
     Effective Date and is renewable  annually.  The Board  concluded that these
     breakpoint levels were acceptable and would appropriately  benefit the Fund
     from any  economies  of scale  realized  by the New  Advisers if the Fund's
     assets grow.

     Support by Significant  Stockholders.  The Board placed considerable weight
     on the views of the Horejsi  Affiliates,  the Fund's largest  stockholders,
     which are affiliated  with Mr. Horejsi and the New Advisers.  As of May 31,
     2009, the Horejsi Affiliates held  approximately  35.51% of the Shares. The
     Board  understands  from  Mr.  Horejsi  that  the  Horejsi  Affiliates  are
     supportive of the New Advisers and the approval of the Advisory Agreements.

     Approval.  The Board based its decision to approve the Advisory  Agreements
     on a careful  analysis,  in consultation  with independent  counsel for the
     Fund  and the  Independent  Directors,  of  these  and  other  factors.  In
     approving the Advisory  Agreements,  the Board  concluded that the terms of
     the Advisory  Agreements  are  reasonable and fair and that approval of the
     Advisory  Agreements  is  in  the  best  interests  of  the  Fund  and  its
     stockholders.

How the Horejsi Affiliates will Vote. Representatives of the Horejsi Affiliates,
which hold approximately  35.51% of the Shares,  who, because of their ownership
of the New  Advisers,  have an  economic  interest in approval of Proposal 1 and
Proposal 2, have informed the Board that the Horejsi  Affiliates will vote their
shares FOR both Proposal 1 and Proposal 2.

Conditional  Proposals.  Passage of  Proposals 1 and 2 (approval of the Advisory
Agreements)  and  Proposal  3  (approval  of  the  Sub-Advisory  Agreement)  are
conditioned on all such Proposals being approved by  stockholders  (i.e., if one
fails to achieve stockholder approval, all three fail).

Required  Vote.  Approval  of each of  Proposals  1 and 2  requires  a 1940  Act
Majority Vote.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
            RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 1.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
            RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 2.


                                   PROPOSAL 3

  TO APPROVE OR DISAAPROVE THE PROPOSED INVESTMENT SUB-ADVISORY AGREEMENT WITH
                       WELLINGTON MANAGEMENT COMPANY, LLP

Background of Proposal.  See  "Background"  discussion  under  Proposals 1 and 2
above.

Wellington  Management Company,  LLP. Wellington Management is being proposed to
act as sub-adviser to the Fund with respect to the Legacy  Holdings for a period
of two years following the Effective Date.  Wellington  Management is located at

75 State Street, Boston, Massachusetts. Wellington Management is a Massachusetts
limited  liability  partnership  and a professional  investment  counseling firm
which provides  investment  services to investment  companies,  employee benefit
plans, endowments,  foundations,  and other institutions.  Wellington Management
and its predecessor organizations have provided investment advisory services for
over 70 years.  As of December 31, 2009,  Wellington  Management  had investment
management  authority  with respect to  approximately  $537*  billion in assets.
Wellington Management has managed the Fund since its inception in 1986. Nicholas
C.  Adams,  Senior Vice  President,  Partner and Equity  Portfolio  Manager,  is
primarily  responsible  for the  day-to-day  management  of the Fund and, if the
Restructuring is approved by stockholders,  is expected to continue managing the
Legacy  Holdings for a period of two years  following  the Effective  Date.  Mr.
Adams joined Wellington Management as an investment professional in 1983.

* The  firm-wide  asset totals do not include  agency  mortgage-backed  security
pass-through accounts managed for the Federal Reserve.

The names and  principal  occupations  of the  principal  executive  officers of
Wellington  Management are set forth below.  Unless  otherwise stated below, the
business address of each such person is 75 State Street, Boston Massachusetts:



------------------------------------------------- ---------------------------------------------------------
                      Name                                 Position with Wellington Management /
                                                                    Principal Occupation
================================================= =========================================================
                                               
Charles S. Argyle                                 Managing  Director,   Partner  and  Executive  Committee
                                                  Member
------------------------------------------------- ---------------------------------------------------------
Edward P. Bousa                                   Senior Vice President,  Partner and Executive  Committee
                                                  Member
------------------------------------------------- ---------------------------------------------------------
Cynthia M. Clarke                                 Senior Vice President, Partner and Chief Legal Officer


------------------------------------------------- ---------------------------------------------------------
Lucius T. Hill, III                               Senior Vice President,  Partner and Executive  Committee
                                                  Member
------------------------------------------------- ---------------------------------------------------------
Selwyn J. Notelovitz                              Senior Vice President, Partner and Chief Compliance
                                                  Officer
------------------------------------------------- ---------------------------------------------------------
Saul J. Pannell                                   Senior Vice President, Partner and Executive Committee
                                                  Member
------------------------------------------------- ---------------------------------------------------------
Phillip H. Perelmuter                             Senior Vice President, Managing Partner and Executive
                                                  Committee Member
------------------------------------------------- ---------------------------------------------------------
Edward J. Steinborn                               Senior Vice President, Partner and Chief Financial
                                                  Officer
------------------------------------------------- ---------------------------------------------------------
Brendan J. Swords                                 Senior Vice President, Managing Partner and Executive
                                                  Committee Member
------------------------------------------------- ---------------------------------------------------------
Perry M. Traquina                                 President,  Chief Executive  Officer,  Managing  Partner
                                                  and Executive Committee Member
------------------------------------------------- ---------------------------------------------------------
Vera M. Trojan                                    Senior Vice President,  Partner and Executive  Committee
                                                  Member
------------------------------------------------- ---------------------------------------------------------
James W. Valone                                   Senior Vice President,  Partner and Executive  Committee
                                                  Member
------------------------------------------------- ---------------------------------------------------------

Current  Agreement.  Wellington  Management  has  served as the sole  investment
manager to the Fund from its  inception  in 1986.  Pursuant  to the terms of the
investment  advisory agreement between  Wellington  Management and the Fund (the
"Current Advisory Agreement"), Wellington Management is responsible for managing
the Fund's investment  portfolio.  The Current Advisory Agreement was amended in
July 2006, after required  approval was obtained from the Board and stockholders
to increase the fees payable to Wellington Management.  Under the agreement,  as

amended, Wellington Management is entitled to receive an investment advisory fee
at the annual rate of 1.125% of the Fund's average net assets,  based on the net
assets on the last business day of each month, up to and including $150 million;
1.00% on net  assets in  excess of $150  million  and up to and  including  $300
million;  and 0.875% on net assets in excess of $300 million  (defined  above as
the "Current Fee").

The Sub-Advisory Agreement. A copy of the Sub-Advisory Agreement is set forth as
Exhibit B to this Proxy Statement. If approved by stockholders, the Sub-Advisory
Agreement  will  become  effective  on the  Effective  Date and  continue  for a
two-year period,  at which time it will terminate by its terms. The Sub-Advisory
Agreement is  terminable,  without  penalty,  on 60 days' written  notice by the
Board  or by  Wellington  Management  upon  written  notice  to  the  Fund.  The
Sub-Advisory Agreement will terminate  automatically upon assignment (as defined
in the 1940 Act). Under the  Sub-Advisory  Agreement,  Wellington  Management is
solely responsible for making investment decisions regarding whether to continue
to hold or to sell Legacy Holdings  (defined above)  including,  but not limited
to, supplying  investment research and portfolio management services and placing
purchase  and  sale  orders  for  portfolio  transactions.  However,  Wellington
Management  will manage the Legacy  Holdings with a view toward  liquidating the
assets to generate cash for the New Advisers to invest or familiarizing  the New
Advisers with these holdings. Wellington Management will have no authority after
the  Effective  Date to directly  purchase any new  security  for the Fund.  The
Sub-Advisory  Agreement also provides that  Wellington  Management will bear all
expenses in connection with its performance, including fees that it might pay to
consultants.  Under the Sub-Advisory  Agreement,  Wellington  Management will be
compensated  at a rate  equal to the  Current  Fee (the  "Proposed  Sub-Advisory
Fee").

Fees and Expenses.  See Table 1 above which  consolidates  the fees and expenses
associated with Proposals 1 through 3.

Board Considerations Regarding the Sub-Advisory Agreement. The 1940 Act requires
that the Board, including a majority of the Independent  Directors,  approve the
terms of the  Sub-Advisory  Agreement.  At a special  meeting  held on April 16,
2009,  and at their  regularly  scheduled  meeting on April 24, 2009,  the Board
considered the Restructuring and, in particular, the Sub-Advisory Agreement and,
by a unanimous vote  (including a separate vote of the  Independent  Directors),
approved  the  Sub-Advisory   Agreement  and  recommended  it  be  submitted  to
stockholders for approval.

Factors  Considered.  Generally,  the Board  considered  a number of  factors in
approving the  Sub-Advisory  Agreement  including,  among other things,  (i) the
nature,  extent and quality of services to be furnished by Wellington Management
to the  Fund;  (ii) the  investment  performance  of the Fund  under  Wellington
Management's  management compared to relevant market indices and the performance
of  comparable  funds;  (iii) the advisory  fees and other  expenses paid by the
Fund; (iv) the profitability to Wellington Management of its investment advisory
relationship  with the  Fund;  (v) the  extent to which  economies  of scale are
realized and whether fee levels reflect any economies of scale;  (vi) support of
Wellington  Management  by the  Fund's  principal  stockholders;  and  (vii) the
historical  relationship between the Fund and Wellington  Management.  The Board
also  reviewed the  willingness  of Wellington  Management to provide  temporary
investment  management  services to the Fund with respect to the Legacy Holdings
and its  ability to provide  supervision  services  to the Fund,  including  the
background,  education  and  experience  of the  key  portfolio  management  and
operational personnel,  the investment philosophy and decision-making process of
those  professionals,   and  the  ethical  standards  maintained  by  Wellington
Management.

Deliberative  Process.  To assist the Board in its  evaluation of the quality of
Wellington  Management's  services and the  reasonableness of the fees under the
Sub-Advisory  Agreement,  the Board received a memorandum from independent legal
counsel  to the  Fund  and the  Independent  Directors  discussing  the  factors
generally regarded as appropriate to consider in evaluating  investment advisory
arrangements  and the duties of  directors in approving  such  arrangements.  In
connection  with its evaluation,  the Board also requested and received  various
materials  relating to Wellington  Management's  investment  services  under the
Current Advisory  Agreement.  These materials included reports and presentations
from  Wellington  Management  that  described,  among other  things,  Wellington
Management's organizational structure,  financial condition,  internal controls,
policies and  procedures on brokerage  practices,  soft-dollar  commissions  and
trade  allocation,   comparative  investment  performance  results,  comparative
sub-advisory  fees,  and  compliance  policies  and  procedures.  The Board also
reviewed  a report  prepared  by  Wellington  Management  comparing  the  Fund's
performance  to a group of  closed-end  and open-end  mutual funds with similar,
though not identical,  investment strategies as the Fund (the "Peer Group"). The
Board also considered information received from Wellington Management throughout
the year,  including  investment  performance and returns as well as stock price
and net asset value.  In advance of the April 24, 2009 meeting,  the Independent
Directors  held a special  telephonic  meeting  with counsel to the Fund and the
Independent  Directors.   The  purpose  of  this  meeting  was  to  discuss  the

Restructuring  and renewal of the Current  Advisory  Agreement and to review the
materials provided to the Board by Wellington  Management in connection with the
annual review process.  The Board held  additional  discussions at the April 24,
2009 Board  meeting,  which  included a private  session  among the  Independent
Directors  and  their  independent  legal  counsel  at  which  no  employees  or
representatives of the New Advisers or Wellington  Management were present.  The
information  below summarizes the Board's  considerations in connection with its
approval of the Sub-Advisory  Agreement. In deciding to approve the Sub-Advisory
Agreement,  the Board did not identify a single factor as  controlling  and this
summary  does not  describe all of the matters  considered.  However,  the Board
concluded  that each of the  various  factors  referred  to below  favored  such
approval.

     Nature,  Extent and Quality of the  Services  Provided;  Ability to Provide
     Services.  The Board received and considered  various data and  information
     regarding the nature,  extent and quality of services currently provided to
     the Fund by Wellington  Management  under the Current  Advisory  Agreement.
     Wellington Management's most recent investment adviser registration form on
     the SEC's Form ADV was  provided  to the Board,  as were the  responses  of
     Wellington  Management  to an  information  request  submitted to it by the
     Independent  Directors through their  independent legal counsel.  The Board
     reviewed and analyzed the materials,  which included  information about the
     background,   education  and  experience  of  Wellington  Management's  key
     portfolio management and operational  personnel and the amount of attention
     currently  devoted  to  the  Fund  by  Wellington   Management's  portfolio
     management  personnel.  The Board  also  reviewed  Wellington  Management's
     policies and procedures on side-by-side management of hedge funds and other
     accounts  and any impact  these might have on the success of the Fund.  The
     Board was satisfied  that  Wellington  Management's  investment  personnel,
     including Mr. Adams, the Fund's principal  portfolio manager,  would devote
     an adequate  portion of their time and attention to the success of the Fund
     and its investment  strategy,  particularly given a reduction in the number
     of accounts  managed by Mr. Adams that occurred in 2006. Based on the above
     factors,  the Board  concluded  that it was  generally  satisfied  with the
     nature,  extent  and  quality of the  investment  advisory  services  to be
     provided  to  the  Fund  by  Wellington  Management,  and  that  Wellington
     Management  possessed the ability to continue to provide these  services to
     the Fund in the future.

     Investment Performance.  The Board considered the investment performance of
     the  Fund as  compared  to  relevant  indices,  the  performance  of  three
     comparable  closed-end  financial  services  funds  (the  "Closed-End  Peer
     Group") and the  performance  of 11 selected  open-end  financial  services
     funds (the "Open-End Peer Group") for the year-to-date, one-, three-, five-
     and  ten-year  periods and  since-inception  period (for the indices  only)
     ended February 28, 2009.  Certain  information for certain periods were not
     available, depending on the inception date of the index or comparable fund.
     The Board noted that the Fund's  returns gross of fees of were in line with
     the returns of the S&P 500 Index,  NASDAQ Composite Principal Index, NASDAQ
     Banks Index, SNL All Daily Thrift Index, and MSCI World Financials  ex-Real
     Estate Index for the one-year,  three-year and five-year periods,  and that
     the Fund  had  outperformed  all of  those  indices  for the  ten-year  and
     since-inception periods. The Board noted that the financial services sector
     of the stock market had experienced a significant  decline in late 2008 and
     early 2009, which accounted for the Fund's recent relative underperformance
     as compared to broader  market  indices.  The Board also  observed that the
     Fund had  significantly  outperformed  the  Closed-End  Peer Group over the
     year-to-date,  one-, five- and ten-year periods except for one fund for the
     one-year  period.  The Board further noted that the Fund  outperformed  the
     Lipper  Financial  Services Fund Average and the Open-End Peer Group in all
     time-period  categories except for four funds in the one-year period, three
     funds in the three-year  period,  and one fund in the five-year  period. In
     concluding that the Fund's overall investment performance supported renewal
     of  the  Current  Advisory  Agreement  and  approval  of  the  Sub-Advisory
     Agreement under the Restructuring, the Board ascribed greater weight to the
     long-term  performance  of  the  Fund  against  its  benchmarks  and  other
     financial services funds.

     Costs of Services  Provided and Profits Realized by Wellington  Management.
     In  evaluating  the costs of the  services  to be  provided  to the Fund by
     Wellington   Management,   the  Board  relied  on  statistical   and  other
     information  regarding  the  Fund's  total  expense  ratio and its  various
     components,  including the Proposed Fee and Proposed  Sub-Advisory  Fee and
     investment-related  expenses.  The  Board  also  noted  that  in  2006,  in
     connection  with a proposed  increase  in  advisory  fees under the Current
     Advisory   Agreement  that  was  ultimately   approved  by  the  Board  and
     stockholders,  it had conducted a detailed evaluation of the Fund's expense
     ratio and the advisory  fees charged by  Wellington  Management.  The Board
     noted that the Proposed  Sub-Advisory  Fee is in the range of advisory fees
     for funds in the Closed-End Peer Group and is comparable to the fees earned
     by  Wellington  Management  on  other  portfolios  managed  by  Mr.  Adams,
     including  certain WHM Hedge Funds.  The Board also noted that the Proposed
     Fee to be charged by the New  Advisers is at the higher end of the spectrum

     of fees charged by similarly  situated  investment  advisers of  closed-end
     funds but that the  Advisory  Agreements  with the New  Advisers  contain a
     waiver of all fees paid to  Wellington  Management  under the  Sub-Advisory
     Agreement.

     The Board also obtained information  regarding the overall profitability of
     Wellington  Management  to assist  the  Board in  determining  the  overall
     benefits to Wellington  Management  from its  relationship to the Fund. The
     Board compared the overall  profitability  of Wellington  Management to the
     profitability of certain publicly traded investment management firms. Based
     on its analysis of this information,  the Board determined that the overall
     level of  profits  earned by  Wellington  Management  did not  appear to be
     unreasonable  based on the  profitability  of other  investment  management
     firms and the quality of the services  rendered by  Wellington  Management.
     Based on  these  factors,  the  Board  concluded  that  the fee  under  the
     Sub-Advisory  Agreement was  reasonable and fair in light of the nature and
     quality of the services provided by Wellington Management.

     Economies of Scale. The Board considered  whether there have been economies
     of scale with respect to the  management of the Fund,  whether the Fund has
     appropriately  benefited  from any  economies  of scale,  and  whether  the
     Proposed  Sub-Advisory  Fee is  reasonable in relation to the Fund's assets
     and any  economies  of scale that may exist.  The Board noted that that the
     Proposed Sub-Advisory Fee includes breakpoints.  In evaluating economies of
     scale,  the Board  noted that  Wellington  Management's  internal  costs of
     providing  investment  management  services  to the Fund had  continued  to
     increase,  particularly  costs  associated  with  attracting  and retaining
     talented  investment  personnel and compliance  costs.  The Board concluded
     that the  breakpoints in the fee schedule are acceptable and  appropriately
     reflect any  economies  of scale  expected  to be  realized  by  Wellington
     Management  in  managing  the  Legacy  Holdings  if the  Fund's  net assets
     increase.

     Support by Significant Stockholder. The Board placed considerable weight on
     the views of the Horejsi Affiliates, the Fund's largest stockholders, which
     are affiliated  with Mr. Horejsi and the New Advisers.  As of May 31, 2009,
     the Horejsi Affiliates held  approximately  35.51% of the Shares. The Board
     understands from Mr. Horejsi that the Horejsi  Affiliates are supportive of
     the Restructuring and engaging  Wellington  Management to manage the Legacy
     Holdings under the Sub-Advisory Agreement.

     Approval.  The  Board  based  its  decision  to  approve  the  Sub-Advisory
     Agreement on a careful analysis,  in consultation with independent  counsel
     to the Fund and the Independent  Directors,  of these and other factors. In
     approving the Sub-Advisory Agreement, the Board concluded that the terms of
     the  Sub-Advisory  are  reasonable  and  fair  and  that  approval  of  the
     Sub-Advisory  Agreement  is in the  best  interests  of the  Fund  and  its
     stockholders.

How the Horejsi Affiliates will Vote. Representatives of the Horejsi Affiliates,
which hold approximately  35.51% of the Shares,  who, because of their ownership
of the New  Advisers,  have an economic  interest  in  approval  of  Proposals 1
through 3, have informed the Board that the Horejsi  Affiliates  will vote their
Shares FOR Proposal 3.

Conditional  Proposal.  Passage of  Proposals 1 and 2 (approval  of the Advisory
Agreements)  and  Proposal  3  (approval  of  the  Sub-Advisory  Agreement)  are
conditioned on all such Proposals being approved by  stockholders  (i.e., if one
fails to achieve stockholder approval, all three fail).

Required Vote. Approval of Proposal 3 requires a 1940 Act Majority Vote.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
            RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 3.


                                   PROPOSAL 4

TO APPROVE OR DISAPPROVE ELIMINATING THE FUND'S FUNDAMENTAL POLICY OF INVESTING
           AT LEAST 65% OF ITS ASSETS IN FINANCIAL SERVICES COMPANIES

Summary of Proposal.  The Fund has adopted a  fundamental  investment  policy of
investing at least 65% of its assets in "financial  services companies" (defined
above as the "Concentration Policy"). "Financial services companies" are broadly
defined to include,  but are not limited to,  savings and banking  institutions,
mortgage banking institutions,  real estate investment trusts,  consumer finance
companies, credit collection and related service companies, insurance companies,
security  and  commodity  brokerage  companies,   security  exchange  companies,

financial-related technology companies, investment advisory and asset management
firms,  and  financial  conglomerates,  and  holding  companies  of any of these
companies. The Concentration Policy is "fundamental",  meaning that it cannot be
changed without a 1940 Act Majority Vote. If approved, Proposal 4 will eliminate
the  Concentration  Policy in its entirety  such that the Fund will no longer be
required to invest  significantly (i.e., greater than 25%) in financial services
companies or the financial services or any other industry.

Reason for this Proposal.  Under the Concentration  Policy, the Fund is required
to invest greater than 65% of its total assets in financial services  companies.
In 2006,  in order to  provide  the Fund's  adviser  with more  flexibility  and
mitigate  industry  risk,  stockholders  approved  an  amendment  to the  Fund's
concentration  policy which broadened the scope of financial  companies in which
the Fund could invest and which would be included when  determining  whether the
Fund  has  met  its  concentration  threshold  (i.e.,  the  "financial  services
companies"  described  above).  Management  believes that, even in its broadened
form,  the  Concentration  Policy is still overly  restrictive  and could unduly
expose  the  Fund to  considerable  downside  risk  and  volatility  should  the
financial  services  industry take a further downturn.  For example,  the recent
sub-prime fiasco, the banking,  credit and liquidity crisis,  changes in the tax
laws and other  factors  have  disproportionately  impacted  the Fund  under its
Concentration Policy.  Financial services companies are also affected by general
economic  conditions.  All of these  risks  are  compounded  because,  under the
Concentration Policy, the Fund is "fundamentally bound" to invest in these types
of assets.  Management believes that eliminating the financial mandate under the
Concentration  Policy will  mitigate the inherent risk of  concentrating  in the
financial services sector.

Generally, as with all equity funds, the Fund's net asset value can fall because
of weakness in the broad market, a particular  industry,  or specific  holdings.
The market as a whole can decline for many reasons,  including adverse political
or economic developments  domestically or abroad, changes in investor psychology
or heavy  institutional  selling.  The  prospects for an industry or company may
deteriorate because of a variety of factors, including disappointing earnings or
changes in the  competitive  environment.  In  addition,  the  Fund's  adviser's
assessment  of  companies  held by the Fund may prove  incorrect,  resulting  in
losses  or poor  performance  even  in a  rising  market.  Finally,  the  Fund's
investment approach could fall out of favor with the investing public, resulting
in lagging  performance  compared to other types of stock funds.  Foreign  stock
holdings  may lose value  because of  declining  foreign  currencies  or adverse
political or economic events overseas. As with any investment company, there can
be no guarantee the Fund will achieve its objective.

If the Concentration  Policy is eliminated under Proposal 4, going forward,  the
Fund  would be  precluded  from  investing  more  than 25% of its  assets in the
financial  services or any other  industry.  However,  the Fund would  likely be
concentrated  in the  securities  of financial  services  companies  immediately
following the  Effective  Date as a result of the current  effectiveness  of the
Concentration  Policy. The New Advisers would seek to reduce the Fund's holdings
in financial  services  companies to below 25% of the Fund's assets in a prudent
manner consistent with elimination of the Concentration Policy. As discussed, if
the  Restructuring  Proposals  are  approved by  stockholders,  the New Advisers
expect to invest  significantly  in the WHM Hedge Funds,  which have significant
exposure to the  financial  services  sector.  However,  the Fund will not "look
through" its investments in the WHM Hedge Funds to underlying portfolio holdings
in financial services companies in determining  whether the Fund exceeds the 25%
maximum concentration threshold contemplated under this Proposal. The Fund could
therefore  become  indirectly  concentrated in financial  services  companies by
virtue of the  investments  by the WHM Hedge Funds in such  investments.  If the
Restructuring  Proposals are approved by stockholders,  in the near term the New
Advisers  expect to focus  primarily on a broad range of companies  which may or
may not include financial services companies.

Risks and Disadvantages of Eliminating the Concentration Policy. Eliminating the
Concentration  Policy so that the Fund may no longer invest more than 25% of its
assets in financial services companies may, for some long-term  investors,  take
away some of their ability to invest in the Fund as a means of diversifying into
the financial services industry.  However,  management does not view eliminating
the  current  policy  as  increasing  risk.  Indeed,  management  believes  that
eliminating the current 65%  requirement  will mitigate  industry  concentration
risks.

Board Considerations.  At a special meeting held on April 16, 2009, and at their
regularly scheduled meeting on April 24, 2009, the Board considered, among other
things,  amending  the  Concentration  Policy.  In view of the  disproportionate
impact that the recent market downturn has had on financial  services  companies
generally,  the Board concluded that  maintaining the 65% requirement  imposes a
disproportionate  industry  risk on the  Fund and  stockholders  and  should  be
eliminated  altogether  should  the  Restructuring   Proposals  be  approved  by
stockholders.



Conditional  Proposal. If Proposals 1 through 3 are not approved by stockholders
(i.e.,   Wellington  Management  continues  as  the  Fund's  primary  investment
manager),  Proposal 4 will not become effective  regardless of whether or not it
is approved by stockholders.

Required Vote.  Approval of Proposal 4 requires a 1940 Act Majority Vote.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
            RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 4.


                                   PROPOSAL 5

           TO APPROVE OR DISAPPROVE AMENDING THE CONCENTRATION POLICY

Summary  of  Proposal.  As  discussed  in  Proposal  4, the Fund has  adopted  a
fundamental  investment  policy  of  investing  at least  65% of its  assets  in
"financial services  companies"  (defined above as the "Concentration  Policy").
The  Concentration  Policy is  "fundamental",  meaning that it cannot be changed
without  a 1940 Act  Majority  Vote.  If  approved,  Proposal  5 will  amend the
Concentration  Policy  to  reduce  the  minimum  threshold  level of the  Fund's
investment in financial services companies to 25% of the Fund's assets. Proposal
5 will become  effective  only if the Proposal is approved by  stockholders  and
stockholders  do not  approve the  Restructuring  Proposals  (i.e.,  Proposals 1
through 3).

Reason  for this  Proposal.  See  discussion  under  Proposal  4  above.  If the
Restructuring Proposals are not approved by stockholders,  Wellington Management
would continue to manage the Fund and would do so with a continued  focus on the
Fund's historic industry (i.e.,  financial  services).  However, as discussed in
Proposal  4,  the  Board  determined  that,  regardless  of  whether  or not the
Restructuring  Proposals are approved,  continuing  Fund  operations  with a 65%
minimum  threshold  imposes  a  disproportionate  industry  risk on the Fund and
should be, at the very least,  reduced to the minimum level  permitted under the
1940 Act for an  investment  company which has declared a  concentration  policy
(i.e.,  25%).  In  2006,  in order to  provide  the  Fund's  adviser  with  more
flexibility and mitigate  industry risk,  stockholders  approved an amendment to
the Fund's concentration policy which broadened the scope of financial companies
in which the Fund could  invest and which  would be  included  when  determining
whether  the Fund has met its  concentration  threshold  (i.e.,  the  "financial
services  companies"  described  above).  Management  believes that, even in its
broadened form, the Concentration  Policy is still overly  restrictive and could
unduly expose the Fund to considerable  downside risk and volatility  should the
financial  services  industry take a further downturn.  For example,  the recent
sub-prime fiasco, the banking,  credit and liquidity crisis,  changes in the tax
laws and other  factors  have  disproportionately  impacted  the Fund  under its
Concentration Policy.  Financial services companies are also affected by general
economic  conditions.  All of these  risks  are  compounded  because,  under the
Concentration Policy, the Fund is "fundamentally bound" to invest in these types
of assets.  Management  believes  that, if the  Restructuring  Proposals are not
approved by stockholders, reducing the financial mandate under the Concentration
Policy  will  mitigate  the  inherent  risk of  concentrating  in the  financial
services sector.

Risks and  Disadvantages of Amending the  Concentration  Policy.  See discussion
under Proposal 4 above.

Board Considerations.  See discussion under Proposal 4 above.

Conditional  Proposal.  Proposal 5 will become effective only if the Proposal is
approved  by  stockholders  and  Proposals  1  through  3 are  not  approved  by
stockholders  (i.e.,  Wellington  Management  continues  as the  Fund's  primary
investment manager).

Required Vote. Approval of Proposal 5 requires a 1940 Act Majority Vote.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
            RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 5.



                                   PROPOSAL 6

                        ELECTION OF DIRECTORS OF THE FUND

The Fund's organizational  documents provide that all of the Directors stand for
election each year. The Board has nominated the following five director-nominees
to stand for election,  each for a one-year term and until their  successors are
duly elected and qualify: Joel W. Looney, Richard I. Barr, Dr. Dean L. Jacobson,
Susan L. Ciciora and John S. Horejsi. The above nominees have consented to serve
as  Directors  if elected at the Meeting for the  one-year  term.  If any of the
designated  nominees  declines or otherwise  becomes  unavailable  for election,
however,  the proxy confers  discretionary power on the persons named therein to
vote in favor of a substitute nominee or nominees for the Board.


INFORMATION  ABOUT  DIRECTORS AND OFFICERS.  Set forth in the following table is
information about the Board of Directors:



Name                               Age    Director Since    Position
--------------------------------------------------------------------
Independent Directors
                                                   
   Joel W. Looney                  48     2003              Chairman
   Richard I. Barr                 72     2001              Director
   Dr. Dean Jacobson               71     2003              Director

Interested Directors

   Susan L. Ciciora                45     2003              Director
   John S. Horejsi                 42     2006              Director



INFORMATION  ABOUT THE  DIRECTORS'  QUALIFICATIONS,  EXPERIENCE,  ATTRIBUTES AND
SKILLS.

The  Board  believes  that  each  of  the  Directors  have  the  qualifications,
experience,  attributes  and skills  appropriate to their  continued  service as
Directors of the Fund in light of its business and structure.  Each Director has
substantial  business and professional  background  and/or board experience that
indicate their ability to critically review,  evaluate and respond appropriately
to  information  provided to them.  Certain of these  business and  professional
experiences are set forth in detail in the narratives  below. In addition,  each
Director has served on boards for investment  companies and organizations  other
than the Fund, as well as having served on the Board of the Fund for a number of
years. They therefore have substantial board experience and, in their service to
the Fund, have gained  substantial  insight as to the operation of the Fund. The
Board annually  conducts a  "self-assessment"  wherein the  effectiveness of the
Board and individual Directors is reviewed.

Below is information  concerning each  particular  Director and certain of their
pertinent  qualifications,  experience,  attributes and skills.  The information
provided  below,  and in the  chart  above,  is not  all-inclusive.  Many of the
Directors'  attributes involve intangible elements,  such as intelligence,  work
and  investment  ethic,  diversity in terms of  background  or  experiences,  an
appreciation of and belief in the long-term investment approach of the Fund, the
ability  to  work   together   collaboratively,   the  ability  to   communicate
effectively,  the ability to exercise judgment,  to ask incisive  questions,  to
manage people and problems or to develop  solutions.  In  conducting  its annual
self-assessment,   the  Board  has  determined   that  the  Directors  have  the
appropriate

qualifications,   skills,   attributes  and  experience  to  continue  to  serve
effectively as Directors of the Fund.

The Directors'  respective  addresses are c/o First Opportunity Fund, Inc., 2344
Spruce Street, Suite A, Boulder, Colorado 80302. Mr. Horejsi and Ms. Ciciora are
each considered  "interested  persons" because of the extent of their beneficial
ownership of Fund shares and by virtue of their indirect beneficial ownership of
BIA and FAS. The following sets forth the backgrounds and business experience of
the Directors:

     Joel W. Looney,  Director and Chairman of the Board.  Mr. Looney joined the
     Board in 2003 and sits on the boards of three other  closed-end  investment
     companies  affiliated  with the  Fund - the  Boulder  Growth & Income  Fund
     ("BIF")  since 2002,  Boulder Total Return Fund ("BTF") since 2001 and, The
     Denali Fund ("DNY") since 2007  (together,  the  "Affiliated  Funds").  Mr.
     Looney has significant  financial,  accounting and investment knowledge and
     experience. He holds a Certified Financial Planner ("CFP") designation and,
     since 1999,  has been a principal  and partner  with  Financial  Management
     Group, LLC, an investment management firm in Salina, KS ("FMG"). Mr. Looney
     is a  registered  representative  with  VSR  Financial  Services,  Inc.  of
     Overland Park, Kansas and holds FINRA-approved  Series 7, Series 63 Uniform
     State Law and  Series 65 Uniform  Investment  Adviser  Law  certifications.
     Prior to his current  position with FMG, Mr. Looney was vice  president and
     CFO for Bethany College in Lindsborg,  Kansas (1995 - 1999) and also served
     as vice president and CFO for St. John's Military School in Salina,  Kansas
     (1986 - 1995). From the late 1980's until January, 2001, Mr. Looney served,
     without  compensation,  as one of three  trustees  of the  Mildred  Horejsi
     Trust, an affiliate of the EH Trust. Mr. Looney holds a B.S. from Marymount
     College and an MBA from Kansas State University.

     Richard I. Barr,  Director.  Mr.  Barr joined the Board in 2001 and sits on
     the boards of each of the three Affiliated Funds; BIF since 2002, BTF since
     1999 and DNY since 2007.  Mr. Barr has  extensive  business,  executive and
     board experience including positions as president and director of Advantage
     Sales and  Marketing  (1996 to 2001),  president  and CEO of CBS  Marketing
     (1963 to 1996),  member of the board of directors  (and National  Chairman)
     for the Association of Sales and Marketing Companies (formerly the National
     Food   Brokers   Association),   president  of  the  Arizona  Food  Brokers
     Association,  and  advisory  board  member for various  food  manufacturers
     including H.J. Heinz,  ConAgra,  Kraft Foods,  and M&M Mars. In addition to
     these  professional  positions  and  experience,  Mr.  Barr has served in a
     number of  leadership  roles with various  charitable  or other  non-profit
     organizations,  including as member of the board of directors of Valley Big
     Brothers/Big  Sisters,  member of the board of advisers for  University  of
     Kansas Business School, and member of the board of directors for St. Mary's
     Food Bank.

     Dr. Dean Jacobson, Director. Dr. Jacobson joined the Board in 2003 and sits
     on the boards of each of the three  Affiliated  Funds;  BIF since 2006, BTF
     since 2004 and DNY since 2007.  He has  significant  executive and business
     experience and extensive academic qualifications.  Since 1985, Dr. Jacobsen
     has been  president  and CEO of Forensic  Engineering,  Inc.,  a consulting
     engineering firm providing  scientific and technical  expertise in a number
     of areas where discovery  related to property damage and/or personal injury
     is necessary (e.g., accident reconstruction, failure and design analysis of
     products,  animation and  simulation of fires,  explosions  and  mechanical
     system  functions).  He sits on the boards of directors of Southwest Mobile
     Storage Inc. (1995 to Present), Arizona State University Foundation,  (1999
     to 2009) and Arizona State  University Sun Angel Foundation (past chairman)
     (1995 to Present).  He is a Professor  Emeritus at Arizona State University
     ("ASU") and held a number of faculty and advisory  positions at ASU between
     1971 and  1997,  including  director  of the  Science  and  Engineering  of
     Materials Ph.D.  program and tenured  professor of Engineering,  and he has

     also served as a professor  and/or research  assistant at the University of
     California  at Los Angeles  ("UCLA")  (1964 to 1969) and the  University of
     Notre Dame ("Notre Dame") (1957 to 1963). Dr. Jacobson is a renowned expert
     in business engineering  processes and has published over 130 scholarly and
     peer-reviewed research articles in numerous academic, research and business
     journals  and   publications.   He  holds  two  patents  and  a  number  of
     professional  and business  designations.  He holds a B.S. and an M.S. from
     Notre Dame, and a Ph.D. from UCLA.

     Susan L. Ciciora,  Director.  Ms. Ciciora joined the Board in 2003 and sits
     on the boards of each of the three  Affiliated  Funds;  BIF since 2006, BTF
     since 2001 and DNY since 2007. She has extensive board experience as one of
     three  trustees  of the Lola  Brown  Trust No. 1B since 1994 and the Ernest
     Horejsi Trust No. 1B since 1992. Ms. Ciciora has other business experiences
     including various  executive  positions with a welding supply company and a
     custom home construction  company. She also has served as a director of the
     Horejsi Charitable  Foundation,  Inc. since 1997. She holds a B.S. from the
     University of Kansas.

     John S. Horejsi, Director. Mr. Horejsi joined the Board in 2006 and sits on
     the boards of each of the three Affiliated Funds; BIF since 2004, BTF since
     2006 and DNY since  2007.  Mr.  Horejsi  has both  executive  and  business
     experience.  He  has  been  involved  in a  number  of  business  ventures,
     including  as  manager  of a record  label  and music  production  company,
     various  positions with a mid-west  regional welding supply business and as
     part owner and driver for an automobile  racing team.  Mr. Horejsi also has
     board  experience  outside  of the  Funds  as a  director  of  the  Horejsi
     Charitable  Foundation,  Inc. (since 1997).  Mr. Horejsi  previously held a
     commercial real estate license in California. Mr. Horejsi holds a B.S. from
     the University of Kansas.

OFFICERS. The names of the executive officers of the Fund are listed below. Each
officer  was  elected to office by the Board at a meeting  held on  February  9,
2009. Officers are elected annually and each officer will hold such office until
a successor has been elected by the Board.

     Stephen C. Miller,  President.  Age: 57. Mr.  Miller is (and has been since
     2003)  president of the Fund. He was a director from 2003 to 2004 and chief
     compliance  officer from 2004 to 2007. He is also  president of and general
     counsel to BIA (since 1999); manager of Fund Administrative  Services,  LLC
     ("FAS") (since 1999);  and vice  president of SIA (since 1999).  Mr. Miller
     was a director of BIF from 2002 to 2004 and is its current president (since
     2002);  a director  of BTF from 1999 to 2004 and is its  current  president
     (since 1999);  and is DNY's  current  president  (since  2007).  Mr. Miller
     practiced  law in the Denver  office of  Kirkland & Ellis from 1987 to 1992
     and started a private  practice in Boulder,  Colorado in 1992.  Mr.  Miller
     became in-house counsel to the Horejsi Affiliates in 1998 and has served in
     a number of  executive  management  capacities  for those  affiliates.  Mr.
     Miller  maintains his law firm,  Stephen C. Miller,  P.C., and "of counsel"
     status with the law firm of Krassa & Miller,  LLC. Mr.  Miller holds a B.S.
     from the University of Georgia and a J.D. from the University of Denver.

     Carl D. Johns,  Vice  President.  Age: 47. Mr. Johns is (and has been since
     2003) the Fund's chief financial officer,  chief accounting  officer,  vice
     president  and  treasurer.  He is also vice  president and treasurer of BIA
     (since 1999);  assistant  manager of FAS (since 1999);  and vice president,
     treasurer,  chief financial officer and chief accounting officer of each of
     the  Affiliated  Funds:  BIF since 2002, BTF since 1999 and DNY since 2007.
     Prior to his current positions with BIA, he spent seven years with the firm
     of  Flaherty &  Crumrine,  a  registered  investment  adviser in  Pasadena,
     California,  which managed  preferred stock  portfolios.  Mr. Johns holds a
     B.S.  in  Mechanical  Engineering  and a M.S.  in  Finance,  both  from the
     University of Colorado.

     Joel L. Terwilliger,  Chief Compliance Officer. Age: 41. Mr. Terwilliger is
     (and  has been  since  2007)  the  Fund's  chief  compliance  officer,  and
     associate  general  counsel since 2006. He is (and has been since 2007) the

     chief  compliance  officer  for BIA,  SIA,  FAS and each of the  Affiliated
     Funds.  Prior to his employment with FAS, Mr. Terwilliger was employed from
     2002 to 2006 as  senior  associate/legal  counsel  for  Great  West  Life &
     Annuity Insurance Company ("Great-West") in Greenwood Village, Colorado. At
     Great-West,  Mr.  Terwilliger served primarily as a business and securities
     law attorney  responsible for complex financial  services  negotiations and
     contracts.  Mr. Terwilliger holds a B.A., JD, and LL.M. from the University
     of Georgia.

     Stephanie J. Kelley,  Secretary.  Age: 53. Ms. Kelley is (and has been) the
     Fund's  Secretary  since 2003. She also serves as secretary for each of the
     Affiliated  Funds:  BIF since 2002,  BTF since 2000 and DNY since 2007.  Ms
     Kelley  also serves as  assistant  secretary  and  assistant  treasurer  of
     various other entities  affiliated  with the Horejsi family and has been an
     employee of FAS since 1999.  Ms.  Kelley  holds a B.A.  and an MBA from the
     State University of New York, Binghamton.

     Nicole L. Murphey,  Vice  President and Assistant  Secretary.  Age: 33. Ms.
     Murphey  is (and has been)  vice  president  of the Fund  since  2008,  and
     assistant  secretary since 2003. She is also vice president (since 2008) of
     each of the  Affiliated  Funds and assistant  secretary for BTF since 2000,
     BIF since 2002 and DNY since 2007. She is also  assistant  treasurer of FAS
     and has been an employee of FAS since 1999.  Ms.  Murphey holds a B.A. from
     the University of Colorado.

Unless otherwise  specified,  the Officers'  respective  addresses are c/o First
Opportunity Fund, Inc., 2344 Spruce Street, Suite A, Boulder, Colorado 80302.


Set forth in the following table are the nominees for election to the Board (all
of whom are current  Directors  of the Fund)  together  with the dollar range of
equity securities beneficially owned by each Director as of the Record Date.



                                  OWNERSHIP OF THE FUND BY DIRECTORS
------------------------------------ --------------------------------- --------------------------------
Independent Directors and Nominees        Dollar Range of Equity       Aggregate Dollar Range of Equity
                                          Securities in the Fund        Securities in All Funds in the
                                                                        Family of Investment Companies
------------------------------------ --------------------------------- --------------------------------
                                                                   
         Joel W. Looney                    $50,001 to $100,000                 Over $100,000
------------------------------------ --------------------------------- --------------------------------
         Richard I. Barr                   $10,001 to $50,000                  Over $100,000
------------------------------------ --------------------------------- --------------------------------
         Dean L. Jacobson                  Up to $10,000                       $10,001 to $50,000
------------------------------------ --------------------------------- --------------------------------
 Interested Directors and Nominees
------------------------------------ --------------------------------- --------------------------------
         Susan L. Ciciora                  Over $100,000+                      Over $100,000+
------------------------------------ --------------------------------- --------------------------------
         John S. Horejsi                   Over $100,000+                      Over $100,000+
------------------------------------ --------------------------------- --------------------------------


+ 10,204,415 Shares of the Fund are held collectively by the Horejsi  Affiliates
(defined above). Accordingly,  Ms. Ciciora and Mr. Horejsi may be deemed to have
indirect beneficial ownership of such Shares.



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

DIRECTOR  AND  OFFICER  COMPENSATION.  The  following  table sets forth  certain
information  regarding the  compensation of the Fund's  Directors for the fiscal
year ended March 31, 2009. 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.  Independent  Directors  receive
reimbursement for travel and other out of pocket expenses incurred in connection
with attending Board and committee meetings.



------------------------------------ --------------------------------- --------------------------------
       Independent Directors              Aggregate Compensation         Total Compensation from the
                                     from the Fund Paid to Directors    Fund and Fund Complex Paid to
                                                                                 Directors+
------------------------------------ --------------------------------- --------------------------------
                                                                            
         Dean L. Jacobson                        $28,500                          $100,000
------------------------------------ --------------------------------- --------------------------------
          Richard I. Barr                        $28,500                          $104,000
------------------------------------ --------------------------------- --------------------------------
     Joel W. Looney (Chairman)                   $35,500                          $121,000
------------------------------------ --------------------------------- --------------------------------
       Interested Directors
------------------------------------ --------------------------------- --------------------------------
         Susan L. Ciciora                           $0                               $0
------------------------------------ --------------------------------- --------------------------------
          John S. Horejsi                           $0                               $0
------------------------------------ --------------------------------- --------------------------------


+    Includes the Fund, Boulder Growth & Income Fund, Inc., Boulder Total Return
     Fund, Inc. and The Denali Fund Inc.



Each Director of the Fund who is not a director,  officer, or employee of one of
the New  Advisers,  FAS,  Wellington  Management,  or any of  their  affiliates,
receives a fee of $8,000 per annum plus $4,000 for each in person meeting of the
Board of  Directors  and $500 for each  telephonic  meeting  of the  Board.  The
Chairman of the Board and the  Chairman of the Audit  Committee  each receive an
additional  $1,000 per meeting and each member of the Audit  Committee  receives
$500 per  meeting.  The  Board  held ten  meetings  (six of which  were  held by
telephone  conference  call) during the fiscal year ended March 31,  2009.  Each
Director  currently serving in such capacity for the entire fiscal year attended
at least 75% of the  meetings of  Directors  and any  Committee of which he is a
member. The aggregate  remuneration paid to the Directors of the Fund for acting
as such during the fiscal year ended March 31, 2009 amounted to $92,500.



                      COMMITTEES OF THE BOARD OF DIRECTORS


AUDIT COMMITTEE;  REPORT OF AUDIT COMMITTEE.  The purpose of the Audit Committee
is to  assist  in Board  oversight  of the  integrity  of the  Fund's  financial
statements,  the Fund's compliance with legal and regulatory  requirements,  the
independent accountants'  qualifications and independence and the performance of
the Fund's  independent  accountants.  The Audit Committee reviews the scope and
results of the Fund's annual audit with the Fund's  independent  accountants and
recommends  the  engagement  of  such  accountants.   Management,   however,  is
responsible  for the  preparation,  presentation  and  integrity  of the  Fund's
financial  statements,  and the  independent  accountants  are  responsible  for
planning  and carrying  out proper  audits and  reviews.  The Board of Directors
adopted a written  charter for the Audit  Committee  on August 19, 2003 and most
recently  amended  the joint  Audit  Committee  Charter on January  29,  2010 to
reflect  recent NYSE rule  changes.  Subsequent  minor  amendments  to the Audit
Committee  Charter  were  adopted  on  February  2,  2009.  A copy of the  Audit
Committee     Charter    is    available    on    the    Fund's    website    at
www.firstopportunityfund.com.


The Audit Committee is composed  entirely of the Fund's  Independent  Directors,
consisting of Dr.  Jacobson and Messrs.  Looney and Barr. The Board of Directors
has  determined  that Joel Looney  qualifies  as an "audit  committee  financial
expert," as defined under the  Securities and Exchange  Commission's  Regulation
S-K, Item 401(h).  The Audit Committee is in compliance with applicable rules of
the listing  requirements  for closed-end fund audit  committees,  including the
requirement  that all members of the audit committee be  "financially  literate"

and that at least one member of the audit committee have  "accounting or related
financial management expertise," as determined by the Board. The Audit Committee
is required to conduct its operations in accordance with applicable requirements
of the  Sarbanes-Oxley  Act,  and the  Fund's  independent  publicly  registered
accounting firm is required to comply with the rules and regulations promulgated
under the  Sarbanes-Oxley  Act and by the Public  Company  Accounting  Oversight
Board.  The members of the Audit  Committee are subject to the fiduciary duty to
exercise  reasonable care in carrying out their duties. Each member of the Audit
Committee is independent, as that term is defined by the NYSE Listing Standards.
The Audit Committee met three times during the fiscal year ended March 31, 2009.

In  connection  with the audited  financial  statements as of and for the period
ended March 31, 2009  included in the Fund's  Annual Report for the period ended
March 31,  2009  (the  "Annual  Report"),  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 Audit Committee discussed with
the independent  accountants the accounting  principles  applied by the Fund and
such  other  matters  brought to the  attention  of the Audit  Committee  by the
independent accountants required by Statement of Auditing Standards No. 114, The
Auditor's  Communication with Those Charged With Governance,  effective December
15, 2006..


On April 1, 2008 the Fund adopted the  Financial  Accounting  Standards  Board's
("FASB")  Statement of Financial  Accounting  Standards No. 157 ("FAS 157"). FAS
157 is  important in the context of helping the Fund define "fair value" for the
underlying  securities or  investments  it holds.  In addition,  FAS 157 expands
disclosures about fair value measurements.

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


Based  on  its  consideration  of  the  audited  financial  statements  and  the
discussions  referred to above with management and the  independent  accountants
and  subject to the  limitation  on the  responsibilities  and role of the Audit
Committee set forth in the Audit Committee  Charter and those  discussed  above,
the  Audit  Committee  of the Fund  recommended  to the Board  that the  audited
financial  statements  be included in the Fund's  Annual Report and be mailed to
stockholders and filed with the SEC.

Submitted  by the Audit  Committee  of the Fund's  Board of  Directors:  Joel W.
Looney, Richard I. Barr and Dean L. Jacobson


NOMINATING  COMMITTEE.  The Board of Directors has a nominating  committee  (the
"Nominating Committee") composed of the Fund's Independent Directors, consisting
of Dr.  Jacobson  and Messrs.  Looney and Barr,  which  Nominating  Committee is
responsible for considering  candidates for election to the Board in the event a
position  is vacated or  created.  Each member of the  Nominating  Committee  is
independent,  as  that  term is  defined  by the  NYSE  Listing  Standards.  The
Nominating  Committee met twice during the fiscal year ended March 31, 2009. The
Board of Directors has adopted a charter for the  Nominating  Committee  that is
available on the Fund's website at www.firstopportunityfund.com.

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

Although the  Nominating  Committee does not have a formal policy with regard to
the consideration of diversity in identifying director  candidates,  as a matter
of practice  the  Committee  typically  considers  the overall  diversity of the
Board's composition when identifying  candidates.  Specifically,  the Nominating
Committee  considers the diversity of skill sets desired among the Board members
in light of the Fund's  characteristics  and  circumstances  and how those skill
sets might  complement  each other.  The  Nominating  Committee  also takes into
account the personal  background  of current and  prospective  Board  members in
considering  the  composition of the Board.  In addition,  as part of its annual
self-evaluation,  the directors have an opportunity to consider the diversity of
the  Board,  both in terms  of  skill  sets  and  personal  background,  and any
observations made by the Board during the self-evaluation  assist the Nominating
Committee in its decision making process.

The  Nominating  Committee  will consider  director  candidates  recommended  by
stockholders  (if a vacancy  were to exist) and  submitted  in  accordance  with
applicable  law and  procedures  as  described  in  this  Proxy  Statement  (see
"Submission  of Stockholder  Proposals"  below).  In reviewing such  stockholder
director-nominees, the Nominating Committee may generally rely on the provisions
set  forth in  Nominating  Committee  charter  and other  information  as deemed
necessary   to   adjudge   the    appropriateness    and   character   of   such
director-nominee(s).  Such recommendations  should be forwarded to the Secretary
of the Fund.


The Fund does not have a compensation committee.



            ADDITIONAL INFORMATION CONCERNING OUR BOARD OF DIRECTORS


COMMUNICATIONS  WITH THE BOARD.  Stockholders who wish to send communications to
the Board  should send them to the address of the Fund and to the  attention  of
the Board. All such  communications  will be directed to the Board's  attention.
The Fund does not have a formal policy regarding Board member  attendance at the
Annual Meeting of Stockholders;  however,  all of the Directors of the Fund, who
were  Directors  at the time,  attended  the July 28,  2008  Annual  Meeting  of
Stockholders.

ROLE OF THE BOARD. The Board provides oversight of the management and operations
of the Fund.  Like all  mutual  funds,  the  day-to-day  responsibility  for the
management  and  operation  of the  Fund is the  responsibility  of its  various
service  providers,  such as the advisers to the Fund (the "Advisers") and their
portfolio  managers,  and the Fund's  co-administrators,  custodian and transfer
agent. The Board has appointed various senior individuals employed by certain of
these service providers as officers of the Fund, with  responsibility to monitor
and report to the Board on the Fund's  operations.  In conducting its oversight,
the Board is provided  regular  reports  from the various  officers  and service
providers regarding the Fund's operations.  For example,  the treasurer provides
reports as to financial  reporting matters and portfolio  managers report on the
performance of the Fund's portfolios. The Board has appointed a chief compliance
officer who administers the Fund's  compliance  program and regularly reports to
the Board as to compliance  matters.  Some of these reports are provided as part
of formal "Board  Meetings" which typically are held quarterly,  in person,  and
involve the Board's review of recent Fund  operations.  From time to time one or
more members of the Board may also meet with management in less formal settings,
between  formal  "Board  Meetings",  to discuss  various  topics.  In all cases,
however,  the  role  of  the  Board  and of any  individual  Director  is one of
oversight and not of management of the day-to-day affairs of the Fund.

BOARD  LEADERSHIP  STRUCTURE.  The  Board  has  determined  that its  leadership
structure  is  appropriate  given the  business  and nature of the Fund.  It has
established four standing  committees,  the audit and nominating  committees (as
described above) and a pricing committee and an executive  committee  (together,
the  "Committees").  Sixty  percent of the members of the Board are  Independent
Directors,  which  are  Directors  not  affiliated  with the  Advisers  or their
affiliates,  and each Committee is comprised entirely of Independent  Directors.
The Board has  determined  that the  Committees  help  ensure  that the Fund has
effective and independent governance and oversight. The Board also believes that
the  Committees and  leadership  structure  facilitate the orderly and efficient
flow of information to the Independent Directors from management,  including the
Advisers. Where deemed appropriate,  from time to time, the Board may constitute
ad hoc committees.

The Board's chairman is an Independent  Director who acts as the primary liaison
between the Independent  Directors and management (the "Independent  Chairman").
The  Independent  Chairman  play an important  role in setting the Board meeting
agendas and may help  identify  matters of special  interest to be  addressed by
management with the Board.  The Independent  Chairman also serves as chairman of
the executive committee,  which is comprised of all of the Independent Directors
(the "Executive Committee"). The Executive Committee meets regularly,  providing
a forum for the  Independent  Directors  to meet in  separate  session,  with or
without independent  counsel, to deliberate on matters relevant to the Fund. The
Independent  Directors have also engaged their own independent counsel to advise
them on matters relating to their  responsibilities in connection with the Fund.
The Board  reviews its structure  annually.  The Board has  determined  that the
structure of the  Independent  Chairman and the function and  composition of the
Committees are appropriate means to address any potential  conflicts of interest
that may arise.

BOARD OVERSIGHT OF RISK  MANAGEMENT.  As an integral part of its  responsibility
for oversight of the Fund in the interests of  stockholders,  the Board oversees

risk  management of the Fund's  investment  programs and business  affairs.  The
Board  has   emphasized  to  management  and  the  Advisers  the  importance  of
maintaining  vigorous risk management policies and procedures.  Oversight of the
risk management process is part of the Board's general oversight of the Fund and
its service  providers.  The Board  exercises  oversight of the risk  management
process  primarily  through the Audit  Committee  and Executive  Committee,  and
through oversight by the Board itself.

As part of its  oversight  function,  the Board of  Directors  receives  various
reports relating to risk management.  The Fund faces a number of risks,  such as
investment risk,  counterparty risk, valuation risk,  reputational risk, risk of
operational failure or lack of business  continuity,  and legal,  compliance and
regulatory risks. The process of "risk management" seeks to identify and address
"risks",  that is,  events or  circumstances  that could have  material  adverse
effects  on  the  business,   operations,   stockholder   services,   investment
performance   or  reputation  of  the  Fund.   Under  the  Board's   overarching
supervision, the Fund, management,  Advisers, FAS and other service providers to
the Fund  employ a variety of  processes,  procedures  and  controls to identify
various risks, to lessen the probability of their occurrence  and/or to mitigate
the  effects  of such  events  or  circumstances  if they  do  occur.  Different
processes,  procedures and controls are employed by different  service providers
and with respect to different types of risks.  Various personnel,  including the
Fund's  CCO as well as  various  personnel  of the  Advisers  and other  service
providers such as the Funds' independent  accountants,  make periodic reports to
the Board and  appropriate  Committees  with respect to various  aspects of risk
management,  as well as events and circumstances  that have arisen and responses
thereto.  For  example,  the audit  committee  meets  regularly  with the CCO to
discuss  compliance  and  operational  risks and with the Fund's  treasurer  and
independent public accounting firm to discuss,  among other things, the internal
control structure of the Fund's financial reporting function.  In addition,  the
full Board  regularly  receives  reports from the  Advisers and their  portfolio
managers as to investment  risks.  The Board  recognizes that not all risks that
may  affect  the  Fund  can be  identified,  that  it may  not be  practical  or
cost-effective  to eliminate or mitigate certain risks, that it may be necessary
to bear certain risks (such as  investment-related  risks) to achieve the Fund's
goals,  and that the  processes,  procedures  and  controls  employed to address
certain risks may be limited in their effectiveness.  Moreover, reports received
by the Directors as to risk  management  matters are typically  summaries of the
relevant  information.  As a result  of the  foregoing  and other  factors,  the
function of the Board with respect to risk  management  is one of oversight  not
active involvement in, or coordination of, day-to-day risk management activities
for the Fund.

LEGAL PROCEEDINGS.  None of the Directors or executive officers of the Fund have
been involved in any of the following events during the past ten years:

     *    Any bankruptcy petition filed by or against any business of which such
          person was a general  partner or executive  officer either at the time
          of the bankruptcy or within two years prior to that time;

     *    Any conviction in a criminal  proceeding or being subject to a pending
          criminal  proceeding  (excluding  traffic  violations  and other minor
          offenses);

     *    Any judicial or administrative  proceedings resulting from involvement
          in mail or wire fraud or fraud in connection with any business entity;

     *    Any judicial or  administrative  proceedings  based on  violations  of
          federal or state  securities,  commodities,  banking or insurance laws
          and regulation (including any settlement of such actions other than in
          connection with a civil proceeding among private parties);


     *    Any disciplinary  sanctions or orders imposed by a stock,  commodities
          or derivatives exchange or other self-regulatory organizations;

     *    Subject to any order,  judgment, or decree, not subsequently reversed,
          suspended  or  vacated,  of  any  court  of  competent   jurisdiction,
          permanently or temporarily enjoining, barring, suspending or otherwise
          limiting  his  involvement  in any  type of  business,  securities  or
          banking activities; or

Found by a court of competent  jurisdiction (in a civil action),  the SEC or the
Commodity  Futures  Trading  Commission  to have  violated  a  federal  or state
securities  or  commodities  law,  and  the  judgment  has  not  been  reversed,
suspended, or vacated.


Required Vote.  The election of each of Messrs.  Looney,  Barr and Horejsi,  Dr.
Jacobson and Ms.  Ciciora as Directors of the Fund will require the  affirmative
vote of a  plurality  of the votes cast by  holders  of the Common  Stock at the
Meeting in person or by proxy.

THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
   RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL THE NOMINEES.




                       SUBMISSION OF STOCKHOLDER PROPOSALS

Notice is hereby  given that for a  stockholder  proposal to be  considered  for
inclusion in the Fund's proxy  material  relating to its 2011 annual  meeting of
stockholders,  the  stockholder  proposal must be addressed to, and received by,
the Fund not earlier than  _____________,  2010 and not later than ____________,
2010.  Any such  proposal  shall set  forth as to each  matter  the  stockholder
proposes to bring  before the meeting (i) a brief  description  of the  business
desired to be brought  before the meeting and the  reasons for  conducting  such
business at the meeting, (ii) the name and address, as they appear on the Fund's
books, of the stockholder proposing such business, (iii) the class and number of
shares of the  capital  stock of the Fund  which are  beneficially  owned by the
stockholder, and (iv) any material interest of the stockholder in such business.
Stockholder proposals,  including any accompanying supporting statement, may not
exceed 500 words.  A stockholder  desiring to submit a proposal must be a record
or  beneficial  owner of Shares with a market  value of at least $2,000 and must
have held such  Shares  for at least one year.  Further,  the  stockholder  must
continue  to hold such  Shares  through  the date on which the  meeting is held.
Documentary  support  regarding  the foregoing  must be provided  along with the
proposal.   Joint  proposals  to  more  than  one  fund  are  not   permissible;
stockholders  may  not  submit  one  proposal  (plus  the  required   additional
documentation)  for more  than  one  fund.  There  are  additional  requirements
regarding proposals of stockholders,  and a stockholder contemplating submission
of a  proposal  is  referred  to Rule  14a-8  promulgated  under the  Securities
Exchange Act of 1934 (the "Exchange Act").  The timely  submission of a proposal
does not guarantee its inclusion in the Fund's proxy materials.

Pursuant to the Fund's Bylaws, at any annual meeting of the  stockholders,  only
business that has been properly brought before the meeting will be conducted. To
be  properly  brought  before  the  annual  meeting,  the  business  must be (i)
specified in the notice of meeting,  (ii) by or at the direction of the Board of
Directors,  or  (iii)  otherwise  properly  brought  before  the  meeting  by  a
stockholder.  For business to be properly brought before the annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Fund. To be timely, a stockholder's notice must be received
by the Secretary at 2344 Spruce Street, Suite A, Boulder, Colorado 80302 by 5:00
P.M.  Mountain  Time not earlier than the 150th day and not later than the 120th
day prior to the first  anniversary  of the date of public release of the notice
for the preceding  year's  annual  meeting.  However,  if the date of the annual
meeting is advanced  or delayed by more than 30 days from the first  anniversary
of  the  date  of  the  preceding  year's  annual  meeting,  for  notice  by the
stockholder  to be timely,  it must be received by the  Secretary not later than
5:00 P.M.  Mountain Time on the later of the 120th day prior to the date of such
annual  meeting or the tenth day following the day on which public  announcement
of the  date of such  meeting  is  first  made.  The  public  announcement  of a
postponement  or  adjournment of an annual meeting shall not commence a new time
period for the giving of a stockholder's notice as described above.



Pursuant to the Fund's Bylaws, such stockholder's  notice shall set forth (i) as
to each  individual  whom the  stockholder  proposes to nominate for election or
reelection  as a director,  (A) the name,  age,  business  address and residence
address of such  individual,  (B) the class,  series and number of any shares of
stock of the Fund that are beneficially  owned by such individual,  (C) the date
such shares were acquired and the  investment  intent of such  acquisition,  (D)
whether  such  stockholder  believes  any  such  individual  is,  or is not,  an
"interested  person" of the Fund,  as  defined  in the 1940 Act and  information
regarding such individual that is sufficient,  in the discretion of the Board of
Directors or any  committee  thereof or any  authorized  officer of the Fund, to
make such determination, (E) the extent to which such individual (including such
individual's principals) has entered into any hedging transaction or arrangement
with the effect or intent of mitigating or otherwise  managing  profit,  loss or
risk of  changes  in the value of the common  stock or the daily  quoted  market
price  of  the  Fund  held  by  such  individual  (including  such  individual's
principals),  or increasing or  decreasing  the voting power of such  individual
(including such individual's  principals),  including  independently  verifiably
information  in  support  of the  foregoing,  (F)  the  investment  strategy  or
objective - including any related  disclosure  documents or other  independently
verifiable  information  in  support  of the  foregoing  - for  such  individual
(including such individual's principals), and (G) all other information relating
to such individual that is required to be disclosed in  solicitations of proxies
for election of directors in an election contest (even if an election contest is
not involved), or is otherwise required, in each case pursuant to Regulation 14A
(or any  successor  provision)  under the Exchange Act and the rules  thereunder
(including  such  individual's  written  consent  to being  named  in the  proxy
statement as a nominee and to serving as a director if elected);  (ii) as to any
other  business  that the  stockholder  proposes to bring before the meeting,  a
description  of such  business,  the reasons for proposing  such business at the
meeting and any material  interest in such business of such  stockholder and any
Stockholder  Associated  Person  (as  defined  below),  individually  or in  the
aggregate,  including  any  anticipated  benefit  to  the  stockholder  and  the
Stockholder Associated Person therefrom;  (iii) as to the stockholder giving the
notice and any Stockholder  Associated Person,  the class,  series and number of
all shares of stock of the Fund which are owned by such  stockholder and by such
Stockholder  Associated  Person,  if any, and the nominee holder for, and number
of, shares owned  beneficially  but not of record by such stockholder and by any
such Stockholder Associated Person; (iv) as to the stockholder giving the notice
and any  Stockholder  Associated  Person  covered by the  immediately  preceding
clauses (ii) or (iii), the name and address of such stockholder,  as they appear
on the Fund's stock ledger and current name and address,  if  different,  and of
such  Stockholder  Associated  Person;  and  (v)  to  the  extent  known  by the
stockholder  giving the notice,  the name and  address of any other  stockholder
supporting  the nominee for election or reelection as a director or the proposal
of  other  business  on the  date of  such  stockholder's  notice.  "Stockholder
Associated  Person" of any  stockholder  shall mean (i) any person  controlling,
directly or indirectly,  or acting in concert with, such  stockholder,  (ii) any
beneficial  owner of shares of stock of the Fund owned of record or beneficially
by such  stockholder  and (iii) any person  controlling,  controlled by or under
common control with such  Stockholder  Associated  Person.  Stockholders may not
submit more than one notice (plus the  required  additional  documentation)  for
more than one Fund.


                             ADDITIONAL INFORMATION

INDEPENDENT ACCOUNTANTS.  At its regularly scheduled Board meeting held on April
24, 2009, the Audit  Committee of the Board,  consisting of those  Directors who
are not "interested persons" (as defined in the 1940 Act) of the Fund, selected,
and the Board ratified,  the selection of Deloitte & Touche LLP  ("Deloitte") of
Denver, Colorado as the Fund's independent registered public accounting firm for
the Fund's  fiscal year ending March 31, 2010.  Deloitte  served as  independent
accountants  for the Fund's  fiscal  years  ending  March 31, 2008 and March 31,
2009.

In addition to performing independent audit services for the Fund, Deloitte also
performs  certain  non-audit  related  services,  i.e., tax, and consulting,  on
behalf  of  the  Fund's  adviser,   Wellington  Management  Company,  L.P.  (the
"investment  adviser").  Under the Sarbanes-Oxley  rules, as adopted by the SEC,
and under the Audit Committee Charter,  the Audit Committee must pre-approve all
non-audit services to be provided by the auditors to the Fund, and all non-audit
services to be provided by the auditors to the Fund's investment adviser and any
service  providers  controlling,  controlled by or under common control with the
Fund's investment adviser ("adviser  affiliates") that provide on-going services
to the Fund, if the engagement  relates directly to the operations and financial
reporting of the Fund,  or must  establish  detailed  pre-approval  policies and
procedures  for such  services in accordance  with  applicable  laws.  The Audit
Committee has reviewed the non-audit  services to be provided by Deloitte to the
investment  adviser  (no  such  services  are  provided  to the  Fund)  and  has
pre-approved  the provision of those  services.  Accordingly,  all of the audit,
audit-related,  non-audit,  and tax services  described below for which Deloitte
billed the Fund fees for the fiscal  years  ended  March 31,  2008 and March 31,
2009, were either  pre-approved by the Audit Committee or were for services that

were unrelated to the direct operations and/or financial  reporting of the Fund.
Deloitte  has  informed  the Fund that it has no direct  or  indirect  financial
interest in the Fund.

A  representative  of  Deloitte  will not be present at the  Meeting but will be
available by telephone and will have an  opportunity  to make a statement if the
representative  so desires  and will be  available  to  respond  to  appropriate
questions.

Set forth below are audit fees and non-audit related fees billed to the Fund for
professional  services  received from Deloitte for the Fund's fiscal years ended
March 31, 2008 and March 31, 2009.



--------------------- ------------------- -------------------- -------------------- -------------------
 Fiscal Year Ended        Audit Fees      Audit-Related Fees        Tax Fees*         All Other Fees
--------------------- ------------------- -------------------- -------------------- -------------------
                                                                               
     3/31/2008             $29,000                $ -                $6,875                $ -
--------------------- ------------------- -------------------- -------------------- -------------------
     3/31/2009             $29,000                $ -                $7,250                $ -
--------------------- ------------------- -------------------- -------------------- -------------------


* "Tax Fees" are those fees billed to the Fund by Deloitte  in  connection  with
tax consulting services, including primarily the review of the Fund's income tax
returns and excise tax calculations.



SECTION 16(A) BENEFICIAL  OWNERSHIP REPORTING  COMPLIANCE.  Section 16(a) of the
Exchange Act and Section 30(h) of the 1940 Act require the Fund's  Directors and
officers,  persons affiliated with the Fund's investment  advisers,  and persons
who own more than 10% of a registered  class of the Fund's  securities,  to file
reports of  ownership  and  changes of  ownership  with the SEC and the New York
Stock  Exchange.  Directors,  officers  and  greater-than-10%  stockholders  are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the Fund's review of the copies of such forms
it receives and written  representations  from such  persons,  the Fund believes
that  through the date hereof all such filing  requirements  applicable  to such
persons were complied with.

BROKER NON-VOTES AND ABSTENTIONS. A proxy for shares held by brokers or nominees
as to which (i) instructions  have not been received from the beneficial  owners
or the  persons  entitled  to vote and (ii) the broker or nominee  does not have
discretionary  voting  power on a  particular  matter,  is a broker  "non-vote".
Proxies   that   reflect   abstentions   or   broker   non-votes   (collectively
"abstentions")  will be counted as shares that are present and  entitled to vote
on the matter for purposes of determining the presence of a quorum. Accordingly,
abstentions and broker non-votes  effectively will be a vote against adjournment
and against Proposals 1 through 7.

OTHER  MATTERS TO COME BEFORE THE  MEETING.  The Fund does not intend to present
any other business at the Meeting,  nor is it aware that any stockholder intends
to do so.  If,  however,  any other  matters  are  properly  brought  before the
Meeting,  the persons named in the accompanying  form of proxy will vote thereon
in accordance with their discretion.


--------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY EVEN IF YOU PLAN TO ATTEND THE
MEETING.  STOCKHOLDERS  ARE  URGED  TO SIGN  THE  ENCLOSED  PROXY  CARD  (UNLESS
AUTHORIZING  THEIR PROXY VIA  TOUCH-TONE  TELEPHONE OR THROUGH THE INTERNET) AND
MAIL IT IN THE ENCLOSED  ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING.  THIS
IS  IMPORTANT  WHETHER YOU OWN FEW OR MANY SHARES.  INSTRUCTIONS  FOR THE PROPER
EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
--------------------------------------------------------------------------------




                                   EXHIBIT A-1

               PROPOSED INVESTMENT CO-ADVISORY AGREEMENT WITH RMA

                                      DRAFT

                          INVESTMENT ADVISORY AGREEMENT



     THIS INVESTMENT  ADVISORY  AGREEMENT  (this  "Agreement") is made as of the
____ day of ____________, 2010, by and among ROCKY MOUNTAIN ADVISERS, L.L.C., an
Alaska limited  liability  company (the "Adviser") and FIRST  OPPORTUNITY  FUND,
INC., a Maryland corporation (the "Fund").

     1.  Investment  Description;  Appointment.  The Fund  desires to employ its
capital by investing  and  reinvesting  in  investments  of the kind and in such
manner and to such  extent as may from time to time be  approved by the Board of
Directors  of the Fund (the  "Board").  The Fund  desires  to employ  and hereby
appoints the Adviser to act as investment  adviser to the Fund.  Adviser  hereby
accepts the appointment and agrees to furnish the services  described herein for
the compensation set forth below.

     2. Services as Investment Adviser. Subject to the supervision and direction
of the Board, the Adviser will (a) act in accordance with the Investment Company
Act of 1940 (the "1940 Act") and the  Investment  Advisers  Act of 1940,  as the
same may be from time to time  amended,  (b) manage the  Fund's  portfolio  on a
discretionary  basis in accordance with its investment  objectives and policies,
(c) make investment decisions and exercise voting rights in respect of portfolio
securities  for the Fund,  (d) place  purchase  and sale orders on behalf of the
Fund,  (e) employ,  at its own  expense,  professional  portfolio  managers  and
securities  analysts to provide research services to the Fund, (f) determine the
portion of the Fund's assets to be invested, from time to time, in various asset
classes (e.g., common stocks,  fixed income securities,  cash equivalents),  (g)
determine the portion of the Fund's  assets to be leveraged,  from time to time,
and the form that such  leverage  will take,  and (h) monitor and  evaluate  the
services  provided by the Fund's  investment  sub-adviser(s),  if any, under the
terms of the applicable investment sub-advisory agreement(s). In providing these
services,  the Adviser will provide  investment  research and supervision of the
Fund's  portfolio  and,  if  appropriate,  sale and  reinvestment  of the Fund's
assets. In addition, the Adviser will furnish the Fund with whatever statistical
information the Fund may reasonably  request with respect to the securities that
the Fund may hold or contemplate purchasing.

     3.  Co-Advisor to the Fund.  Subject to the approval of the Board and where
required,   the  Fund's  stockholders,   the  Fund  will  engage  an  investment
co-adviser,  Stewart  Investment  Advisers,  a Barbados  international  business
company and registered  investment adviser under the Investment  Advisers Act of
1940,  in respect of all or a portion of the Fund's  assets (the  "Co-Adviser").
The Adviser and the  Co-Adviser  will be jointly  responsible  for providing the
services described in subparagraphs (b), (c), (d), (e), (f) and (g) in Paragraph
2 above and  Paragraphs 5 and 6 below  (Brokerage  and  Information  Provided to
Fund, respectively) with respect to the Fund's assets, although the Adviser will
have primary  responsibility  for all  record-keeping  and  day-to-day  business
activities relating to the investment  operations of the Fund. In the event that
the Co-Adviser's engagement is terminated,  the Adviser shall be responsible for
furnishing the Fund with the services  theretofore  performed by such Co-Adviser
under the applicable  investment advisory agreement or arranging for a successor
co-adviser or  sub-adviser,  as the case may be, to provide such services  under
terms and  conditions  acceptable  to the Fund and the Board and  subject to the
requirements of the 1940 Act.

     4. Engagement of  Sub-Advisers to the Fund.  Subject to the approval of the
Board and where  required,  the Fund's  stockholders,  the Adviser may engage an
investment  sub-adviser or sub-advisers to provide advisory  services in respect
of all or a portion of the Fund's  assets (the  "Sub-Advised  Portion")  and may
delegate   to  such   investment   sub-adviser(s)   all  or  a  portion  of  the
responsibilities  described in subparagraphs  (b), (c), (d), (e), (f) and (g) in
Paragraph  2 above and  Paragraph  6 below  (Information  Provided to Fund) with
respect  to  the   Sub-Advised   Portion.   In  the  event  that  an  investment
sub-adviser's  engagement has been terminated,  the Adviser shall be responsible
for  furnishing  the Fund with the  services  required to be  performed  by such
investment   sub-adviser(s)   under  the  applicable   investment   sub-advisory
agreements or arranging for a successor  co-adviser or sub-adviser,  as the case
may be, to provide such services  under terms and  conditions  acceptable to the
Fund and the Board and subject to the requirements of the 1940 Act.

     5. Brokerage.  In executing transactions for the Fund and selecting brokers
or dealers, the Adviser will use its best efforts to seek the best overall terms
available.   In  assessing  the  best  overall  terms  available  for  any  Fund

transaction,  the Adviser will consider all factors it deems relevant including,
but not  limited  to,  breadth of the market in the  security,  the price of the
security,  the financial  condition  and  execution  capability of the broker or
dealer and the reasonableness of any commission for the specific transaction and
on  a  continuing  basis.  In  selecting  brokers  or  dealers  to  execute  any
transaction and in evaluating the best overall terms available,  the Adviser may
consider  the  brokerage  and  research  services (as those terms are defined in
Section  28(e) of the  Securities  Exchange  Act of 1934)  provided  to the Fund
and/or  other  accounts  over  which  the  Adviser  or any  affiliate  exercises
investment discretion.

     6. Information  Provided to the Fund. The Adviser will use its best efforts
to keep the Fund informed of  developments  materially  affecting the Fund,  and
will,  on its own  initiative,  furnish the Fund from time to time with whatever
information the Adviser believes is appropriate for this purpose.

     7.  Standard  of Care.  The Adviser  shall  exercise  its best  judgment in
rendering the services described herein. The Adviser 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 this Agreement  relates,  provided that
nothing  herein  shall be deemed to protect or  purport to protect  the  Adviser
against  any  liability  to the Fund to which the  Adviser  would  otherwise  be
subject by reason of willful misfeasance, bad faith or negligence on its part in
the  performance  of  its  duties  or  from  reckless  disregard  by it  of  its
obligations and duties under this Agreement ("Disabling Conduct"). The Fund will
indemnify the Adviser  against,  and hold it harmless  from, any and all losses,
claims, damages,  liabilities or expenses (including reasonable counsel fees and
expenses),   including  any  amounts  paid  in  satisfaction  of  judgments,  in
compromise or as fines or penalties, not resulting from Disabling Conduct by the
Adviser.  Indemnification  shall be made only  following (i) a final decision on
the merits by a court or other body before whom the  proceeding was brought that
the  Adviser  was not  liable  by reason of  Disabling  Conduct,  or (ii) in the
absence of such a decision, a reasonable  determination,  based upon a review of
the facts, that the Adviser was not liable by reason of Disabling Conduct by (a)
the vote of a majority of the Directors of the Fund who are neither  "interested
persons" of the Fund nor  parties to the  proceeding  ("disinterested  non-party
Directors"),  or (b) independent legal counsel in a written opinion. The Adviser
shall be  entitled  to  advances  from the Fund for  payment  of the  reasonable
expenses  incurred  by it in  connection  with the matter to which it is seeking
indemnification  in the manner and to the fullest extent  permissible  under the
law. The Adviser  shall  provide to the Fund a written  affirmation  of its good
faith belief that the standard of conduct necessary for  indemnification  by the
Fund has been met and a  written  undertaking  to repay any such  advance  if it
should  ultimately be determined  that the standard of conduct has not been met.
In addition,  at least one of the following additional  conditions shall be met:
(a) the Adviser  shall  provide a security in form and amount  acceptable to the
Fund for its  undertaking;  (b) the Fund is insured  against  losses  arising by
reason of the advance; or (c) a majority of disinterested  non-party  Directors,
or independent legal counsel, in a written opinion, shall have determined, based
on a review of facts  readily  available  to the Fund at the time the advance is
proposed  to be made,  that there is reason to  believe  that the  Adviser  will
ultimately be found to be entitled to indemnification.

     8. Compensation. In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser the Advisory Fee (as defined in the Fee
Schedule)  such  amount to be paid  monthly,  in the amount set forth in the fee
schedule  attached  hereto as Exhibit A (the "Fee  Schedule").  The Advisory Fee
shall be the  aggregate and entirety of all advisory fees to be paid by the Fund
and will be divided  between the Adviser and the  Co-Adviser as set forth in the
Fee  Schedule,  which fee  allocation  may be adjusted  from time to time in the
discretion  of the Board so long as the  aggregate  advisory fee does not exceed
the Advisory Fee. The fee payable to Adviser for any period  shorter than a full
calendar month shall be prorated  according to the proportion  that such payment
bears to the full monthly payment.

     9. Expenses.  Except as indicated below, the Adviser will bear all expenses
in  connection  with the  performance  of its  services  under  this  Agreement,
including the fees payable to the Co-Adviser  and to any investment  sub-adviser
engaged  pursuant to  Paragraphs  3 or 4 of this  Agreement.  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 the
employees of Adviser;  Securities and Exchange  Commission  fees; state Blue Sky
qualification  fees;  charges of any custodian,  any sub-custodians and transfer
and  dividend-paying  agents;  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;  litigation and other
extraordinary or non-recurring expenses.

     10. Services to other Companies or Accounts.  The Fund understands that the
Adviser now acts, or may act in the future as an investment adviser to fiduciary
and other managed accounts or other trusts,  or as investment  adviser to one or

more other registered or unregistered investment companies,  and the Fund has no
objection  to the  Adviser  so acting.  The Fund  understands  that the  persons
employed  by  Adviser  to  assist in the  performance  of the  Adviser's  duties
hereunder will not devote their full time to such service and nothing  contained
herein  shall be deemed to limit or  restrict  the right of the  Adviser  or any
affiliate  of the  Adviser to engage in and devote time and  attention  to other
businesses or to render services of whatever kind or nature.

     11. Term of Agreement. This Agreement shall become effective as of the date
it is  approved  by a vote of a  "majority"  (as defined in the 1940 Act) of the
Fund's  outstanding  voting securities (the "Effective Date") and shall continue
for an initial  two-year  term and shall  remain in effect  from year to year so
long as such  continuance  is  specifically  approved  by (a) a majority  of the
Directors who are not  "interested  persons" of the Fund (as defined in the 1940
Act) and a  majority  of the full  Board or (b) a  majority  of the  outstanding
voting  securities of the Fund (as defined in the 1940 Act).  This  Agreement is
terminable by a party  hereto,  by the Board or by the vote of a majority of the
outstanding voting securities of the Fund, on sixty (60) days' written notice to
the respective party. Any termination shall be without penalty and any notice of
termination shall be deemed given when received by the addressee.

     12. No Assignment. This Agreement may not be transferred, assigned, sold or
in any manner  hypothecated  or pledged by any party  hereto and will  terminate
automatically  in the event of its  assignment  (as defined in the 1940 Act). It
may be amended by mutual agreement, in writing, by the parties hereto.

     13. Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between the parties hereto.

     14.  Governing Law. This  Agreement  shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado.

     15. Counterparts.  This Agreement may be executed in counterparts,  each of
which  shall  be  deemed  an  original  for all  purposes,  and  together  shall
constitute one and the same Agreement.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.




ADVISER:

ROCKY MOUNTAIN ADVISERS, LLC, an Alaska limited liability company




By: ________________________________

         Carl D. Johns

 Its: Vice President



FUND:

FIRST OPPORTUNITY FUND, INC., a Maryland corporation




By: ________________________________

         Stephen C. Miller

 Its: President





                                    Exhibit A


                                  FEE SCHEDULE

     The  Fund  shall  pay the  Adviser  and  Co-Adviser  after  the end of each
calendar  month an aggregate fee for the previous  month  computed at the annual
rate of 1.25%  of the  value of the  Fund's  average  monthly  net  assets  plus
leverage (the "Advisory Fee");  provided that Adviser and Co-Adviser shall waive
(i) that portion of the  Advisory Fee equal to up to 1.00% of the Fund's  assets
invested in any hedge fund managed by Wellington Hedge  Management,  LLC (a "WHM
Hedge Fund") to offset any asset-based fees (but not any performance-based fees)
paid to  Wellington  Hedge  Management,  LLC with  respect to the Fund's  assets
invested in any WHM Hedge Fund, and (ii) all fees paid to Wellington Management,
LLP ("Wellington Management") under its sub-advisory agreement with the Fund.

     For purposes of calculating  the Advisory Fee, the Fund's  average  monthly
net assets will be deemed to be the average  monthly  value of the Fund's  total
assets minus the sum of the Fund's liabilities  (excluding  leverage  borrowings
such as bank or institutional  borrowings,  preferred stock, bonds,  debentures,
etc.) and accrued dividends.

                  Fee Allocation Between Adviser and Co-Adviser

     The  Advisory  Fee shall be  allocated  among Rocky  Mountain  Advisers and
Stewart Investment Advisers in the proportion of 25% and 75% respectively.  Such
allocation  may be adjusted  from time to time by Board  action alone so long as
the Advisory Fee is not increased.





                                   EXHIBIT A-2

               PROPOSED INVESTMENT CO-ADVISORY AGREEMENT WITH SIA

                                      DRAFT

                          INVESTMENT ADVISORY AGREEMENT



     THIS INVESTMENT  ADVISORY  AGREEMENT  (this  "Agreement") is made as of the
______ day of ___________,  2010, by and among STEWART  INVESTMENT  ADVISERS,  a
Barbados  international  business company (the "Adviser") and FIRST  OPPORTUNITY
FUND, INC., a Maryland corporation (the "Fund").

     1.  Investment  Description;  Appointment.  The Fund  desires to employ its
capital by investing  and  reinvesting  in  investments  of the kind and in such
manner and to such  extent as may from time to time be  approved by the Board of
Directors  of the Fund (the  "Board").  The Fund  desires  to employ  and hereby
appoints the Adviser to act as investment  adviser to the Fund.  Adviser  hereby
accepts the appointment and agrees to furnish the services  described herein for
the compensation set forth below.

     2. Services as Investment Adviser. Subject to the supervision and direction
of the Board, the Adviser will (a) act in accordance with the Investment Company
Act of 1940 (the "1940 Act") and the  Investment  Advisers  Act of 1940,  as the
same may be from time to time  amended,  (b) manage the  Fund's  portfolio  on a
discretionary  basis in accordance with its investment  objectives and policies,
(c) make investment decisions and exercise voting rights in respect of portfolio
securities  for the Fund,  (d) place  purchase  and sale orders on behalf of the
Fund,  (e) employ,  at its own  expense,  professional  portfolio  managers  and
securities  analysts to provide research services to the Fund, (f) determine the
portion of the Fund's assets to be invested, from time to time, in various asset
classes (e.g., common stocks,  fixed income securities,  cash equivalents),  (g)
determine the portion of the Fund's  assets to be leveraged,  from time to time,
and the form that such  leverage  will take,  and (h) monitor and  evaluate  the
services  provided by the Fund's  investment  sub-adviser(s),  if any, under the
terms of the applicable investment sub-advisory agreement(s). In providing these
services,  the Adviser will provide  investment  research and supervision of the
Fund's  portfolio  and,  if  appropriate,  sale and  reinvestment  of the Fund's
assets. In addition, the Adviser will furnish the Fund with whatever statistical
information the Fund may reasonably  request with respect to the securities that
the Fund may hold or contemplate purchasing.

     3.  Co-Advisor to the Fund.  Subject to the approval of the Board and where
required,   the  Fund's  stockholders,   the  Fund  will  engage  an  investment
co-adviser, Rocky Mountain Advisers, L.L.C., an Alaska limited liability company
and registered  investment adviser under the Investment Advisers Act of 1940, in
respect of all or a portion of the Fund's assets (the "Co-Adviser"). The Adviser
and the  Co-Adviser  will be jointly  responsible  for  providing  the  services
described in subparagraphs  (b), (c), (d), (e), (f) and (g) in Paragraph 2 above
and  Paragraphs  5 and 6 below  (Brokerage  and  Information  Provided  to Fund,
respectively) with respect to the Fund's assets,  although the Adviser will have
primary responsibility for all record-keeping and day-to-day business activities
relating  to the  investment  operations  of the  Fund.  In the  event  that the
Co-Adviser's  engagement is  terminated,  the Adviser shall be  responsible  for
furnishing the Fund with the services  theretofore  performed by such Co-Adviser
under the applicable  investment advisory agreement or arranging for a successor
co-adviser or  sub-adviser,  as the case may be, to provide such services  under
terms and  conditions  acceptable  to the Fund and the Board and  subject to the
requirements of the 1940 Act.

     4. Engagement of  Sub-Advisers to the Fund.  Subject to the approval of the
Board and where  required,  the Fund's  stockholders,  the Adviser may engage an
investment  sub-adviser or sub-advisers to provide advisory  services in respect
of all or a portion of the Fund's  assets (the  "Sub-Advised  Portion")  and may
delegate   to  such   investment   sub-adviser(s)   all  or  a  portion  of  the
responsibilities  described in subparagraphs  (b), (c), (d), (e), (f) and (g) in
Paragraph  2 above and  Paragraph  6 below  (Information  Provided to Fund) with
respect  to  the   Sub-Advised   Portion.   In  the  event  that  an  investment
sub-adviser's  engagement has been terminated,  the Adviser shall be responsible
for  furnishing  the Fund with the  services  required to be  performed  by such
investment   sub-adviser(s)   under  the  applicable   investment   sub-advisory
agreements or arranging for a successor  co-adviser or sub-adviser,  as the case
may be, to provide such services  under terms and  conditions  acceptable to the
Fund and the Board and subject to the requirements of the 1940 Act.


     5. Brokerage.  In executing transactions for the Fund and selecting brokers
or dealers, the Adviser will use its best efforts to seek the best overall terms

available.   In  assessing  the  best  overall  terms  available  for  any  Fund
transaction,  the Adviser will consider all factors it deems relevant including,
but not  limited  to,  breadth of the market in the  security,  the price of the
security,  the financial  condition  and  execution  capability of the broker or
dealer and the reasonableness of any commission for the specific transaction and
on  a  continuing  basis.  In  selecting  brokers  or  dealers  to  execute  any
transaction and in evaluating the best overall terms available,  the Adviser may
consider  the  brokerage  and  research  services (as those terms are defined in
Section  28(e) of the  Securities  Exchange  Act of 1934)  provided  to the Fund
and/or  other  accounts  over  which  the  Adviser  or any  affiliate  exercises
investment discretion.

     6. Information  Provided to the Fund. The Adviser will use its best efforts
to keep the Fund informed of  developments  materially  affecting the Fund,  and
will,  on its own  initiative,  furnish the Fund from time to time with whatever
information the Adviser believes is appropriate for this purpose.

     7.  Standard  of Care.  The Adviser  shall  exercise  its best  judgment in
rendering the services described herein. The Adviser 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 this Agreement  relates,  provided that
nothing  herein  shall be deemed to protect or  purport to protect  the  Adviser
against  any  liability  to the Fund to which the  Adviser  would  otherwise  be
subject by reason of willful  misfeasance,  bad faith or gross negligence on its
part in the  performance  of its duties or from reckless  disregard by it of its
obligations and duties under this Agreement ("Disabling Conduct"). The Fund will
indemnify the Adviser  against,  and hold it harmless  from, any and all losses,
claims, damages,  liabilities or expenses (including reasonable counsel fees and
expenses),   including  any  amounts  paid  in  satisfaction  of  judgments,  in
compromise or as fines or penalties, not resulting from Disabling Conduct by the
Adviser.  Indemnification  shall be made only  following (i) a final decision on
the merits by a court or other body before whom the  proceeding was brought that
the  Adviser  was not  liable  by reason of  Disabling  Conduct,  or (ii) in the
absence of such a decision, a reasonable  determination,  based upon a review of
the facts, that the Adviser was not liable by reason of Disabling Conduct by (a)
the vote of a majority of the Directors of the Fund who are neither  "interested
persons" of the Fund nor  parties to the  proceeding  ("disinterested  non-party
Directors"),  or (b) independent legal counsel in a written opinion. The Adviser
shall be  entitled  to  advances  from the Fund for  payment  of the  reasonable
expenses  incurred  by it in  connection  with the matter to which it is seeking
indemnification  in the manner and to the fullest extent  permissible  under the
law. The Adviser  shall  provide to the Fund a written  affirmation  of its good
faith belief that the standard of conduct necessary for  indemnification  by the
Fund has been met and a  written  undertaking  to repay any such  advance  if it
should  ultimately be determined  that the standard of conduct has not been met.
In addition,  at least one of the following additional  conditions shall be met:
(a) the Adviser  shall  provide a security in form and amount  acceptable to the
Fund for its  undertaking;  (b) the Fund is insured  against  losses  arising by
reason of the advance; or (c) a majority of disinterested  non-party  Directors,
or independent legal counsel, in a written opinion, shall have determined, based
on a review of facts  readily  available  to the Fund at the time the advance is
proposed  to be made,  that there is reason to  believe  that the  Adviser  will
ultimately be found to be entitled to indemnification.

     8. Compensation. In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser the Advisory Fee (as defined in the Fee
Schedule)  such  amount to be paid  monthly,  in the amount set forth in the fee
schedule  attached  hereto as Exhibit A (the "Fee  Schedule").  The Advisory Fee
shall be the  aggregate and entirety of all advisory fees to be paid by the Fund
and will be divided  between the Adviser and the  Co-Adviser as set forth in the
Fee  Schedule,  which fee  allocation  may be adjusted  from time to time in the
discretion  of the Board so long as the  aggregate  advisory fee does not exceed
the Advisory Fee. The fee payable to Adviser for any period  shorter than a full
calendar month shall be prorated  according to the proportion  that such payment
bears to the full monthly payment.

     9. Expenses.  Except as indicated below, the Adviser will bear all expenses
in  connection  with the  performance  of its  services  under  this  Agreement,
including the fees payable to the Co-Adviser  and to any investment  sub-adviser
engaged  pursuant to  Paragraphs  3 or 4 of this  Agreement.  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 the
employees of Adviser;  Securities and Exchange  Commission  fees; state Blue Sky
qualification  fees;  charges of any custodian,  any sub-custodians and transfer
and  dividend-paying  agents;  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;  litigation and other
extraordinary or non-recurring expenses.



     10. Services to other Companies or Accounts.  The Fund understands that the
Adviser now acts, or may act in the future as an investment adviser to fiduciary
and other managed accounts or other trusts,  or as investment  adviser to one or
more other registered or unregistered investment companies,  and the Fund has no
objection  to the  Adviser  so acting.  The Fund  understands  that the  persons
employed  by  Adviser  to  assist in the  performance  of the  Adviser's  duties
hereunder will not devote their full time to such service and nothing  contained
herein  shall be deemed to limit or  restrict  the right of the  Adviser  or any
affiliate  of the  Adviser to engage in and devote time and  attention  to other
businesses or to render services of whatever kind or nature.

     11. Term of Agreement. This Agreement shall become effective as of the date
it is  approved  by a vote of a  "majority"  (as defined in the 1940 Act) of the
Fund's  outstanding  voting securities (the "Effective Date") and shall continue
for an initial  two-year  term and shall  remain in effect  from year to year so
long as such  continuance  is  specifically  approved  by (a) a majority  of the
Directors who are not  "interested  persons" of the Fund (as defined in the 1940
Act) and a  majority  of the full  Board or (b) a  majority  of the  outstanding
voting  securities of the Fund (as defined in the 1940 Act).  This  Agreement is
terminable by a party  hereto,  by the Board or by the vote of a majority of the
outstanding  securities of the Fund,  on sixty (60) days' written  notice to the
respective  party.  Any  termination  shall be without penalty and any notice of
termination shall be deemed given when received by the addressee.

     12. No Assignment. This Agreement may not be transferred, assigned, sold or
in any manner  hypothecated  or pledged by any party  hereto and will  terminate
automatically  in the event of its  assignment  (as defined in the 1940 Act). It
may be amended by mutual agreement, in writing, by the parties hereto.

     13. Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between the parties hereto.

     14.  Governing Law. This  Agreement  shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado.

     15. Counterparts.  This Agreement may be executed in counterparts,  each of
which  shall  be  deemed  an  original  for all  purposes,  and  together  shall
constitute one and the same Agreement.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.




ADVISER:

STEWART INVESTMENT ADVISERS, a Barbados international business company




By: ________________________________

         Glade L. Christensen

 Its: President



FUND:

FIRST OPPORTUNITY FUND, INC., a Maryland corporation




By: ________________________________

         Stephen C. Miller

 Its: President





                                    Exhibit A


                                  FEE SCHEDULE

     The  Fund  shall  pay the  Adviser  and  Co-Adviser  after  the end of each
calendar  month an aggregate fee for the previous  month  computed at the annual
rate of 1.25%  of the  value of the  Fund's  average  monthly  net  assets  plus
leverage (the "Advisory Fee");  provided that Adviser and Co-Adviser shall waive
(i) that portion of the  Advisory Fee equal to up to 1.00% of the Fund's  assets
invested in any hedge fund managed by Wellington Hedge  Management,  LLC (a "WHM
Hedge Fund") to offset any asset-based fees (but not any performance-based fees)
paid to  Wellington  Hedge  Management,  LLC with  respect to the Fund's  assets
invested in any WHM Hedge Fund, and (ii) all fees paid to Wellington Management,
LLP ("Wellington Management") under its sub-advisory agreement with the Fund.

     For purposes of calculating  the Advisory Fee, the Fund's  average  monthly
net assets will be deemed to be the average  monthly  value of the Fund's  total
assets minus the sum of the Fund's liabilities  (excluding  leverage  borrowings
such as bank or institutional  borrowings,  preferred stock, bonds,  debentures,
etc.) and accrued dividends.

                  Fee Allocation Between Adviser and Co-Adviser

     The  Advisory  Fee shall be  allocated  among Rocky  Mountain  Advisers and
Stewart Investment Advisers in the proportion of 25% and 75% respectively.  Such
allocation  may be adjusted  from time to time by Board  action alone so long as
the Advisory Fee is not increased.





                                    EXHIBIT B

           PROPOSED SUB-ADVISORY AGREEMENT WITH WELLINGTON MANAGEMENT

                                      DRAFT

                        INVESTMENT SUB-ADVISORY AGREEMENT



     THIS INVESTMENT SUB-ADVISORY AGREEMENT (this "Agreement") is made as of the
_____ day of ___________,  2010, by and among ROCKY MOUNTAIN  ADVISERS,  LLC, an
Alaska  limited  liability  company,  STEWART  INVESTMENT  ADVISERS,  a Barbados
international business corporation  (collectively,  the "Advisers");  WELLINGTON
MANAGEMENT  COMPANY LLP, a  Massachusetts  limited  liability  partnership  (the
"Sub-Adviser");  and FIRST  OPPORTUNITY  FUND, INC. a Maryland  corporation (the
"Fund").

     1. Investment Description;  Appointment.  The Advisers have been authorized
by the Board of  Directors  of the Fund to engage  Sub-Adviser  to assist in the
management  of the  Fund's  assets.  The  Advisers  desire to employ  and hereby
appoint the  Sub-Adviser  to act as investment  sub-adviser  with respect to the
portion of the Fund's assets  allocated to it for  management by the Advisers as
of the effective date of this Agreement for a period of no longer than two years
(the  "Designated  Securities").   The  Designated  Securities  are  more  fully
described  in  "Exhibit  A"  attached  hereto.  Sub-Adviser  hereby  accepts the
appointment  and  agrees  to  furnish  the  services  described  herein  for the
compensation set forth below.

     2. Services as  Sub-Adviser.  Subject to the  supervision  and direction of
Advisers, the Sub-Adviser will act in accordance with the Investment Company Act
of 1940 (the "1940 Act") and the  Investment  Advisers Act of 1940,  as the same
may be from time to time  amended,  and  manage  the  Designated  Securities  in
accordance with the governing documents of the Fund and as directed from time to
time by the Fund's Board of Directors (the "Board").  In managing the Designated
Securities,  the Sub-Adviser shall be responsible solely for determining whether
the Fund shall hold or liquidate such securities, and for assisting the Advisers
in gaining greater  understanding  of these securities to enable the Advisers to
assume management of any remaining  Designated  Securities after the termination
of this  Agreement  no later  than two  years  from the  effective  date of this
Agreement. Once the Advisers provide identification of the Designated Securities
to the Sub-Adviser, the Adviser will maintain limited supervisory authority over
the Sub-Adviser  with respect to such Designated  Securities and the Sub-Adviser
will have the sole discretion whether to sell or hold the Designated Securities;
provided,  however,  that the Advisers shall assume sole  responsibility for any
proceeds  received  from the  disposition  of any  Designated  Security  and may
re-characterize  any  Designated  Security  such  that  the  management  of such
security  will become the sole  responsibility  of the  Advisers to manage.  The
Advisers,  however,  shall have no authority to add securities to the Designated
Securities  list after the  effective  date of this  Agreement.  For purposes of
clarity,  the Sub-Adviser shall have no investment  discretion over or otherwise
affect the  decision-making  with  respect to any  portion of the Fund's  assets
other than the Designated Securities and shall have no ability to participate in
any  decision by the  Advisers to invest the Fund's  assets in, or withdraw  the
Fund's assets from, any private  investment  companies managed or advised by the
Sub-Adviser  or any of its  affiliates  (each,  a "WHM Hedge  Fund");  provided,
however,  that  the  Sub-Adviser  and/or  its  affiliates  shall  have  the same
authority to determine whether to accept any investment by the Fund on behalf of
a WHM  Hedge  Fund or cause  the Fund to  withdraw  from  such  WHM  Hedge  Fund
applicable  to any other  investor  in such WHM Hedge Fund  pursuant to such WHM
Hedge Fund's  governing  documents.  The  Advisers  and the Fund are  developing
procedures to prevent the flow of information  about  prospective  purchases and
sales by the Advisers and the  Sub-Adviser in their  respective  portions of the
Fund (the  "Procedures").  Sub-Adviser agrees to comply with the Procedures with
respect to 1) portfolio  transactions  by the Advisers and Sub-Adviser on behalf
of the Fund and 2) transactions by the Sub-Adviser as the portfolio  manager for
any WHM Hedge Fund in which the Fund is an investor.



     3. Brokerage.  In executing  transactions for the Designated Securities and
selecting brokers or dealers,  the Sub-Adviser will use its best efforts to seek
the best overall terms available.  In assessing the best overall terms available
for any Designated  Securities  transaction,  the Sub-Adviser  will consider all
factors it deems relevant,  including, but not limited to, breadth of the market
in the  security,  the  price  of the  security,  the  financial  condition  and
execution  capability  of the  broker or dealer  and the  reasonableness  of any
commission for the specific  transaction and on a continuing basis. In selecting
brokers or dealers to execute any transaction and in evaluating the best overall
terms  available,  the  Sub-Adviser  may  consider  the  brokerage  and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934)  provided to the Designated  Securities  and/or other accounts over
which the Sub-Adviser or any affiliate exercises investment discretion.

     4. Information  Provided to the Advisers and the Fund. The Sub-Adviser will
use its best efforts to keep the Advisers and the Fund informed of  developments
materially affecting the Designated Securities, and will, on its own initiative,
furnish the Advisers from time to time with whatever information the Sub-Adviser
believes is appropriate for this purpose.

     5.  Standard  of Care.  Sub-Adviser  shall  exercise  its best  judgment in
rendering the services described herein. The Sub-Adviser shall not be liable for
any error of judgment or mistake of law or omission or any loss  suffered by the
Advisers  or the Fund in  connection  with the  matters to which this  Agreement
relates,  provided that nothing  herein shall be deemed to protect or purport to
protect the  Sub-Adviser  against any  liability  to the Advisers or the Fund to
which  the  Sub-Adviser   would  otherwise  be  subject  by  reason  of  willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement  ("disabling  conduct").  The  Sub-Adviser  will  look to the Fund for
indemnification  with  respect  to,  and the  Fund  will  indemnify  Sub-Adviser
against,  and  hold it  harmless  from,  any and all  losses,  claims,  damages,
liabilities  or  expenses  (including  reasonable  counsel  fees and  expenses),
including any amounts paid in  satisfaction  of  judgments,  in compromise or as
fines or penalties,  not resulting  from disabling  conduct by the  Sub-Adviser.
Indemnification  shall be made only following (i) a final decision on the merits
by a court  or other  body  before  whom the  proceeding  was  brought  that the
Sub-Adviser  was not  liable  by  reason of  disabling  conduct,  or (ii) in the
absence of such a decision, a reasonable  determination,  based upon a review of
the facts, that the Sub-Adviser was not liable by reason of disabling conduct by
(a) the  vote  of a  majority  of the  Directors  of the  Fund  who are  neither
"interested  persons" of the Fund nor parties to the proceeding  ("disinterested
non-party  Directors"),  or (b) independent  legal counsel in a written opinion.
The  Sub-Adviser  shall be entitled to advances from the Fund for payment of the
reasonable  expenses incurred by it in connection with the matter to which it is
seeking  indemnification  in the manner and to the  fullest  extent  permissible
under the law. The Sub-Adviser  shall provide to the Fund a written  affirmation
of  its  good  faith  belief  that  the  standard  of  conduct   necessary   for
indemnification by the Fund has been met and a written  undertaking to repay any
such advance if it should  ultimately be determined that the standard of conduct
has not  been  met.  In  addition,  at  least  one of the  following  additional
conditions  shall be met: (a) the  Sub-Adviser  shall provide a security in form
and amount  acceptable to the Fund for its undertaking;  (b) the Fund is insured
against  losses  arising  by  reason  of  the  advance;  or  (c) a  majority  of
disinterested  non-party Directors of the Fund, or independent legal counsel, in
a written  opinion,  shall have  determined,  based on a review of facts readily
available to the Fund at the time the advance is proposed to be made, that there
is  reason  to  believe  that the  Sub-Adviser  will  ultimately  be found to be
entitled to indemnification.

     6. Compensation. In consideration of the services rendered pursuant to this
Agreement,  Advisers will pay the  Sub-Adviser  a monthly fee  calculated at the
annual  rate of 1.125% of the  Fund's  average  net  assets  represented  by the
Designated Securities,  based on the net assets on the last business day of each
month, up to and including $150 Million;  1.00% of the Fund's average  month-end
net assets  represented by the  Designated  Securities in excess of $150 Million
and up to and including $300 Million; and 0.875% of the Fund's average month-end
net assets  represented by the Designated  Securities in excess of $300 Million.
The fee payable to Sub-Adviser for any period shorter than a full calendar month
shall be prorated  according to the  proportion  that such payment  bears to the
full monthly payment.



     7.  Expenses.  Sub-Adviser  will bear all expenses in  connection  with the
performance  of its services  under this  Agreement.  The Fund will bear certain
other expenses to be incurred in its operation,  including  investment  advisory
fees, 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  Advisers;   Securities  and  Exchange   Commission   fees,  state  Blue  Sky
qualification  fees,  charges of any custodian,  any sub-custodians and transfer
and  dividend-paying  agents,  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,  litigation and other
extraordinary or non-recurring expenses.

     8.  Services to other  Companies  or  Accounts.  The  Advisers and the Fund
understand  that  the  Sub-Adviser  now  acts,  or may  act,  in the  future  as
investment  adviser to fiduciary and other managed accounts or other trusts,  or
as investment adviser to one or more other investment companies, and the Adviser
and the Fund have no objection to the Sub-Adviser so acting. The Adviser and the
Fund  understand  that the  persons  employed  by  Sub-Adviser  to assist in the
performance  of the  Sub-Adviser's  duties  hereunder will not devote their full
time to such  service and nothing  contained  herein shall be deemed to limit or
restrict the right of the  Sub-Adviser  or any affiliate of the  Sub-Adviser  to
engage  in and  devote  time and  attention  to other  businesses  or to  render
services of whatever kind or nature.

     9. Term of Agreement.  This Agreement shall become effective as of the date
it is  approved  by a vote of a  "majority"  (as defined in the 1940 Act) of the
Fund's  outstanding  voting securities (the "Effective Date") and shall continue
for a  two-year  term and  shall  terminate  at that  time.  This  Agreement  is
terminable by any party hereto, by the Board or by the vote of a majority of the
outstanding voting securities of the Fund, on sixty (60) days' written notice to
the respective party. Any termination shall be without penalty and any notice of
termination shall be deemed given when received by the addressee.

     10. No Assignment. This Agreement may not be transferred, assigned, sold or
in any manner  hypothecated  or pledged by any party  hereto and will  terminate
automatically  in the event of its  assignment  (as defined in the 1940 Act). It
may be amended by mutual agreement, in writing, by the parties hereto.

     11. Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between the parties hereto.

     12.  Governing Law. This  Agreement  shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado.

     13.  Consent to  Jurisdiction  and  Service  of  Process.  The  Sub-Adviser
irrevocably  submits to the  jurisdiction of any Colorado State or United States
Federal court sitting in Colorado,  over any suit, action or proceeding  arising
out of or relating to this Agreement. The Sub-Adviser irrevocably waives, to the
fullest extent  permitted by law, any objection  which it may have to the laying
of the venue of any such suit, action or proceeding  brought in such a court and
any claim that any such suit,  action or proceeding  brought in such a court has
been  brought  in an  inconvenient  forum.  The  Sub-Adviser  agrees  that final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon the  Sub-Adviser,  and may be enforced to the extent
permitted  by  applicable  law in any  court of the  jurisdiction  of which  the
Sub-Adviser  is subject by a suit upon such  judgment,  provided that service of
process  is  effected  upon  the  Sub-Adviser  in the  manner  specified  in the
following paragraph or as otherwise permitted by law.

     Nothing in this section  shall affect the right of the Fund or the Advisers
to serve  process in any manner  permitted by law or limit the right of the Fund
or the Advisers to bring  proceedings  against the  Sub-Adviser in the courts of
any jurisdiction or jurisdictions.

     14. Counterparts.  This Agreement may be executed in counterparts,  each of
which  shall  be  deemed  an  original  for all  purposes,  and  together  shall
constitute one and the same Agreement.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed as of the date first above written.






THE ADVISERS:

ROCKY MOUNTAIN ADVISERS, LLC, an Alaska limited liability company




By: _________________________________________

         Stephen C. Miller

Its:     President



STEWART INVESTMENT ADVISERS, a Barbados international business company




By:  ____________________________________

         Glade Christensen

Its:     President



THE SUB-ADVISER:

WELLINGTON MANAGEMENT COMPANY, LLP, a Massachusetts limited liability
partnership




By: ________________________________________

 Its:



THE FUND:

FIRST OPPORTUNITY FUND, INC., a Maryland corporation




By: ____________________________________

         Carl D. Johns

Its:     Vice President/CFO




                                    EXHIBIT A


                        SCHEDULE OF DESIGNATED SECURITIES









                               [GRAPHIC OMITTED]
                          www.firstopportunityfund.com






                                     PROXY


                          FIRST OPPORTUNITY FUND, INC.

                    PROXY SOLICITED BY THE BOARD OF DIRECTORS


The  undersigned  holder of shares of Common  Stock of First  Opportunity  Fund,
Inc., a Maryland  corporation  (the "Fund"),  hereby appoints Stephen C. Miller,
Carl D.  Johns,  and  Nicole L.  Murphey,  or any of them,  as  proxies  for the
undersigned,  with full powers of  substitution  in each of them,  to attend the
Annual  Meeting  of   Stockholders   (the  "Annual   Meeting")  to  be  held  at
____________________  at  ___  a.m.  Pacific  Daylight  Time  (local  time),  on
_____________,  2010, and any adjournments or postponements  thereof, to cast on
behalf of the  undersigned all votes that the undersigned is entitled to cast at
the Annual  Meeting and to otherwise  represent  the  undersigned  at the Annual
Meeting with all the powers  possessed by the undersigned if personally  present
at the Meeting.


The votes entitled to be cast will be cast as instructed below. If this Proxy is
executed  but no  instruction  is given,  the votes  entitled  to be cast by the
undersigned  will be cast "FOR"  each of the  proposals  described  in the Proxy
Statement.

The undersigned hereby acknowledges  receipt of the Notice of Annual Meeting and
Proxy Statement.  In their  discretion,  the proxies are authorized to vote upon
such other  business as may properly come before the Meeting.  A majority of the
proxies  present  and acting at the Special  Meeting in person or by  substitute
(or, if only one shall be so present, then that one) shall have and may exercise
all of the power and authority of said proxies hereunder. The undersigned hereby
revokes any proxy previously given.


                   CONTINUED AND TO BE SIGNED ON REVERSE SIDE





Please indicate your vote by an "X" in the appropriate box below.

This proxy,  if properly  executed,  will be voted in the manner directed by the
undersigned  stockholder.  IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ALL PROPOSALS.

Please refer to the Proxy Statement for a discussion of the Proposals.

                                                                                             

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

 1.          To approve or disapprove the proposed  investment  advisory  FOR____     AGAINST___         ABSTAIN ___
             agreement with Rocky Mountain Advisers, LLC.

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

THE BOARD OF DIRECTORS,  INCLUDING ALL OF THE INDEPENDENT  DIRECTORS,  UNANIMOUSLY  RECOMMENDS THAT  STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT

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

2.           To approve or disapprove the proposed  investment  advisory  FOR___      AGAINST ___        ABSTAIN ___
             agreement with Stewart Investment Advisers.

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

THE BOARD OF DIRECTORS,  INCLUDING ALL OF THE INDEPENDENT  DIRECTORS,  UNANIMOUSLY  RECOMMENDS THAT  STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------

3.           To   approve  or   disapprove   the   proposed   investment  FOR ___     AGAINST ___        ABSTAIN ____
             sub-advisory agreement with Wellington Management LLP.
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------
----------------------------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS,  INCLUDING ALL OF THE INDEPENDENT  DIRECTORS,  UNANIMOUSLY  RECOMMENDS THAT  STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------

4.           To  approve  or  disapprove   elimination   of  the  Fund's  FOR ___     AGAINST ___        ABSTAIN ___
             fundamental  policy of investing at least 65% of its assets
             in  financial   services   companies  (the   "Concentration
             Policy").
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------
----------------------------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS,  INCLUDING ALL OF THE INDEPENDENT  DIRECTORS,  UNANIMOUSLY  RECOMMENDS THAT  STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------

5.           To approve or disapprove amending the Concentration  Policy  FOR ___     AGAINST ___        ABSTAIN ___
             to reduce the Fund's  minimum  threshold  for  investing in
             financial services companies to 25%.
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------
----------------------------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS,  INCLUDING ALL OF THE INDEPENDENT  DIRECTORS,  UNANIMOUSLY  RECOMMENDS THAT  STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL, AS MORE FULLY DESCRIBED IN THE PROXY STATEMENT
----------------------------------------------------------------------------------------------------------------------------------
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------


6.           Election of Directors:  Nominees are Richard I. Barr,  John  FOR ___     WITHHOLD ___       FOR ALL EXCEPT ____
             S. Horejsi,  Susan L. Ciciora,  Dr. Dean L.  Jacobson,  and
             Joel W. Looney
------------ ------------------------------------------------------------ ----------- ------------------ -------------------------
----------------------------------------------------------------------------------------------------------------------------------


Instruction:  If you do not wish your shares  voted "for" a particular  nominee,  mark the "For All Except" box and strike a line
through  the  name(s) of the  nominee(s).  Your shares will be voted  "For" the  remaining  nominee(s).  THE BOARD OF  DIRECTORS,
INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ELECTION OF ALL THE NOMINEES
----------------------------------------------------------------------------------------------------------------------------------


MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT        ____

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.

NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EACH should sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.






Signature:
                   -------------------------

Date:
                   -------------------------
Signature:
                   -------------------------

Date:
                   -------------------------