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<SEC-DOCUMENT>0000950123-05-010149.txt : 20050819
<SEC-HEADER>0000950123-05-010149.hdr.sgml : 20050819
<ACCEPTANCE-DATETIME>20050819171152
ACCESSION NUMBER:		0000950123-05-010149
CONFORMED SUBMISSION TYPE:	497
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20050819
DATE AS OF CHANGE:		20050819
EFFECTIVENESS DATE:		20050819

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GABELLI EQUITY TRUST INC
		CENTRAL INDEX KEY:			0000794685
		IRS NUMBER:				222736509
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		497
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-126111
		FILM NUMBER:		051039273

	BUSINESS ADDRESS:	
		STREET 1:		ONE CORP CENTER
		CITY:			RYE
		STATE:			NY
		ZIP:			10580
		BUSINESS PHONE:		9149215070
</SEC-HEADER>
<DOCUMENT>
<TYPE>497
<SEQUENCE>1
<FILENAME>y1213997e497.htm
<DESCRIPTION>497
<TEXT>
<HTML>
<HEAD>
<TITLE>497</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 14pt;">
<B>STERLING CAPITAL CORPORATION</B>
</DIV>


<DIV align="center" style="font-size: 10pt;">
<B>100&nbsp;Wall Street, 11th Floor</B>
</DIV>



<DIV align="center" style="font-size: 10pt;">
<B>New York, New York 10005</B>
</DIV>


<DIV align="center" style="font-size: 10pt;">
<B>(212)&nbsp;980-3360</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 10pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTICE OF SPECIAL MEETING OF SHAREHOLDERS</B>
</DIV>


<DIV align="center" style="font-size: 12pt;">
<B>To Be Held On September&nbsp;12, 2005</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
To the Shareholders of
</DIV>

<DIV align="left" style="font-size: 10pt;">
Sterling Capital Corporation:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notice is hereby given that a special meeting (the &#147;Special
Meeting&#148;) of shareholders of Sterling Capital Corporation,
a New York corporation (&#147;Sterling Capital&#148;), is
scheduled to be held at 11:00 a.m., Eastern time, on
September&nbsp;12, 2005, at the offices of Sterling
Capital&#146;s counsel, Skadden, Arps, Slate, Meagher &#38; Flom
LLP, 4 Times Square, New York, New York 10036, for the following
purposes:
</DIV>


<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1.&nbsp;To approve an Amended and Restated Agreement and Plan of
    Reorganization providing for the transfer of all or
    substantially all of the assets (other than a reserve of
    $250,000 in cash set aside to pay Sterling Capital&#146;s known
    and contingent expenses in connection with its dissolution and
    liquidation) of Sterling Capital to The Gabelli Equity Trust
    Inc. (the &#147;Equity Trust&#148;) in exchange solely for full
    shares of common stock of the Equity Trust and cash in lieu of
    fractional shares of common stock of the Equity Trust, the
    assumption by the Equity Trust of the Stated Liabilities (as
    defined herein) of Sterling Capital and the distribution of
    shares of common stock of the Equity Trust to the shareholders
    of Sterling Capital, followed by the termination, dissolution
    and complete liquidation of Sterling Capital;&nbsp;and</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2.&nbsp;To transact such other business as may properly come
    before the Special Meeting or any adjournments thereof.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The enclosed Proxy Statement/ Prospectus, which you should
retain for future reference, sets forth concisely information
about the proposed reorganization that you should know before
voting.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors has fixed the close of business on
August&nbsp;22, 2005 as the record date for the determination of
shareholders entitled to notice of and to vote at the Special
Meeting, and only shareholders of record on such date are
entitled to so vote.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital shareholders have the right to dissent from the
Reorganization and obtain payment in cash of the fair value of
their shares of Sterling Capital common stock under applicable
provisions of New York law. In order to exercise
dissenters&#146; rights, shareholders must give written demand
for appraisal of their shares before the vote on the
Reorganization and must not vote &#147;FOR&#148; the
Reorganization. A copy of the New York statutory requirements is
included as Exhibit&nbsp;B to the accompanying Proxy Statement/
Prospectus and a summary of the provisions can be found under
&#147;Required Vote&#148; in the Proxy Statement/ Prospectus.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of June&nbsp;30, 2005, members of the Scheuer family and
Gaymark Associates, a limited partnership indirectly controlled
by members of the Scheuer family, owned approximately 83.1% of
the outstanding common stock of Sterling Capital. Sterling
Capital expects that all of the shares held by members of the
Scheuer family and Gaymark Associates will be voted in favor of
the Reorganization, in which case the Reorganization will be
approved.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please execute and return the enclosed Proxy promptly in the
enclosed envelope, whether or not you intend to be present at
the Special Meeting. If you can attend and vote in person, you
are invited to do so; but if not, you are urged to submit the
enclosed Proxy with your vote marked thereon. You may revoke
your Proxy at any time before it is voted. No postage is
required if the Proxy is mailed in the United States.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors,</TD>
</TR>

<TR>
    <TD style="font-size: 36pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Michael Carey</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Vice President,</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Secretary and Treasurer</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
New York, New York
</DIV>


<DIV align="left" style="font-size: 10pt;">
August&nbsp;26, 2005
</DIV>


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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">

</DIV>

<DIV align="center" style="font-size: 10pt;">
Acquisition of the Assets of
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
STERLING CAPITAL CORPORATION
</DIV>

<DIV align="center" style="font-size: 10pt;">
100 Wall Street, 11th Floor
</DIV>

<DIV align="center" style="font-size: 10pt;">
New York, New York 10005
</DIV>

<DIV align="center" style="font-size: 10pt;">
(212)&nbsp;980-3360
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
By
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
THE GABELLI EQUITY TRUST INC.
</DIV>

<DIV align="center" style="font-size: 10pt;">
One Corporate Center
</DIV>

<DIV align="center" style="font-size: 10pt;">
Rye, New York 10580-1422
</DIV>

<DIV align="center" style="font-size: 10pt;">
(914)&nbsp;921-5100
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
PROXY STATEMENT/ PROSPECTUS
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Proxy Statement/ Prospectus is being furnished to
shareholders of Sterling Capital Corporation (&#147;Sterling
Capital&#148;) for use at the Special Meeting of Shareholders of
Sterling Capital to be held on September&nbsp;12, 2005 at 11:00
a.m., Eastern time, and at any and all postponements or
adjournments thereof (the &#147;Special Meeting&#148;). The
Special Meeting will be held at the offices of Sterling
Capital&#146;s counsel, Skadden, Arps, Slate, Meagher &#38; Flom
LLP, 4 Times Square, New York, New York 10036. The approximate
mailing date of this Proxy Statement/ Prospectus is
August&nbsp;26, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES NOR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROXY STATEMENT/ PROSPECTUS AND IN THE MATERIALS EXPRESSLY
INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY STERLING CAPITAL OR THE GABELLI EQUITY
TRUST INC.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Purpose of the Special Meeting.</I> At the Special Meeting,
shareholders of Sterling Capital will be asked to approve an
Amended and Restated Agreement and Plan of Reorganization dated
as of August&nbsp;16, 2005 (the &#147;Agreement&#148;) providing
for (a)&nbsp;the transfer of all or substantially all of the
assets of Sterling Capital (other than a reserve of $250,000 in
cash set aside to pay Sterling Capital&#146;s known and
contingent expenses in connection with its dissolution and
liquidation, referred to herein as the &#147;Reserve&#148;) to
The Gabelli Equity Trust&nbsp;Inc. (the &#147;Equity
Trust&#148;) in exchange solely for shares of Equity Trust
common stock (the &#147;Equity Trust Common Stock&#148;) and
cash in lieu of fractional shares of Equity Trust Common Stock,
(b)&nbsp;the assumption by the Equity Trust of the Stated
Liabilities (as defined herein) of Sterling Capital, and
(c)&nbsp;the distribution of Equity Trust Common Stock to the
Sterling Capital shareholders, followed by the termination,
dissolution and complete liquidation of Sterling Capital (the
&#147;Reorganization&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If approved by shareholders of Sterling Capital at the Special
Meeting, and as a result of the Reorganization, each Sterling
Capital shareholder will become a stockholder of the Equity
Trust and will receive that number of shares of Equity Trust
Common Stock (plus cash in lieu of fractional shares) having an
aggregate net asset value equal to the aggregate net asset value
of such shareholder&#146;s shares of common stock of Sterling
Capital (the &#147;Sterling Capital Shares&#148;) as of the
close of business on the closing date of the Reorganization (as
reduced by the shareholder&#146;s pro&nbsp;rata share of the
Reserve); provided, however, that if the average closing price
of Equity Trust Common Stock on the New York Stock Exchange (the
&#147;NYSE&#148;) for the 20 business days prior to the date of
the Reorganization exceeds the net asset value per share of
Equity Trust Common Stock on the date of the Reorganization, the
number of shares of Equity Trust Common Stock to be issued to
Sterling Capital shall be computed by dividing (i)&nbsp;the
aggregate value of Sterling Capital&#146;s assets, net of
Sterling Capital&#146;s Stated Liabilities (as defined herein)
and the Reserve by (ii)&nbsp;the lower of (x)&nbsp;the average
of such closing prices for the 20 business days prior to the
date of the Reorganization and (y)&nbsp;103% of the net asset
value per share of Equity Trust Common Stock as determined by
the Equity Trust
</DIV>

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<DIV align="left" style="font-size: 10pt;">
on the date of the Reorganization (the &#147;Alternative
Value&#148;). Because shares of Equity Trust Common Stock
recently have been trading at a premium to its net asset value,
if the Reorganization had been effected on June&nbsp;30, 2005,
the number of shares of Equity Trust Common Stock to be
distributed to Sterling Capital shareholders would have been
calculated according to the Alternative Value. However, there
can be no guarantee that Equity Trust Common Stock will continue
to trade at a premium or will be trading at a premium on the
date of the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital shareholders will not receive any fractional
shares of Equity Trust Common Stock as part of the
Reorganization. In lieu thereof, Sterling Capital will receive
from the Equity Trust for distribution to its shareholders cash
in an amount equal to the aggregate net asset value of the
fractional shares of Equity Trust Common Stock otherwise
distributable to Sterling Capital shareholders. The cash to be
distributed in lieu of fractional shares will be calculated on
the same basis as the formula to be used to calculate the number
of full shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is expected that Sterling Capital shareholders will recognize
no gain or loss for federal income tax purposes as a result of
the Reorganization, except with respect to any cash proceeds
distributed in lieu of fractional shares of Equity Trust Common
Stock. Sterling Capital shareholders will be treated for federal
income tax purposes as if they received fractional share
interests and then sold such interests for cash.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of June&nbsp;30, 2005, members of the Scheuer family and
Gaymark Associates, a limited partnership indirectly controlled
by members of the Scheuer family, owned approximately 83.1% of
the outstanding common stock of Sterling Capital. Sterling
Capital expects that all of the shares held by members of the
Scheuer family and Gaymark Associates will be voted in favor of
the Reorganization, in which case the Reorganization will be
approved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Information About the Equity Trust and Sterling Capital.</I>
The Equity Trust and Sterling Capital are closed-end management
investment companies with similar investment objectives. The
Equity Trust has a primary investment objective of long-term
growth of capital and a secondary investment objective of
income. The Equity Trust invests primarily in equity securities,
including common stock, preferred stock, convertible or
exchangeable securities and warrants and rights to purchase such
securities. Sterling Capital&#146;s investment objective is
long-term capital growth. Sterling Capital pursues this
objective by generally investing directly or indirectly in
equity securities which it believes to offer attractive
investment opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust is non-diversified for purposes of the
Investment Company Act of 1940 (the &#147;1940 Act&#148;), which
means it is not limited by the 1940 Act in the proportion of its
assets that may be invested in securities of a single issuer,
and accordingly, an investment in the Equity Trust may, under
certain circumstances, present greater risk to an investor than
an investment in a diversified company. The Equity Trust is
required to comply with the diversification standards of the
Internal Revenue Code of 1986, as amended (the &#147;Code&#148;)
applicable to regulated investment companies, under which, with
respect to 50% of its assets, it may not invest more than 5% of
its assets in the securities of a single issuer. As a
diversified investment company under the 1940 Act, Sterling
Capital is subject to this limitation with respect to 75% of its
assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unlike Sterling Capital, which has only common shares
outstanding, the Equity Trust has issued several series of
preferred stock in addition to its Common Stock, which presents
the risks of leverage. The use of leverage generally increases
the volatility of returns to the Equity Trust. Also, if the
Equity Trust is utilizing leverage, a decline in net asset value
could affect the ability of the Equity Trust to make
distribution payments on its Common Stock. Under the Equity
Trust&#146;s charter and the 1940 Act, holders of its
outstanding preferred stock, voting as a separate class, are
entitled to elect two Directors of the Equity Trust, and holders
of its outstanding Common Stock and preferred stock, voting
together as a single class, are entitled to elect the remaining
Directors, subject to the provisions of the 1940 Act and the
Equity Trust&#146;s charter and by-laws. The holders of the
Equity Trust&#146;s outstanding preferred stock would be
entitled to elect the minimum number of additional Directors
that would represent a majority of the Directors in the event
that dividends on its preferred stock are in arrears for two
full years. No dividend arrearages exist at this time. See
&#147;Comparison of the Organizational Structure of the Equity
Trust and Sterling Capital&nbsp;&#151; the Equity
Trust&nbsp;&#151; Voting Rights of Common Stock and Preferred
Stock&#148; and &#147;Anti-Takeover Provisions of the Charter
and By-Laws,&#148; for additional information concerning the
voting rights of the preferred stock.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The terms and conditions of the Reorganization are more fully
described in this Proxy Statement/Prospectus and in the
Agreement, a copy of which is attached as Exhibit&nbsp;A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Proxy Statement/ Prospectus serves as a prospectus for
shares of Equity Trust Common Stock under the Securities Act of
1933, as amended (the &#147;Securities Act&#148;), in connection
with the issuance of shares of Equity Trust Common Stock in the
Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
You should retain this Proxy Statement/ Prospectus for future
reference as it sets forth concisely information about the
Equity Trust and Sterling Capital that you should know before
voting on the proposal described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A Statement of Additional Information, which is referred to in
this Proxy Statement/ Prospectus as the &#147;SAI,&#148; dated
August&nbsp;16, 2005, and which contains additional information
about the Reorganization and the Equity Trust, has been filed
with the Securities and Exchange Commission (the
&#147;SEC&#148;). The SAI is incorporated by reference into this
Proxy Statement/ Prospectus. Copies of the SAI are available
upon request, without charge, by calling 800-GABELLI
(800-422-3554). You may also submit your request in writing to
The Gabelli Equity Trust&nbsp;Inc., One Corporate Center, Rye,
NY 10580-1422. If you should have any questions regarding the
proxy material or how to execute your vote, you may call Michael
Carey at 212-980-3360 or 800-949-3456. Sterling Capital has
provided the information included in this Proxy Statement/
Prospectus relating to it. The Equity Trust has provided the
information included in this Proxy Statement/ Prospectus
relating to it.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The date of this Proxy Statement/ Prospectus is August&nbsp;16,
2005.
</DIV>
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</DIV>

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</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>TABLE OF CONTENTS</U></B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="90%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
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<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#101'>PROPOSAL&nbsp;1: APPROVAL OF THE AMENDED
    AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#102'>SYNOPSIS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#103'>EXPENSE TABLE</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#104'>FINANCIAL HIGHLIGHTS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#105'>COMPARISON OF INVESTMENT OBJECTIVES AND
    POLICIES</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#106'>RISK FACTORS AND SPECIAL CONSIDERATIONS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#117'>RECENT DEVELOPMENTS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#107'>UNITED STATES FEDERAL INCOME TAXES</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#108'>INFORMATION ABOUT THE REORGANIZATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#109'>ADDITIONAL INFORMATION ABOUT THE FUNDS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#110'>COMPARISON OF ORGANIZATIONAL STRUCTURE OF
    THE EQUITY TRUST AND STERLING CAPITAL</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#111'>MANAGEMENT OF THE FUNDS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#112'>REQUIRED VOTE</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#113'>LEGAL PROCEEDINGS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#114'>LEGAL OPINIONS</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#115'>ADDITIONAL INFORMATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#116'>AMENDED AND RESTATED AGREEMENT AND PLAN OF
    REORGANIZATION</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    DISSENTERS&#146; RIGHTS STATUTE</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>B-1</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<DIV align="left" style="font-size: 10pt;">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt;">(i)

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>GENERAL</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Proxy Statement/ Prospectus is furnished to the
shareholders of Sterling Capital in connection with the
solicitation of proxies on behalf of the Board of Directors of
Sterling Capital for use at the Special Meeting. The mailing
address for Sterling Capital is 100&nbsp;Wall Street,
11th&nbsp;Floor, New York, New York, 10005. The mailing address
for the Equity Trust is One Corporate Center, Rye, New York
10580-1422.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Proxy Statement/Prospectus, the Notice of Special Meeting
of Shareholders and the proxy card(s) are first being mailed to
shareholders on or about August&nbsp;26, 2005 or as soon as
practicable thereafter. Any shareholder who gives a proxy has
the power to revoke the proxy either:
</DIV>


<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    by mail, addressed to the Secretary of Sterling Capital, at
    Sterling Capital&#146;s mailing address above,&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    in person at the Special Meeting by executing a superseding
    proxy or by submitting a notice of revocation to Sterling
    Capital.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All properly executed proxies received in time for the Special
Meeting will be voted as specified in the proxy or, if no
specification is made, in favor of the proposal referred to in
the Proxy Statement/Prospectus, and in accordance with the
judgment of the persons named as proxies on other matters that
may properly come before the Special Meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shareholders of Sterling Capital will be asked to vote on a
proposal to approve the Agreement, which provides for the
transfer of all or substantially all of the assets (other than
the Reserve, as defined herein) of Sterling Capital in exchange
solely for full shares of Equity Trust Common Stock and cash in
lieu of fractional shares of Equity Trust Common Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The presence, either in person or by proxy, of the holders of
one-third of the total number of outstanding shares of common
stock entitled to vote at a meeting of Sterling Capital will
constitute a quorum for the transaction of business by Sterling
Capital. For purposes of determining the presence of a quorum
for transacting business at a meeting, abstentions and broker
&#147;non-votes&#148; will be treated as shares that are
present. Broker non-votes are proxies received by Sterling
Capital from brokers or nominees, indicating that the broker or
nominee has neither received instructions from the beneficial
owner or other persons entitled to vote nor has the
discretionary power to vote on a particular matter. Abstentions
and broker non-votes will have the effect of a &#147;no&#148;
vote on Proposal&nbsp;1. Therefore, shareholders are urged to
forward their voting instructions promptly.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proxy solicitations will be made primarily by mail, but
solicitations may also be made by telephone, telegraph, or
personal interviews conducted by directors, officers or
employees of Sterling Capital, the Equity Trust, or Gabelli
Funds, LLC, the Equity Trust&#146;s investment adviser
(&#147;Gabelli Funds&#148;). Each of Sterling Capital and the
Equity Trust will pay its own expenses incurred in connection
with the Reorganization, except that each of Sterling Capital
and Gabelli Funds will pay 50% of the reasonable and documented
expenses of printing and mailing proxy statements and proxy
cards to Sterling Capital shareholders. See
&#147;Synopsis&nbsp;&#151; Expenses of the Reorganization.&#148;
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Only shareholders of record of Sterling Capital at the close of
business on August&nbsp;22, 2005 (the &#147;Record Date&#148;)
are entitled to vote. Each outstanding share of Sterling Capital
is entitled to one vote on all matters voted upon at the Special
Meeting. As of August&nbsp;22, 2005, there were
2,500,000&nbsp;shares of common stock of Sterling Capital
outstanding.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of Sterling Capital and the Equity Trust provides periodic
reports to its shareholders. These reports highlight relevant
information, including investment results and a list of
portfolio holdings for each entity. Sterling Capital and the
Equity Trust have previously furnished their respective annual
reports containing audited financial statements for the year
ended December&nbsp;31, 2004. You may receive a copy of the most
recent annual reports for Sterling Capital or the Equity Trust
and a copy of any more recent interim report, without charge, by
calling 800-949-3456 and 800-GABELLI (800-422-3554) for Sterling
Capital&#146;s and the Equity Trust&#146;s reports, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors of Sterling Capital knows of no business
other than the proposal described above which will be presented
for consideration at the Special Meeting. If any other matter is
properly presented, it is the intention of the persons named in
the enclosed proxy to vote on that matter in their discretion.
</DIV>

<P align="center" style="font-size: 10pt;">1
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<DIV align="left" style="font-size: 10pt;">
<A name='101'></A>
</DIV>

<!-- link1 "PROPOSAL 1: APPROVAL OF THE AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION" -->


<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;1:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPROVAL OF THE
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors of Sterling Capital, including a majority
of the Directors of Sterling Capital who are not
&#147;interested persons&#148; of Sterling Capital (the
&#147;Non-Interested Directors&#148;), at meetings held on
October&nbsp;5, 2004 and March&nbsp;28, April&nbsp;25 and
May&nbsp;16, 2005:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    determined that the proposed Reorganization is in the best
    interests of Sterling Capital and its shareholders,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    approved the Agreement,&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    recommended that the Agreement be approved by the shareholders
    of Sterling Capital.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For more information about the Reorganization, see
&#147;Information About the Reorganization.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Agreement is subject to the approval of the shareholders of
Sterling Capital and the satisfaction or waiver of certain other
conditions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A copy of the Agreement is attached to this Proxy
Statement/Prospectus as Exhibit&nbsp;A, and the description of
the Agreement included in this Proxy Statement/Prospectus is
qualified in its entirety by reference to Exhibit&nbsp;A.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following provides a more detailed discussion about the
proposed Reorganization, Sterling Capital and the Equity Trust
and additional information that you may find helpful in deciding
how to vote on the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='102'></A>
</DIV>

<!-- link1 "SYNOPSIS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SYNOPSIS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This summary highlights important information included in this
Proxy Statement/Prospectus. This summary is qualified by
reference to the more complete information included elsewhere in
this Proxy Statement/Prospectus and the Agreement. Shareholders
of Sterling Capital should read this entire Proxy
Statement/Prospectus carefully.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Proposed Reorganization.</I> Each of the Boards of
Directors of the Equity Trust and Sterling Capital, including a
majority of the Non-Interested Directors of each Fund, have
approved the Agreement. The Agreement provides for a
reorganization of Sterling Capital whereby the Equity Trust will
acquire all or substantially all of the assets of Sterling
Capital, other than the Reserve, and assume all of the accrued
and unpaid liabilities of Sterling Capital set forth in Sterling
Capital&#146;s statement of assets and liabilities (the
&#147;Stated Liabilities&#148;), solely in exchange for full
shares of Equity Trust Common Stock and cash in lieu of
fractional shares of Equity Trust Common Stock. The full shares
of Equity Trust Common Stock and cash in lieu of fractional
shares will be distributed by Sterling Capital to its
shareholders in liquidation of Sterling Capital and Sterling
Capital will subsequently dissolve. If approved by the
shareholders of Sterling Capital, the Reorganization is expected
to be consummated promptly after the Meeting.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Reorganization is approved by shareholders of Sterling
Capital, as a result of the Reorganization each shareholder of
Sterling Capital will become an Equity Trust stockholder and
will receive, on the date of the Reorganization, that number of
full shares of Equity Trust Common Stock (plus cash in lieu of
fractional shares) having an aggregate net asset value equal to
the aggregate net asset value of such shareholder&#146;s shares
of common stock of Sterling Capital as of the close of business
on the date of the Reorganization (as reduced by the
shareholder&#146;s pro&nbsp;rata share of the Reserve). However,
if the average closing price of Equity Trust Common Stock on the
NYSE for the 20 business days prior to the date of the
Reorganization exceeds the net asset value per share of Equity
Trust Common Stock on the date of the Reorganization, the number
of shares of Equity Trust Common Stock to be issued to Sterling
Capital shall be computed by dividing (i)&nbsp;the aggregate
value of Sterling Capital&#146;s assets, net of Sterling
Capital&#146;s Stated Liabilities and the Reserve on the date of
the Reorganization by (ii)&nbsp;the lower of (x)&nbsp;the
average of such closing prices for the 20 business days prior to
the date of the Reorganization and (y)&nbsp;103% of the net
asset value per share of Equity Trust Common Stock as determined
by the Equity Trust on the date of the Reorganization (the
&#147;Alternative Value&#148;). As of June&nbsp;30, 2005, the
closing price of Equity Trust Common Stock on the NYSE was
$8.98, which represents a
</DIV>


<P align="center" style="font-size: 10pt;">2

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<DIV align="left" style="font-size: 10pt;">
premium of 7.16% to its net asset value per share of $8.38 on
such date. Equity Trust Common Stock has generally traded at a
premium to its net asset value since February 2001. If the
Reorganization had been effected on June&nbsp;30, 2005, the
number of shares of Equity Trust Common Stock to be distributed
to Sterling Capital shareholders would have been calculated
according to the Alternative Value. However, there can be no
guarantee that Equity Trust Common Stock will continue to trade
at a premium or will be trading at a premium on the date of the
Reorganization. The cash to be distributed in lieu of fractional
shares will be calculated on the same basis as the formula to be
used to calculate the number of full shares. The Reorganization
will be effective five business days after each of the
conditions to the Reorganization has been satisfied or at such
other time and date as fixed by the mutual consent of the
parties (the &#147;Effective Date&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors of Sterling Capital recommends approval
of the Reorganization. If the Reorganization is not approved,
Sterling Capital will continue as a separate investment company,
and the Board of Directors of Sterling Capital will consider
such other alternatives it determines to be in the best
interests of its shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of June&nbsp;30, 2005, members of the Scheuer family and
Gaymark Associates, a limited partnership indirectly controlled
by members of the Scheuer family, owned approximately 83.1% of
the outstanding common stock of Sterling Capital. Sterling
Capital expects that all of the shares held by members of the
Scheuer family and Gaymark Associates will be voted in favor of
the Reorganization, in which case the Reorganization will be
approved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Form of Organization.</I> Both Funds are closed-end
management investment companies registered under the 1940 Act.
The Equity Trust was organized as a Maryland corporation on
May&nbsp;20, 1986, and Sterling Capital was organized as a New
York corporation on August&nbsp;4, 1967. The business and
affairs of the Funds are managed under the direction of their
respective Boards of Directors. The Equity Trust is managed by
Gabelli Funds, its investment adviser. Sterling Capital operates
as an internally managed investment company whereby its own
officers and employees, under the general supervision of its
Board of Directors, conduct its operations. Equity Trust Common
Stock trades on the NYSE under the symbol &#147;GAB.&#148;
Sterling Capital&#146;s common stock trades on the American
Stock Exchange (the &#147;AMEX&#148;) under the symbol
&#147;SPR.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust is non-diversified for purposes of the 1940
Act, which means it is not limited by the 1940 Act in the
proportion of its assets that may be invested in securities of a
single issuer, and accordingly, an investment in the Equity
Trust may, under certain circumstances, present greater risk to
an investor than an investment in a diversified company. The
Equity Trust is required to comply with the diversification
standards of the Code applicable to regulated investment
companies, under which, with respect to 50% of its assets, it
may not invest more than 5% of its assets in the securities of a
single issuer. As a diversified investment company under the
1940 Act, Sterling Capital is subject to this limitation with
respect to 75% of its assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Investment Objectives and Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> The Equity Trust&#146;s primary
investment objective is to achieve long-term growth of capital
by investing primarily in a portfolio of equity securities
consisting of common stock, preferred stock, convertible or
exchangeable securities and warrants and rights to purchase such
securities selected by Gabelli Funds. Income is the secondary
investment objective. The Equity Trust&#146;s investment
objectives may be changed only by vote of a majority of its
outstanding voting securities, as defined in the 1940 Act, and
by a majority, as defined in the 1940 Act, of its outstanding
preferred stock, voting separately as a single class.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Sterling Capital&#146;s investment
objective is long-term capital growth. Sterling Capital&#146;s
investment objective can be changed with the approval of a
majority of its directors. Sterling Capital pursues its
investment objective by generally investing directly or
indirectly in equity securities which it believes to offer
attractive investment opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Comparison of Investment Objectives and Policies.</I> Each of
the Equity Trust and Sterling Capital has an investment
objective of long-term capital growth; however, they employ
different strategies in pursuing that objective. In addition,
the Equity Trust seeks income as a secondary objective, while
Sterling Capital does not. A key difference between the
Funds&#146; investment strategies is that the Equity Trust uses
leverage, while
</DIV>

<P align="center" style="font-size: 10pt;">3

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<DIV align="left" style="font-size: 10pt;">
Sterling Capital does not. The Equity Trust&#146;s use of
leverage creates special risks not associated with unleveraged
funds having similar investment objectives and policies, such as
Sterling Capital. These include the possibility of greater loss
and the likelihood of higher volatility of the net asset value
of the Equity Trust and the asset coverage. See &#147;Comparison
of Investment Objectives and Policies&nbsp;&#151;
Leveraging&#148; and &#147;Risk Factors and Special
Considerations&nbsp;&#151; Leverage Risk.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Reorganization is approved, it is expected that any of
Sterling Capital&#146;s holdings that are not compatible with
the Equity Trust&#146;s investment objective, policies and
restrictions will be liquidated in an orderly manner, and the
proceeds of these sales will be reinvested in securities that
are consistent with the Equity Trust&#146;s investment
objective, policies and restrictions. The need for Sterling
Capital to dispose of investments in connection with the
Reorganization may result in its selling securities at a
disadvantageous time and price and could result in its incurring
transaction costs that it would not otherwise have incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Investment Adviser and Fee Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Sterling Capital operates as an
internally managed investment company whereby its own officers
and employees, under the general supervision of its Board of
Directors, conduct its operations. For the fiscal year ended
December&nbsp;31, 2004, Sterling Capital&#146;s total expense
ratio (the ratio of total annual operating expenses to average
net assets, net of fee waivers (if any) and including taxes)
was&nbsp;2.60%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> Gabelli Funds, located at One Corporate
Center, Rye, New York 10580-1422, serves as the investment
adviser to the Equity Trust. Gabelli Funds provides a continuous
investment program for the Equity Trust&#146;s portfolio and
oversees the administration of all aspects of the Equity
Trust&#146;s business and affairs. For its services, Gabelli
Funds receives an annual fee, calculated weekly and paid
monthly, equal to 1.00% of the Equity Trust&#146;s average
weekly net assets plus the liquidation value of its outstanding
preferred stock. Gabelli Funds has agreed to reduce the
management fee on the incremental assets attributable to the
cumulative preferred stock during the fiscal year if the total
return of the net asset value of Equity Trust Common Stock,
including distributions and advisory fee subject to reduction
for that year, does not exceed the stated dividend rate or
corresponding swap rate of each particular series of preferred
stock. The Equity Trust&#146;s total return on the net asset
value of its Common Stock is monitored on a monthly basis to
assess whether the total return on the net asset value of the
Common Stock exceeds the stated dividend rate or corresponding
swap rate of each particular series of preferred stock for the
period. The test to confirm the accrual of the management fee on
the assets attributable to each particular series of preferred
stock is annual. The Equity Trust will accrue for the management
fee on those assets during the fiscal year if it appears
probable that the Equity Trust will incur the additional
management fee on those assets. For the year ended
December&nbsp;31, 2004, the Equity Trust&#146;s total return on
the net asset value of its Common Stock exceeded the stated
dividend rate or corresponding swap rate of all outstanding
preferred stock, and thus management fees were accrued on those
assets. For the year ended December&nbsp;31, 2004, Gabelli Funds
earned $15,167,775 for advisory services. For the six months
ended June&nbsp;30, 2005, the Equity Trust&#146;s total return
on the net asset value of the Common Stock did not exceed the
stated dividend rates or corresponding swap rate of all
outstanding preferred stock. Thus, management fees with respect
to the liquidation value of the preferred stock assets in the
amount of $2,076,504 were not accrued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PFPC Inc. (&#147;PFPC&#148;), located at 760 Moore Road, King of
Prussia, Pennsylvania 19406, serves as the Equity Trust&#146;s
sub-administrator. For these services and the related expenses
borne by PFPC, Gabelli Funds (not the Equity Trust) pays a
prorated monthly fee at the annual rate of .0275% of the first
$10&nbsp;billion of the aggregate average net assets of the
Equity Trust and all other funds advised by Gabelli Funds and
administered by PFPC, .0125% of the aggregate average net assets
exceeding $10&nbsp;billion and .01% of the aggregate average net
assets in excess of $15&nbsp;billion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the fiscal year ended December&nbsp;31, 2004, the Equity
Trust&#146;s total expense ratio to average net assets
attributable to Common Stock was 1.57%, and is currently 1.20%
on an annualized basis based on operating expenses for the first
six months of fiscal year 2005. The difference between the total
expense ratio for the 2004 fiscal year and the first six months
of fiscal 2005 is that the expense ratio for the 2004 fiscal
year includes the advisory fee accrued on assets attributable to
the Equity Trust&#146;s outstanding shares of preferred stock,
</DIV>

<P align="center" style="font-size: 10pt;">4
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<DIV align="left" style="font-size: 10pt;">
while the expense ratio for the 2005 fiscal period does not.
Accordingly, any advisory fees reduced may be recouped during
the fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The expense ratio of the Equity Trust, assuming the
Reorganization was consummated on June&nbsp;30, 2005 and
advisory fees were accrued on assets attributable to the Equity
Trust&#146;s outstanding shares of preferred stock, would have
been estimated to be approximately 1.57% after giving effect to
the Reorganization. The actual expense ratios for the Equity
Trust for the current and future fiscal years, if the
Reorganization occurs, may be higher or lower than this
projection and depend upon the Equity Trust&#146;s investment
performance, general stock market and economic conditions, net
asset levels, stock price and other factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See &#147;Expense Table&#148; below for the current expenses of
each Fund and pro forma expenses following the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Federal Income Tax Consequences of the Reorganization.</I>
The Reorganization is intended to qualify as a tax-free
reorganization within the meaning of Section&nbsp;368(a) of the
Code. Accordingly, it is expected that none of Sterling Capital,
the Equity Trust or the shareholders of either Fund will
recognize any gain or loss for U.S.&nbsp;federal income tax
purposes as a result of the Reorganization, except with respect
to cash received in lieu of fractional shares of Equity Trust
Common Stock by shareholders of Sterling Capital. For more
information about the tax consequences of the Reorganization,
see &#147;Information About the Reorganization&nbsp;&#151; Tax
Considerations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Discount from Net Asset Value.</I> Shares of closed-end funds
often trade at a market price that is less than the value of the
shares&#146; net assets. The possibility that shares of the
Equity Trust will trade at a discount from its net asset value
is a risk separate and distinct from the risk that the Equity
Trust&#146;s net asset value will decrease. The Equity
Trust&#146;s shares have traded in the market for periods of
time above and below net asset value, and recently have traded
generally at a premium to net asset value. As of
December&nbsp;31, 2004, Equity Trust Common Stock traded at a
price of $9.02, representing a premium of 3.80% to its net asset
value of $8.69. As of June&nbsp;30, 2005, Equity Trust Common
Stock traded at a price of $8.98, representing a premium of
7.16% to its net asset value per share of $8.38. There can be no
assurance that Equity Trust Common Stock will continue to trade
at a premium before or after the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The shares of Sterling Capital generally have traded at a
discount to net asset value over the last five years. As of
December&nbsp;31, 2004, shares of Sterling Capital traded at a
price of $5.70, representing a discount of 23.69% to its net
asset value of $7.47. As of June&nbsp;30, 2005, which was after
announcement of the Reorganization, shares of Sterling Capital
traded at a price of $7.00, representing a discount of 3.98% to
its net asset value of $7.29.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Disparity in Sterling Capital and Equity Trust Market
Levels.</I> Sterling Capital&#146;s shares currently are trading
at a discount to net asset value, while the Equity Trust&#146;s
shares have been trading at a premium. Under the Agreement, if
the average closing price of Equity Trust Common Stock on the
NYSE for the 20 business days prior to the Effective Date of the
Reorganization exceeds the net asset value per share of Equity
Trust Common Stock on the Effective Date, the number of shares
of Equity Trust Common Stock to be issued to Sterling Capital
shall be computed by dividing (i)&nbsp;the aggregate value of
Sterling Capital&#146;s assets, net of Sterling Capital&#146;s
Stated Liabilities and the Reserve on the Effective Date by
(ii)&nbsp;the lower of (x)&nbsp;the average of such closing
prices for the 20 business days prior to the date of the
Reorganization and (y)&nbsp;103% of the net asset value per
share of Equity Trust Common Stock computed on the Effective
Date (the &#147;Alternative Value&#148;). The cash to be
distributed in lieu of fractional shares will be calculated on
the same basis as the formula to be used to calculate the number
of full shares. There can be no assurance that the value of the
shares of Equity Trust Common Stock to be issued in the
Reorganization will be valued according to the Alternative Value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Expenses of the Reorganization.</I> Each Fund will bear its
own legal, accounting and state securities or blue sky fees (if
any), consulting fees, proxy solicitation fees, filing fees,
stock exchange fees, rating agency fees, portfolio transfer
taxes (if any), and any similar expenses incurred in connection
with the Reorganization. Each of Sterling Capital and Gabelli
Funds will bear one-half of the reasonable and documented
expenses of printing and mailing the proxy statements and proxy
cards to Sterling Capital shareholders. The
</DIV>

<P align="center" style="font-size: 10pt;">5
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<DIV align="left" style="font-size: 10pt;">
expenses of the Reorganization are expected to be $100,000 for
Sterling Capital and, assuming its consummation, are expected to
result in a reduction of approximately $0.04 in Sterling
Capital&#146;s net asset value per share. Such expenses are
nondeductible for tax purposes for both Sterling Capital and the
Equity Trust.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Summary of Fund Expenses.</I> The purpose of the following
table is to help shareholders of Sterling Capital understand the
fees and expenses that they currently bear as a Sterling Capital
shareholder and what they would bear, directly or indirectly, as
a holder of Equity Trust Common Stock if the Reorganization is
consummated. For the Equity Trust, the table shows expenses as a
percentage of net assets attributable to the Equity Trust Common
Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='103'></A>
</DIV>

<!-- link1 "EXPENSE TABLE" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXPENSE TABLE</B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pro Forma</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Sterling Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>The Equity Trust</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Post-Reorganization(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SHAREHOLDER TRANSACTION EXPENSES</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Voluntary Cash Purchase Plan Purchase Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom">$0.75 per transaction plus pro rata share of brokerage commissions</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom">$0.75 per transaction plus pro rata share of brokerage commissions</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Automatic Dividend Reinvestment and Voluntary Cash Purchase Plan
    Sales Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom">$2.50 per transaction plus pro rata share of brokerage commissions</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom">$2.50 per transaction plus pro rata share of brokerage commissions</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
    ASSETS ATTRIBUTABLE TO COMMON SHARES)(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Management Fees(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;1.36%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;1.36%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.60%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;0.21%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;0.21%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Annual Fund Operating Expenses</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.60%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;1.57%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;1.57%</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<DIV align="left" style="font-size: 3pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Equity Trust is the &#147;accounting survivor,&#148; meaning
    that the entity surviving the Reorganization will have
    substantially the same attributes as the Equity Trust in terms
    of portfolio management, portfolio composition, investment
    objective, policies and restrictions and expenses.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The percentages in the above table expressing annual fund
    operating expenses are based on Sterling Capital&#146;s and the
    Equity Trust&#146;s operating expenses for the year ended
    December&nbsp;31, 2004. &#147;Other Expenses&#148; include, but
    are not limited to, fees for shareholder services, custody,
    legal and accounting services, auditing and tax reporting fees,
    directors&#146; fees, printing costs, the costs involved in
    communication with shareholders and the costs of regulatory
    compliance, maintaining corporate existence and the listing of
    the shares of common stock on the NYSE or the AMEX, as the case
    may be.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Gabelli Funds has agreed to reduce the management fee on the
    incremental assets attributable to the cumulative preferred
    stock during the fiscal year if the total return of the net
    asset value of Equity Trust Common Stock, including
    distributions and advisory fee subject to reduction for that
    year, does not exceed the stated dividend rate or corresponding
    swap rate of each particular series of cumulative preferred
    stock. The Equity Trust&#146;s total return on the net asset
    value of Common Stock is monitored on a monthly basis to assess
    whether the total return on the net asset value of the Common
    Stock exceeds the stated dividend rate or corresponding swap
    rate of each particular series of cumulative preferred stock for
    the period. The test to confirm the accrual of the management
    fee on the assets attributable to each particular series of
    preferred stock is annual. The Equity Trust will accrue for the
    management fee on these assets during the fiscal year if it
    appears probable that the Equity Trust will incur the additional</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt;">6

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    management fee on those assets. For the year ended
    December&nbsp;31, 2004, the Equity Trust&#146;s total return on
    the net asset value of the Common Stock exceeded the stated
    dividend rate or corresponding swap rate of all outstanding
    preferred stock. Thus management fees were accrued on those
    assets. For the six months ended June&nbsp;30, 2005, the Equity
    Trust&#146;s total return on the net asset value of the Common
    Stock did not exceed the stated dividend rates or corresponding
    swap rate of all outstanding preferred stock. Thus, management
    fees with respect to the liquidation value of the preferred
    stock assets in the amount of $2,076,504 were not accrued. The
    management fees for the pro forma post-reorganization assume the
    accrual of the management fees with respect to the liquidation
    value of the preferred stock assets.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Example.</I> The purpose of the following example is to help
Sterling Capital shareholders understand the costs and expenses
they currently bear as an investor in Sterling Capital and what
they would bear as a stockholder in the Equity Trust if the
Reorganization is consummated. This example is based on the
level of total annual operating expenses for each of Sterling
Capital and the Equity Trust relating to a $1,000 investment in
such Fund, and assumes a 5% annual return and reinvestment of
all dividends and distributions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shareholders do not pay these expenses directly; they are paid
by the Funds before they distribute net investment income to
shareholders. This example should not be considered a
representation of future expenses, and actual expenses may be
greater or less than those shown. SEC regulations require the
example to assume a 5% annual return, but actual annual returns
may vary.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>The Equity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pro Forma</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Sterling Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Trust</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Post-Reorganization</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1&nbsp;Year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3&nbsp;Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    5&nbsp;Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    10&nbsp;Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>187</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Performance.</I> The table below provides performance data
for periods ended December&nbsp;31, 2004 based on each
Fund&#146;s net asset value and market value. Past performance
is not a guarantee of future results, and it is not possible to
predict whether or how investment performance will be affected
by the Reorganization.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Sterling Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>The Equity Trust</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cumulative</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Annual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cumulative</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Annual</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net Asset Value</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    One Year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.75</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.75</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20.14</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20.14</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Three Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.19</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.46</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.00</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.52</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Five Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.12</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.84</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.46</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.64</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ten Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70.50</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.48</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>205.84</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.83</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Market Value</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    One Year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.54</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.54</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.04</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.04</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Three Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.46</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.43</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.04</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.48</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Five Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.92</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.97</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27.95</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.05</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ten Years</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97.05</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.02</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204.30</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.77</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='104'></A>
</DIV>

<!-- link1 "FINANCIAL HIGHLIGHTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FINANCIAL HIGHLIGHTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The tables below are intended to help you understand the
financial performance of Sterling Capital and the Equity Trust.
This information is derived from financial and accounting
records of each Fund.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information for Sterling Capital has been audited by
Tardino, Tocci&nbsp;&#38; Goldstein LLP, which serves as
Sterling Capital&#146;s independent registered public accounting
firm. The information for the Equity Trust has been audited by
PricewaterhouseCoopers LLP, which serves as the Equity
Trust&#146;s independent registered public accounting firm. The
reports of Tardino, Tocci&nbsp;&#38; Goldstein LLP and
PricewaterhouseCoopers LLP, along with the Funds&#146; financial
statements, are incorporated herein by reference and included in
the Funds&#146; Annual Reports to Shareholders. The Annual
Reports may be obtained without charge, by writing to The
Gabelli Equity Trust Inc., One&nbsp;Corporate Center, Rye, NY
10580-1422 or calling 800-GABELLI
</DIV>

<P align="center" style="font-size: 10pt;">7
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV align="left" style="font-size: 10pt;">
(800-422-3554) for the Equity Trust or by writing to Sterling
Capital Corporation, 100 Wall Street, 11th Floor, New York, NY
10005 or calling 800-949-3456 for Sterling Capital.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Sterling Capital</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Financial Highlights</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following tables include per share operating performance
data for a share of common stock outstanding, total investment
return, ratios to average net assets and other supplemental data
for each period indicated. This information has been derived
from information provided in the financial statements and market
price data for Sterling Capital&#146;s shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selected data for each share of capital stock outstanding
throughout each year:
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net asset value, beginning of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.97</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net investment income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.09</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net realized gain (loss) and increase (decrease) in unrealized
    appreciation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.69</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total from investment operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.69</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions of net investment income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.13</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.08</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions of net realized capital gains</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.03</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.43</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.51</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total distributions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.59</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net asset value, end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net asset value total return(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Market value, end of period(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total investment return(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6.3</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net assets, end of period (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,057</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ratio of expenses to average net assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ratio of net investment income (loss) to average net assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Portfolio turnover</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Number of shares outstanding at end of year (in&nbsp;000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Unaudited</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt;">8
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Equity Trust</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Financial Highlights</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table includes per share operating performance
data for a share of Common Stock outstanding, total investment
return, ratios to average net assets and other supplemental data
for each period indicated. This information has been derived
from information provided in the financial statements and market
price data for Equity Trust Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Selected data for a share of Equity Trust Common Stock
outstanding throughout each period:
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004(a)(b)(g)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003(a)(b)(g)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002(a)(b)(g)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001(a)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000(a)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    OPERATING PERFORMANCE:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net asset value, beginning of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12.75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net investment income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.05</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net realized and unrealized gain (loss) on investments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.65</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.16</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.51</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total from investment operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.08</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.46</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    DISTRIBUTIONS TO PREFERRED STOCK SHAREHOLDERS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net investment income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net realized gain on investments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.16</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.09</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total distributions to preferred stock shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.12</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.09</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NET INCREASE (DECREASE)&nbsp;IN NET ASSETS ATTRIBUTABLE TO
    COMMON STOCK SHAREHOLDERS RESULTING FROM OPERATIONS</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.75</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.20</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.55</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net investment income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net realized gain on investments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.79</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.68</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.90</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.27</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Return of capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total distributions to common stock shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.80</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.69</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.95</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.08</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.31</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CAPITAL SHARE TRANSACTIONS:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in net asset value from common stock share transactions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Decrease in net asset value from shares issued in rights offering</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.62</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Increase in net asset value from repurchase of preferred shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Offering costs for preferred shares charged to paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total capital share transactions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.00</TD>
    <TD align="left" valign="bottom" nowrap>)(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.01</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.64</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NET ASSET VALUE ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS, END
    OF PERIOD</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.89</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net Asset Value Total Return +</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.81</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.90</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21.00</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3.68</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.39</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Market Value, End of Period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11.44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Investment Return ++</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.04</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.58</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28.36</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.32</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.91</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">9

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004(a)(b)(g)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003(a)(b)(g)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002(a)(b)(g)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001(a)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000(a)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    RATIOS AND SUPPLEMENTAL DATA:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net assets including liquidation value of preferred shares, end
    of period (in&nbsp;000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,638,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,514,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,271,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,465,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,318,263</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net assets attributable to common shares, end of period (in
    000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,219,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,094,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>842,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,166,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,184,041</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ratio of net investment income to average net assets
    attributable to common shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.64</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.67</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.99</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.81</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.42</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ratio of operating expenses to average net assets attributable
    to common shares(b)(e)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.57</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.62</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.19</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.12</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.14</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ratio of operating expenses to average total net assets
    including liquidation value of preferred shares(b)(e)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.14</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.14</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.87</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.95</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.03</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Portfolio turnover rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PREFERRED STOCK:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7.25% CUMULATIVE PREFERRED STOCK</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation value, end of period (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>134,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>134,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>134,223</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shares outstanding (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,369</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation preference per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average market value(d)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22.62</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset coverage per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>74.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>122.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>245.54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7.20% CUMULATIVE PREFERRED STOCK</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation value, end of period (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>165,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>165,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>165,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>165,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shares outstanding (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation preference per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average market value(d)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26.57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset coverage per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>97.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>74.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>122.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    AUCTION RATE SERIES C CUMULATIVE PREFERRED STOCK</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation value, end of period (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shares outstanding (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation preference per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average market value(d)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset coverage per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>97,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>74,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    5.875% CUMULATIVE PREFERRED STOCK</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation value, end of period (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>73,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shares outstanding (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation preference per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average market value(d)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset coverage per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>97.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    AUCTION RATE SERIES E CUMULATIVE PREFERRED STOCK</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation value, end of period (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total shares outstanding (in 000&#146;s)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liquidation preference per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average market value(d)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset coverage per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>97,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    ASSET COVERAGE(f)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>391</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>361</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>296</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>490</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>982</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">10

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<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    &nbsp;+</TD>
    <TD></TD>
    <TD valign="top">
    Based on net asset value per share, adjusted for reinvestment of
    distributions, including the effect of shares issued pursuant to
    rights offering, assuming full subscription by shareholder.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR>
    <TD valign="top">
    ++</TD>
    <TD></TD>
    <TD valign="top">
    Based on market value per share, adjusted for reinvestment of
    distributions, including the effect of shares issued pursuant to
    rights offering, assuming full subscription by shareholder.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    Per share amounts have been calculated using the monthly average
    shares outstanding method.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    See Note&nbsp;2 to Financial Statements (Swap Agreements).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    Amount represents less than $0.005&nbsp;per share.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    Based on weekly prices.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR>
    <TD valign="top">
    (e)</TD>
    <TD></TD>
    <TD valign="top">
    The ratios do not include a reduction of expenses for custodian
    fee credits on cash balances maintained with the custodian.
    Including such custodian fee credits for the years ended
    December&nbsp;31, 2002, 2001 and 2000, the ratios of operating
    expenses to average net assets attributable to common stock
    would be 1.19%, 1.11% and 1.14%, respectively, and the ratios of
    operating expenses to average total net assets including
    liquidation value of preferred shares would be 0.88%, 0.94% and
    1.03%, respectively. For the fiscal years ended
    December&nbsp;31, 2004 and 2003, the effect of the custodian fee
    credits was minimal.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (f)</TD>
    <TD></TD>
    <TD valign="top">
    Asset coverage is calculated by combining all series of
    preferred stock.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR>
    <TD valign="top">
    (g)</TD>
    <TD></TD>
    <TD valign="top">
    As a result of changes in accounting principles, the Equity
    Trust has reclassified periodic payments made under interest
    rate swap agreements, previously included within net investment
    income, to components of realized and unrealized gain (loss) in
    the Statement of Operations. The effect of this reclassification
    for the years ended December&nbsp;31, 2004, December&nbsp;31,
    2003 and December&nbsp;31, 2002 was net investment income per
    share increased by $0.03, $0.03 and $0.01, respectively, ratios
    of net investment income to average net assets attributable to
    common shares increased by 0.36%, 0.47% and 0.18%, respectively,
    ratios of operating expenses to average net assets attributable
    to common shares decreased by 0.36%, 0.47% and 0.18%,
    respectively, and ratios of operating expenses to average total
    net assets including liquidation value of preferred shares
    decreased by 0.26%, 0.33% and 0.13%, respectively.</TD>
</TR>


</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='105'></A>
</DIV>

<!-- link1 "COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal structural differences between the Funds are that
the Equity Trust has issued and outstanding several series of
preferred stock, so that holders of its Common Stock are subject
to the risks of leverage, and that the Equity Trust is
non-diversified under the 1940 Act, while Sterling Capital is
diversified. In addition, if the Equity Trust were to fail to
meet the asset coverage requirements applicable to its preferred
stock, its ability to pay distributions to holders of its Common
Stock could be restricted. See &#147;Leverage Risk,&#148;
&#147;Restrictions on Dividends and Other Distributions&#148;
and &#147;Comparison of Organizational Structure of the Equity
Trust and Sterling Capital.&#148; In addition, the Equity Trust
has a managed distribution policy, under which the Equity Trust
pays a minimum annual distribution to holders of its Common
Stock of 10% of its average net asset value. Sterling Capital
does not have such a policy. See &#147;Additional Information
about the Funds&nbsp;&#151; Dividends and Distributions.&#148; A
comparison of the Funds&#146; investment objectives and
investment policies follows.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Organization.</I> Sterling Capital and the Equity Trust are
both closed-end management investment companies registered under
the 1940 Act. There can be no assurance that either Fund will
achieve its stated investment objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Current Investment Objectives and Principal
Investments&nbsp;&#151; the Equity Trust.</I> The Equity Trust
seeks long-term capital growth as its principal investment
objective and seeks income as a secondary consideration. The
Equity Trust&#146;s investment objectives are fundamental and
cannot be changed without the approval of the holders of a
&#147;majority of the Fund&#146;s outstanding voting
securities,&#148; as defined in the 1940 Act. A majority of a
fund&#146;s outstanding voting securities means the lesser of
67% of the shares represented at a meeting at which more than
50% of the outstanding shares are represented, or more than 50%
of the outstanding shares. In addition, pursuant to the Equity
Trust&#146;s Articles&nbsp;Supplementary, a majority, as defined
in the 1940 Act, of the
</DIV>

<P align="center" style="font-size: 10pt;">11

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<DIV align="left" style="font-size: 10pt;">
outstanding preferred stock of the Equity Trust (voting
separately as a single class) is also required to change the
Fund&#146;s investment objectives or any of its fundamental
investment policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In selecting securities for the Equity Trust, Gabelli Funds
normally will consider the following factors, among others:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Gabelli Funds&#146; own evaluations of the private market value,
    cash flow, earnings per share and other fundamental aspects of
    the underlying assets and business of the company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the potential for capital appreciation of the securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the interest or dividend income generated by the securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the prices of the securities relative to other comparable
    securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    whether the securities are entitled to the benefits of call
    protection or other protective covenants;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the existence of any anti-dilution protections or guarantees of
    the security;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the diversification of the portfolio of the Equity Trust as to
    issuers.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gabelli Funds&#146; investment philosophy with respect to equity
securities seeks to identify assets that are selling in the
public market at a discount to their private market value.
Gabelli Funds defines private market value as the value informed
purchasers are willing to pay to acquire assets with similar
characteristics. Gabelli Funds also normally evaluates the
issuers&#146; free cash flow and long-term earnings trends.
Finally, Gabelli Funds looks for a catalyst, something
indigenous to the company, its industry or country that will
surface additional value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Current Investment Objectives and Principal
Investments&nbsp;&#151; Sterling Capital.</I> Sterling
Capital&#146;s investment objective is long-term capital growth.
Sterling Capital pursues its investment objective by generally
investing directly or indirectly in equity securities which it
believes to offer attractive investment opportunities. Sterling
Capital&#146;s investment objective is not a fundamental policy
and therefore can be changed with the approval of a majority of
its directors and without the approval of the holders of its
voting securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In selecting securities for Sterling Capital, Sterling
Capital&#146;s management will normally seek to invest in a
diversified list of companies having the potential for above
average appreciation. Equity securities selected for investment
are generally deemed to be selling in the public market at a
meaningful discount to management&#146;s estimate of intrinsic
or private market valuations, or selling at an attractive
valuation relative to the expected rate of earnings growth.
Sterling Capital&#146;s investment process includes a review of
a company&#146;s financial strength through analysis of rates of
return earned on sales and shareholder&#146;s equity, debt to
equity ratios, and free cash flow. The evaluation process also
includes industry analysis, a company&#146;s competitive
position, product mix, and the impact of macroeconomic factors
on a company&#146;s earnings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with Sterling Capital&#146;s investment objective
and investment strategy, Sterling Capital does not engage in
rapid portfolio turnover for trading profits but rather seeks to
invest in companies for relatively long periods of time. In
2004, Sterling Capital&#146;s portfolio turnover rate was
approximately 18%.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Market Capitalizations.</I> Neither the Equity Trust nor
Sterling Capital have a policy limiting the market
capitalizations of the issuers of the securities in which they
can invest. Both funds can invest in issuers of any size.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Foreign Securities.</I> The Equity Trust may invest up to 35%
of its total assets in foreign securities. Among the foreign
securities in which the Equity Trust may invest are those issued
by companies located in developing countries, which are
countries in the initial stages of their industrialization
cycles. Investing in the equity and debt markets of developing
countries involves exposure to economic structures that are
generally less diverse and less mature, and to political systems
that may have less stability, than those of developed countries.
The markets of developing countries historically have been more
volatile than the markets of the more mature economies of
developed countries, but often have provided higher rates of
return to investors. The Equity Trust may also invest in the
debt securities of foreign governments. Although such
investments are
</DIV>


<P align="center" style="font-size: 10pt;">12

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<DIV align="left" style="font-size: 10pt;">
not a principal strategy of the Equity Trust, there is no
independent limit on its ability to invest in the debt
securities of foreign governments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may invest up to 100% of its total assets in
foreign securities, although such investments are not a
principal part of Sterling Capital&#146;s investment strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Lower Rated Securities.</I> The Equity Trust may invest up to
10% of its total assets in fixed-income securities rated in the
lower rating categories (as described below) of recognized
statistical rating agencies, such as securities rated
&#147;CCC&#148; or lower by the Standard&nbsp;&#38; Poor&#146;s
Division of The McGraw-Hill Companies, Inc.
(&#147;S&#38;P&#148;) or &#147;Caa&#148; or lower by
Moody&#146;s Investors Service Inc. (&#147;Moody&#146;s&#148;) ,
or non-rated securities of comparable quality. These debt
securities are predominantly speculative and involve major risk
exposure to adverse conditions and are often referred to in the
financial press as &#147;junk bonds.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, lower rated securities and unrated securities of
comparable quality offer a higher current yield than is offered
by higher rated securities, but also (i)&nbsp;will likely have
some quality and protective characteristics that, in the
judgment of the ratings organizations, are outweighed by large
uncertainties or major risk exposures to adverse conditions and
(ii)&nbsp;are predominantly speculative with respect to the
issuer&#146;s capacity to pay interest and repay principal in
accordance with the terms of the obligation. The market values
of certain of these securities also tend to be more sensitive to
individual corporate developments and changes in economic
conditions than higher quality bonds. In addition, such lower
rated securities and comparable unrated securities generally
present a higher degree of credit risk. The risk of loss due to
default by these issuers is significantly greater because such
lower rated securities and unrated securities of comparable
quality generally are unsecured and frequently are subordinated
to the prior payment of senior indebtedness. In light of these
risks, Gabelli Funds, in evaluating the creditworthiness of an
issue, whether rated or unrated, will take various factors into
consideration, which may include, as applicable, the
issuer&#146;s operating history, financial resources, its
sensitivity to economic conditions and trends, the market
support for the facility financed by the issue, the perceived
ability and integrity of the issuer&#146;s management and
regulatory matters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the market value of securities in lower rated
categories is more volatile than that of higher quality
securities, and the markets in which such lower rated or unrated
securities are traded are more limited than those in which
higher rated securities are traded. The existence of limited
markets may make it more difficult for the Equity Trust to
obtain accurate market quotations for purposes of valuing its
portfolio and calculating its net asset value. Moreover, the
lack of a liquid trading market may restrict the availability of
securities for the Equity Trust to purchase and may also have
the effect of limiting the ability of the Equity Trust to sell
securities at their fair market value to respond to changes in
the economy or the financial markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lower rated debt obligations also present risks based on payment
expectations. If an issuer calls the obligation for redemption
(often a feature of fixed income securities), the Equity Trust
may have to replace the security with a lower yielding security,
resulting in a decreased return for investors. Also, as the
principal value of bonds moves inversely with movements in
interest rates, in the event of rising interest rates the value
of the securities held by the Equity Trust may decline
proportionately more than a portfolio consisting of higher rated
securities. Investments in zero coupon bonds may be more
speculative and subject to greater fluctuations in value due to
changes in interest rates than bonds that pay interest currently.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of its investments in lower rated fixed-income
securities, the Equity Trust may invest in securities of issuers
in default. The Equity Trust will only make an investment in
securities of issuers in default when Gabelli Funds believes
that such issuers will honor their obligations or emerge from
bankruptcy protection and the value of these securities will
appreciate. By investing in the securities of issuers in
default, the Equity Trust bears the risk that these issuers will
not continue to honor their obligations or emerge from
bankruptcy protection or that the value of the securities will
not appreciate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital has the ability to invest in lower rated
securities, although such investments are not a principal part
of Sterling Capital&#146;s current investment strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Futures Contracts and Options Thereon.</I> Gabelli Funds may,
subject to the Equity Trust&#146;s investment restrictions and
guidelines of the Board of Directors, purchase and sell
financial futures contracts and options
</DIV>

<P align="center" style="font-size: 10pt;">13

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<DIV align="left" style="font-size: 10pt;">
thereon which are traded on a commodities exchange or board of
trade for certain hedging, yield enhancement and risk management
purposes. These futures contracts and related options may be on
debt securities, financial indices, securities indices,
U.S.&nbsp;government securities and foreign currencies. A
financial futures contract is an agreement to purchase or sell
an agreed amount of securities or currencies at a set price for
delivery in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gabelli Funds has claimed an exclusion from the definition of
the term &#147;commodity pool operator&#148; under the Commodity
Exchange Act and therefore is not subject to the registration
requirements under the Commodity Exchange Act. Accordingly, the
Equity Trust&#146;s investments in derivative instruments are
not limited by or subject to regulation under the Commodity
Exchange Act or otherwise regulated by the Commodity Futures
Trading Commission. Nevertheless, the Equity Trust&#146;s
investment restrictions place certain limitations and
prohibitions on its ability to purchase or sell commodities or
commodity contracts. In addition, investment in futures
contracts and related options generally will be limited by the
rating agency guidelines applicable to any of the Equity
Trust&#146;s outstanding preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital is not permitted to invest in commodities or
futures contracts other than in connection with hedging
activities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Forward Currency Exchange Contracts.</I> Subject to
guidelines of the Board of Directors, the Equity Trust may enter
into forward foreign currency exchange contracts to protect the
value of its portfolio against future changes in the level of
currency exchange rates. The Equity Trust may enter into such
contracts on a spot, i.e., cash, basis at the rate then
prevailing in the currency exchange market or on a forward
basis, by entering into a forward contract to purchase or sell
currency. A forward contract on foreign currency is an
obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days agreed upon by the
parties from the date of the contract at a price set on the date
of the contract. The Equity Trust&#146;s dealings in forward
contracts generally will be limited to hedging involving either
specific transactions or portfolio positions. The Equity Trust
does not have an independent limitation on its investments in
foreign futures contracts and options on foreign currency
futures contracts.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
While Sterling Capital is not restricted from entering into
foreign currency exchange contracts, it has not done so in the
past and has no present intention to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Repurchase Agreements.</I> The Equity Trust may enter into
repurchase agreements with banks and non-bank dealers of
U.S.&nbsp;government securities which are listed as reporting
dealers of the Federal Reserve Bank and which furnish collateral
at least equal in value or market price to the amount of their
repurchase obligation. In a repurchase agreement, the Equity
Trust purchases a debt security from a seller who undertakes to
repurchase the security at a specified resale price on an agreed
future date. Repurchase agreements are generally for one
business day and generally will not have a duration of longer
than one week. The SEC has taken the position that, in economic
reality, a repurchase agreement is a loan by a fund to the other
party to the transaction secured by securities transferred to
the fund. The resale price generally exceeds the purchase price
by an amount which reflects an agreed upon market interest rate
for the term of the repurchase agreement. The Equity
Trust&#146;s risk is primarily that, if the seller defaults, the
proceeds from the disposition of the underlying securities and
other collateral for the seller&#146;s obligation may be less
than the repurchase price. If the seller becomes insolvent, the
Equity Trust might be delayed in or prevented from selling the
collateral. In the event of a default or bankruptcy by a seller,
the Equity Trust will promptly seek to liquidate the collateral.
To the extent that the proceeds from any sale of the collateral
upon a default in the obligation to repurchase is less than the
repurchase price, the Equity Trust will experience a loss. If
the financial institution that is a party to the repurchase
agreement petitions for bankruptcy or becomes subject to the
U.S.&nbsp;Bankruptcy Code, the law regarding the rights of the
Equity Trust is unsettled. As a result, under extreme
circumstances, there may be a restriction on the Equity
Trust&#146;s ability to sell the collateral and the Equity Trust
could suffer a loss.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
While Sterling Capital is not restricted from entering into
repurchase agreements, it has not done so in the past and has no
present intention to do so.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Loans of Portfolio Securities.</I> To increase income, the
Equity Trust may lend its portfolio securities to securities
broker-dealers or financial institutions if (i)&nbsp;the loan is
collateralized in accordance with applicable regulatory
requirements and (ii)&nbsp;no loan will cause the value of all
loaned securities to exceed 20% of the value of its total
assets. If the borrower fails to maintain the requisite amount
of collateral, the loan automatically terminates and the Equity
Trust could use the collateral to replace the securities while
holding the borrower liable for any excess of replacement cost
over the value of the collateral. As with any extension of
credit, there are risks of delay in recovery and in some cases
even loss of rights in collateral should the borrower of the
securities fail financially.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
While these loans of portfolio securities will be made in
accordance with guidelines approved by the Equity Trust&#146;s
Board of Directors, there can be no assurance that borrowers
will not fail financially. On termination of the loan, the
borrower is required to return the securities to the Equity
Trust, and any gain or loss in the market price during the loan
would inure to the Equity Trust. If the counterparty to the loan
petitions for bankruptcy or becomes subject to the United States
Bankruptcy Code, the law regarding the Equity Trust&#146;s
rights is unsettled. As a result, under these circumstances,
there may be a restriction on the Equity Trust&#146;s ability to
sell the collateral and it would suffer a loss.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may lend its portfolio securities to
broker-dealers or any other person provided that such loans are
secured by collateral in cash or securities of the
U.S.&nbsp;government or its agencies, or any combination
thereof, in an amount, maintained on a current basis, not less
than the market value of the securities loaned, and provided
further that no such loan shall be made if at the time of such
loan more than 30% of Sterling Capital&#146;s total assets would
be loaned. Sterling Capital is not permitted to make loans to
any of its officers or directors or to other persons who are
affiliated with Sterling Capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Borrowing.</I> The Equity Trust may borrow money in
accordance with its investment restrictions, including as a
temporary measure for extraordinary or emergency purposes. It
may not borrow for investment purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may make unsecured borrowings from banks, but
will not incur aggregate borrowings in excess of 25% of its net
assets taken at market or other fair value, computed on the
basis of gross assets less liabilities other than all such
borrowings. Sterling Capital currently has no unsecured
borrowings and has no present intention to make any such
borrowings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Leveraging.</I> As provided in the 1940 Act, and subject to
compliance with its investment limitations, the Equity Trust may
issue senior securities representing stock, such as preferred
stock, so long as immediately following such issuance of stock,
its total assets exceed 200% of the amount of such stock. The
use of leverage magnifies the impact of changes in net asset
value. For example, a fund that uses 33% leverage will show a
1.5% increase or decline in net asset value for each 1% increase
or decline in the value of its total assets. In addition, if the
cost of leverage exceeds the return on the securities acquired
with the proceeds of leverage, the use of leverage will
diminish, rather than enhance, the return to the Equity Trust.
The use of leverage generally increases the volatility of
returns to the Equity Trust. The Equity Trust currently has four
series of preferred stock outstanding: the 7.20% Series&nbsp;B
Cumulative Preferred Stock, the Series&nbsp;C Auction Rate
Cumulative Preferred Stock, the 5.785% Series&nbsp;D Cumulative
Preferred Stock and the Series&nbsp;E Auction Rate Cumulative
Preferred Stock. See &#147;Leverage Risk,&#148;
&#147;Restrictions on Dividends and Other Distributions&#148;
and &#147;Comparison of Organizational Structure of the Equity
Trust and Sterling Capital.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital has one class of shares outstanding, its common
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Temporary Investments.</I> Subject to the Equity Trust&#146;s
investment restrictions, when a temporary defensive period is
believed by Gabelli Funds to be warranted (&#147;temporary
defensive periods&#148;), the Equity Trust may, without
limitation, hold cash or invest its assets in securities of
U.S.&nbsp;government sponsored instrumentalities, in repurchase
agreements in respect of those instruments, and in certain
high-grade commercial paper instruments. During temporary
defensive periods the Equity Trust may also invest in money
market mutual funds that invest primarily in securities of
U.S.&nbsp;government sponsored instrumentalities and repurchase
agreements in respect of those instruments. Under current law,
in the absence of an exemptive order, such money market mutual
funds will not be affiliated with Gabelli Funds. Obligations of
certain
</DIV>

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<DIV align="left" style="font-size: 10pt;">
agencies and instrumentalities of the U.S.&nbsp;government, such
as the Government National Mortgage Association, are supported
by the &#147;full faith and credit&#148; of the
U.S.&nbsp;government; others, such as those of the Export-Import
Bank of the U.S., are supported by the right of the issuer to
borrow from the U.S.&nbsp;Treasury; others, such as those of the
Federal National Mortgage Association, are supported by the
discretionary authority of the U.S.&nbsp;government to purchase
the agency&#146;s obligations; and still others, such as those
of the Student Loan Marketing Association, are supported only by
the credit of the instrumentality.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No assurance can be given that the U.S.&nbsp;government would
provide financial support to U.S.&nbsp;government sponsored
instrumentalities if it is not obligated to do so by law. During
temporary defensive periods, the Equity Trust may be less likely
to achieve its secondary investment objective of income.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to Sterling Capital&#146;s investment restrictions,
Sterling Capital may invest in cash and cash equivalents such as
U.S.&nbsp;Treasury securities and money market funds for
temporary defensive purposes.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Portfolio Turnover Rate.</I> Neither Fund engages in the
trading of securities for the purpose of realizing short-term
profits, but adjusts its portfolio as it deems advisable in view
of prevailing or anticipated market conditions to accomplish its
investment objective. A high rate of portfolio turnover involves
correspondingly greater brokerage commission expenses than a
lower rate, which expenses must be borne by each Fund and its
respective shareholders. High portfolio turnover may also result
in the realization of substantial net short-term capital gains
and any distributions resulting from such gains will be taxable
at ordinary income rates for U.S.&nbsp;federal income tax
purposes. Sterling Capital&#146;s portfolio turnover rates for
the fiscal years ended December&nbsp;31, 2003 and 2004 were 47%
and 18%, respectively. The Equity Trust&#146;s portfolio
turnover rates for the fiscal years ended December&nbsp;31, 2003
and 2004 were 19% and 29%, respectively. The portfolio turnover
rate is calculated by dividing the lesser of sales or purchases
of portfolio securities by the average monthly value of a
fund&#146;s portfolio securities. For purposes of this
calculation, portfolio securities exclude purchases and sales of
debt securities having a maturity at the date of purchase of one
year or less.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fundamental Policies.</I> Each Fund has
&#147;fundamental&#148; investment policies that may not be
changed without the prior approval of the holders of a majority
of each Fund&#146;s outstanding voting securities (and its
preferred stock voting as a single class, in the case of the
Equity Trust).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> The Equity Trust may not:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1.&nbsp;Invest 25% or more of its total assets, taken at market
    value at the time of each investment, in the securities of
    issuers in any particular industry. This restriction does not
    apply to investments in direct obligations of the United States
    or by its agencies or instrumentalities that are entitled to the
    full faith and credit of the United States and that, other than
    United States Treasury Bills, provide for the periodic payment
    of interest and the full payment of principal at maturity or
    call for redemption (&#147;U.S.&nbsp;Government
    Obligations&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2.&nbsp;Purchase securities of other investment companies,
    except in connection with a merger, consolidation, acquisition
    or reorganization, if more than 10% of the market value of the
    total assets of the Equity Trust would be invested in securities
    of other investment companies, more than 5% of the market value
    of the total assets of the Equity Trust would be invested in the
    securities of any one investment company or the Equity Trust
    would own more than 3% of any other investment company&#146;s
    securities, provided, however, this restriction shall not apply
    to securities of any investment company organized by the Equity
    Trust that are to be distributed pro rata as a dividend to its
    stockholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    3.&nbsp;Purchase or sell commodities or commodity contracts
    except that the Equity Trust may purchase or sell futures
    contracts and related options thereon if immediately thereafter
    (i)&nbsp;no more than 5% of its total assets are invested in
    margins and premiums and (ii)&nbsp;the aggregate market value of
    its outstanding futures contracts and market value of the
    currencies and futures contracts subject to outstanding options
    written by the Equity Trust do not exceed 50% of the market
    value of its total assets. The Equity Trust may not purchase or
    sell real estate, provided that the Equity Trust may invest in
    securities secured by real estate or interests therein or issued
    by companies which invest in real estate or interests therein.</TD>
</TR>

</TABLE>

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    4.&nbsp;Purchase any securities on margin or make short sales,
    except that the Equity Trust may obtain such short-term credit
    as may be necessary for the clearance of purchases and sales of
    portfolio securities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    5.&nbsp;Make loans of money, except by the purchase of a portion
    of publicly distributed debt obligations in which the Equity
    Trust may invest, and repurchase agreements with respect to
    those obligations, consistent with its investment objectives and
    policies. The Equity Trust reserves the authority to make loans
    of its portfolio securities to financial intermediaries in an
    aggregate amount not exceeding 20% of its total assets. Any such
    loans may only be made upon approval of, and subject to any
    conditions imposed by, the Board of Directors of the Equity
    Trust. Because these loans would at all times be fully
    collateralized, the risk of loss in the event of default of the
    borrower should be slight.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    6.&nbsp;Borrow money, except that the Equity Trust may borrow
    from banks and other financial institutions on an unsecured
    basis, in an amount not exceeding 10% of its total assets, to
    finance the repurchase of its stock. The Equity Trust also may
    borrow money on a secured basis from banks as a temporary
    measure for extraordinary or emergency purposes. Temporary
    borrowings may not exceed 5% of the value of the total assets of
    the Equity Trust at the time the loan is made. The Equity Trust
    may pledge up to 10% of the lesser of the cost or value of its
    total assets to secure temporary borrowings. The Equity Trust
    will not borrow for investment purposes. Immediately after any
    borrowing, the Equity Trust will maintain asset coverage of not
    less than 300% with respect to all borrowings. While the
    borrowing of the Equity Trust exceeds 5% of its respective total
    assets, the Equity Trust will make no further purchases of
    securities, although this limitation will not apply to
    repurchase transactions as described above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    7.&nbsp;Issue senior securities, except to the extent permitted
    by applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    8.&nbsp;Underwrite securities of other issuers except insofar as
    the Equity Trust may be deemed an underwriter under the
    Securities Act in selling portfolio securities; provided,
    however, this restriction shall not apply to securities of any
    investment company organized by the Equity Trust that are to be
    distributed pro rata as a dividend to its stockholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    9.&nbsp;Invest more than 10% of its total assets in illiquid
    securities, such as repurchase agreements with maturities in
    excess of seven days, or securities that at the time of purchase
    have legal or contractual restrictions on resale.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Sterling Capital does not concentrate
its investments in any one or more particular industries.
Sterling Capital will not purchase securities of issuers in any
one industry, if, immediately after such purchase, more than 25%
in value of its total assets would be invested in such industry.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The only securities which Sterling Capital is authorized to
issue are 10,000,000&nbsp;shares of common stock, $1&nbsp;par
value.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may guarantee the obligations of others in
furtherance of its investment policy and borrow money when, in
the opinion of Sterling Capital&#146;s Board of Directors, such
action will serve the interests of Sterling Capital&#146;s
shareholders, but such guarantees and borrowings shall be
subject to the limitations contained in the 1940 Act and in any
event any such guarantee or other debt shall not exceed, in the
aggregate, 50% of Sterling Capital&#146;s net assets before any
such guarantee or borrowing. Sterling Capital may pledge any of
its assets as security for any permissible guarantee or
borrowing. Sterling Capital will not guarantee the obligations
of its officers or directors or other persons who are affiliates
of Sterling Capital within the meaning of the 1940 Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital will not underwrite the securities of other
issuers, except that it may acquire restricted securities under
certain circumstances where, if sold, it might be deemed an
underwriter for purposes of the Securities Act. Sterling Capital
may invest freely up to 100% of its total assets in restricted
securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital intends, if, in the opinion of its management,
favorable opportunities exist, to invest from time to time in
real estate. In connection therewith, Sterling Capital may,
itself or through one or more subsidiaries, purchase or
otherwise acquire, hold, mortgage, lease, convey or otherwise
dispose of any kind or kinds of real property or interests
therein (which may be developed or underdeveloped and either
located within or outside the United States) and related
personal property. Sterling Capital may not invest more than 25%
of its total assets in real estate.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital will not engage in the purchase and sale of
commodities or commodities contracts, except commodity futures
or futures options contracts for hedging purposes. Sterling
Capital may make and maintain such margin or premium deposits
and segregate such liquid assets, including cash,
U.S.&nbsp;government securities or other appropriate high-grade
debt obligations as are necessary and required in connection
with its permitted transactions in such commodity futures or
futures options contracts.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital will not engage in the making of loans to other
persons, except that it may (i)&nbsp;purchase debt securities
which are publicly distributed or are of a type customarily
purchased by institutional investors, (ii)&nbsp;purchase any
other debt securities limited to an aggregate of 50% of the
value of its total assets at the time of such purchase and
(iii)&nbsp;lend its portfolio securities, provided that such
loans are secured by collateral in cash or securities of the
U.S.&nbsp;government or its agencies, or any combination
thereof, in an amount, maintained on a current basis, not less
than the market value of the securities loaned, and provided
further that no such loan will be made if at the time of such
loan more than 30% of Sterling Capital&#146;s total assets would
be so loaned. Sterling Capital will not make loans to any of its
officers or directors or other persons who are affiliates of
Sterling Capital within the meaning of the 1940 Act.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may effect from time to time short sales of
securities, including short sales used in connection with
hedging transactions. In connection with short sales, Sterling
Capital: (i)&nbsp;will incur an obligation to replace the
securities sold short (whatever its price may subsequently be);
(ii)&nbsp;may have to pay a premium to borrow the security;
(iii)&nbsp;will pay the lender of the security the dividends or
interest payable thereon during the period in which the security
is borrowed; (iv)&nbsp;will collateralize the obligation to
replace the security by a deposit of cash and/or
U.S.&nbsp;government obligations equal to the current market
value of the securities to be replaced and will maintain such
collateral so that (a)&nbsp;the amount deposited as collateral
will equal the current market value of the securities sold short
and (b)&nbsp;the amount deposited will not be less than the
market value of the securities at the time they were sold short;
(v)&nbsp;will not receive the proceeds of the sale until
replacement of the borrowed securities; and (vi)&nbsp;under
ordinary circumstances will not receive any interest on cash
collateral and proceeds. Sterling Capital intends to limit any
large short positions to securities having wide public
distribution and a broad market.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No more than 35% of the value of Sterling Capital&#146;s net
assets will be, in the aggregate, in deposits collateralizing
the obligation to replace securities borrowed to effect short
sales, excluding, however, proceeds from short sales and
excluding short sales &#147;against the box&#148; which may be
collateralized by up to an additional 15% of the value of
Sterling Capital&#146;s net assets or allocated to a segregated
account in connection with short sales.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may from time to time purchase and sell put and
call options written by others, combinations thereof or similar
options. Sterling Capital also may from time to time write
covered or uncovered put and call options, combinations thereof
or similar options. Purchasing and selling put and call options
or writing put and call options will not constitute a dominant
investment practice of Sterling Capital.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Securities transactions of Sterling Capital will be conducted so
that not more than 10% of the value of Sterling Capital&#146;s
net assets will be in premiums on put and call options written
by others, combinations thereof or similar options. To adhere to
such percentage limits Sterling Capital may be required to
dispose of put and call options at a time when it may not
otherwise desire to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital will not write put and call options,
combinations thereof or similar options if, as a result thereof,
the aggregate value of securities or collateral underlying such
options would exceed 25% of Sterling Capital&#146;s total assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon writing an uncovered call option Sterling Capital will
(i)&nbsp;purchase, as soon thereafter as practicable, and hold
for the term of the option, the securities (or securities
readily convertible into such securities without additional
consideration) against which call options are written,
(ii)&nbsp;purchase a call on the same securities at the same
price or (iii)&nbsp;establish, at the time of selling the
option, and maintain for the term of the option, a segregated
account consisting of cash, U.S.&nbsp;government securities or
high-grade debt securities equal to, on a daily basis, the
fluctuating market value of the underlying securities.
Similarly, with respect to the writing of put options, Sterling
Capital will provide that such options will be offset at the
time of sale by
</DIV>

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<DIV align="left" style="font-size: 10pt;">
(i)&nbsp;the purchase of a put on the same securities at the
same price, (ii)&nbsp;a segregated account consisting of cash,
U.S.&nbsp;government securities or high-grade debt securities
equal to the option price or (iii)&nbsp;a corresponding short
sale of the securities underlying the option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital may also acquire warrants or other rights to
subscribe to securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital will not purchase any securities of a company
if any of the directors or officers of Sterling Capital
individually own more than 0.5% of the shares of such company or
together own 5% or more of the shares of such company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to its investments represented by the securities of
other issuers, Sterling Capital intends, if in the opinion of
its management favorable opportunities exist, to make
investments or other commitments, not necessarily represented by
securities, in businesses and other enterprises, as lessee,
licensee, operator, partner, sole proprietor or otherwise, and
to conduct the operations of such businesses or other
enterprises itself in which it may have a full or partial
ownership interest, or through agents or otherwise. Sterling
Capital will not invest more than 25% of its total assets in
such a manner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The above policies are deemed fundamental and may not be changed
without the approval of the lesser of (i)&nbsp;67% or more of
the voting securities of Sterling Capital present at a meeting
if the holders of more than 50% of the outstanding voting
securities of Sterling Capital are present or represented by
proxy at such a meeting or (ii)&nbsp;more than 50% of the
outstanding voting securities of Sterling Capital.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

<!-- link1 "RISK FACTORS AND SPECIAL CONSIDERATIONS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RISK FACTORS AND SPECIAL CONSIDERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal risks of an investment in Sterling Capital are
similar to the principal risks of an investment in the Equity
Trust, as each invests primarily in equity securities. However,
to the extent that Sterling Capital and the Equity Trust pursue
their investment objectives using different investment
strategies, they are subject to different risks. Accordingly, if
the Reorganization is consummated, Sterling Capital shareholders
will be subject to different risks than those to which they are
subject prior to the Reorganization. Certain investment risks of
the Funds are described below.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Leverage Risk.</I> The Equity Trust uses financial leverage
for investment purposes by issuing preferred stock. The amount
of leverage represents approximately 26% of the Equity
Trust&#146;s Managed Assets (defined as the aggregate net asset
value of the Common Stock plus assets attributable to
outstanding shares of preferred stock, with no deduction for the
liquidation preference of such shares of preferred stock) as of
June&nbsp;30, 2005. The Equity Trust&#146;s leveraged capital
structure creates special risks not associated with unleveraged
funds having similar investment objectives and policies. These
include the possibility of greater loss and the likelihood of
higher volatility of the net asset value of the Equity Trust and
the asset coverage. Such volatility may increase the likelihood
of the Equity Trust&#146;s having to sell investments in order
to meet dividend payments on the preferred stock, or to redeem
preferred stock, when it may be disadvantageous to do so. Also,
if the Equity Trust is utilizing leverage, a decline in net
asset value could affect the ability of the Equity Trust to make
Common Stock distribution payments, and such a failure to pay
dividends or make distributions could result in the Equity
Trust&#146;s ceasing to qualify as a regulated investment
company under the Code.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because the advisory fee paid to Gabelli Funds is calculated on
the basis of the Equity Trust&#146;s Managed Assets, rather than
only on the basis of net assets attributable to the Common
Stock, the fee may be higher when leverage is utilized, giving
Gabelli Funds an incentive to utilize leverage. However, Gabelli
Funds has agreed to reduce any management fee on the incremental
assets attributable to the cumulative preferred stock during the
fiscal year if the total return of the net asset value of Equity
Trust Common Stock, including distributions and advisory fee
subject to reduction for that year, does not exceed the stated
dividend rate or corresponding swap rate of each particular
series of preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital has no shares of preferred stock authorized or
outstanding so it is not subject to leverage risk.
</DIV>

<P align="center" style="font-size: 10pt;">19

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Restrictions on Dividends and Other Distributions.</I>
Restrictions imposed on the declaration and payment of dividends
or other distributions to the holders of the Equity Trust&#146;s
Common Stock and preferred stock, both by the 1940&nbsp;Act and
by requirements imposed by rating agencies, might impair the
Equity Trust&#146;s ability to maintain its qualification as a
regulated investment company for federal income tax purposes.
While the Equity Trust intends to redeem its preferred stock to
the extent necessary to enable the Equity Trust to distribute
its income as required to maintain its qualification as a
regulated investment company under the Code, there can be no
assurance that such actions can be effected in time to meet the
Code requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Non-diversified Status.</I> The Equity Trust is classified as
a &#147;non-diversified&#148; investment company under the 1940
Act, which means it is not limited by the 1940 Act in the
proportion of its assets that may be invested in the securities
of a single issuer. However, the Equity Trust has in the past
conducted and intends to conduct its operations so as to qualify
as a &#147;regulated investment company,&#148; or RIC, for
purposes of the Code, which will relieve it of any liability for
federal income tax to the extent its earnings are distributed to
stockholders. To qualify as a &#147;regulated investment
company,&#148; among other requirements, the Equity Trust will
limit its investments so that, with certain exceptions, at the
close of each quarter of the taxable year:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    not more than 25% of the market value of its total assets will
    be invested in the securities (other than U.S.&nbsp;government
    securities or the securities of other RICs) of a single issuer
    or any two or more issuers that the Equity Trust controls and
    which are determined to be engaged in the same, similar or
    related trades or businesses;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    at least 50% of the market value of the Equity Trust&#146;s
    assets will be represented by cash, securities of other
    regulated investment companies, U.S.&nbsp;government securities
    and other securities, with such other securities limited in
    respect of any one issuer to an amount not greater than 5% of
    the value of its assets and not more than 10% of the outstanding
    voting securities of such issuer.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a non-diversified investment company, the Equity Trust may
invest in the securities of individual issuers to a greater
degree than a diversified investment company. As a result, the
Equity Trust may be more vulnerable to events affecting a single
issuer and, therefore, subject to greater volatility than a fund
that is more broadly diversified. Accordingly, an investment in
the Equity Trust may present greater risk to an investor than an
investment in a diversified company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital is a diversified investment company and,
therefore, is not subject to the risks of non-diversification.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Market Value and Net Asset Value.</I> Shares of closed-end
funds are bought and sold in the securities markets and may
trade at either a premium or discount from net asset value.
Listed shares of closed-end investment companies often trade at
a discount from net asset value. This characteristic of stock of
a closed-end fund is a risk separate and distinct from the risk
that its net asset value will decrease. Neither Fund can predict
whether its listed stock will trade at, below or above net asset
value but, as noted above, Equity Trust Common Stock has traded
at a premium since February 2001 while over the same period
Sterling Capital shares have traded at a discount. Stockholders
desiring liquidity may, subject to applicable securities laws,
trade their common stock in a Fund on the NYSE (for Equity
Trust), the AMEX (for Sterling Capital) or other markets on
which such stock may trade at the then-current market value,
which may differ from the then-current net asset value.
Stockholders will incur brokerage or other transaction costs to
sell stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Special Risks of Derivative Transactions.</I> Participation
in the options or futures markets and in currency exchange
transactions involves investment risks and transaction costs to
which the Equity Trust would not be subject absent the use of
these strategies. If the Equity Trust&#146;s prediction of
movements in the direction of the securities, foreign currency
and interest rate markets are inaccurate, the consequences to
the Equity Trust may leave it in a worse position than if such
strategies were not used. Risks inherent in the use of options,
foreign currency, futures contracts and options on futures
contracts, securities indices and foreign currencies include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dependence on Gabelli Funds&#146; ability to predict correctly
    movements in the direction of interest rates, securities prices
    and currency markets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    imperfect correlation between the price of options and futures
    contracts and options thereon and movements in the prices of the
    securities or currencies being hedged;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">20

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the fact that skills needed to use these strategies are
    different from those needed to select portfolio securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the possible absence of a liquid secondary market for any
    particular instrument at any time;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the possible need to defer closing out certain hedged positions
    to avoid adverse tax consequences;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the possible inability of the Equity Trust to purchase or sell a
    security at a time that otherwise would be favorable for it to
    do so, or the possible need for the Equity Trust to sell a
    security at a disadvantageous time due to a need for the Equity
    Trust to maintain &#147;cover&#148; or to segregate securities
    in connection with the hedging techniques.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As noted above, Sterling Capital is not permitted to invest in
commodities or futures contracts other than in connection with
hedging activities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Lower Rated Securities.</I> The Equity Trust may invest up to
10% of its total assets in fixed-income securities rated in the
lower rating categories of recognized statistical rating
agencies. These high yield securities, also sometimes referred
to as &#147;junk bonds,&#148; generally pay a premium above the
yields of U.S.&nbsp;government securities or debt securities of
investment grade issuers because they are subject to greater
risks than these securities. These risks, which reflect their
speculative character, include the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    greater volatility;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    greater credit risk;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    potentially greater sensitivity to general economic or industry
    conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    potential lack of attractive resale opportunities
    (illiquidity);&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    additional expenses to seek recovery from issuers who default.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The market value of lower-rated securities may be more volatile
than the market value of higher-rated securities and generally
tends to reflect the market&#146;s perception of the
creditworthiness of the issuer and short-term market
developments to a greater extent than more highly rated
securities, which primarily reflect fluctuations in general
levels of interest rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Ratings are relative and subjective and not absolute standards
of quality. Securities ratings are based largely on the
issuer&#146;s historical financial condition and the rating
agencies&#146; analysis at the time of rating. Consequently, the
rating assigned to any particular security is not necessarily a
reflection of the issuer&#146;s current financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a part of its investment in lower rated fixed-income
securities, the Equity Trust may invest in the securities of
issuers in default. The Equity Trust will invest in securities
of issuers in default only when Gabelli Funds believes that such
issuers will honor their obligations and emerge from bankruptcy
protection and that the value of such issues&#146; securities
will appreciate. By investing in the securities of issuers in
default, the Equity Trust bears the risk that these issuers will
not continue to honor their obligations or emerge from
bankruptcy protection or that the value of these securities will
not appreciate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As noted herein, Sterling Capital has the ability to invest in
lower rated securities, although such securities are not a
principal part of Sterling Capital&#146;s current investment
strategy.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Foreign Securities.</I> The Equity Trust may invest up to 35%
of its total assets in foreign securities. Investments in the
securities of foreign issuers involve certain considerations and
risks not ordinarily associated with investments in securities
of domestic issuers. Foreign companies are not generally subject
to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to
U.S.&nbsp;companies. Foreign securities exchanges, brokers and
listed companies may be subject to less government supervision
and regulation than exists in the United States. Dividend and
interest income may be subject to withholding and other foreign
taxes, which may adversely affect the net return on such
investments. There may be difficulty in obtaining or enforcing a
court judgment abroad. In addition, it may be difficult to
effect repatriation of capital invested in certain countries. In
addition, with respect to certain countries, there
</DIV>

<P align="center" style="font-size: 10pt;">21

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<DIV align="left" style="font-size: 10pt;">
are risks of expropriation, confiscatory taxation, political or
social instability or diplomatic developments that could affect
assets of the Equity Trust held in foreign countries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There may be less publicly available information about a foreign
company than a U.S.&nbsp;company. Foreign securities markets may
have substantially less volume than U.S.&nbsp;securities markets
and some foreign company securities are less liquid than
securities of otherwise comparable U.S.&nbsp;companies. A
portfolio of foreign securities may also be adversely affected
by fluctuations in the rates of exchange between the currencies
of different nations and by exchange control regulations.
Foreign markets also have different clearance and settlement
procedures that could cause the Equity Trust to encounter
difficulties in purchasing and selling securities on such
markets and may result in the Equity Trust missing attractive
investment opportunities or experiencing loss. In addition, a
portfolio that includes foreign securities can expect to have a
higher expense ratio because of the increased transaction costs
on non-U.S.&nbsp;securities markets and the increased costs of
maintaining the custody of foreign securities. The Equity Trust
does not have an independent limit on the amount of its assets
that it may invest in the securities of foreign issuers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust also may purchase sponsored American Depository
Receipts (&#147;ADRs&#148;) or U.S.&nbsp;denominated securities
of foreign issuers. ADRs are receipts issued by United States
banks or trust companies in respect of securities of foreign
issuers held on deposit for use in the United States securities
markets. While ADRs may not necessarily be denominated in the
same currency as the securities into which they may be
converted, many of the risks associated with foreign securities
may also apply to ADRs. In addition, the underlying issuers of
certain depository receipts, particularly unsponsored or
unregistered depositary receipts, are under no obligation to
distribute stockholder communications to the holders of such
receipts, or to pass through to them any voting rights with
respect to the deposited securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As noted herein, Sterling Capital may invest up to 100% of its
total assets in foreign securities, although such investments
are not a principal part of Sterling Capital&#146;s investment
strategy.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Interest Rate Transactions.</I> The Equity Trust has entered
into an interest rate swap agreement and may enter into interest
rate swap or cap transactions. The use of interest rate swaps
and caps is a highly specialized activity that involves
investment techniques and risks different from those associated
with ordinary portfolio security transactions. In an interest
rate swap, the Equity Trust would agree to pay to the other
party to the interest rate swap (which is known as the
&#147;counterparty&#148;) periodically a fixed rate payment in
exchange for the counterparty agreeing to pay to the Equity
Trust periodically a variable rate payment that is intended to
approximate the Equity Trust&#146;s variable rate payment
obligation on one or more series of its preferred stock. In an
interest rate cap, the Equity Trust would pay a premium to the
counterparty and, to the extent that a specified variable rate
index exceeds a predetermined fixed rate, would receive from the
counterparty payments of the difference based on the notional
amount of such cap. Interest rate swap and cap transactions
introduce additional risk because the Equity Trust would remain
obligated to pay preferred stock dividends when due in
accordance with the Articles&nbsp;Supplementary even if the
counterparty defaulted. In addition, at the time an interest
rate swap or cap transaction reaches its scheduled termination
date, there is a risk that the Equity Trust will not be able to
obtain a replacement transaction or that the terms of the
replacement will not be as favorable as on the expiring
transaction. The Equity Trust will usually enter into swaps or
caps on a net basis; that is, the two payment streams will be
netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Equity Trust&#146;s
receiving or paying, as the case may be, only the net amount of
the two payments. The Equity Trust intends to segregate cash or
liquid securities having a value at least equal to the value of
its net payment obligations under any swap transaction, marked
to market daily.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If there is a default by the counterparty to a swap contract,
the Equity Trust will be limited to contractual remedies
pursuant to the agreements related to the transaction. There is
no assurance that the swap contract counterparties will be able
to meet their obligations pursuant to the swap contracts or
that, in the event of default, the Equity Trust will succeed in
pursuing contractual remedies. The Equity Trust thus assumes the
risk that it may be delayed in or prevented from obtaining
payments owed to it pursuant to the swap contracts. The
creditworthiness of the swap contract counterparties is closely
monitored in order to minimize this risk.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The use of derivative instruments involves, to varying degrees,
elements of market risk in excess of the amount recognized in
the statements of assets and liabilities.
</DIV>


<P align="center" style="font-size: 10pt;">22

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital does not enter into interest rate transactions
as part of its current investment strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Futures Transactions.</I> Futures and options on futures
entail certain risks, including but not limited to the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    no assurance that futures contracts or options on futures can be
    offset at favorable prices;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    possible reduction of the yield of the Equity Trust due to the
    use of hedging;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    possible reduction in value of both the securities hedged and
    the hedging instrument;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    possible lack of liquidity due to daily limits or price
    fluctuations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    imperfect correlation between the contracts and the securities
    being hedged;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    losses from investing in futures transactions that are
    potentially unlimited and the segregation requirements for such
    transactions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As noted herein, Sterling Capital is not permitted to invest in
commodities or futures contracts other than in connection with
hedging activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Forward Currency Exchange Contracts.</I> The use of forward
currency contracts may involve certain risks, including the
failure of the counterparty to perform its obligations under the
contract and that the use of forward contracts may not serve as
a complete hedge because of an imperfect correlation between
movements in the prices of the contracts and the prices of the
currencies hedged or used for cover.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As noted herein, Sterling Capital has not entered into foreign
currency exchange contracts in the past and has no current
intention to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Dependence on Key Personnel.</I> Mario J. Gabelli serves as
the Equity Trust&#146;s portfolio manager. Gabelli Funds is
dependent upon the expertise of Mr.&nbsp;Gabelli in providing
advisory services with respect to the Equity Trust&#146;s
investments. If Gabelli Funds were to lose the services of
Mr.&nbsp;Gabelli, its ability to service the Equity Trust could
be adversely affected. There can be no assurance that a suitable
replacement could be found for Mr.&nbsp;Gabelli in the event of
his death, resignation, retirement or inability to act on behalf
of Gabelli Funds.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='117'></A>
</DIV>

<!-- link1 "RECENT DEVELOPMENTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RECENT DEVELOPMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors of the Equity Trust, at a meeting held on
August&nbsp;9, 2005, authorized the filing of a preliminary
registration statement for a rights offering to the Equity
Trust&#146;s shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the offering, each Equity Trust shareholder will receive
one right for each share held on the record date. The number of
rights required to acquire one additional share of the Equity
Trust and the subscription price for such rights will be
determined at a later date. Shareholders of record on the record
date for the rights offering are expected to be entitled to
oversubscribe, subject to certain limitations and subject to
allotment, for any shares not purchased pursuant to the primary
subscription rights. If the record date of the rights offering
occurs after the Effective Date, shareholders of Sterling
Capital will be able to participate in the rights offering. In
addition, it is expected that if the Equity Trust&#146;s net
asset value per share on the expiration date of the offer is
equal to or less than the subscription price, the Fund may issue
additional shares, subject to certain limitations and subject to
allotment, in order to satisfy over-subscription requests in
excess of the primary subscription shares. The record date for
the offering and the length of the offering period will also be
announced at a later date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The rights offering will be made only by means of a prospectus.
The rights are expected to be transferable and Equity Trust
expects to apply to have them accepted for trading on the NYSE.
As a result of the rights offering, shareholders of the Equity
Trust who do not exercise their rights may, at the completion of
the offer, own a smaller proportional interest in the Equity
Trust than if they exercised their rights, and a shareholder of
the Equity Trust may experience dilution of the aggregate net
asset value of his or her shares if the Equity Trust&#146;s net
asset value per share is above the subscription price.
</DIV>

<P align="center" style="font-size: 10pt;">23
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<DIV align="left" style="font-size: 10pt;">
<A name='107'></A>
</DIV>

<!-- link1 "UNITED STATES FEDERAL INCOME TAXES" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNITED STATES FEDERAL INCOME TAXES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following discussion is a brief summary of certain
U.S.&nbsp;federal income tax considerations affecting the Equity
Trust and its stockholders. No attempt is made to present a
detailed explanation of all U.S.&nbsp;federal, state, local and
foreign tax concerns affecting the Funds and their stockholders,
and the discussion set forth herein does not constitute tax
advice. The discussion reflects applicable tax laws of the
United States as of the date of this Proxy Statement/
Prospectus, which tax laws may be changed or subject to new
interpretations by the courts or the Internal Revenue Service
(the &#147;IRS&#148;) retroactively or prospectively.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Taxation of the Equity Trust.</I> The Equity Trust has
elected to be treated and has qualified as, and intends to
continue to qualify as, a regulated investment company under
Subchapter M of the Code. Accordingly, it must, among other
things, (i)&nbsp;derive in each taxable year at least 90% of its
gross income (including tax-exempt interest) from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale or other disposition of stock, securities or
foreign currencies, other income (including but not limited to
gain from options, futures and forward contracts) derived with
respect to its business of investing in such stock, securities
or currencies and interests in &#147;qualified publicly traded
partnerships&#148; (as defined in the Code); and
(ii)&nbsp;diversify its holdings so that, at the end of each
quarter of each taxable year (a)&nbsp;at least 50% of the market
value of its total assets is represented by cash and cash items,
U.S.&nbsp;government securities, the securities of other
regulated investment companies and other securities, with such
other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the value of its total assets and
not more than 10% of the outstanding voting securities of such
issuer, and (b)&nbsp;not more than 25% of the market value of
its total assets is invested in the securities (other than
U.S.&nbsp;government securities and the securities of other
regulated investment companies) of (I)&nbsp;any one issuer,
(II)&nbsp;any two or more issuers that it controls and that are
determined to be engaged in the same business or similar or
related trades or businesses or (III)&nbsp;any one or more
&#147;qualified publicly traded partnerships&#148; (as defined
in the Code).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a regulated investment company, the Equity Trust generally is
not subject to U.S.&nbsp;federal income tax on income and gains
that it distributes each taxable year to stockholders, if it
distributes at least 90% of the sum of its (i)&nbsp;investment
company taxable income (as that term is defined in the Code)
determined without regard to the deduction for dividends paid,
and (ii)&nbsp;its net tax-exempt interest (the excess of its
gross tax-exempt interest over certain disallowed deductions).
The Equity Trust intends to distribute at least annually
substantially all of such income. The Equity Trust will be
subject to income tax at regular corporate rates on any taxable
income or gains that it does not distribute to its shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a
nondeductible 4% excise tax at the fund level. To avoid the
excise tax, the Equity Trust must distribute during each
calendar year an amount at least equal to the sum of
(i)&nbsp;98% of its ordinary income (not taking into account any
capital gains or losses) for the calendar year, (ii)&nbsp;98% of
its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending
on October&nbsp;31 of the calendar year (unless an election is
made to use its fiscal year), and (iii)&nbsp;certain
undistributed amounts from previous years on which it paid no
U.S.&nbsp;federal income tax. While the Equity Trust intends to
distribute any income and capital gains in the manner necessary
to minimize imposition of the 4% excise tax, there can be no
assurance that sufficient amounts of its taxable income and
capital gains will be distributed to avoid entirely the
imposition of the excise tax. In that event, the Equity Trust
will be liable for the excise tax only on the amount by which it
does not meet the foregoing distribution requirement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If for any taxable year the Equity Trust does not qualify as a
regulated investment company, all of its taxable income
(including its net capital gain) will be subject to tax at
regular corporate rates without any deduction for distributions
to stockholders, and such distributions will be taxable to the
stockholders as ordinary dividends to the extent of its current
and accumulated earnings and profits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Taxation of Equity Trust Stockholders.</I> Distributions paid
to holders of Equity Trust Common Stock by the Equity Trust from
its net investment income or from an excess of net short-term
capital gains over net long-term capital losses (together
referred to hereinafter as &#147;ordinary income
dividends&#148;) are generally taxable to them as ordinary
income to the extent of the Equity Trust&#146;s earnings and
profits. Such dividends (if designated by the Equity Trust) may,
however, qualify (provided holding period and other requirements
are
</DIV>


<P align="center" style="font-size: 10pt;">24

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<DIV align="left" style="font-size: 10pt;">
met at the Fund and stockholder level) (i)&nbsp;for the
dividends received deduction in the case of corporate
stockholders to the extent that the Equity Trust&#146;s income
consists of qualifying dividend income from
U.S.&nbsp;corporations and (ii)&nbsp;under the Jobs and Growth
Tax Relief Reconciliation Act of 2003 (effective for taxable
years after December&nbsp;31, 2002 through December&nbsp;31,
2008), as qualified dividend income eligible for
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
the reduced maximum rate to individuals of generally 15% (5% for
individuals in lower tax brackets) to the extent that the Equity
Trust receives qualified dividend income. Qualified dividend
income is, in general, dividend income from taxable domestic
corporations and certain foreign corporations (e.g., generally,
foreign corporations incorporated in a possession of the United
States or in certain countries with a comprehensive tax treaty
with the United States, or the stock of which is readily
tradable on an established securities market in the United
States). Distributions made to stockholders from an excess of
net long-term capital gains over net short-term capital losses
(&#147;capital gain dividends&#148;), including capital gain
dividends credited to you but retained by the Equity Trust, are
taxable to stockholders as long-term capital gains if they have
been properly designated by the Equity Trust, regardless of the
length of time stockholders have owned Equity Trust Common
Stock. The tax rate on net long-term capital gain of individuals
is reduced generally from 20% to 15% (5% for individuals in
lower tax brackets) for such gain realized before
January&nbsp;1, 2009. Distributions in excess of the Equity
Trust&#146;s earnings and profits will first reduce the adjusted
tax basis of Equity Trust Common Stock and, after such adjusted
tax basis is reduced to zero, will constitute capital gains
(assuming the Equity Trust Common Stock is held as a capital
asset). Generally, not later than 60&nbsp;days after the close
of its taxable year, the Equity Trust will provide stockholders
with a written notice designating the amount of any qualified
dividend income or capital gain dividends and other
distributions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The sale or other disposition of Equity Trust Common Stock will
generally result in capital gain or loss, and will be long-term
capital gain or loss if the stock has been held for more than
one year at the time of sale. Any loss upon the sale or exchange
of Equity Trust Common Stock held for six months or less will be
treated as long-term capital loss to the extent of any capital
gain dividends received (including amounts credited as an
undistributed capital gain dividend). A loss realized on a sale
or exchange of Equity Trust Common Stock will be disallowed if
other Equity Trust Common Stock is acquired within a 61-day
period beginning 30&nbsp;days before and ending 30&nbsp;days
after the date that the stock is disposed of. In such case, the
basis of the stock acquired will be adjusted to reflect the
disallowed loss. Present law taxes both long-term and short-term
capital gains of corporations at the rates applicable to
ordinary income. For non-corporate taxpayers, short-term capital
gains will currently be taxed at a maximum rate of 35% while
long-term capital gains generally will be taxed at a maximum
rate of 15%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Equity Trust pays a dividend in January that was declared
in the previous October, November or December to stockholders of
record on a specified date in one of such months, then such
dividend will be treated for tax purposes as being paid by the
Equity Trust and received by stockholders on December&nbsp;31 of
the year in which the dividend was declared.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust is required in certain circumstances to backup
withhold on taxable dividends and certain other payments paid to
non-corporate holders of its stock who do not furnish the Equity
Trust with their correct taxpayer identification number (in the
case of individuals, their social security number) and certain
certifications, or who are otherwise subject to backup
withholding. Backup withholding is not an additional tax. Any
amounts withheld from payments made may be refunded or credited
against the stockholder&#146;s U.S.&nbsp;federal income tax
liability, if any, provided that the required information is
furnished to the IRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The foregoing is a general and abbreviated summary of the
provisions of the Code and the Treasury regulations in effect as
they directly govern the taxation of the Equity Trust and its
stockholders. These provisions are subject to change by
legislative or administrative action, and any such change may be
retroactive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stockholders are urged to consult their tax advisers regarding
specific questions as to U.S.&nbsp;federal, foreign, state,
local income or other taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='108'></A>
</DIV>

<!-- link1 "INFORMATION ABOUT THE REORGANIZATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION ABOUT THE REORGANIZATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>General.</I> Under the Agreement, the Equity Trust will
acquire all or substantially all of the assets of Sterling
Capital (other than the Reserve), and assume the Stated
Liabilities of Sterling Capital in exchange for Equity Trust
Common Stock (plus cash in lieu of fractional shares) on the
Effective Date. As a result of
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the Reorganization and on the Effective Date, each Sterling
Capital shareholder would receive that number of shares of
Equity Trust Common Stock (plus cash in lieu of fractional
shares) having an aggregate net asset value equal to the
aggregate net asset value of such shareholder&#146;s Sterling
Capital shares as of the close of business on the Effective Date
(as reduced by the shareholder&#146;s pro rata share of the
Reserve); provided, however, that if the average closing price
of Equity Trust Common Stock on the NYSE for the 20 business
days prior to the Effective Date exceeds the net asset value per
share of Equity Trust Common Stock on the Effective Date, the
number of shares of Equity Trust Common Stock to be issued to
Sterling Capital shall be computed by dividing (i)&nbsp;the
aggregate value of Sterling Capital&#146;s assets, net of
Sterling Capital&#146;s Stated Liabilities and the Reserve on
the Effective Date by (ii)&nbsp;the lower of (x)&nbsp;the
average of such closing prices for the 20 business days prior to
the date of the Reorganization and (y)&nbsp;103% of the net
asset value per share of Equity Trust Common Stock as determined
by the Equity Trust on the Effective Date (the &#147;Alternative
Value&#148;). As of June&nbsp;30, 2005, the closing price of
Equity Trust Common Stock on the NYSE was $8.98, which
represents a premium of 7.16% to its net asset value per share
of $8.38 on such date. Equity Trust Common Stock has generally
traded at a premium to its net asset value since February 2001.
There can be no assurance that this will continue or that the
value of the shares of Equity Trust Common Stock to be issued in
the Reorganization will be valued according to the Alternative
Value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust will not issue any fractional shares to
Sterling Capital shareholders. In lieu thereof, Sterling Capital
will receive from the Equity Trust for distribution to its
shareholders cash in an amount equal to the aggregate net asset
value of the fractional shares otherwise distributable to
Sterling Capital shareholders. The cash to be distributed in
lieu of fractional shares will be calculated on the same basis
as the formula to be used to calculate the number of full
shares. No sales charge or fee of any kind will be charged to
Sterling Capital shareholders in connection with their receipt
of Equity Trust Common Stock in the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Following the Reorganization, Sterling Capital will proceed to
dissolve and terminate in accordance with the New York Business
Corporation Law and other applicable law, and the Reserve will
be transferred to a liquidating trust for the benefit of
Sterling Capital shareholders. The four Non-Interested Directors
currently serving on the Board of Directors of Sterling Capital,
and a fifth person who will serve as trustee solely to satisfy
applicable state law requirements, will serve as trustees of the
liquidating trust. For their service as trustees of the
liquidating trust, such persons will receive trustee&#146;s fees
in the amount of $1,000 per month from the liquidating trust
until the liquidation of the liquidating trust. The liquidating
trust will be in place on or about the Effective Date and will
continue until the trustees thereof have made a determination
that all liabilities of Sterling Capital have been discharged.
It is currently expected that the liquidating trust will be in
place for six months to one year following the Effective Date,
but no guarantee can be made in this regard. Any portion of the
Reserve remaining after all expenses associated with the
Reorganization have been paid will be distributed to Sterling
Capital shareholders by the liquidating trust upon its
liquidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Agreement may be terminated and the Reorganization
abandoned, whether before or after approval by Sterling
Capital&#146;s shareholders, at any time prior to the Effective
Date:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    by the mutual written consent of the Board of Directors of each
    Fund,&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    by either Fund if the conditions to that Fund&#146;s obligations
    under the Agreement have not been satisfied or waived.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because Sterling Capital shareholders are being asked to approve
a sale of substantially all of Sterling Capital&#146;s assets to
the Equity Trust in connection with the Reorganization, under
New York law each Sterling Capital shareholder entitled to vote
on the Reorganization has the right to receive a cash payment
equal to the fair value of the common stock of Sterling Capital
held by such shareholder, in lieu of Equity Trust Common Stock,
if such shareholder follows certain procedures to preserve and
enforce such rights. See &#147;Required Vote.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Reasons for the Reorganization.</I> The Board of Directors of
Sterling Capital considered the Reorganization at meetings held
on October&nbsp;5, 2004 and March&nbsp;28, April 25 and
May&nbsp;16, 2005, and approved the Reorganization at the
meeting held on May&nbsp;16, 2005. The Board of Directors of the
Equity Trust considered
</DIV>

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<DIV align="left" style="font-size: 10pt;">
and approved the Reorganization at meetings held on
February&nbsp;16, 2005 and May&nbsp;18, 2005. The Equity Trust
and Sterling Capital executed the original agreement and plan of
reorganization and announced the proposed Reorganization on
May&nbsp;23, 2005. The Amended and Restated Agreement and Plan
of Reorganization was executed on August&nbsp;16, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the reasons discussed below, the Board of Directors of each
Fund, including a majority of the Non-Interested Directors of
each Fund, after consideration of the potential benefits of the
Reorganization to the shareholders of that Fund, the options
available and consequences that could potentially occur without
the Reorganization, and the expenses expected to be incurred by
that Fund in connection with the Reorganization, determined that
the proposed Reorganization is in the best interests of each
Fund. The Board of Directors of Sterling Capital, including the
Non-Interested Directors, voted unanimously to recommend that
shareholders of Sterling Capital also approve the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital Board Considerations.</I> The Sterling
Capital Board of Directors considered several factors prior to
approving the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Beginning in 2003, the management of Sterling Capital began to
express its concern to the Board of Directors of Sterling
Capital regarding Sterling Capital&#146;s high expense ratio due
to its relatively small size and the potential increase in
Sterling Capital&#146;s expense ratio due to the various
requirements of the Sarbanes-Oxley Act of 2002 and related
legislation which generally imposed increased compliance
expenses on registered investment companies. At this time, the
management of Sterling Capital began to review several options
with the Board in connection with the operation of Sterling
Capital in light of the anticipated increased expense ratio.
These options included the merger of the Fund with an investment
company managed by a third party investment adviser and the
liquidation of the Fund.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At a meeting of the Sterling Capital Board of Directors in early
2004, the management of Sterling Capital recommended to the
Board of Directors of Sterling Capital merging Sterling Capital
with a fund managed by a reputable third party adviser, provided
that such fund had a similar investment objective, a good
performance record, the transaction was able to be structured on
a tax free basis and the target fund was large enough to provide
investors with improved liquidity and lower expenses. During
these discussions, the management of Sterling Capital noted that
liquidating Sterling Capital could cause investors to incur
unfavorable tax consequences if they were required to pay
capital gains taxes on the proceeds received in connection with
liquidation. In addition, Wayne&nbsp;S. Reisner, the President
of Sterling Capital, informed the Board of Directors that he
would like to retire from his position of president and
portfolio manager of Sterling Capital and that hiring a new
portfolio manager to run Sterling Capital internally or hiring a
third party manager to manage Sterling Capital externally likely
would increase Sterling Capital&#146;s expense ratio. In
connection with these discussions, the Board of Directors of
Sterling Capital authorized Sterling Capital&#146;s management
to commence a search for a merger candidate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Throughout the early part of 2004, Sterling Capital&#146;s
management entered into discussions with different investment
advisers regarding a potential merger transaction involving
Sterling Capital, and the Board of Directors of Sterling Capital
was periodically updated regarding the status of these
discussions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Following a lengthy search process, the management of Sterling
Capital reached a preliminary agreement with the Equity Trust on
the key economic terms of a transaction to combine the two
funds. The management of Sterling Capital presented these
economic terms to the Board of Directors of Sterling Capital at
a meeting held on October&nbsp;5, 2004. At this meeting, the
Board of Directors of Sterling Capital approved these terms in
principle, provided that Sterling Capital was able to negotiate
an acceptable agreement with the Equity Trust and due diligence
with respect to the Equity Trust was acceptable to the Board of
Directors of Sterling Capital. The Board of Directors of
Sterling Capital directed Sterling Capital&#146;s management and
legal counsel to negotiate an agreement with the Equity Trust
and to conduct due diligence with respect to the Equity Trust
and to present a final proposal to the Board at a subsequent
meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At subsequent meetings of the Board of Directors of Sterling
Capital held on March&nbsp;28, April 25 and May&nbsp;16, 2005,
the Board of Directors of Sterling Capital considered the terms
of the Reorganization Agreement and the due diligence reports
with respect to the Equity Trust. Although the Board of
Directors of Sterling Capital did not consider any one factor
determinative in connection with its deliberations regarding
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the Reorganization, the Board of Directors of Sterling Capital
considered the following factors to be significant in its
consideration of the Reorganization:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the reduced expense ratio for the current shareholders of
    Sterling Capital upon becoming shareholders of the Equity Trust;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the lack of liquidity of the Sterling Capital common shares and
    the greater liquidity of Equity Trust Common Stock;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the tax free nature of the Reorganization;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the discount to net asset value at which the Sterling Capital
    common shares historically have traded;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the reputation and performance of the Equity Trust and Gabelli
    Funds;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the impending retirement of Mr.&nbsp;Reisner from the positions
    of president and portfolio manager of Sterling Capital;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the economic terms of the Reorganization.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the May&nbsp;16, 2005 meeting of the Board of Directors of
Sterling Capital, the Board of Directors of Sterling Capital
approved the Reorganization, approved the execution and delivery
of the Reorganization Agreement and approved submitting the
Reorganization to the vote of Sterling Capital&#146;s
shareholders together with a recommendation for Sterling
Capital&#146;s shareholders to vote &#147;for&#148; the
Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the Sterling Capital Board of Directors&#146;
consideration and approval of the Reorganization, certain common
shareholders of Sterling Capital who, in the aggregate, owned
approximately 83.1% of the outstanding common shares of Sterling
Capital as of June&nbsp;30, 2005, entered into an exculpation
agreement, dated as of May&nbsp;12, 2005, with the Board of
Directors of Sterling Capital whereby each such shareholder
agreed (i)&nbsp;to waive and forgo any claim such shareholder
might have against any director of Sterling Capital and
(ii)&nbsp;to release each director of Sterling Capital from any
liability such director may have to such shareholder in
connection with the consideration and approval of the
Reorganization by the Board of Directors of Sterling Capital.
Sterling Capital also purchased an errors and omissions
insurance policy for the directors and officers of Sterling
Capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Equity Trust Board Considerations.</I> At meetings of the
Equity Trust Board of Directors held on February&nbsp;16, 2005
and May&nbsp;18, 2005, the Board considered information
concerning Sterling Capital and the proposed Reorganization,
including the general compatibility of the investment objectives
and strategies of the two Funds. The Board noted that the
Reorganization represented an opportunity to increase the Equity
Trust&#146;s assets without diluting the interests of existing
stockholders. The Board further noted that the Reorganization
was structured to be a tax-free transaction for the Equity Trust
and that each of the Equity Trust and Sterling Capital would pay
its own expenses in the Reorganization, except that the expenses
of printing and mailing the Prospectus/ Proxy Statement to
Sterling Capital shareholders would be shared by Sterling
Capital and Gabelli Funds. The Board of Directors of the Equity
Trust, including a majority of the Non-Interested Directors,
after consideration of the potential benefits of the
Reorganization to the shareholders of the Equity Trust, the
options available and consequences that could potentially occur
without the Reorganization, and the expenses expected to be
incurred by the Equity Trust in connection with the
Reorganization, determined that the proposed Reorganization is
in the best interests of the Equity Trust. No one factor was
identified by the Board as the principal factor in its decision
to approve the Reorganization and authorize the execution and
delivery of the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Terms of the Agreement.</I> The following is a summary of
certain terms of the Agreement. This description is qualified by
reference to the Agreement, which is attached to this Proxy
Statement/ Prospectus as Exhibit&nbsp;A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Agreement provides for the transfer of all or substantially
all of the assets of Sterling Capital (other than the Reserve)
to the Equity Trust in exchange solely for full shares of Equity
Trust Common Stock, the assumption by the Equity Trust of the
Stated Liabilities of Sterling Capital, and the distribution of
Equity Trust Common Stock to the shareholders of Sterling
Capital, followed by the termination, dissolution and complete
liquidation (other than the Reserve) of Sterling Capital. On the
Effective Date of the Reorganization, Sterling Capital will
transfer all its assets, other than cash in an amount necessary
to pay dividends and distributions and the Reserve, to the
Equity Trust. The Equity Trust will assume only the Stated
Liabilities and will not assume any other debts, liabilities or
obligations of Sterling Capital.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital will receive for distribution to its
shareholders the number of full shares of Equity Trust Common
Stock computed by dividing the aggregate value of Sterling
Capital&#146;s assets, net of its Stated Liabilities and the
Reserve, by the net asset value of one share of Equity Trust
Common Stock as determined by the Equity Trust on the Effective
Date; except that if the average closing price of Equity Trust
Common Stock for the 20 business days prior to the Effective
Date of the Reorganization exceeds the net asset value per share
of Equity Trust Common Stock on the Effective Date, the number
of shares of Equity Trust Common Stock to be issued to Sterling
Capital shall be computed according to the &#147;Alternative
Value,&#148; as follows: the number of shares shall be computed
by dividing (i)&nbsp;the aggregate value of Sterling
Capital&#146;s assets, net of the Stated Liabilities and the
Reserve, by (ii)&nbsp;the lower of (x)&nbsp;the average of such
closing prices on the NYSE for the 20 business days prior to the
Effective Date and (y)&nbsp;103% of the net asset value per
share of Equity Trust Common Stock computed on the Effective
Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust will not issue fractional shares of Common
Stock. Instead, it will deliver cash in lieu of fractional
shares to Sterling Capital for distribution to its shareholders.
The cash to be distributed in lieu of fractional shares will be
calculated on the same basis as the formula to be used to
calculate the number of full shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As soon as possible after the Effective Date, Sterling Capital
will distribute in complete liquidation (other than the
Reserve), pro rata to its stockholders of record, all of the
Equity Trust Common Stock and cash in lieu of fractional shares.
Upon completion of that distribution, Sterling Capital will
thereupon proceed to dissolve and terminate in accordance with
the New York Business Corporation Law and other applicable law,
and the Reserve will be transferred to a liquidating trust for
the benefit of Sterling Capital shareholders. Any portion of the
Reserve remaining after all expenses associated with the
Reorganization have been paid will be distributed to Sterling
Capital shareholders by the liquidating trust. All issued and
outstanding shares of Sterling Capital (&#147;Sterling Capital
Shares&#148;) will be cancelled on its books.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust will not issue new certificates evidencing
ownership of Equity Trust Common Stock to shareholders of
Sterling Capital holding share certificates until such
shareholders have surrendered their outstanding certificates or,
in the event of lost certificates, posted adequate bond.
Sterling Capital will request its shareholders with share
certificates to surrender their certificates or post adequate
bond therefor. The Equity Trust will not pay dividends to a
shareholder of Sterling Capital who continues to hold Sterling
Capital share certificates unless and until such Sterling
Capital shareholder has surrendered his or her certificates for
exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Please do not send in any stock certificates at this time.
Upon consummation of the Reorganization, shareholders of
Sterling Capital will be furnished with instructions for
exchanging their stock certificates for stock certificates of
the Equity Trust.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Agreement may be terminated at any time prior to the
Effective Date, whether before or after approval of the
Agreement by Sterling Capital shareholders, or the Effective
Date may be postponed, by mutual consent of the Board of
Directors of each Fund or by either Fund if the other Fund has
violated a condition of the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Expenses of the Reorganization.</I> For information about the
expenses of the Reorganization, see &#147;Synopsis&nbsp;&#151;
Expenses of the Reorganization.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Tax Considerations.</I> The following is a general summary of
the material anticipated U.S.&nbsp;federal income tax
consequences of the Reorganization. The discussion is based upon
the Code, Treasury regulations, court decisions, published
positions of the IRS and other applicable authorities, all as in
effect on the date hereof and all of which are subject to change
or differing interpretations (possibly with retroactive effect).
The discussion is limited to U.S.&nbsp;persons who hold their
Sterling Capital Shares as capital assets for U.S.&nbsp;federal
income tax purposes (generally, assets held for investment).
This summary does not address all of the U.S.&nbsp;federal
income tax consequences that may be relevant to a particular
shareholder or to shareholders who may be subject to special
treatment under U.S.&nbsp;federal income tax laws. No ruling has
been or will be obtained from the IRS regarding any matter
relating to the Reorganization. No assurance can be given that
the IRS would not assert a position contrary to any of the tax
aspects described below. Shareholders must consult their own tax
advisers as to the U.S.&nbsp;federal income tax consequences of
the Reorganization, as well as the effects of state, local and
non-U.S.&nbsp;tax laws.
</DIV>

<P align="center" style="font-size: 10pt;">29

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<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
It is a condition to closing the Reorganization that Sterling
Capital will receive an opinion of Skadden, Arps, Slate,
Meagher&nbsp;&#38; Flom LLP (&#147;Skadden&#148;), counsel to
Sterling Capital, and the Equity Trust will receive an opinion
of Willkie Farr&nbsp;&#38; Gallagher LLP (&#147;Willkie&#148;),
counsel to the Equity Trust, dated as of the closing date of the
Reorganization, regarding the characterization of the
Reorganization as a &#147;reorganization&#148; within the
meaning of Section&nbsp;368(a) of the Internal Revenue Code. As
such a reorganization, the U.S.&nbsp;federal income tax
consequences of the Reorganization can be summarized as follows:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No gain or loss will be recognized by the Equity Trust or
    Sterling Capital upon the transfer to the Equity Trust of all or
    substantially all of the assets of Sterling Capital in exchange
    solely for Equity Trust Common Stock and the assumption by the
    Equity Trust of the Stated Liabilities and the subsequent
    liquidation of Sterling Capital.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    No gain or loss will be recognized by a shareholder of Sterling
    Capital who exchanges all of his, her or its Sterling Capital
    Shares solely for Equity Trust Common Stock pursuant to the
    Reorganization (except with respect to cash received in lieu of
    a fractional share of Equity Trust Common Stock, as discussed
    below).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The aggregate tax basis of the Equity Trust Common Stock
    received by a shareholder of Sterling Capital pursuant to the
    Reorganization will be the same as the aggregate tax basis of
    the Sterling Capital Shares surrendered in exchange therefor
    (reduced by any amount of tax basis allocable to a fractional
    share of Equity Trust Common Stock for which cash is received).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    A shareholder of Sterling Capital that receives cash in lieu of
    a fractional share of Equity Trust Common Stock pursuant to the
    Reorganization will recognize capital gain or loss with respect
    to the fractional share in an amount equal to the difference
    between the amount of cash received for the fractional share and
    the portion of such shareholder&#146;s tax basis in its Sterling
    Capital Shares that is allocable to the fractional share. The
    capital gain or loss will be long-term if the holding period for
    such Sterling Capital Shares is more than one year as of the
    date of the exchange.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The holding period of the Equity Trust Common Stock received by
    a shareholder of Sterling Capital pursuant to the Reorganization
    will include the holding period of the Sterling Capital Shares
    surrendered in exchange therefor.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The Equity Trust&#146;s tax basis in Sterling Capital&#146;s
    assets received by the Equity Trust pursuant to the
    Reorganization will, in each instance, equal the tax basis of
    such assets in the hands of Sterling Capital immediately prior
    to the Reorganization, and the Equity Trust&#146;s holding
    period of such assets will, in each instance, include the period
    during which the assets were held by Sterling Capital.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The opinions of Skadden and Willkie, in each case, will be based
on U.S.&nbsp;federal income tax law in effect on the closing
date of the Reorganization. Also, in rendering their respective
opinions, Skadden and Willkie will each rely upon certain
representations of the management of the Equity Trust and
Sterling Capital and assume, among other things, that the
Reorganization will be consummated in accordance with the
Agreement and as described herein. An opinion of counsel is not
binding on the IRS or any court.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A shareholder of Sterling Capital that dissents to the
Reorganization and that perfects his, her or its appraisal
rights generally should recognize capital gain or loss at the
effective time of the Reorganization in an amount equal to the
difference between the &#147;amount realized&#148; by the
shareholder and the shareholder&#146;s tax basis in his, her or
its Sterling Capital Shares. For this purpose, although there is
no authority directly on point, the &#147;amount realized&#148;
by a shareholder should be approximately equal to the net asset
value of the shareholder&#146;s Sterling Capital Shares on the
Effective Date of the Reorganization. Capital gain or loss
should also be recognized by such Sterling Capital shareholder
at the time the appraisal proceeds are received, to the extent
that the amount of such proceeds exceeds or is less than the
amount realized by such Sterling Capital shareholder on the
Effective Date of the Reorganization. In addition, a portion of
such proceeds may be characterized as interest income, thus
reducing the amount of such capital gain or increasing the
amount of such capital loss (as the case may be). Shareholders
of Sterling Capital are encouraged to consult their tax advisers
as to the tax consequences of exercising appraisal rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A portion of the portfolio assets of Sterling Capital may be
sold in connection with the Reorganization. Any capital gains
recognized in these sales on a net basis will be distributed to
Sterling Capital&#146;s shareholders
</DIV>

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<DIV align="left" style="font-size: 10pt;">
as taxable capital-gain dividends (to the extent of net realized
long-term capital gains) and/or taxable ordinary dividends (to
the extent of net realized short-term capital gains).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For U.S. federal income tax purposes, distributions from the
liquidating trust will be taxable to the former shareholders of
Sterling Capital. Please consult your own tax adviser in this
regard.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust intends to continue to be taxed under the rules
applicable to regulated investment companies as defined in
Section&nbsp;851 of the Code, which are the same rules currently
applicable to Sterling Capital and its shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For five years after the Closing Date, the combined Fund will
not be allowed to offset certain pre-Reorganization built-in
gains attributable to one Fund with certain built-in losses, if
any, attributable to the other Fund.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Required Vote.</I> Approval of the Reorganization requires
the affirmative vote of the holders of two-thirds of the votes
of all outstanding shares of Sterling Capital entitled to vote
thereon on the record date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='109'></A>
</DIV>

<!-- link1 "ADDITIONAL INFORMATION ABOUT THE FUNDS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ADDITIONAL INFORMATION ABOUT THE FUNDS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Description of Common Stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> Pursuant to an amendment to the Equity
Trust&#146;s Articles of Incorporation that was approved by
stockholders in 2004, the Board of Directors may increase or
decrease the aggregate number of shares of stock of the Equity
Trust or the number of shares of stock of any class or series
that the Equity Trust has authority to issue without stockholder
approval. The Equity Trust is currently authorized to issue
182,000,000&nbsp;shares of Common Stock, $.001&nbsp;par value.
Shares of Equity Trust Common Stock entitle its holders to one
vote per share. Holders of Equity Trust Common Stock are
entitled to share equally in dividends authorized by the Equity
Trust&#146;s Board of Directors payable to the holders of such
Common Stock and in the net assets of the Equity Trust available
on liquidation for distribution to holders of such Common Stock.
Shares have noncumulative voting rights and no conversion,
preemptive or other subscription rights, and are not redeemable.
The outstanding shares of Common Stock of the Equity Trust are
fully paid and non-assessable. In the event of liquidation, each
share of Common Stock is entitled to its proportion of the
Equity Trust&#146;s assets after payment of debts and expenses
and the amounts payable to holders of the Equity Trust preferred
stock ranking senior to the Common Stock as described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon a liquidation, dissolution or winding up of the affairs of
the Equity Trust (whether voluntary or involuntary), holders of
the Equity Trust preferred stock then outstanding will be
entitled to receive out of the assets of the Equity Trust
available for distribution to stockholders, after satisfying
claims of creditors but before any distribution or payment of
assets is made to holders of Equity Trust Common Stock, a
liquidation distribution in the amount of the liquidation
preference of the preferred stock plus an amount equal to all
unpaid dividends accumulated to and including the date fixed for
such distribution or payment (whether or not earned or declared
by the Equity Trust but excluding interest thereon), and such
preferred stockholders will be entitled to no further
participation in any distribution or payment in connection with
any such liquidation, dissolution or winding up. Unless and
until the liquidation payments due to preferred stockholders
have been paid in full, no dividends or distributions will be
made to holders of Equity Trust Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust is currently authorized to issue up to
18,000,000&nbsp;shares of $0.001&nbsp;par value cumulative
preferred stock. The cumulative preferred stock is senior to the
Common Stock and results in the financial leveraging of the
Common Stock. Such leveraging tends to magnify both the risks
and opportunities to holders of Equity Trust Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust holds shareholder meetings annually.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Sterling Capital is authorized to issue
10,000,000&nbsp;shares of common stock, par value $1&nbsp;per
share.
</DIV>

<P align="center" style="font-size: 10pt;">31
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows information about the common stock of
each Fund as of June&nbsp;30, 2005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(4)</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount Issued and</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(3)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding Exclusive</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount held by Fund</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Amount Shown</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Title of Class</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount Authorized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>for its Own Account</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Under (3)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    STERLING CAPITAL</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom">Common Stock, $1&nbsp; par value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,000,000&nbsp;shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500,000 shares</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    EQUITY TRUST</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="bottom">Common Stock, $0.001&nbsp;par value</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,000,000&nbsp; shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,702,724&nbsp;shares</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The shares of common stock of Sterling Capital are listed and
traded on the AMEX under the symbol &#147;SPR.&#148; The shares
of Common Stock of the Equity Trust are listed and traded on the
NYSE under the symbol &#147;GAB.&#148; As of June&nbsp;30, 2005,
the net asset value of Sterling Capital common stock was $7.29,
and the market price per share was $7.00. As of June 30, 2005,
the net asset value of Equity Trust Common Stock was $8.38, and
the market price per share was $8.98.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Share Repurchases</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders of Equity Trust Common Stock do not, and will not, have
the right to require the Equity Trust to repurchase their stock.
The Equity Trust, however, may repurchase its Common Stock from
time to time as and when it deems such a repurchase advisable,
subject to maintaining required asset coverage for each series
of outstanding preferred stock. The Board of Directors has
adopted a policy to authorize such repurchases when Equity Trust
Common Stock is trading at a discount of 10% or more from net
asset value. The policy does not limit the amount of shares of
Common Stock that can be repurchased. The percentage of the
discount from net asset value at which share repurchases will be
authorized may be changed by the Board of Directors. Pursuant to
the 1940&nbsp;Act, the Equity Trust may repurchase its Common
Stock on a securities exchange (provided that the Equity Trust
has informed its stockholders within the preceding six months of
its intention to repurchase such stock) or pursuant to tenders
or as otherwise permitted in accordance with Rule&nbsp;23c-1
under the 1940&nbsp;Act. Under that Rule, certain conditions
must be met regarding, among other things, distribution of net
income for the preceding fiscal year, status of the seller,
price paid, brokerage commissions, prior notice to stockholders
of an intention to purchase stock and purchasing in a manner and
on a basis that does not discriminate unfairly against the other
stockholders through their interest in the Equity Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When the Equity Trust repurchases its Common Stock for a price
below net asset value, the net asset value of the Common Stock
that remains outstanding will be enhanced, but this does not
necessarily mean that the market price of the outstanding Common
Stock will be affected, either positively or negatively. During
the year ended December&nbsp;31, 2004 and the six months ended
June&nbsp;30, 2005, the Equity Trust did not repurchase any
shares of its Common Stock in the open market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Sterling Capital has not repurchased,
and has no present intention to repurchase, any of its common
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Discount to Net Asset Value</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of closed-end investment companies often trade at a
discount to net asset value. This characteristic is a risk
separate and distinct from the risk that a Fund&#146;s net asset
value may decrease, and this risk may be greater for
shareholders expecting to sell their shares in a relatively
short period. THE SHARES OF COMMON STOCK OF THE FUNDS SHOULD
THUS BE VIEWED AS BEING DESIGNED PRIMARILY FOR LONG-TERM
INVESTORS AND SHOULD NOT BE CONSIDERED A VEHICLE FOR TRADING
PURPOSES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of June&nbsp;30, 2005, shares of Sterling Capital traded at a
discount to net asset value of 3.98%, although prior to the
announcement of the Reorganization, shares of Sterling Capital
generally traded at a larger discount to net asset value. The
Equity Trust&#146;s shares have traded in the market for periods
of time above and below net asset value, and recently have
traded generally at a premium to net asset value. As of
June&nbsp;30, 2005, shares of the Equity Trust traded at a
market price premium to net asset value of 7.16%. There can be
no assurance that Equity Trust Common Stock will continue to
trade at a premium before or after the Reorganization.
</DIV>

<P align="center" style="font-size: 10pt;">32
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PER SHARE DATA FOR STERLING CAPITAL</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMMON STOCK TRADED ON THE AMEX</B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Premium</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center"><B>(Discount)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Period (Calendar Year)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Market Price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Net Asset Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>as % of NAV</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FISCAL YEAR 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15.65</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22.27</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17.25</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24.08</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q3</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16.95</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23.69</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q4</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22.51</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25.72</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FISCAL YEAR 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22.59</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30.66</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21.59</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27.03</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q3</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14.91</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24.69</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q4</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.04</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23.66</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FISCAL YEAR 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17.30</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25.25</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.16</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22.78</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PER SHARE DATA FOR THE EQUITY TRUST</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMMON STOCK TRADED ON THE NYSE</B>
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Premium</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center"><B>(Discount)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Market Price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Net Asset Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>as % of NAV</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FISCAL YEAR 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.72</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.13</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.62</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.29</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q3</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.54</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.90</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q4</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.88</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.63</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FISCAL YEAR 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.47</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.37</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.53</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.64</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q3</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.68</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.63</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q4</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.14</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.24</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FISCAL YEAR 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q1</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.84</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.83</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Q2</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.69</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.32</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">33
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Capitalization</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows the capitalization of Sterling Capital
on an unaudited basis and the Equity Trust on an unaudited basis
as of June&nbsp;30, 2005 and on a pro forma basis as of that
same date giving effect to the Reorganization:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Sterling</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pro Forma</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Pro Forma</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>The Equity Trust</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Adjustments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Reorganization(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net assets attributable to common stock shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,219,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,187,956,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(575,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,205,600,771</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net asset value per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.39</TD>
    <TD align="left" valign="bottom" nowrap>(3)</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Shares outstanding</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,702,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(429,768</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>143,772,956</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Equity Trust is the &#147;accounting survivor,&#148; meaning
    that the entity surviving the Reorganization will have
    substantially the same attributes as the Equity Trust in terms
    of portfolio management, portfolio composition, investment
    objective, policies and restrictions and expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Assumes that the Reorganization had been consummated on
    June&nbsp;30, 2005 and is for information purposes only. No
    assurance can be given as to how many shares of Equity Trust
    Common Stock shareholders of Sterling Capital will receive on
    the date the Reorganization takes place, and the foregoing
    should not be relied upon to reflect the number of shares of
    Equity Trust Common Stock that actually will be received on or
    after such date. Assumes accrual of estimated
    Reorganization-related expenses of $100,000 for Sterling Capital
    and $225,000 for the Equity Trust, as well as a reduction of
    $250,000 attributable to the Reserve.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Net asset value per share after Reorganization-related expenses
    and distribution of ordinary income, if any.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Assumes the issuance of 2,070,232&nbsp;shares of Equity Trust
    Common Stock in exchange for the net assets of Sterling Capital.
    The number of shares issued was based on the net assets of
    Sterling Capital, net of the Reserve of $250,000 and estimated
    Reorganization-related expenses of $100,000, and 103% of the net
    asset value of the Equity Trust on June&nbsp;30, 2005, which is
    $8.6314.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Trading Volume.</I> The following table shows the average
daily trading volume of the Common Stock of the Equity Trust and
shares of Sterling Capital for each of the five most recent
calendar years as reported by the NYSE and AMEX, respectively.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>The Equity Trust</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Sterling Capital</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2000</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109,539&nbsp;shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>207&nbsp;shares</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>195,769&nbsp;shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>206&nbsp;shares</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>213,011&nbsp;shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>499&nbsp;shares</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>181,152&nbsp;shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>268&nbsp;shares</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,971&nbsp;shares</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>295&nbsp;shares</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Dividends and Other Distributions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> The Equity Trust may retain for
reinvestment, and pay the resulting federal income taxes on, its
net capital gain, if any, although the Equity Trust reserves the
authority to distribute its net capital gain in any year. The
Equity Trust has a policy, which may be modified at any time by
its Board of Directors, of paying a minimum annual distribution
of 10% of the average net asset value of the Fund to holders of
its Common Stock. The Equity Trust&#146;s current quarterly
distribution level was raised to $0.19&nbsp;per share for the
third quarter, a 6% increase from the previous quarter&#146;s
$0.18&nbsp;per share distribution. The Equity Trust anticipates
an adjusting distribution in the fourth quarter of a sufficient
amount to pay 10% of the average net asset value of the Equity
Trust, as of the last day of the four preceding calendar
quarters, or to satisfy the minimum distribution requirements of
the Code, whichever is greater. Each quarter, the Board of
Directors of the Equity Trust reviews the amount of any
potential distribution and the income, capital gains or capital
available. This policy permits holders of Equity Trust Common
Stock to realize a predictable, but not assured, level of cash
flow and some liquidity periodically with respect to their
Common Stock without having to sell shares. To avoid paying
income tax at the corporate level, the Equity Trust distributes
substantially all of its
</DIV>

<P align="center" style="font-size: 10pt;">34

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
investment company taxable income and net capital gain. In the
event that the Equity Trust&#146;s investment company taxable
income and net capital gain exceed the total of its quarterly
distributions, the Equity Trust intends to pay such excess once
a year. If, for any calendar year, the total quarterly
distributions exceed both current earnings and profits and
accumulated earnings and profits, the excess will generally be
treated as a tax-free return of capital up to the amount of a
stockholder&#146;s tax basis in the stock. The amount treated as
a tax-free return of capital will reduce a stockholder&#146;s
tax basis in the stock, thereby increasing such
stockholder&#146;s potential gain or reducing his or her
potential loss on the sale of the stock. Any amounts distributed
to a stockholder in excess of the basis in the stock will be
taxable to the stockholder as capital gain. The Equity
Trust&#146;s distribution policy may cause it to make taxable
distributions to shareholders in excess of the minimum amounts
of such taxable distributions it would be required to make in
order to avoid liability for federal income tax. In certain
situations, this excess distribution may cause shareholders to
be liable for taxes for which they would not otherwise be liable
if the Equity Trust paid only that amount required to avoid
liability for federal income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event the Equity Trust distributes amounts in excess of
its investment company taxable income and net capital gain, such
distributions will decrease the Equity Trust&#146;s total assets
and, therefore, have the likely effect of increasing its expense
ratio. In addition, in order to make such distributions, the
Equity Trust might have to sell a portion of its investment
portfolio at a time when independent investment judgment might
not dictate such action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust, along with other closed-end registered
investment companies advised by Gabelli Funds, has obtained an
exemption from Section&nbsp;19(b) of the 1940&nbsp;Act and
Rule&nbsp;19b-1 thereunder permitting it to make periodic
distributions of long-term capital gains provided that any
distribution policy of the Equity Trust with respect to its
Common Stock calls for periodic (e.g., quarterly or
semi-annually, but in no event more frequently than monthly)
distributions in an amount equal to a fixed percentage of the
Equity Trust&#146;s average net asset value over a specified
period of time or market price per share of Common Stock at or
about the time of distribution or pay-out of a fixed dollar
amount. The exemption also permits the Equity Trust to make
distributions with respect to its preferred stock in accordance
with such stock&#146;s terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> If the Reorganization is approved by
Sterling Capital&#146;s shareholders, then as soon as
practicable before the Effective Date, Sterling Capital will pay
its shareholders a cash distribution of all undistributed
investment company taxable income and net capital gain. The
Reorganization will restrict the availability of certain
favorable tax attributes of Sterling Capital following the
Reorganization, including any capital loss carryover.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Portfolio Valuation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> The net asset value of Equity Trust
Common Stock is computed based on the market value of the
securities it holds and will generally be determined daily as of
the close of regular trading on the NYSE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Portfolio securities listed or traded on a nationally recognized
securities exchange or traded in the U.S.&nbsp;over-the-counter
market for which market quotations are readily available are
valued at the last quoted sale price or a market&#146;s official
closing price as of the close of business on the day the
securities are being valued. If there were no sales that day,
the security is valued at the average of the closing bid and
asked prices, or, if there were no asked prices quoted on such
day, the security is valued at the most recently available price
or, if the Board of Directors so determines, by such other
method as the Board of Directors shall determine in good faith,
to reflect its fair market value. Portfolio securities traded on
more than one national securities exchange or market are valued
according to the broadest and most representative market, as
determined by Gabelli Funds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Portfolio securities primarily traded on foreign markets are
generally valued at the preceding closing values of such
securities on their respective exchanges or if after the close,
market conditions change significantly, certain foreign
securities may be fair valued pursuant to procedures established
by the Board of Directors. Debt instruments that are not credit
impaired with remaining maturities of 60&nbsp;days or less are
valued at amortized cost, unless the Board of Directors
determines such does not reflect fair value, in which
</DIV>

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<DIV align="left" style="font-size: 10pt;">
case these securities will be valued at their fair value as
determined by the Board of Directors. Debt instruments having a
maturity greater than 60&nbsp;days for which market quotations
are readily available are valued at the latest average of the
bid and asked prices. If there were no asked prices quoted on
such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of
the exchange or board of trade on which the applicable contract
is traded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Securities and assets for which market quotations are not
readily available are valued at their fair value as determined
in good faith under procedures established by and under the
general supervision of the Board of Directors. Fair valuation
methodologies and procedures may include, but are not limited
to: analysis and review of available financial and non-financial
information about the company; comparisons to the valuation and
changes in valuation of similar securities, including a
comparison of foreign securities to the equivalent
U.S.&nbsp;dollar value ADR securities at the close of the
U.S.&nbsp;exchange; and evaluation of any other information that
could be indicative of the value of the security.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust obtains valuations on the basis of prices
provided by a pricing service approved by the Board of
Directors. All other investment assets, including restricted and
not readily marketable securities, are valued in good faith at
fair value under procedures established by and under the general
supervision and responsibility of the Equity Trust&#146;s Board
of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, whenever developments in one or more securities
markets after the close of the principal markets for one or more
portfolio securities and before the time as of which the Equity
Trust determines its net asset value would, if such developments
had been reflected in such principal markets, likely have more
than a minimal effect on its net asset value per share, the
Equity Trust may fair value such portfolio securities based on
available market information as of the time it determines its
net asset value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Investments in securities traded on a
national securities exchange (or reported on the NASDAQ national
market) are valued at the last reported sales price on the day
of valuation; other securities traded in the over-the-counter
market and listed securities for which no sale was reported on
that date are valued at the last quoted bid price, except for
short positions and call options written, for which the last
quoted asked price is used. Investments in real estate are
valued at fair value as determined by the Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Portfolio Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> Subject to policies established by the
Board of Directors of the Equity Trust, Gabelli Funds is
responsible for placing purchase and sale orders and the
allocation of brokerage on behalf of the Equity Trust.
Transactions in equity securities are in most cases effected on
U.S.&nbsp;stock exchanges and involve the payment of negotiated
brokerage commissions. In general, there may be no stated
commission in the case of securities traded in over-the-counter
markets, but the prices of those securities may include
undisclosed commissions or mark-ups. Principal transactions are
not entered into with affiliates of the Equity Trust. However,
Gabelli&nbsp;&#38; Company, Inc. may execute transactions in the
over-the-counter markets on an agency basis and receive a stated
commission therefrom. To the extent consistent with applicable
provisions of the 1940 Act and the rules and exemptions adopted
by the SEC thereunder, as well as other regulatory requirements,
the Equity Trust&#146;s Board of Directors has determined that
portfolio transactions may be executed through
Gabelli&nbsp;&#38; Company, Inc. and its broker-dealer
affiliates if, in the judgment of Gabelli Funds, the use of
those broker-dealers is likely to result in price and execution
at least as favorable as those of other qualified
broker-dealers, and if, in particular transactions, those
broker-dealers charge the Equity Trust a rate consistent with
that charged to comparable unaffiliated customers in similar
transactions. The Equity Trust has no obligations to deal with
any broker or group of brokers in executing transactions in
portfolio securities. In executing transactions, Gabelli Funds
seeks to obtain the best price and execution for the Equity
Trust, taking into account such factors as price, size of order,
difficulty of execution and operational facilities of the firm
involved and the firm&#146;s risk in positioning a block of
securities. While Gabelli Funds generally seeks reasonably
competitive commission rates, the Equity Trust does not
necessarily pay the lowest commission available.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to obtaining the best price and execution, brokers who
provide supplemental research, market and statistical
information to Gabelli Funds or its affiliates may receive
orders for transactions by the Equity
</DIV>

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<DIV align="left" style="font-size: 10pt;">
Trust. The term &#147;research, market and statistical
information&#148; includes advice as to the value of securities,
and advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or
sellers of securities, and furnishing analyses and reports
concerning issues, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts.
Information so received will be in addition to and not in lieu
of the services required to be performed by Gabelli Funds under
the Investment Advisory Agreement and the expenses of Gabelli
Funds will not necessarily be reduced as a result of the receipt
of such supplemental information. Such information may be useful
to Gabelli Funds and its affiliates in providing services to
clients other than the Equity Trust, and not all such
information is used by Gabelli Funds in connection with the
Equity Trust. Conversely, such information provided to Gabelli
Funds and its affiliates by brokers and dealers through whom
other clients of Gabelli Funds and its affiliates effect
securities transactions may be useful to Gabelli Funds in
providing services to the Equity Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although investment decisions for the Equity Trust are made
independently from those of the other accounts managed by
Gabelli Funds and its affiliates, investments of the kind made
by the Equity Trust may also be made by those other accounts.
When the same securities are purchased for or sold by the Equity
Trust and any of such other accounts, it is the policy of
Gabelli Funds and its affiliates to allocate such purchases and
sales in the manner deemed fair and equitable to all of the
accounts, including the Equity Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Decisions to buy and sell securities
for Sterling Capital are made by its Investment Committee,
pursuant to policies approved by its Board of Directors, which
periodically reviews investment decisions. The officers and
Investment Committee of Sterling Capital are also responsible
for placing orders for the purchase and sale of securities and
placing its brokerage business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Dividend Reinvestment Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The Equity Trust.</I> Under the Equity Trust&#146;s Automatic
Dividend Reinvestment and Voluntary Cash Purchase Plan (the
&#147;Plan&#148;), a stockholder whose shares of Equity Trust
Common Stock are registered in his own name will have all
distributions reinvested automatically by EquiServe Trust
Company (&#147;EquiServe&#148;), which is agent under the Plan,
unless the stockholder elects to receive cash. Distributions
with respect to shares registered in the name of a broker-dealer
or other nominee (that is, in &#147;street name&#148;) will be
reinvested by the broker or nominee in additional shares under
the Plan, unless the service is not provided by the broker or
nominee or the stockholder elects to receive distributions in
cash. Investors who own Equity Trust Common Stock registered in
street name should consult their broker-dealers for details
regarding reinvestment. All distributions to investors who do
not participate in the Plan will be paid by check mailed
directly to the record holder by EquiServe as dividend
disbursing agent.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Plan, whenever the market price of Equity Trust Common
Stock is equal to or exceeds net asset value at the time shares
are valued for purposes of determining the number of shares
equivalent to the cash dividend or capital gains distribution,
participants in the Plan are issued shares of Equity Trust
Common Stock, valued at the greater of (i)&nbsp;the net asset
value as most recently determined or (ii)&nbsp;95% of the
then-current market price of the Equity Trust Common Stock. The
valuation date is the dividend or distribution payment date or,
if that date is not a NYSE trading day, the next preceding
trading day. If the net asset value of the Equity Trust Common
Stock at the time of valuation exceeds the market price of the
Common Stock, participants will receive shares from the Equity
Trust, valued at market price. If the Equity Trust should
declare a dividend or capital gains distribution payable only in
cash, EquiServe will purchase the Equity Trust Common Stock for
such Plan in the open market, on the NYSE or elsewhere, for the
participants&#146; accounts, except that EquiServe will endeavor
to terminate purchases in the open market and cause the Equity
Trust to issue shares at the greater of net asset value or 95%
or market value if, following the commencement of such
purchases, the market value of the Common Stock exceeds net
asset value.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Participants in the Plan have the option of making additional
cash payments to EquiServe, semi-monthly, for investment in the
shares as applicable. Such payments may be made in any amount
from $250 to $10,000. EquiServe will use all funds received from
participants to purchase shares of Equity Trust Common Stock in
the open market on or about the 1st and 15th of each month.
EquiServe will charge each stockholder who participates $0.75,
plus a pro rata share of the brokerage commissions. Brokerage
charges for such purchases
</DIV>


<P align="center" style="font-size: 10pt;">37

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<DIV align="left" style="font-size: 10pt;">
are expected to be less than the usual brokerage charge for such
transactions. It is suggested that participants send voluntary
cash payments to EquiServe in a manner that ensures that
EquiServe will receive these payments approximately 10&nbsp;days
before the 1st and 15th of the month. A participant may without
charge withdraw a voluntary cash payment by written notice, if
the notice is received by EquiServe at least 48&nbsp;hours
before such payment is to be invested.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EquiServe maintains all stockholder accounts in the Plan and
furnishes written confirmations of all transactions in the
account, including information needed by stockholders for
personal and tax records. Shares in the account of each Plan
participant will be held by EquiServe in noncertificated form in
the name of the participant. A Plan participant may send its
share certificates to EquiServe so that the shares represented
by such certificates will be held by EquiServe in the
participant&#146;s stockholder account under the Plan. In the
case of stockholders such as banks, brokers or nominees, which
hold shares for others who are the beneficial owners, EquiServe
will administer the Plan on the basis of the number of shares
certified from time to time by the stockholder as representing
the total amount registered in the stockholder&#146;s name and
held for the account of beneficial owners who participate in the
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Experience under the Plan may indicate that changes are
desirable. Accordingly, the Equity Trust reserves the right to
amend or terminate its Plan as applied to any voluntary cash
payments made and any dividend or distribution paid subsequent
to written notice of the change sent to the members of such Plan
at least 90&nbsp;days before the record date for such dividend
or distribution. The Plan also may be amended or terminated by
EquiServe on at least 90&nbsp;days written notice to the
participants in such Plan. All correspondence concerning the
Plan should be directed to EquiServe at P.O. Box&nbsp;43010,
Providence, RI 02940-3010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sterling Capital.</I> Sterling Capital does not have a
dividend reinvestment plan.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='110'></A>
</DIV>

<!-- link1 "COMPARISON OF ORGANIZATIONAL STRUCTURE OF THE EQUITY TRUST AND STERLING CAPITAL" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPARISON OF ORGANIZATIONAL STRUCTURE OF</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>THE EQUITY TRUST AND STERLING CAPITAL</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital is organized as a New York corporation and the
Equity Trust is organized as a Maryland corporation. Key
differences between the Funds&#146; articles of incorporation
and by-laws are discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Sterling Capital</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The full text of Sterling Capital&#146;s Certificate of
Incorporation (the &#147;Certificate&#148;) and By-Laws are on
file with the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Indemnification of Directors and Officers.</I> Sterling
Capital&#146;s Certificate provides that Sterling Capital, to
the fullest extent permitted by law, may indemnify its current
and former Directors, officers and employees against reasonable
expenses incurred in connection with an action by or in the
right of Sterling Capital to procure a judgment in its favor in
which they may be involved because of their offices or
association with Sterling Capital. The Certificate does not
permit indemnification in connection with any such matter to
which such person would otherwise be subject if such person is
adjudicated to not have performed his or her duties in good
faith and with that degree of care which an ordinarily prudent
person in a like position would use under similar circumstances.
Indemnification is also unavailable in connection with such
matters for amounts paid in settling or otherwise disposing of a
threatened action, or a pending action, with or without court
approval, or expenses incurred in defending a threatened action,
or a pending action which is settled or otherwise disposed of,
without court approval. In addition, the Certificate does not
permit indemnification of Sterling Capital&#146;s Directors and
officers in connection with such matters if they acted with
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
person&#146;s office.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital&#146;s Certificate also provides that Sterling
Capital, to the fullest extent permitted by law, may indemnify
its current and former Directors, officers and employees against
judgments, fines, amounts paid in settlement and reasonable
expenses incurred in connection with an action in which they may
be involved because of their offices or association with
Sterling Capital, other than an action by or in the right of
Sterling Capital to procure a judgment in its favor, if such
person acted in good faith for a purpose which such person
reasonably believed to be in the best interest of Sterling
Capital and, in addition, with respect to
</DIV>

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<DIV align="left" style="font-size: 10pt;">
criminal actions or proceedings, such person had no reasonable
cause to believe that such person&#146;s conduct was unlawful.
In connection with the foregoing, the termination of any civil
or criminal action or proceeding by a judgment, settlement,
conviction or plea of nolo contendere, or its equivalent, shall
not in itself create a presumption that a person did not act in
good faith for a purpose which such person reasonably believed
to be in the best interests of Sterling Capital or that such
person had reasonable cause to believe that such person&#146;s
conduct was unlawful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A person who has been wholly successful, on the merits or
otherwise, in the defense of a civil or criminal action or
proceeding shall be entitled to indemnification as discussed
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital is a New York corporation. New York law does
not permit indemnification of present or former Directors,
officers or employees in connection with any threatened or
pending action by or in the right of Sterling Capital to procure
a judgment in its favor to which such person may be made a party
by reason of his or her service to Sterling Capital
(i)&nbsp;which is settled or otherwise disposed of or
(ii)&nbsp;as to which such person shall be adjudged to be liable
to Sterling Capital, unless and only to the extent that the
court on which such action was brought, or, if no action was
brought, any court with jurisdiction, determines that, in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such portion of the
settlement amount and expenses as the court deems proper. In
addition, New York law prohibits indemnification of Directors
and officers if a judgment or other final adjudication adverse
to the Director or officer establishes that such person&#146;s
acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of
action so adjudicated, or that such person personally gained in
fact a financial profit or other advantage to which such person
was not legally entitled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Certificate permits Sterling Capital to advance reasonable
expenses to current or former Directors, officers and employees
in connection with the defense by any such person of a civil or
criminal action, subject to repayment to Sterling Capital by
such person if it is ultimately found such person was not
entitled to such indemnification or to the extent any advances
exceed the indemnification to which such person is entitled,
provided that one of the following conditions is met: (i)&nbsp;a
majority of the Directors of Sterling Capital present at a
meeting at which one-third of the Directors of Sterling Capital
not party to the action or proceeding are present determines
that the person seeking indemnity meets the applicable standard
of conduct for indemnification; (ii)&nbsp;the Board obtains a
written opinion of independent legal counsel which states that
indemnification is proper in the circumstances because the
person seeking indemnification has met the applicable standard
of conduct for indemnification; (iii)&nbsp;the shareholders of
Sterling Capital find that the person seeking indemnification
has met the applicable standard of conduct for indemnification;
or (iv)&nbsp;a court has ordered such expenses to be advanced to
such person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sterling Capital&#146;s Certificate requires that, upon payment
of any amount in indemnification of a person as described above,
other than pursuant to court order or shareholder action, that
shareholders be notified of the facts and circumstances related
to such payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Voting Rights of Common Stock.</I> The shareholders of
Sterling Capital have one vote per share of common stock held by
such shareholder on all matters submitted to the shareholders
for action. Sterling Capital does not have any preferred stock
outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Dividends and Distributions to Holders of Common Stock.</I>
Other than restrictions imposed on Sterling Capital by the 1940
Act or applicable New York law, there are no restrictions on the
ability of Sterling Capital to pay a duly declared dividend to
the holders of its common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Equity Trust</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The full text of the Equity Trust&#146;s Articles of
Incorporation and Articles&nbsp;Supplementary (collectively, the
&#147;Charter&#148;) and By-Laws are on file with the SEC and
these documents, as may be amended from time to time, will
govern the Equity Trust after the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Indemnification of Directors and Officers.</I> The Equity
Trust&#146;s By-Laws provide that the Equity Trust, to the
fullest extent permitted by law, will indemnify its current and
former Directors and officers and may indemnify its employees or
agents against liabilities and expenses incurred in connection
with litigation in
</DIV>

<P align="center" style="font-size: 10pt;">39

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<DIV align="left" style="font-size: 10pt;">
which they may be involved because of their offices or
association with the Equity Trust. The By-Laws do not permit
indemnification against any liability to which such person would
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office. Maryland law does not permit
indemnification of present or former directors, officers,
employees or agents in connection with any proceeding to which
they may be made a party by reason of their service to the
Equity Trust if (i)&nbsp;the act or omission of such person or
entity was material to the matter giving rise to the proceeding
and (a)&nbsp;was committed in bad faith; or (b)&nbsp;was the
result of active and deliberate dishonesty; (ii)&nbsp;such
person or entity actually received an improper personal benefit
in money, property or services; or (iii)&nbsp;in the case of any
criminal proceeding, such person or entity had reasonable cause
to believe that the act or omission was unlawful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Maryland law, the Equity Trust is not permitted to
indemnify for an adverse judgment in a suit by or in the right
of the Equity Trust for a judgment of liability on the basis
that personal benefit was improperly received, unless in either
case a court orders indemnification and then only for expenses.
The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent or an entry of an order of
probation prior to judgment creates a rebuttable presumption
that the director, officer, employee or agent did not meet the
requisite standard of conduct required for permitted
indemnification. The termination of any proceeding by judgment,
order or settlement, however, does not create such a presumption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The By-Laws and Maryland law permit the Equity Trust to advance
reasonable expenses to current or former Directors, officers,
employees and agents upon the Equity Trust&#146;s receipt of a
written affirmation by such person or entity of its good faith
belief that it has met the standard of conduct necessary for
indemnification by the Equity Trust, and a written undertaking
by such person or entity (or on its behalf) to repay the amount
paid or reimbursed by the Equity Trust if it is ultimately
determined that such person or entity did not meet the requisite
standard of conduct. The By-Laws further require that one of the
following conditions must also be met to advance payment of
expenses: (i)&nbsp;the person or entity seeking indemnification
shall provide a security in the form and amount acceptable to
the Equity Trust for its undertaking; (ii)&nbsp;the Equity Trust
is insured against losses arising by reason of the advance;
(iii)&nbsp;approval by a majority of a quorum of the Directors
of the Equity Trust who are neither &#147;interested
persons&#148; as defined by Section&nbsp;2(a)(19) of the 1940
Act nor parties to the proceeding, or (iv)&nbsp;a written
opinion of independent legal counsel, based on a review of the
facts readily available to the Equity Trust at the time the
advance is proposed to be made, to the effect that there is
reason to believe that the person or entity seeking
indemnification will ultimately be found to be entitled to
indemnification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Maryland law permits a Maryland corporation to include in its
charter a provision limiting the liability of its directors and
officers to the corporation and its stockholders for money
damages except for liability resulting from actual receipt of an
improper benefit or profit in money, property or services or
active and deliberate dishonesty established by final judgment
as being material to the cause of action. The Equity
Trust&#146;s Charter provides for such a limitation, except to
the extent such exemption is not permitted by the 1940 Act, as
amended from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Voting Rights of Common Stock and Preferred Stock.</I> The
holders of the Equity Trust&#146;s cumulative preferred stock
have voting rights equivalent to those of the holders of Equity
Trust Common Stock (one vote per share) and will vote together
with holders of shares of Equity Trust Common Stock as a single
class. In addition, the 1940 Act requires that along with
approval of a majority of the holders of Equity Trust Common
Stock, approval of a majority, as defined in the 1940 Act, of
the holders of any outstanding shares of cumulative preferred
stock, voting separately as a class, would be required to
(a)&nbsp;adopt any plan of reorganization that would adversely
affect the cumulative preferred stock, and (b)&nbsp;take any
action requiring a vote of security holders under
Section&nbsp;13(a) of the 1940 Act, including, among other
things, changes in the Equity Trust&#146;s subclassification as
a closed-end investment company or changes in its investment
objectives or fundamental investment restrictions. Under the
Equity Trust&#146;s Charter and the 1940 Act, holders of the
Equity Trust&#146;s outstanding preferred stock, voting as a
separate class, are entitled to elect two Directors, and holders
of outstanding Equity Trust Common Stock and preferred stock,
voting together as a single class, are entitled to elect the
remaining Directors, subject to the provisions of the 1940 Act
and the Equity Trust&#146;s Charter and By-Laws. The holders of
the Equity Trust&#146;s outstanding preferred stock would be
entitled to elect the minimum number of additional Directors
that would represent a majority of the Directors in the event
that
</DIV>

<P align="center" style="font-size: 10pt;">40

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<DIV align="left" style="font-size: 10pt;">
dividends on the Equity Trust&#146;s preferred stock are in
arrears for two full years. No dividend arrearages exist at this
time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Dividends and Distributions to Holders of Common Stock and
Preferred Stock.</I> Dividends on shares of the Equity Trust
cumulative preferred stock are cumulative. The Equity Trust is
required to meet certain asset coverage tests as required by the
1940 Act and by the Charter with respect to the cumulative
preferred stock. If the Equity Trust fails to meet these
requirements and does not correct such failure, the Equity Trust
may be required to redeem, in part or in full, the 7.20%
Series&nbsp;B, Series&nbsp;C Auction Rate, 5.875% Series&nbsp;D,
and Series&nbsp;E Auction Rate Cumulative Preferred Stock at a
redemption price of $25, $25,000, $25, and $25,000,
respectively, per share plus an amount equal to the accumulated
and unpaid dividends whether or not declared on such shares in
order to meet these requirements. Additionally, failure to meet
the foregoing asset requirements could restrict the Equity
Trust&#146;s ability to pay distributions to holders of its
Common Stock and could lead to sales of portfolio securities at
inopportune times. The income received on the Equity
Trust&#146;s assets may vary in a manner unrelated to the fixed
and variable rates, which could have either a beneficial or
detrimental impact on net investment income and gains available
to holders of its Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Anti-Takeover Provisions of the Charter and By-Laws.</I> The
Equity Trust presently has provisions in its Charter and By-Laws
which could have the effect of limiting, in each case:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the ability of other entities or persons to acquire control of
    the Equity Trust;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the Equity Trust&#146;s freedom to engage in certain
    transactions;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the ability of the Equity Trust&#146;s Directors or stockholders
    to amend the Charter and By-Laws or effectuate changes in its
    management.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
These provisions may be regarded as &#147;anti-takeover&#148;
provisions. The Board of Directors of the Equity Trust is
divided into three classes, each having a term of three years.
Each year the term of one class of Directors will expire.
Accordingly, only those Directors in one class may be changed in
any one year, and it would require two years to change a
majority of the Board of Directors. Such system of electing
Directors may have the effect of maintaining the continuity of
management and, thus, make it more difficult for the
stockholders of the Equity Trust to change the majority of
Directors. A Director of the Equity Trust may be removed only
for cause and by a vote of a majority of the votes entitled to
be cast for the election of Directors. In addition, the
affirmative vote of the holders of two-thirds of the Equity
Trust&#146;s outstanding shares of each class (voting
separately) is required to authorize the conversion of the
Equity Trust from a closed-end to an open-end investment company
or generally to authorize any of the following transactions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the merger or consolidation of the Equity Trust with any entity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the issuance of any securities of the Equity Trust for cash to
    any entity or person;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the sale, lease or exchange of all or any substantial part of
    the assets of the Equity Trust to any entity or person (except
    assets having an aggregate fair market value of less than
    $1,000,000);&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the sale, lease or exchange to the Equity Trust, in exchange for
    its securities, of any assets of any entity or person (except
    assets having an aggregate fair market value of less than
    $1,000,000);</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
if such corporation, person or entity is directly, or indirectly
through affiliates, the beneficial owner of more than 5% of the
outstanding shares of any class of capital stock of the Equity
Trust. However, such vote would not be required when, under
certain conditions, the Board of Directors approves the
transaction. Further, unless a higher percentage is provided for
under the Charter, the affirmative vote of a majority (as
defined in the 1940 Act) of the votes entitled to be cast by
holders of outstanding shares of the Equity Trust&#146;s
preferred stock, voting as a separate class, will be required to
approve any plan of reorganization adversely affecting such
stock or any action requiring a vote of security holders under
Section&nbsp;13(a) of the 1940 Act, including, among other
things, changing the Equity Trust&#146;s subclassification as a
closed-end investment company, changing the Equity Trust&#146;s
investment objectives or changing its fundamental investment
restrictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Maryland corporations that are subject to the Securities
Exchange Act of 1934 and have at least three outside directors,
such as the Equity Trust, may by board resolution elect to
become subject to certain
</DIV>

<P align="center" style="font-size: 10pt;">41
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<DIV align="left" style="font-size: 10pt;">
corporate governance provisions set forth in the Maryland
corporate law, even if such provisions are inconsistent with the
corporation&#146;s charter and by-laws. Accordingly,
notwithstanding its Charter or By-Laws, under Maryland law the
Equity Trust&#146;s Board of Directors may elect by resolution
to, among other things:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    require that special meetings of stockholders be called only at
    the request of stockholders entitled to cast at least a majority
    of the votes entitled to be cast at such meeting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    reserve for the Board the right to fix the number of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provide that directors are subject to removal only by the vote
    of the holders of two-thirds of the stock entitled to
    vote;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    retain for the Board sole authority to fill vacancies created by
    the death, removal or resignation of a director, with any
    director so appointed to serve for the balance of the unexpired
    term rather than only until the next annual meeting of
    stockholders.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board may make any of the foregoing elections without
amending the Equity Trust&#146;s Charter or By-Laws and without
stockholder approval. Though a corporation&#146;s charter or a
resolution by its board may prohibit its directors from making
the elections set forth above, the Equity Trust&#146;s Board
currently is not prohibited from making any such elections.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The provisions of the Charter and By-Laws described above could
have the effect of depriving the owners of shares in the Equity
Trust of opportunities to sell their shares at a premium over
prevailing market prices, by discouraging a third party from
seeking to obtain control of the Equity Trust in a tender offer
or similar transaction. The overall effect of these provisions
is to render more difficult the accomplishment of a merger or
the assumption of control by a principal stockholder. The Board
of Directors has determined that the foregoing voting
requirements, which are generally greater than the minimum
requirements under Maryland law and the 1940 Act, are in the
best interests of the stockholders generally.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='111'></A>
</DIV>

<!-- link1 "MANAGEMENT OF THE FUNDS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MANAGEMENT OF THE FUNDS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>The Equity Trust</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The business and affairs of the Equity Trust are managed under
the direction of its Board of Directors, and the day-to-day
operations are conducted through or under the direction of its
officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Directors and Executive Officers of the Equity Trust are as
follows:
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Term of Office</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Funds in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and Length</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Complex</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Other</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name, Position(s),</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>of Time</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Overseen by</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Occupation(s) During</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Directorships Held</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Address and Age(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Served(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Director</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Past Five Years</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>by Director</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Interested Directors:</B>(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Mario J. Gabelli Director and Chief Investment Officer<BR>
    Age: 63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1986**</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board, Chief Executive Officer of Gabelli Asset
    Management Inc. and Chief Investment Officer&nbsp;&#151; Value
    Portfolios of Gabelli Funds, LLC and GAMCO Investors, Inc.; Vice
    Chairman and Chief Executive Officer of Lynch Interactive
    Corporation (multimedia and services)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of Morgan Group Holdings, Inc. (holding company)</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">42

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Term of Office</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Funds in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and Length</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Complex</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Other</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name, Position(s),</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>of Time</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Overseen by</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Occupation(s) During</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Directorships Held</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Address and Age(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Served(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Director</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Past Five Years</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>by Director</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Karl Otto P&#246;hl Director<BR>
    Age: 75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1992*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Member of the Shareholder Committee of Sal. Oppenheim
    Jr.&nbsp;&#38; Cie, Zurich (private investment bank); Former
    President of the Deutsche Bundesbank and Chairman of its Central
    Bank Council (1980-1991)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of Gabelli Asset Management Inc. (investment management); Chairman, InCentive Capital AG and InCentive Asset Management AG (Zurich); Director of Sal. Oppenheim Jr.&nbsp;&#38; Cie, Zurich (private investment bank)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Non-Interested Directors:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Thomas E. Bratter<BR>
    Director<BR>
    Age: 66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1986**</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director, President and Founder, The John Dewey Academy
    (residential college preparatory therapeutic high school)</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>None</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Anthony J. Colavita(4) Director<BR>
    Age: 69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1999***</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Partner in the law firm of Anthony J. Colavita,&nbsp;P.C.</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>None</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    James P. Conn(4)<BR>
    Director<BR>
    Age: 67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1989*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Former Managing Director and Chief Investment Officer of
    Financial Security Assurance Holdings Ltd. (insurance holding
    company) (1992-1998)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of LaQuinta Corp. (hotels) and First Republic Bank (banking)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Frank J. Fahrenkopf,&nbsp;Jr. Director<BR>
    Age: 65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1998***</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President and Chief Executive Officer of the American Gaming
    Association; Partner in the law firm of Hogan&nbsp;&#38;
    Hartson; Co-Chairman of the Commission on Presidential Debates;
    Former Chairman of the Republican National Committee</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of First Republic Bank (banking)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Arthur V. Ferrara<BR>
    Director<BR>
    Age: 74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 2001**</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Former Chairman of the Board and Chief Executive Officer of The
    Guardian Life Insurance Company of America (1993-1995);
    President, Chief Executive Officer and a Director prior thereto</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of The Guardian Life Insurance Company of America and 5 mutual funds within the Guardian Fund Complex</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">43
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Term of Office</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Funds in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and Length</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Complex</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Other</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name, Position(s),</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>of Time</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Overseen by</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Occupation(s) During</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Directorships Held</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Address and Age(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Served(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Director</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Past Five Years</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>by Director</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Anthony R. Pustorino<BR>
    Director<BR>
    Age: 80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1986*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certified Public Accountant; Professor Emeritus, Pace University</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of Lynch Corporation (diversified manufacturing)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Salvatore J. Zizza Director<BR>
    Age: 59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1986***</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman, Hallmark Electrical Supplies Corp.</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">Director of Hollis Eden Pharmaceuticals and Earl Scheib, Inc. (automotive services)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Officers:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Bruce N. Alpert<BR>
    President and Treasurer<BR>
    Age: 53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President and Chief Operating Officer of Gabelli
    Funds, LLC since 1988. Director and President of Gabelli
    Advisers, Inc. since 1988. Officer of all the registered
    investment companies in the Gabelli fund complex.</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Carter W. Austin Vice President<BR>
    Age: 38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 2000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice President of Gabelli Funds, LLC since 1996. Vice President
    of Gabelli Dividend&nbsp;&#38; Income Trust since 2003.</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Dawn M. Donato<BR>
    Assistant Vice<BR>
    President<BR>
    Age: 37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Assistant Vice President of Gabelli Funds, LLC since 2004.
    Registered Representative for Gabelli&nbsp;&#38; Company, Inc.
    since 2002; Senior Sales Representative for Manulife Wood Logan,
    Inc. prior to 2002.</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">44

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Term of Office</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Funds in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and Length</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Complex</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Other</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name, Position(s),</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>of Time</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Overseen by</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Occupation(s) During</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Directorships Held</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Address and Age(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Served(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Director</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Past Five Years</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>by Director</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Peter D. Goldstein<BR>
    Chief Compliance<BR>
    Officer<BR>
    Age: 51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Director of Regulatory Affairs for Gabelli Asset Management Inc.
    since 2004. Chief Compliance Officer of all the registered
    investment companies in the Gabelli fund complex. Vice President
    of Goldman Sachs Asset Management from 2000-2004; Deputy General
    Counsel of Gabelli Asset Management Inc. from 1998- 2000</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    James E. McKee<BR>
    Secretary<BR>
    Age: 42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>Since 1995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice President, General Counsel and Secretary of Gabelli Asset
    Management Inc. since 1999 and GAMCO Investors, Inc. since 1993;
    Secretary of all the registered investment companies in the
    Gabelli fund complex</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Address: One&nbsp;Corporate Center, Rye, NY 10580-1422, unless
    otherwise noted.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Equity Trust&#146;s Board of Directors is divided into three
    classes, each class having a term of three years. Each year the
    term of office of one class expires and the successor or
    successors elected to such class serve for a three-year term.
    The three year term for each class is as follows:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;</TD>
    <TD align="left">
    Term continues until the Equity Trust&#146;s 2006 Annual Meeting
    of Shareholders and until their successors are duly elected and
    qualified.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="6%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**&nbsp;</TD>
    <TD align="left">
    Term continues until the Equity Trust&#146;s 2007 Annual Meeting
    of Shareholders and until their successors are duly elected and
    qualified.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="7%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***&nbsp;</TD>
    <TD align="left">
    Term continues until the Equity Trust&#146;s 2008 Annual Meeting
    of Shareholders and until their successors are duly elected and
    qualified.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">
    Each officer will hold office for an indefinite term until the
    date he or she resigns or retires or until his or her successor
    is elected and qualified.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    &#147;Interested person&#148; of the Equity Trust as defined in
    the 1940 Act. Messrs.&nbsp;Gabelli and P&#246;hl are each
    considered an &#147;interested person&#148; because of their
    affiliation with Gabelli Funds, the Equity Trust&#146;s
    investment adviser.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    As a Director, elected solely by holders of the Equity
    Trust&#146;s Preferred Stock.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Non-resident Director.</I> Karl Otto P&#246;hl, a director of
the Equity Trust, resides outside the United States and all or a
significant portion of his assets are located outside the United
States. Mr.&nbsp;P&#246;hl does not have an authorized agent in
the United States to receive service of process. As a result, it
may not be possible for investors to effect service of process
within the United States or to enforce against
Mr.&nbsp;P&#246;hl in United States courts judgments predicated
upon civil liability provisions of United States securities
laws. It may also not be
</DIV>

<P align="center" style="font-size: 10pt;">45
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
possible to enforce against Mr.&nbsp;P&#246;hl in foreign courts
judgments of United States courts or liabilities in original
actions predicated upon civil liability provisions of the United
States securities laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Investment Management.</I> Gabelli Funds, located at One
Corporate Center, Rye, New York 10580-1422, serves as the
investment adviser to the Equity Trust pursuant to an investment
advisory agreement. Gabelli Funds was organized in 1999 and is
the successor to Gabelli Funds, Inc., which was organized in
1980. As of June&nbsp;30, 2005, Gabelli Funds acted as
registered investment adviser to 28 management investment
companies with aggregate net assets of $12.8&nbsp;billion.
Gabelli Funds, together with other affiliated investment
advisers, had assets under management totaling approximately
$27.6&nbsp;billion as of June&nbsp;30, 2005. GAMCO Investors,
Inc., an affiliate of Gabelli Funds, acts as investment adviser
for individuals, pension trusts, profit sharing trusts and
endowments, and as a sub-adviser to management investment
companies having aggregate assets of $13.2&nbsp;billion under
management as of June&nbsp;30, 2005. Gabelli Fixed Income LLC,
an affiliate of Gabelli Funds, acts as investment adviser for
The Treasurer&#146;s Fund and separate accounts having aggregate
assets of approximately $400&nbsp;million under management as of
June&nbsp;30, 2005. Gabelli Advisers, Inc., an affiliate of
Gabelli Funds, acts as investment manager to the Westwood Funds
having aggregate assets of approximately $400&nbsp;million under
management as of June&nbsp;30, 2005.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gabelli Funds is a wholly-owned subsidiary of Gabelli Asset
Management Inc., a New York corporation, whose Class&nbsp;A
Common Stock is traded on the NYSE under the symbol
&#147;GBL.&#148; Mr.&nbsp;Mario J. Gabelli may be deemed a
&#147;controlling person&#148; of Gabelli Funds on the basis of
his ownership of a majority of the stock of Gabelli Group
Capital Partners, Inc., which owns a majority of the capital
stock of Gabelli Asset Management Inc.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gabelli Funds has sole investment discretion for the Equity
Trust&#146;s assets under the supervision of the Equity
Trust&#146;s Board of Directors and in accordance with the
Equity Trust&#146;s stated policies. Gabelli Funds will select
investments for the Equity Trust and will place purchase and
sale orders on behalf of the Equity Trust. For information about
the Equity Trust&#146;s investment advisory fees, including
amounts paid for the year ended December&nbsp;31, 2004, see
&#147;Synopsis&nbsp;&#151; Investment Adviser and Fee
Information&nbsp;&#151; The Equity Trust.&#148;
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following chart sets forth information with respect to name,
address and principal occupations of the executive officer(s)
and managing member(s) of Gabelli Funds. (Unless otherwise
noted, the person&#146;s position at Gabelli Funds constitutes
his principal occupation.) Each person&#146;s address is
One&nbsp;Corporate Center, Rye, New&nbsp;York 10580-1422.
</DIV>



<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Position with Gabelli</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal Occupation</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gabelli Asset Management Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Sole member</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    N/A</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mario J. Gabelli</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Investment Officer&nbsp;&#151; Value Portfolios</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    See above.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bruce N. Alpert</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President and Chief Operating Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    See above.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    James E. McKee</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Secretary</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    See above.</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Peter D. Goldstein</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Compliance Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    See above.</TD>
</TR>

</TABLE>
</CENTER>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Portfolio Manager Information.</I> It is anticipated that
Mr.&nbsp;Mario&nbsp;J. Gabelli will continue as the Equity
Trust&#146;s portfolio manager after the Reorganization.
Additionally, Mr.&nbsp;Caesar M.P. Bryan manages approximately
$76&nbsp;million of the Equity Trust&#146;s assets as of
June&nbsp;30, 2005. The information below lists other accounts
</DIV>


<P align="center" style="font-size: 10pt;">46
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
for which Mr.&nbsp;Gabelli and Mr.&nbsp;Bryan were primarily
responsible for the day-to-day management during the fiscal year
ended December&nbsp;31, 2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accounts Managed</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Assets</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with Advisory Fee</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with Advisory</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Based on</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fee Based on</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name of Portfolio Manager</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Types of Accounts</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accounts&nbsp;Managed</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Assets</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Performance</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Performance</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mario&nbsp;J. Gabelli</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Registered Investment Companies</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>11.1B*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>493.8M*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Other Pooled Investment Vehicles</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>707.7M*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>707.7M*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Other Accounts</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>9.9B</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>1.2B</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accounts Managed</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Assets</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with Advisory Fee</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with Advisory</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Based on</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fee Based on</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name of Portfolio Manager</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Types of Accounts</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accounts&nbsp;Managed</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Assets</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Performance</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Performance</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Caesar M.P. Bryan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Registered Investment Companies</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>$409.1M*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Other Pooled Investment Vehicles</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>$26.9M*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>26.9M*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Other Accounts</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>$1.6M</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
* Represents the portion of assets for which the portfolio
manager has primary responsibility in the accounts indicated.
The accounts indicated may contain additional assets under the
primary responsibility of other portfolio managers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Potential Conflicts of Interest.</I> Actual or apparent
conflicts of interest may arise when the portfolio manager also
has day-to-day management responsibilities with respect to one
or more other accounts. These potential conflicts include:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Allocation of Limited Time and Attention.</B> Because the
portfolio manager manages many accounts, he may not be able to
formulate as complete a strategy or identify equally attractive
investment opportunities for each of those accounts as if he
were to devote substantially more attention to the management of
only a few accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Allocation of Limited Investment Opportunities.</B> If the
portfolio manager identifies an investment opportunity that may
be suitable for multiple accounts, the Equity Trust may not be
able to take full advantage of that opportunity because the
opportunity may need to be allocated among all or many of these
accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Pursuit of Differing Strategies.</B> At times, the portfolio
manager may determine that an investment opportunity may be
appropriate for only some of the accounts for which he exercises
investment responsibility, or may decide that certain of these
accounts should take differing positions with respect to a
particular security. In these cases, the portfolio manager may
execute differing or opposite transactions for one or more
accounts which may affect the market price of the security or
the execution of the transactions, or both, to the detriment of
one or more of his accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Selection of Broker/ Dealers.</B> Because of the portfolio
manager&#146;s position with the distributor of funds affiliated
with the Equity Trust and his indirect majority ownership
interest in such distributor, he may have an incentive to use
the distributor to execute portfolio transactions for the Equity
Trust even if using the distributor is not in the best interest
of the Equity Trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Variation in Compensation.</B> A conflict of interest may
arise where the financial or other benefits available to the
portfolio manager differ among the accounts that he manages. If
the structure of Gabelli Funds&#146; management fee or the
portfolio manager&#146;s compensation differs among accounts
(such as where certain funds or accounts pay higher management
fees or performance-based management fees), the portfolio
manager may be motivated to favor certain funds or accounts over
others. The portfolio manager also may be motivated to favor
funds or accounts in which he has an investment interest, or in
which Gabelli Funds or its affiliates have investment
</DIV>

<P align="center" style="font-size: 10pt;">47
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<DIV align="left" style="font-size: 10pt;">
interests. In Mr.&nbsp;Gabelli&#146;s case, Gabelli Funds&#146;
compensation (and expenses) for the Equity Trust is marginally
greater as a percentage of assets than for certain other
accounts and is less than for certain other accounts managed by
Mr.&nbsp;Gabelli, while his personal compensation structure
varies with near-term performance to a greater degree in certain
performance fee-based accounts than with non-performance-based
accounts. In addition, he has investment interests in several of
the funds managed by Gabelli Funds and its affiliates. Gabelli
Funds and the Equity Trust have adopted compliance policies and
procedures that are designed to address the various conflicts of
interest that may arise for Gabelli Funds and its staff members.
However, there is no guarantee that such policies and procedures
will be able to detect and address every situation in which an
actual or potential conflict may arise. In Mr.&nbsp;Bryan&#146;s
case, his compensation is not affected by changes in assets of
the Equity Trust while it is for other accounts that he manages.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Compensation Structure.</B> Mr.&nbsp;Gabelli receives
incentive-based variable compensation based on a percentage of
net revenues received by Gabelli Funds for managing the Equity
Trust. Net revenues are determined by deducting from gross
investment management fees the firm&#146;s expenses (other than
Mr.&nbsp;Gabelli&#146;s compensation) allocable to the Equity
Trust. Additionally, he receives similar incentive-based
variable compensation for managing other accounts within the
firm. This method of compensation is based on the premise that
superior long-term performance in managing a portfolio should be
rewarded with higher compensation as a result of growth of
assets through appreciation and net investment activity. One of
the other registered investment companies managed by
Mr.&nbsp;Gabelli has a performance (fulcrum)&nbsp;fee
arrangement for which his compensation is adjusted up or down
based on the performance of the investment company relative to
an index. Mr.&nbsp;Gabelli manages other accounts with
performance fees. Compensation for managing these accounts has
two components. One component of the fee is based on a
percentage of net revenues received by Gabelli Funds for
managing the account. The second component is based on absolute
performance of the account, with respect to which a percentage
of such performance fee is paid to Mr.&nbsp;Gabelli. As an
executive officer of Gabelli Funds&#146; parent company, Gabelli
Asset Management Inc., Mr.&nbsp;Gabelli also receives ten
percent of the net operating profits of the parent company.
Mr.&nbsp;Gabelli receives no base salary, no annual bonus and no
stock options.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The compensation of portfolio managers in the Gabelli
organization is structured to enable it to attract and retain
highly qualified professionals in a competitive environment.
Mr.&nbsp;Bryan receives a compensation package that includes a
minimum draw or base salary, equity-based incentive compensation
via awards of stock options, and incentive-based variable
compensation based on a percentage of net revenues received by
Gabelli Funds for managing certain accounts other than the
Equity Trust to the extent that the amount exceeds a minimum
level of compensation. Net revenues are determined by deducting
from gross investment management fees certain of the firm&#146;s
expenses (other than Mr.&nbsp;Bryan&#146;s compensation)
allocable to such other accounts. This method of compensation is
based on the premise that superior long-term performance in
managing a portfolio should be rewarded with higher compensation
as a result of growth of assets through appreciation and net
investment activity. Equity-based incentive compensation is
based on an evaluation by Gabelli Funds&#146; parent, Gabelli
Asset Management Inc., of quantitative and qualitative
performance evaluation criteria.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Bryan&#146;s compensation for managing other pooled
investment accounts is based on a percentage of net revenues
received by Gabelli Funds for managing the account. Compensation
for managing accounts that have a performance-based fee will
have two components. One component is based on a percentage of
net revenues received by Gabelli Funds for managing the account.
The second component is based on absolute performance of the
account, with respect to which a percentage of the performance
fee is paid to the portfolio manager.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Ownership of Shares in the Equity Trust.</B> Set forth in the
table below is the dollar range of equity securities in the
Equity Trust beneficially owned by Messrs. Gabelli and Bryan:
</DIV>



<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dollar Range of Equity</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Securities Held in Equity Trust*</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mario&nbsp;J. Gabelli</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>G</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Caesar M.P. Bryan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>A</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">48
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<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*
Key to Dollar Ranges&nbsp;&#151; Information as of
December&nbsp;31, 2004
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$1&nbsp;&#151;
$10,000
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$10,001&nbsp;&#151;
$50,000
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$50,001&nbsp;&#151;
$100,000
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$100,001&nbsp;&#151;
$500,000
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$500,001&nbsp;&#151;
$1,000,000
</DIV>

<DIV align="left" style="font-size: 10pt;">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;G.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;over
$1,000,000
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Advisory Agreement.</I> Under the terms of the Equity
Trust&#146;s Investment Advisory Agreement (the &#147;Advisory
Agreement&#148;), Gabelli Funds manages the portfolio of the
Equity Trust in accordance with its stated investment objectives
and policies, makes investment decisions for the Equity Trust,
places orders to purchase and sell securities on behalf of the
Equity Trust and manages the Equity Trust&#146;s other business
and affairs, all subject to the supervision and direction of its
Board of Directors. In addition, under the Advisory Agreement,
Gabelli Funds oversees the administration of all aspects of the
Equity Trust&#146;s business and affairs and provides, or
arranges for others to provide, at Gabelli Funds&#146; expense,
certain enumerated services, including maintaining the Equity
Trust&#146;s books and records, preparing reports to its
stockholders and supervising the calculation of the net asset
value of its stock. All expenses of computing the Equity
Trust&#146;s net asset value, including any equipment or
services obtained solely for the purpose of pricing shares of
stock or valuing the Equity Trust&#146;s investment portfolio,
will be an expense of the Equity Trust under the Advisory
Agreement unless Gabelli Funds voluntarily assumes
responsibility for such expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Advisory Agreement combines investment advisory and
administrative responsibilities in one agreement. For services
rendered by Gabelli Funds on behalf of the Equity Trust under
the Advisory Agreement, the Equity Trust pays Gabelli Funds a
fee computed weekly and paid monthly at the annual rate of 1.00%
of its average weekly net assets plus the liquidation value of
any outstanding preferred stock. Gabelli Funds has agreed to
reduce the management fee on the incremental assets attributable
to the cumulative preferred stock during the fiscal year if the
total return of the net asset value of Equity Trust Common
Stock, including distributions and advisory fee subject to
reduction for that year, does not exceed the stated dividend
rate or corresponding swap rate of each particular series of the
preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Equity Trust&#146;s total return on the net asset value of
its Common Stock is monitored on a monthly basis to assess
whether the total return on the net asset value of its Common
Stock exceeds the stated dividend rate or corresponding swap
rate of each particular series of outstanding preferred stock
for the period. The test to confirm the accrual of the
management fee on the assets attributable to each particular
series of preferred stock is annual. The Equity Trust will
accrue for the management fee on those assets during the fiscal
year if it appears probable that the Equity Trust will incur the
additional management fee on those assets. For the year ended
December&nbsp;31, 2004, the Equity Trust&#146;s total return on
the net asset value of the Common Stock exceeded the stated
dividend rate or corresponding swap rate of all outstanding
preferred stock. Thus, management fees were accrued on these
assets. For the six months ended June&nbsp;30, 2005, the Equity
Trust&#146;s total return on the net asset value of the Common
Stock did not exceed the stated dividend rates or corresponding
swap rate of all outstanding preferred stock. Thus, management
fees with respect to the liquidation value of the preferred
stock assets in the amount of $2,076,504 were not accrued.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard
for its obligations and duties thereunder, Gabelli Funds is not
liable for any error or judgment or mistake of law or for any
loss suffered by the Equity Trust. As part of the Advisory
Agreement, the Equity Trust has agreed that the name
&#147;Gabelli&#148; is Gabelli Funds&#146; property, and that in
the event Gabelli Funds ceases to act as an investment adviser
to the Equity Trust, the Equity Trust will change its name to
one not including &#147;Gabelli.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to its terms, the Advisory Agreement will remain in
effect with respect to the Equity Trust from year to year if
approved annually (i)&nbsp;by the Equity Trust Board of
Directors or by the holders of a majority of the Equity
Trust&#146;s outstanding voting securities and (ii)&nbsp;by a
majority of the Directors who are not &#147;interested
persons&#148; (as defined in the 1940 Act) of any party to the
Advisory Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval.
</DIV>

<P align="center" style="font-size: 10pt;">49
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<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The cost of calculating the Equity Trust&#146;s net asset value
per share is an expense of the Equity Trust pursuant to the
Advisory Agreement. During fiscal year 2004, the Equity Trust
reimbursed Gabelli Funds $34,800 in connection with the cost of
computing the Equity Trust&#146;s net asset value.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sub-Administrator.</I> PFPC, located at 760&nbsp;Moore Road,
King of Prussia, Pennsylvania 19406, serves as the Equity
Trust&#146;s sub-administrator. For these services and the
related expenses borne by PFPC, Gabelli Funds pays a prorated
monthly fee at the annual rate of .0275% of the first
$10.0&nbsp;billion of the aggregate average net assets of the
Equity Trust and all other funds advised by Gabelli Funds and
administered by PFPC, .0125% of the aggregate average net assets
exceeding $10&nbsp;billion and .01% of the aggregate average net
assets in excess of $15&nbsp;billion.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Interest of Certain Persons.</I> Gabelli Funds may be
considered to have a financial interest in the Reorganization,
arising from the fact that the amount of its management fee
under the Advisory Agreement between Gabelli Funds and the
Equity Trust will increase as the amount of the Equity
Trust&#146;s assets increases, and the amount of those assets
will increase by virtue of the Reorganization.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Sterling Capital</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The business and affairs of Sterling Capital are managed under
the direction of its Board of Directors, and the day-to-day
operations are conducted through or under the direction of its
officers. Sterling Capital operates exclusively as an internally
managed investment company whereby its own officers and
employees, under the general supervision of its Board of
Directors, conduct its operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Directors and Executive Officers of Sterling Capital are as
follows:
</DIV>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 8pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Term of Office</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Funds in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>and Length</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Complex</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Other</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name, Position(s),</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>of Time</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Overseen by</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Occupation(s) During</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Directorships Held</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Address and Age(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Served(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Director</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Past Five Years</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>by Director</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Interested Director:</B>(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Jeffrey Scheuer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Since 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Writer and private investor(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    None</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Non-Interested Directors:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Jay Eliasberg</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Since 1980</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Private investor</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    None</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Arthur P. Floor</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Since 1980</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Energy consultant</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    None</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Nathan Kingsley</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Since 1984</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    President, Total</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    None</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Communications</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    International, a media consulting firm</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Archer Scherl</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Since 1994</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Private investor</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    None</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<P align="center" style="font-size: 10pt;">50

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Term of Office</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Funds in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>and Length</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Complex</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Other</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name, Position(s),</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>of Time</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Overseen by</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Occupation(s) During</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Directorships Held</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Address and Age(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Served(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Director</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Past Five Years</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>by Director</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <B>Officers:</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Wayne S. Reisner</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Since 1993</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Mr.&nbsp;Reisner was Executive</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    N/A</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    President</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice President of Sterling</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Capital from July 1988 to March 1993 and was Vice President from
    November 1985 to July 1988. Mr.&nbsp;Reisner has been employed
    by Sterling Capital since August 1985. Mr.&nbsp;Reisner was also
    a Vice President and a Director of Windy Gates Corporation, a
    corporation controlled by Jeffrey Scheuer and members of his
    family, from March 1993 to August&nbsp;2004. Mr.&nbsp;Reisner
    has been a Director and President of Winterset Management
    Corporation (formerly known as Manchester Capital Corporation)
    since December 1988 and March 1989, respectively.
    Mr.&nbsp;Reisner was a director of Carret and Company LLC from
    June 2002 until May 2004. Mr.&nbsp;Reisner has been President of
    Carret Asset Management, LLC since May 2004.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Michael Carey</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Mr.&nbsp;Carey has been employed</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    N/A</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Vice President,</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    since 1999;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    by Sterling Capital since</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Secretary and</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Secretary</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    February 1995.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Treasurer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    since 2003;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    Age: 38</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Treasurer since 1997</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>


<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>


<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Address: c/o&nbsp;Sterling Capital, 100 Wall Street, 11th Floor,
    New&nbsp;York, New&nbsp;York 10005, unless otherwise noted.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Each director serves for a term of one year and until his
    successor is duly elected and qualified.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Scheuer, together with members of the Scheuer family,
    may be deemed to be a controlling shareholder of Sterling
    Capital and Mr.&nbsp;Scheuer may be deemed an &#147;interested
    person&#148; of Sterling Capital as that term is defined in
    Section&nbsp;2(a)(19) of the 1940 Act.</TD>
</TR>


<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Scheuer has been a private investor and writer for more
    than the past five years.</TD>
</TR>


</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Decisions to buy and sell securities for Sterling Capital are
made by its Investment Committee, pursuant to policies approved
by its Board of Directors, which periodically reviews investment
decisions. The officers and Investment Committee of Sterling
Capital are also responsible for placing orders for the purchase
and sale of securities and placing its brokerage business.
</DIV>

<P align="center" style="font-size: 10pt;">51
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research services furnished by brokers through which Sterling
Capital effects securities transactions may be used by officers
and employees in connection with their duties to Walter
Scheuer&#146;s estate, members of his family and associates.
Research services furnished to officers and employees by brokers
in connection with their duties to Walter Scheuer&#146;s estate,
members of his family and associates may be used by such
employees in connection with their duties to Sterling Capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to June&nbsp;30, 2005, Sterling Capital sublet a portion
of office space at 635 Madison Avenue, New York, NY, from Windy
Gates Corporation (&#147;Windy Gates&#148;), a corporation
controlled by Jeffrey Scheuer and members of his family. The
term of the Windy Gates lease expired on June&nbsp;30, 2005. The
term of the sublease to Sterling Capital expired on
June&nbsp;30, 2005. The annual rental obligation of these
premises was allocated between the Corporation and Windy Gates
on the basis of each such party&#146;s use of this space.
Sterling Capital&#146;s net annual rent expense for this space
was approximately $26,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incident to the sublease arrangements for office space at
635&nbsp;Madison Avenue that were in effect prior to
June&nbsp;30, 2005, Walter Scheuer&#146;s estate and Sterling
Capital allocated certain of the expenses incurred in connection
with each of such party&#146;s use of various services located
thereat, including office equipment and secretarial,
administrative and internal accounting personnel. For the year
ended December&nbsp;31, 2004, Walter Scheuer (and his estate)
and Sterling Capital paid or accrued approximately $334,000 and
$37,000, respectively, in connection with the allocation of
expenses incurred with respect to the use of such services. In
addition, during the period certain persons who are also
officers of Sterling Capital rendered services to Walter Scheuer
and his estate personally for which they received compensation
from Walter Scheuer and his estate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Security Ownership of Directors and Officers, and Other
Principal Holders Of Sterling Capital&#146;s Voting
Securities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information concerning the shares
of Sterling Capital&#146;s common stock beneficially owned by
the directors, its executive officers, all directors and
officers of Sterling Capital as a group without naming them, and
each person who is known by Sterling Capital to be the
beneficial owner of more than five percent of Sterling
Capital&#146;s common stock as of June&nbsp;30, 2005. The
address of each of the directors is c/o&nbsp;Sterling Capital
Corporation, 100 Wall Street, 11th Floor, New&nbsp;York,
New&nbsp;York 10005. The address of Gaymark Associates and Wayne
S. Reisner is 100 Wall Street, 11th Floor, New&nbsp;York,
New&nbsp;York 10005. The address of each of Marge P. Scheuer,
Susan Scheuer and Judith Scheuer is 100 Wall Street, 11th Floor,
New&nbsp;York, New&nbsp;York 10005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount and Nature of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percent of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name of Beneficial Owner</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beneficial Owner</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Class</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jay Eliasberg*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Arthur P. Floor*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gaymark Associates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,921,796</TD>
    <TD align="left" valign="bottom" nowrap>(a)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Nathan Kingsley*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Archer Scherl*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Estate of Walter Scheuer</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>401,129</TD>
    <TD align="left" valign="bottom" nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Wayne S. Reisner</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Marge P. Scheuer</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,397</TD>
    <TD align="left" valign="bottom" nowrap>(c)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jeffrey Scheuer*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>671,676</TD>
    <TD align="left" valign="bottom" nowrap>(d)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Susan Scheuer</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,572</TD>
    <TD align="left" valign="bottom" nowrap>(e)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Judith Scheuer</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>303,154</TD>
    <TD align="left" valign="bottom" nowrap>(f)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Directors and Executive Officers as a Group consisting of 6
    persons</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,078,396</TD>
    <TD align="left" valign="bottom" nowrap>(g)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    &nbsp;*</TD>
    <TD></TD>
    <TD valign="top">
    Current member of the Board of Directors of Sterling Capital.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    Of the 1,921,796&nbsp;shares (approximately 76.9% of Sterling
    Capital&#146;s outstanding common stock) owned of record by
    Gaymark Associates (&#147;Gaymark&#148;), a limited partnership,
    of which Windy Gates is the general</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">52

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    partner and Jeffrey&nbsp;Scheuer is a limited partner,
    18,032&nbsp;shares are held for Windy Gates, 346,529&nbsp;shares
    are held for Walter Scheuer&#146;s estate (see note&nbsp;(b)
    below), 166,797&nbsp;shares are held for Marge P. Scheuer, who
    was Walter Scheuer&#146;s wife (see note&nbsp;(d) below),
    34,068, 482,976, 204,097 and 200,904&nbsp;shares, respectively,
    are held for the four children of Walter Scheuer (see
    notes&nbsp;(e), (f), and (g) below), 54,600&nbsp;shares are held
    for a revocable trust which will become part of Walter
    Scheuer&#146;s estate, 312,793&nbsp;shares are held for seven
    trusts for the benefit of seven of Walter Scheuer&#146;s
    grandchildren, and 101,000&nbsp;shares are held for
    Mrs.&nbsp;Marcelle Halpern. The shares of the Corporation&#146;s
    common stock that are reflected in the table as being
    beneficially owned by Gaymark do not include 56,064&nbsp;shares
    which Gaymark has an option to acquire. Windy Gates is a
    New&nbsp;York corporation of which Jeffrey Scheuer is President,
    a director and a shareholder. The other shareholders of Windy
    Gates are Marge Scheuer and her children, David Scheuer, Susan
    Scheuer, Judith Scheuer and the estate of Walter Scheuer. Windy
    Gates, as the general partner of Gaymark, has the sole power to
    vote the aforementioned shares of Sterling Capital&#146;s common
    stock owned by Gaymark.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    Of the 401,129&nbsp;shares (approximately 16.0% of Sterling
    Capital&#146;s outstanding common stock) of which Walter
    Scheuer&#146;s estate may be deemed to be a beneficial owner,
    346,529&nbsp;shares (approximately 13.9% of Sterling
    Capital&#146;s outstanding common stock) are held for the
    estate&#146;s account by Gaymark as described in note&nbsp;(a)
    above. Also, as described in note&nbsp;(a) above, Gaymark holds
    54,600&nbsp;shares for the account of a revocable trust, the
    beneficiary of which is Walter Scheuer&#146;s estate.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    Of the 221,397&nbsp;shares (approximately 8.9% of Sterling
    Capital&#146;s outstanding stock) of which Mrs.&nbsp;Marge
    Scheuer may be deemed to be a beneficial owner,
    166,797&nbsp;shares are held for her account by Gaymark and
    54,600&nbsp;shares are held by Gaymark for the account of a
    revocable trust, the beneficiary of which is Walter
    Scheuer&#146;s estate, which trust&#146;s shareholdings in
    Sterling Capital are described in note&nbsp;(b) above, of which
    trust Mrs.&nbsp;Scheuer is a trustee. Mrs.&nbsp;Scheuer
    disclaims any beneficial ownership in the shares held by Gaymark
    for the account of such trust.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    Of the 671,676&nbsp;shares (approximately 26.8% of Sterling
    Capital&#146;s outstanding stock) of which Jeffrey Scheuer may
    be deemed to be a beneficial owner, 482,976&nbsp;shares are held
    for his account by Gaymark, 18,032&nbsp;shares are held by
    Gaymark for the account of Windy Gates and
    (i)&nbsp;111,668&nbsp;shares are held by Gaymark for the account
    of two trusts for the benefit of Jeffrey Scheuer&#146;s children
    and (ii)&nbsp;59,000&nbsp;shares are held directly by a trust
    for the benefit of one of Jeffrey Scheuer&#146;s children, of
    which trusts Jeffrey Scheuer is a trustee. Jeffrey Scheuer
    disclaims any beneficial ownership in the shares held by Gaymark
    for the account of such trusts.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (e)</TD>
    <TD></TD>
    <TD valign="top">
    Of the 400,572&nbsp;shares (approximately 16.0% of Sterling
    Capital&#146;s outstanding common stock) of which Susan Scheuer,
    a daughter of Walter Scheuer, may be deemed to be a beneficial
    owner, 204,097&nbsp;shares are held for her account by Gaymark,
    98,875&nbsp;shares are held by Gaymark for the account of three
    trusts for the benefit of Susan Scheuer&#146;s children and
    97,600&nbsp;shares are held directly by a trust for the benefit
    of one of Susan Scheuer&#146;s children, of which trusts Susan
    Scheuer is a trustee. Susan Scheuer disclaims any beneficial
    ownership in the shares held by Gaymark for the account of such
    trusts.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (f)</TD>
    <TD></TD>
    <TD valign="top">
    Of the 303,154&nbsp;shares (approximately 12.1% of Sterling
    Capital&#146;s outstanding common stock) of which Judith
    Scheuer, a daughter of Walter Scheuer, may be deemed to be a
    beneficial owner, 200,904&nbsp;shares are held for her account
    by Gaymark and 102,250&nbsp;shares are held by Gaymark for the
    account of two trusts for the benefit of Judith Scheuer&#146;s
    children, of which trusts Judith Scheuer is a trustee. Judith
    Scheuer disclaims any beneficial ownership in the shares held by
    Gaymark for the account of such trusts.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (g)</TD>
    <TD></TD>
    <TD valign="top">
    The computation of 2,078,396 (approximately 83.1% of Sterling
    Capital&#146;s outstanding common stock) shares reported in this
    column includes all shares which may be deemed to be
    beneficially owned as described in the foregoing notes, but
    eliminates the duplication that would arise from including more
    than one beneficial owner of the same shares. Such shares do not
    include 56,064&nbsp;shares, which Gaymark has an option to
    acquire.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of Equity Trust Common Stock received in connection with
the Reorganization by persons that are considered affiliates of
Sterling Capital will be subject to certain transfer
restrictions contained in Rules&nbsp;144 and 145 under the
Securities Act due to such persons&#146; relationship with
Sterling Capital prior to the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, affiliates of Sterling Capital that receive Equity
Trust Common Stock in connection with the Reorganization may
sell such Equity Trust Common Stock only if the following
conditions are met: (i)&nbsp;such securities are sold in
accordance with the following procedures: (a)&nbsp;(I)&nbsp;the
aggregate number of securities
</DIV>

<P align="center" style="font-size: 10pt;">53
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<DIV align="left" style="font-size: 10pt;">
sold by the affiliate in any three-month period cannot exceed
the greater of (y)&nbsp;one percent of the total shares of
Equity Trust Common Stock outstanding and (z)&nbsp;the average
weekly volume of trading in Equity Trust Common Stock on the
NYSE during the four calendar weeks preceding the sale in
question, (II)&nbsp;the Equity Trust has filed all necessary
reports under the Securities Exchange Act of 1934 (the
&#147;Exchange Act&#148;) during the 12&nbsp;months preceding
such sale and (III)&nbsp;such securities are sold in a
brokers&#146; transaction in which the selling affiliate did not
solicit orders in anticipation of the Reorganization or make
payments to anyone other that the usual and customary
broker&#146;s commission to the broker; (b)&nbsp;the affiliate
is not an affiliate of the Equity Trust and a period of at least
one year has elapsed since the date the securities were acquired
in connection with the Reorganization and the Equity Trust has
filed all necessary reports under the Exchange Act during the
12&nbsp;months preceding such sale; or (c)&nbsp;the affiliate is
not, and has not been for at least three months, an affiliate of
the Equity Trust and a period of at least two years has elapsed
since the date the securities were acquired in connection with
Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Persons that may be considered affiliates of Sterling Capital
should consult legal counsel prior to selling any Equity Trust
Common Stock acquired by such person in connection with the
Reorganization. For these purposes, an affiliate of Sterling
Capital includes any person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is
under common control with, Sterling Capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Other Service Providers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Custodian.</I> Mellon Trust of New England, N.A., located at
135&nbsp;Santilli Highway, Everett, Massachusetts 02149, serves
as custodian of the Equity Trust&#146;s assets. Citibank, N.A.,
located at 120&nbsp;Broadway, New York, NY 10271, serves as
Sterling Capital&#146;s custodian.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Transfer Agent and Registrar.</I> EquiServe Trust Company,
N.A., located at 250 Royall Street, Canton, Massachusetts 02021,
serves as the Equity Trust&#146;s dividend disbursing agent, as
agent under the Equity Trust&#146;s automatic dividend
reinvestment and voluntary cash purchase plan and as transfer
agent and registrar for Equity Trust Common Stock. Registrar and
Transfer Company, located at 10&nbsp;Commerce Drive, Cranford,
NJ 07016, serves as Sterling Capital&#146;s transfer agent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Exchange Agent.</I> American Stock Transfer &#38; Trust
Company, located at 59&nbsp;Maiden Lane, New York, New York
10038, will serve as the Equity Trust&#146;s exchange agent for
the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Independent Registered Public Accounting Firm.</I>
PricewaterhouseCoopers LLP, New York, New York, serves as the
Equity Trust&#146;s independent registered public accounting
firm. Sterling Capital has selected Tardino, Tocci &#38;
Goldstein LLP, New York, New York, as its independent registered
public accounting firm.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='112'></A>
</DIV>

<!-- link1 "REQUIRED VOTE" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>REQUIRED VOTE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approval of Proposal&nbsp;1 requires the affirmative vote of the
holders of two-thirds of the votes of all outstanding shares of
Sterling Capital entitled to vote thereon on the record date.
Subject to such approval, the Reorganization is currently
scheduled to be consummated promptly after the meeting. The
Board of Directors of Sterling Capital recommends that the
shareholders of Sterling Capital vote in favor of
Proposal&nbsp;1. As of June&nbsp;30, 2005, members of the
Scheuer family and Gaymark Associates, a limited partnership
indirectly controlled by members of the Scheuer family, owned
approximately 83.1% of the outstanding common stock of Sterling
Capital. Sterling Capital expects that all of the shares held by
members of the Scheuer family and Gaymark Associates will be
voted in favor of the Reorganization, in which case the
Reorganization will be approved. See &#147;Management of the
Funds&nbsp;&#151; Sterling Capital&nbsp;&#151; Security
Ownership of Directors and Officers, and Other Principal Holders
of Sterling Capital&#146;s Voting Securities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>You Have Dissenters&#146; Appraisal Rights in Connection with
the Reorganization.</I> Because Sterling Capital shareholders
are being asked to approve a sale of substantially all of
Sterling Capital&#146;s assets to the Equity Trust in connection
with the Reorganization, under New York law each Sterling
Capital shareholder entitled to vote on the Reorganization has
the right to receive a cash payment equal to the fair value of
the common stock of Sterling Capital held by such shareholder,
in lieu of Equity Trust Common Stock, if such shareholder
follows certain procedures to preserve and enforce such rights.
The following is a brief summary of
</DIV>

<P align="center" style="font-size: 10pt;">54

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<DIV align="left" style="font-size: 10pt;">
the statutory procedures to be followed by a holder of shares of
Sterling Capital common stock who does not wish to accept Equity
Trust Common Stock pursuant to the Reorganization in order to
dissent from the Reorganization and perfect dissenters&#146;
rights under New York law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SECTIONS&nbsp;623 AND 910 OF THE
NEW YORK BUSINESS CORPORATION LAW, THE TEXT OF WHICH IS SET
FORTH IN EXHIBIT&nbsp;2 TO THIS PROXY STATEMENT/ PROSPECTUS. ANY
STERLING CAPITAL SHAREHOLDER CONSIDERING DEMANDING APPRAISAL IS
ADVISED TO CONSULT LEGAL COUNSEL. DISSENTERS&#146; RIGHTS WILL
NOT BE AVAILABLE UNLESS AND UNTIL THE REORGANIZATION IS
CONSUMMATED.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder of shares of Sterling Capital common stock who desires
to exercise its dissenters&#146; rights must fully satisfy the
following conditions. Dissenters&#146; rights of appraisal will
be lost and waived if the procedural requirements of
Section&nbsp;623 of the New York Business Corporation Law are
not fully and precisely satisfied. If dissenters&#146; rights
are lost and waived, a shareholder will be entitled to receive
the consideration provided for in the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order for a Sterling Capital shareholder to preserve such
shareholder&#146;s right to receive cash in lieu of Equity Trust
Common Stock in connection with the Reorganization, such
shareholder must notify Sterling Capital, prior to the Special
Meeting or at the Special Meeting but prior to the shareholder
vote being taken at such Special Meeting, in a writing (the
&#147;Election Notice&#148;) that indicates (i)&nbsp;such
shareholder&#146;s election to dissent to the Reorganization,
(ii)&nbsp;such shareholder&#146;s name and residence address,
(iii)&nbsp;the number of shares as to which such shareholder
dissents and (iv)&nbsp;a demand for payment of the fair value of
such shares if the Reorganization is approved. Such Election
Notice is not required from any shareholder to whom Sterling
Capital did not give notice of the meeting in accordance with
the New York Business Corporation Law. Submission by a Sterling
Capital shareholder of a proxy indicating such shareholder does
not consent to the Reorganization shall not be considered
adequate notice to satisfy the aforementioned requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A shareholder may not dissent as to less than all the shares of
Sterling Capital common stock as to which such shareholder has a
right of dissent, held by such shareholder of record and that
such shareholder owns beneficially. A nominee or fiduciary may
not dissent on behalf of any beneficial owner as to less than
all the shares of Sterling Capital common stock of such owner as
to which such nominee or fiduciary has a right to dissent, held
of record by such nominee or fiduciary. Furthermore, if the
shares of Sterling Capital common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
the demand should be made in that capacity, and if the shares of
Sterling Capital common stock are owned of record by more than
one person, as in a joint tenancy or tenancy in common, the
demand should be made by or for all owners of record.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon filing the Election Notice with Sterling Capital or within
one month thereafter, a shareholder holding Sterling Capital
common stock represented by certificates must submit its stock
certificates to Sterling Capital or its transfer agent,
Registrar and Transfer Company, located at 10 Commerce Drive,
Cranford, New Jersey 07016.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within 10&nbsp;days after the Special Meeting, if the
Reorganization is approved, Sterling Capital must give written
notice of such approval (the &#147;Approval Notice&#148;) by
registered mail to each Sterling Capital shareholder who filed
an Election Notice or from whom an Election Notice was not
required. However, an Approval Notice will not be sent to any
shareholder who voted for the Reorganization because such
shareholder will be deemed to have elected not to enforce such
shareholder&#146;s dissenters&#146; rights. The failure to vote
against the Reorganization will not itself constitute a waiver
of a shareholder&#146;s dissenters&#146; rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within 20&nbsp;days after the giving of an Appraisal Notice to a
shareholder, any shareholder from whom an Election Notice was
not required and who elects to dissent must file with Sterling
Capital a written notice of such election, stating such
shareholder&#146;s name and residence address, the number of
shares of Sterling Capital common stock as to which such
shareholder dissents and a demand for payment of the fair value
of such shares.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All notices required to be delivered hereunder to Sterling
Capital should be delivered before the vote on the
Reorganization is taken at the Special Meeting and should be
addressed to Sterling Capital Corporation, 100 Wall Street, 11th
Floor, New York, New York, 10005, Attention: Michael Carey.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within fifteen days of the Special Meeting date, or the
Effective Date of the Reorganization, whichever is later,
Sterling Capital is required to make a written offer to each
shareholder that has filed a timely and valid Election Notice
with Sterling Capital, which offer will contain (i)&nbsp;an
offer to purchase such shareholder&#146;s shares at their fair
value, as determined by Sterling Capital, (ii)&nbsp;the
aggregate number of shares with respect to which Election
Notices have been filed and (iii)&nbsp;the aggregate number of
shareholders of such shares (the &#147;Sterling Offer&#148;). If
the Reorganization is approved at the Special Meeting, the
Sterling Offer will also be accompanied by advance payment of
80% of the fair value of a shareholder&#146;s shares, if such
shareholder has submitted its stock certificates as noted above
or does not hold stock certificates representing its shares, or
a statement that such shareholder will receive such payment upon
its submission of its stock certificates.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If within 30&nbsp;days after the making of the Sterling Offer,
Sterling Capital and any dissenting shareholder agree upon the
price to be paid for such holder&#146;s shares of Sterling
Capital common stock, payment therefor will be made within
60&nbsp;days after the making of the Sterling Offer or the
Effective Date of the Reorganization, whichever is later, upon
the surrender of the certificates representing such shares of
Sterling Capital common stock. If Sterling Capital fails to make
such an offer within the 15-day period described above, or if it
makes an offer but Sterling Capital and a dissenting shareholder
do not agree within 30&nbsp;days of Sterling Capital&#146;s
making of the offer upon the price to be paid for such
shareholder&#146;s shares of Sterling Capital common stock,
Sterling Capital must, within 20&nbsp;days of such 15- or 30-day
period, as the case may be, institute a special proceeding in
the Supreme Court of New York to determine the rights of
dissenting shareholders and fix the fair value of their shares
of Sterling Capital. If Sterling Capital does not institute such
a proceeding within the 20-day period, any dissenting
shareholder may, within 30&nbsp;days after such 20-day period,
institute a proceeding for the same. If such proceeding is not
instituted within such 30-day period, any dissenting
shareholders who have not agreed with Sterling Capital as to the
price to be paid for their shares of Sterling Capital common
stock will lose their dissenters&#146; rights, unless the court,
for good cause shown, otherwise directs.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within 60&nbsp;days after the completion of any such court
proceeding, Sterling Capital must pay to each dissenting
shareholder the amount found to be due such shareholder, with
interest thereon at such rate as the court finds to be
equitable, from the Effective Date of the Reorganization to the
date of payment, upon surrender by such shareholder of the
certificates representing such shares of Sterling Capital common
stock. If the court finds that the refusal of any dissenting
shareholder to accept Sterling Capital&#146;s offer was
arbitrary, vexatious or otherwise not in good faith, no interest
will be allowed to such shareholder.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The parties to such court proceeding will bear their own costs
and expenses, including the fees and expenses of their counsel
and any experts employed by them, except that the court, in its
discretion and under certain conditions, may apportion and
assess all or any part of the costs, expenses and fees incurred
by dissenting shareholders against Sterling Capital or may
apportion and assess all or any part of the costs, expenses and
fees incurred by Sterling Capital against any dissenting
shareholders, including any dissenting shareholders who have
withdrawn their Election Notice to dissent from the
Reorganization, who the court finds were arbitrary, vexatious or
otherwise not acting in good faith in refusing Sterling
Capital&#146;s offer of payment. Any shareholder who has filed
an Election Notice will not, after the Effective Date of the
Reorganization, have any of the rights of a shareholder with
respect to his shares of Sterling Capital common stock other
than the right to be paid the fair value of such shares of
common stock under the New York Business Corporation Law.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any notice of election to dissent may be withdrawn by a
dissenting shareholder at any time before the acceptance in
writing of the Sterling Offer, but in no case later than
60&nbsp;days after the Effective Date of the Reorganization
unless Sterling Capital consents in writing. However, if
Sterling Capital fails to make a timely offer to pay such
shareholder the fair value of such shareholder&#146;s shares of
Sterling Capital common stock as provided above, the dissenting
shareholder may withdraw such shareholder&#146;s election to
dissent at any time within 60&nbsp;days after any date on which
such an offer is made.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any amounts payable in respect of dissenting shareholders will
be an obligation of Sterling Capital and not of the Equity Trust.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='113'></A>
</DIV>

<!-- link1 "LEGAL PROCEEDINGS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LEGAL PROCEEDINGS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The SEC, the New York Attorney General and officials of other
states have been conducting inquiries into, and bringing
enforcement and other proceedings regarding, trading abuses
involving open-end investment companies. Gabelli Funds has
received information requests and subpoenas from the SEC and the
New York Attorney General in connection with these inquiries.
Gabelli Funds and its affiliates have been complying with these
requests for documents and testimony and have implemented
additional compliance policies and procedures in response to
recent industry initiatives and their internal reviews of their
mutual fund practices in a variety of areas. Gabelli Funds has
not found any information that it believes would be material to
the ability of Gabelli Funds to fulfill its obligations under
the Advisory Agreement. More specifically, Gabelli Funds has not
found any evidence of facilitating trading in the Gabelli mutual
funds after the 4:00&nbsp;p.m. pricing time or of improper
short-term trading in these funds by its investment
professionals or senior executives. Gabelli Funds has found that
one investor, who had been engaged in short-term trading in one
of the Gabelli mutual funds (the prospectus of which did not at
that time impose limits on short-term trading) and who had
subsequently made an investment in a hedge fund managed by an
affiliate of Gabelli Funds, was banned from the mutual fund only
after certain other investors were banned. Gabelli Funds
believes that this relationship was not material to Gabelli
Funds. Inasmuch as both Gabelli Funds&#146; review of its mutual
fund practices and the governmental probes of the mutual fund
industry are ongoing, no assurance can be provided that
additional facts will not come to light in the course of its
review that may be material to Gabelli Funds or that Gabelli
Funds will not become the subject of enforcement or other
proceedings by the SEC or the New York Attorney General. In
light of the current turmoil in the mutual fund industry arising
from the late trading, improper market timing and employee
trading problems, there can be no assurance that any such action
could not have an adverse impact on Gabelli Funds or on its
ability to fulfill its obligations under the Advisory Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='114'></A>
</DIV>

<!-- link1 "LEGAL OPINIONS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>LEGAL OPINIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain legal matters in connection with the Reorganization will
be passed upon for the Equity Trust by Willkie Farr&nbsp;&#38;
Gallagher LLP and for Sterling Capital by Skadden, Arps, Slate,
Meagher&nbsp;&#38; Flom LLP. As to certain matters of Maryland
law, Willkie Farr&nbsp;&#38; Gallagher LLP will rely on the
opinion of Venable LLP.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='115'></A>
</DIV>

<!-- link1 "ADDITIONAL INFORMATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ADDITIONAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Proxy Statement/ Prospectus does not contain all of the
information set forth in the registration statements and the
exhibits relating thereto which the Funds have filed with the
SEC, under the Securities Act, the Exchange Act and the 1940
Act, to which reference is hereby made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Funds are subject to the informational requirements of the
Exchange Act and in accordance therewith, file reports and other
information with the SEC. Reports, proxy statements,
registration statements and other information filed by the Funds
can be inspected and copied at the Public Reference Room of the
SEC in Washington,&nbsp;D.C. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Reports and other information about the Funds
are available on the EDGAR Database on the SEC&#146;s Internet
site at http://www.sec.gov. Copies of such materials also may be
obtained, at prescribed rates, by electronic request at
publicinfo@sec.gov, or by writing the SEC&#146;s Public
Reference Section, Securities and Exchange Commission,
Washington,&nbsp;D.C. 20549-0102.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
YOU SHOULD NOT RELY UPON THE REPRESENTATIONS AND WARRANTIES IN
THE AGREEMENT OR THE DESCRIPTION OF THEM IN THIS PROXY
STATEMENT/ PROSPECTUS AS STATEMENTS OF FACTUAL INFORMATION ABOUT
EQUITY TRUST OR STERLING CAPITAL. THESE REPRESENTATIONS AND
WARRANTIES WERE MADE BY THE RESPECTIVE PARTIES ONLY FOR THE
PURPOSES OF THE AGREEMENT, WERE MADE SOLELY TO THE RESPECTIVE
PARTIES TO THE AGREEMENT AS OF THE DATE OF SUCH AGREEMENT
</DIV>

<P align="center" style="font-size: 10pt;">57
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<DIV align="left" style="font-size: 10pt;">
AND ARE SUBJECT TO MODIFICATION OR QUALIFICATION BY OTHER
DISCLOSURES MADE IN CONNECTION THEREWITH. THE REPRESENTATIONS
AND WARRANTIES ARE REPRODUCED AND SUMMARIZED IN THIS PROXY
STATEMENT/PROSPECTUS SOLELY TO PROVIDE INFORMATION REGARDING THE
TERMS OF THE AGREEMENT AND NOT FOR ANY OTHER PURPOSE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other Matters to Come Before the Meeting.</I> The Board of
Directors of Sterling Capital is not aware of any matters that
will be presented for action at the meeting other than the
matters set forth herein. Should any other matters requiring a
vote of shareholders arise, the proxy in the accompanying form
will confer upon the person or persons entitled to vote the
shares represented by such proxy the discretionary authority to
vote the shares as to any such other matters in their discretion
in the interest of Sterling Capital. PLEASE COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By order of the Board of Directors of Sterling Capital
    Corporation</TD>
</TR>

<TR>
    <TD style="font-size: 48pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Michael Carey</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Secretary, Sterling Capital Corporation</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">58
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Exhibit&nbsp;A</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='116'></A>
</DIV>

<!-- link1 "AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION" -->


<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
(this &#147;Agreement&#148;) is made as of the 16th&nbsp;day of
August, 2005, by and among The Gabelli Equity Trust Inc.
(&#147;GAB&#148;), a Maryland corporation, and Sterling Capital
Corporation (&#147;SPR&#148;), a New York corporation
(&#147;GAB&#148; and &#147;SPR&#148; are referred to
collectively as the &#147;Funds&#148;) and, solely for purposes
of Section&nbsp;5(b) hereof, Gabelli Funds, LLC
(&#147;Gabelli&#148;).
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, GAB and SPR entered into an Agreement and Plan of
Reorganization dated as of May&nbsp;23, 2005 (the &#147;Original
Agreement&#148;);&nbsp;and
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
WHEREAS, the parties now wish to amend and restate the Original
Agreement in its entirety pursuant to Section&nbsp;10(e) hereof.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PLAN OF REORGANIZATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the terms and conditions of this Agreement and the
New York Business Corporation Law (the &#147;NYBCL&#148;), at
the Effective Date (as defined herein), SPR and GAB shall
consummate a reorganization (the &#147;Reorganization&#148;).
The Reorganization shall consist of (a)&nbsp;the transfer of all
or substantially all of the assets of SPR (other than the
Reserve (as defined herein)) to GAB in exchange solely for full
shares of GAB Common Stock (as defined herein) and cash in lieu
of fractional shares of GAB Common Stock, (b)&nbsp;the
assumption by GAB of the Stated Liabilities (as defined herein)
of SPR, and (c)&nbsp;the distribution of GAB Common Stock to the
SPR Stockholders (as defined herein), followed by the
termination, dissolution and complete liquidation (other than
the Reserve) of SPR. The parties intend that the Reorganization
shall qualify as a reorganization under Section&nbsp;368(a) of
the Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In consideration of the covenants and agreements hereinafter set
forth, and intending to be legally bound, the Funds hereby amend
and restate the Original Agreement as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Representations and
Warranties of GAB.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
GAB represents and warrants to, and agrees with, SPR that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;GAB is a corporation duly organized, validly existing
    and in good standing under the laws of the State of Maryland and
    has the requisite corporate power to own all of its properties
    and assets and to carry out this Agreement. GAB has all
    necessary Federal, state and local authorizations to carry on
    its business as it is now being conducted.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;GAB is duly registered under the Investment Company Act
    of 1940 (the &#147;1940 Act&#148;) (File No.&nbsp;811-04700) as
    a non-diversified, closed-end management investment company and
    such registration has not been revoked or rescinded and is in
    full force and effect. GAB has elected and qualified for the
    special tax treatment afforded regulated investment companies
    (&#147;RICs&#148;) under Sections&nbsp;851-855 of the Code at
    all times since its inception, and intends to continue to so
    qualify until consummation of the Reorganization and at all
    times thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;GAB has corporate power and authority to enter into and
    perform its obligations under this Agreement. The execution,
    delivery and performance of this Agreement has been duly
    authorized by all necessary action of its Board of Directors,
    and this Agreement constitutes its valid and binding agreement
    enforceable against it in accordance with its terms, subject to
    the effects of bankruptcy, insolvency, moratorium, fraudulent
    conveyance and similar laws relating to or affecting
    creditors&#146; rights generally and court decisions with
    respect thereto.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;There are no material legal, administrative or other
    proceedings pending or, to the knowledge of GAB, threatened
    against GAB which assert liability on the part of GAB or which
    materially affect its financial condition or its ability to
    consummate the Reorganization. GAB is not charged with or, to
    the best</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-1
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    of its knowledge, threatened with any violation or investigation
    of any possible violation of any provisions of any Federal,
    state or local law or regulation or administrative ruling
    relating to any aspect of its business.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;GAB is not a party to or obligated under any provision
    of its Articles of Incorporation, as amended, its
    Articles&nbsp;Supplementary, as amended, or its by-laws, as
    amended, or any contract or other commitment or obligation, and
    is not subject to any order or decree, which would be violated
    by its execution of or performance under this Agreement, except
    for those that will be complied with, satisfied, amended or
    waived to cure any potential violation as a condition precedent
    to the Reorganization.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;SPR has been furnished with a statement of assets,
    liabilities and capital and a schedule of investments of GAB,
    each as of the end of GAB&#146;s most recently completed fiscal
    year, said financial statements having been audited by
    PricewaterhouseCoopers LLP, an independent registered public
    accounting firm.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;SPR has been furnished with GAB&#146;s Annual Report to
    Stockholders for its most recently completed fiscal year, and
    the audited financial statements appearing therein fairly
    present the financial position of GAB as of the dates indicated
    therein, in conformity with generally accepted accounting
    principles applied on a consistent basis.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;There are no material contracts outstanding to which
    GAB is a party that have not been disclosed in the N-14
    Registration Statement or not otherwise disclosed in writing to
    SPR prior to the date of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;GAB has no known liabilities of a material amount,
    contingent or otherwise, other than those shown on its
    statements of assets, liabilities and capital referred to above,
    those incurred in the ordinary course of business as an
    investment company since the date of such statements, and those
    incurred in connection with the Reorganization.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;GAB has filed, or has obtained extensions to file, all
    Federal, state and local tax returns which are required to be
    filed by it, and has paid all Federal, state and local taxes
    shown on said returns to be due and owing and all assessments
    received by it, up to and including the taxable year in which
    the Effective Date occurs. All tax liabilities of GAB have been
    adequately provided for on its books, and no tax deficiency or
    liability of GAB has been asserted and no question with respect
    thereto has been raised by the Internal Revenue Service or by
    any state or local tax authority for taxes in excess of those
    already paid, up to and including the taxable year in which the
    Effective Date occurs.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (k)&nbsp;No consent, approval, authorization or order of any
    court or governmental authority is required for the consummation
    by GAB of the Reorganization, except (i)&nbsp;such as may be
    required under the Securities Act of 1933, as amended (the
    &#147;1933&nbsp;Act&#148;), the Securities Exchange Act of 1934
    (the &#147;1934&nbsp;Act&#148;) and the 1940 Act and
    (ii)&nbsp;such as may be required by state securities laws.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (l)&nbsp;The registration statement to be filed by GAB on
    Form&nbsp;N-14 relating to the GAB Common Stock to be issued
    pursuant to this Agreement, and any supplement or amendment
    thereto or to the documents therein (as amended, the &#147;N-14
    Registration Statement&#148;) on the effective date of the N-14
    Registration Statement, at the time of the stockholders&#146;
    meeting referred to in Section&nbsp;6(a) of this Agreement and
    at the Effective Date, insofar as it relates to GAB or the
    description of this Agreement or the Reorganization
    (i)&nbsp;shall have complied or will comply in all material
    respects with the provisions of the 1933&nbsp;Act, the
    1934&nbsp;Act and the 1940 Act and the rules and regulations
    thereunder and (ii)&nbsp;did not or will not contain any untrue
    statement of a material fact or omit to state any material fact
    required to be stated therein or necessary to make the
    statements therein not misleading; and the prospectus included
    therein did not or will not contain any untrue statement of a
    material fact or omit to state any material fact necessary to
    make the statements therein, in the light of the circumstances
    under which they were made, not misleading; provided, however,
    that the representations and warranties in this subsection shall
    not apply to statements in, or omissions from, the N-14
    Registration Statement made in reliance upon and in conformity
    with information furnished by SPR in writing for use in the N-14
    Registration Statement.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (m)&nbsp;On the date of this Agreement, GAB is authorized to
    issue 182,000,000&nbsp;shares of common stock, par value
    $.001&nbsp;per share (the &#147;GAB Common Stock&#148;), of
    which 141,012,252&nbsp;shares were</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-2

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    outstanding as of March&nbsp;31, 2005. Each outstanding share of
    capital stock is fully paid, nonassessable and has all voting
    rights required by the 1940 Act.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (n)&nbsp;All of the issued and outstanding shares of GAB Common
    Stock have been issued in conformity with all applicable Federal
    and state securities laws.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (o)&nbsp;The GAB Common Stock to be issued pursuant to this
    Agreement will have been duly authorized and, when issued and
    delivered pursuant to this Agreement, will be duly and validly
    issued and outstanding, fully paid and nonassessable, and will
    have the voting rights set forth in GAB&#146;s Articles of
    Incorporation, as amended, GAB&#146;s
    Articles&nbsp;Supplementary, as amended, GAB&#146;s By-Laws, as
    amended, and the 1940 Act, and no stockholder of GAB will have
    any preemptive right of subscription or purchase in respect
    thereof. GAB has issued preferred stock the holders of which,
    voting as a separate class, are entitled to elect two directors
    of GAB.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (p)&nbsp;At or prior to the Effective Date, the GAB Common Stock
    to be issued pursuant to this Agreement will be duly qualified
    for offering to the public in conformity with all applicable
    federal and state securities laws, and there will be a
    sufficient number of such shares registered under the
    1933&nbsp;Act to permit the issuance contemplated by this
    Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (q)&nbsp;GAB has adopted and implemented policies and procedures
    required by Rule&nbsp;38a-1 under the 1940 Act.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (r)&nbsp;The books and records of GAB made available to SPR
    and/or its counsel are substantially true and correct and
    contain no material misstatements or omissions with respect to
    the operations of GAB.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Representations and Warranties of SPR.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SPR represents and warrants to, and agrees with, GAB that:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;SPR is a corporation duly organized, validly existing
    and in good standing in conformity with New York Law, and has
    the requisite corporate power to own all of its assets and to
    carry out this Agreement. SPR has all necessary Federal, state
    and local authorizations to carry on its business as it is now
    being conducted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;SPR is duly registered under the 1940 Act (File
    No.&nbsp;811-01537) as a diversified, closed-end management
    investment company, and such registration has not been revoked
    or rescinded and is in full force and effect. SPR has elected
    and qualified for the special tax treatment afforded RICs under
    Sections&nbsp;851-855 of the Code at all times since its
    inception and intends to continue to so qualify for its taxable
    year ending upon the Effective Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;SPR has corporate power and authority to enter into and
    perform its obligations under this Agreement. The execution,
    delivery and performance of this Agreement has been duly
    authorized by all necessary action of SPR&#146;s Board of
    Directors, and, subject to stockholder approval, this Agreement
    constitutes its valid and binding agreement enforceable against
    it in accordance with its terms, subject to the effects of
    bankruptcy, insolvency, moratorium, fraudulent conveyance and
    similar laws relating to or affecting creditors&#146; rights
    generally and court decisions with respect thereto.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;There are no material legal, administrative or other
    proceedings pending or, to the knowledge of SPR, threatened
    against SPR which assert liability on the part of SPR or which
    materially affect its financial condition or its ability to
    consummate the Reorganization. SPR is not charged with or, to
    the best of its knowledge, threatened with any violation or
    investigation of any possible violation of any provisions of any
    Federal, state or local law or regulation or administrative
    ruling relating to any aspect of its business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;SPR is not a party to or obligated under any provision
    of its Certificate of Incorporation, as amended, or its by-laws,
    as amended, or any contract or other commitment or obligation,
    and is not subject to any order or decree which would be
    violated by its execution of or performance under this</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-3

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Agreement, except for those that will be complied with,
    satisfied, amended or waived to cure any potential violation as
    a condition precedent to the Reorganization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;GAB has been furnished with a statement of assets,
    liabilities and capital and a schedule of investments of SPR,
    each as of the end of SPR&#146;s most recently completed fiscal
    year, said financial statements having been audited by Tardino
    Tocci&nbsp;&#38; Goldstein LLP, an independent registered public
    accounting firm.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;GAB has been furnished with SPR&#146;s Annual Report to
    Stockholders for SPR&#146;s most recently completed fiscal year,
    and the audited financial statements appearing therein fairly
    present the financial position of SPR as of the date thereof, in
    conformity with generally accepted accounting principles applied
    on a consistent basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;There are no material contracts outstanding to which
    SPR is a party that have not been disclosed in the N-14
    Registration Statement or not otherwise disclosed in writing to
    GAB prior to the date of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;SPR has no known liabilities of a material amount,
    contingent or otherwise, other than those shown on its
    statements of assets, liabilities and capital referred to above,
    those incurred in the ordinary course of its business as an
    investment company since the date of such statements, and those
    incurred in connection with the Reorganization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;SPR has filed, or has obtained extensions to file, all
    Federal, state and local tax returns which are required to be
    filed by it, and has paid all Federal, state and local taxes
    shown on said returns to be due and owing and all assessments
    received by it, up to and including the taxable year in which
    the Effective Date occurs. All tax liabilities of SPR have
    adequately been provided for on its books, and no tax deficiency
    or liability of SPR has been asserted and no question with
    respect thereto has been raised by the Internal Revenue Service
    or by any state or local tax authority for taxes in excess of
    those already paid, up to and including the taxable year in
    which the Effective Date occurs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (k)&nbsp;The approval by the holders of two-thirds of the votes
    of all outstanding shares of SPR Common Stock entitled to vote
    thereon on the record date for the special meeting of SPR
    Stockholders is the only vote of stockholders necessary to
    approve the Agreement on behalf of SPR.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (l)&nbsp;No consent, approval, authorization or order of any
    court or governmental authority is required for the consummation
    by SPR of the Reorganization, except such as may be required
    under the 1933&nbsp;Act, the 1934&nbsp;Act, the 1940 Act and the
    laws of the State of New York.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (m)&nbsp;The N-14 Registration Statement, on its effective date,
    at the time of the stockholders&#146; meeting referred to in
    Section&nbsp;6(a) of this Agreement and on the Effective Date,
    insofar as it relates to SPR (i)&nbsp;shall have complied or
    will comply in all material respects with the provisions of the
    1933&nbsp;Act, the 1934&nbsp;Act and the 1940 Act and the rules
    and regulations thereunder, and (ii)&nbsp;did not or will not
    contain any untrue statement of a material fact or omit to state
    any material fact required to be stated therein or necessary to
    make the statements therein not misleading; and the prospectus
    included therein did not or will not contain any untrue
    statement of a material fact or omit to state any material fact
    necessary to make the statements therein, in the light of the
    circumstances under which they were made, not misleading;
    provided, however, that the representations and warranties in
    this subsection shall apply only to statements in or omissions
    from the N-14 Registration Statement made in reliance upon and
    in conformity with information furnished by SPR in writing for
    use in the N-14 Registration Statement as provided in
    Section&nbsp;6 of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (n)&nbsp;On the date of this Agreement, the only shares of
    capital stock authorized for issuance by SPR are
    10,000,000&nbsp;shares of common stock, par value $1.00&nbsp;per
    share (the &#147;SPR Common Stock&#148;), of which
    2,500,000&nbsp;shares are outstanding. Each outstanding share of
    SPR Common Stock is fully paid, nonassessable and has full
    voting rights.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (o)&nbsp;All of the issued and outstanding shares of SPR Common
    Stock have been offered for sale and sold in conformity with all
    applicable Federal and state securities laws.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-4

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (p)&nbsp;The books and records of SPR made available to GAB
    and/or its counsel are substantially true and correct and
    contain no material misstatements or omissions with respect to
    the operations of SPR.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>The Reorganization.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Subject to the terms and conditions contained herein
and on the basis of the representations and warranties contained
herein, SPR agrees to convey, transfer and deliver the assets of
SPR described in Section&nbsp;3(b) to GAB free and clear of all
liens, encumbrances and claims whatsoever. In exchange, GAB
agrees: (a)&nbsp;to deliver to SPR the number of full shares of
GAB determined by dividing the aggregate value of SPR&#146;s
assets, net of the liabilities of SPR and the Reserve (as
defined below), computed in the manner and as of the time and
date set forth in Section&nbsp;3(f), by the net asset value of
one share of GAB computed in the manner and as of the time and
date set forth in Section&nbsp;3(f), subject to the calculation
of Alternative Value as may required by Section&nbsp;3(f), and
cash in lieu of fractional shares of GAB Common Stock; and
(b)&nbsp;to assume the Stated Liabilities of SPR described in
Section&nbsp;3(c). Such transactions shall take place on the
Effective Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;The assets of SPR to be acquired by GAB shall consist
of all property owned by SPR, including, without limitation, all
cash, securities, commodities, interests in futures and other
financial instruments, claims (whether absolute or contingent,
known or unknown), receivables (including dividends, interest,
principal, subscriptions and other receivables), goodwill and
other intangible property, all books and records belonging to
SPR, any deferred or prepaid expenses shown as an asset on the
books of SPR on the Effective Date, and all interests, rights,
privileges and powers, other than cash in an amount necessary to
pay dividends and distributions as provided in
Section&nbsp;6(i), and $250,000 in cash set aside as a reserve
by SPR (the &#147;Reserve&#148;) to pay the estimated amount of
SPR&#146;s expenses in connection with its dissolution and
liquidation (other than the Stated Liabilities) and other than
SPR&#146;s rights under this Agreement (the &#147;Assets&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;SPR will endeavor to identify and discharge, to the
extent practicable, all of its liabilities and obligations,
including all liabilities relating to operations, before the
Effective Date. GAB will assume only those accrued and unpaid
liabilities of SPR set forth in SPR&#146;s statement of assets
and liabilities as of the Effective Date delivered by SPR to GAB
pursuant to this Section (the &#147;Stated Liabilities&#148;).
GAB shall assume only the Stated Liabilities and shall not
assume any other debts, liabilities or obligations of SPR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;SPR will prepare and deliver to GAB on the Effective
Date (1)&nbsp;a statement of the Assets and Stated Liabilities
of SPR and (2)&nbsp;a list of SPR&#146;s portfolio securities
showing the tax costs of each of its assets by lot and the
holding period of such assets, each of (1)&nbsp;and (2)&nbsp;as
of the Effective Date, and certified by the President (or any
Vice President) and Treasurer of SPR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;Prior to the Effective Date, SPR shall have made
arrangements with Citibank, N.A., its custodian, to deliver on
the Effective Date a certificate of an authorized officer
stating that (a)&nbsp;the Assets shall have been delivered in
proper form to Mellon Trust of New England, N.A., custodian for
GAB, prior to or on the Effective Date and (b)&nbsp;all
necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer
stamps, if any, have been paid or provision for payment has been
made. SPR&#146;s portfolio securities represented by a
certificate or other written instrument shall be presented by
the custodian for SPR to the custodian for GAB for examination
no later than five business days preceding the Effective Date
and transferred and delivered by SPR as of the Effective Date
for the account of GAB duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof.
SPR&#146;s portfolio securities and instruments deposited with a
securities depository, as defined in Rule&nbsp;17f-4 under the
1940 Act, shall be delivered as of the Effective Date by book
entry with the customary practices of such depositories and the
custodian for GAB. The cash to be transferred by SPR shall be
delivered by wire transfer of federal funds on the Effective
Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;The number of full shares of GAB Common Stock to be
issued to SPR shall be computed by dividing: (i)&nbsp;the
aggregate value of SPR&#146;s Assets, net of SPR&#146;s Stated
Liabilities and the Reserve, as computed by SPR on the Effective
Date by (ii)&nbsp;the net asset value of one share of GAB Common
Stock as determined by GAB on the Effective Date;
<U>provided</U>, <U>however</U>, that if the average closing
price of GAB Common Stock on the New York Stock Exchange for the
20 business days prior to the Effective Date exceeds
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the net asset value per share of GAB Common Stock on the
Effective Date, the number of shares of GAB Common Stock to be
issued to SPR shall be computed by dividing (i)&nbsp;the
aggregate value of SPR&#146;s Assets, net of SPR&#146;s Stated
Liabilities and the Reserve, as computed by SPR on the Effective
Date by (ii)&nbsp;the lower of (x)&nbsp;the average of such
closing prices for the 20 business days prior to the Effective
Date and (y)&nbsp;103% of the net asset value per share of GAB
Common Stock computed on the Effective Date (&#147;Alternative
Value&#148;). GAB will at the same time deliver to SPR cash in
lieu of any fractional shares of GAB Common Stock.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B>Liquidation and Distribution.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;At or as soon as practicable after the Effective Date,
SPR will distribute in complete liquidation of SPR (other than
the Reserve), pro rata to its stockholders of record, determined
as of the close of business on the Effective Date (the &#147;SPR
Stockholders&#148;), all of the GAB Common Stock and cash in
lieu of fractional shares received by SPR. Upon completion of
the distribution of the GAB Common Stock and cash, SPR will
thereupon proceed to dissolve and terminate in accordance with
the NYBCL and other applicable law, and the Reserve will be
transferred to a liquidating trust for the benefit of the SPR
Stockholders. Such distribution and liquidation will be
accomplished by the transfer of the GAB Common Stock then
credited to the account of SPR on the books of GAB to open
accounts on the share records of GAB in the names of the SPR
Stockholders. All issued and outstanding shares of SPR will,
simultaneously with the liquidation, be cancelled on the books
of SPR and will be null and void.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;With respect to any SPR Stockholder holding
certificates evidencing ownership of SPR Common Stock as of the
Effective Date, and subject to GAB being informed thereof in
writing by SPR, GAB will not issue new certificates evidencing
ownership of the GAB Common Stock or permit such SPR Stockholder
to pledge or redeem such GAB Common Stock, in any case, until
such SPR Stockholder has surrendered his or her outstanding
certificates evidencing ownership of SPR Common Stock or, in the
event of lost certificates, posted adequate bond. SPR, at its
own expense, will request SPR Stockholders to surrender their
outstanding certificates evidencing ownership of SPR Common
Stock or post adequate bond therefor. Dividends payable to
holders of record of shares of GAB Common Stock as of any date
after the Effective Date and prior to the exchange of
certificates by any SPR Stockholder shall be paid to such SPR
Stockholder, without interest; however, such dividends shall not
be paid unless and until such SPR Stockholder surrenders his or
her stock certificates for exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Prior to the Effective Date, SPR shall have made
arrangements with Registrar and Transfer Company, its transfer
agent and registrar, to deliver to GAB a list of the names and
addresses of all of the stockholders of record of SPR Common
Stock on the Effective Date and the number of shares of SPR
Common Stock owned by each such stockholder, certified by
SPR&#146;s transfer agent or President to the best of their
knowledge and belief.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Payment of Expenses.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Each of GAB and SPR shall pay, subject to paragraph
(b)&nbsp;of this Section&nbsp;5, all of their respective
expenses incurred in connection with the Reorganization. Such
fees and expenses shall include legal, accounting and state
securities or blue sky fees (if any), printing costs, proxy
solicitation fees, consulting fees, filing fees, stock exchange
fees, rating agency fees, portfolio transfer taxes (if any), and
any similar expenses incurred in connection with the
Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Each of Gabelli and SPR shall pay 50% of the reasonable
and documented expenses of printing and mailing the proxy
statements and proxy cards to SPR shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Neither GAB nor SPR shall pay any expenses of its
respective stockholders arising out of or in connection with the
Reorganization.
</DIV>

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Covenants of the Funds.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;SPR agrees to call a special meeting of its
stockholders to be held as soon as is practicable after the
effective date of the N-14 Registration Statement for the
purpose of considering the Reorganization as described in this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Each Fund covenants to operate its respective business
as presently conducted between the date hereof and the Effective
Date, it being understood that such ordinary course of business
will include (i)&nbsp;the declaration and payment of customary
dividends and other distributions and (ii)&nbsp;in the case of
SPR, (A)&nbsp;preparing for its deregistration and (B)&nbsp;the
establishment of the Reserve, except that the distribution of
dividends pursuant to Section&nbsp;6(i) of this Agreement shall
not be deemed to constitute a breach of the provisions of this
Section&nbsp;6(b).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;GAB will file the N-14 Registration Statement with the
Securities and Exchange Commission (the &#147;Commission&#148;)
as promptly as practicable and will use its best efforts to
provide that the N-14 Registration Statement becomes effective
as promptly as practicable thereafter. SPR agrees to cooperate
fully with GAB and will furnish to GAB the information relating
to itself to be set forth in the N-14 Registration Statement as
required by the 1933 Act, the 1934 Act, the 1940 Act, and the
rules and regulations thereunder and applicable state securities
or blue sky laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;GAB will use commercially reasonable efforts to obtain
any and all regulatory, rating agency, director and/or
stockholder approvals necessary to issue the GAB Common Stock in
connection with the Reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;GAB agrees that it has no plan or intention to sell or
otherwise dispose of the Assets of SPR to be acquired in the
Reorganization, except for dispositions made in the ordinary
course of business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;Each Fund agrees that, on or before the Effective Date,
all of its Federal and other tax returns and reports required to
be filed on or before such date shall have been filed and all
taxes shown as due on said returns either shall have been paid
or adequate liability reserves shall have been provided for the
payment of such taxes. In connection with this covenant, SPR
agrees to cooperate with GAB in filing any tax return, amended
return or claim for refund, determining a liability for taxes or
a right to a refund of taxes or participating in or conducting
any audit or other proceeding in respect of taxes. GAB agrees to
retain for a period of ten (10)&nbsp;years following the
Effective Date all returns, schedules and work papers and all
material records or other documents relating to tax matters of
SPR for its taxable periods first ending after such Effective
Date and for all prior taxable periods. Any information obtained
under this subsection shall be kept confidential except as
otherwise may be necessary in connection with the filing of
returns or claims for refund or in conducting an audit or other
proceeding. After the Effective Date, GAB at its expense shall
prepare, or cause its agents to prepare, any federal, state or
local tax returns, including any Forms&nbsp;1099, required to be
filed and provided to required persons by SPR with respect to
its final taxable year ending with the Effective Date and for
any prior periods or taxable years for which the due date for
such return has not passed as of the Effective Date and further
shall cause such tax returns and Forms&nbsp;1099 to be duly
filed with the appropriate taxing authorities and provided to
required persons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;SPR agrees to mail to its respective stockholders of
record entitled to vote at the special meeting of stockholders
at which action is to be considered regarding this Agreement, in
sufficient time to comply with requirements as to notice
thereof, a combined Proxy Statement and Prospectus which
complies in all material respects with the applicable provisions
of Section&nbsp;14(a) of the 1934 Act and Section&nbsp;20(a) of
the 1940 Act, and the rules and regulations, respectively,
thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;SPR shall have taken all steps required to terminate
all contracts with service providers effective not later than
the Effective Date and SPR shall record any liabilities arising
therefrom.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;Prior to the Effective Date, SPR shall have declared a
dividend or dividends, with a record and ex-dividend date prior
to the Effective Date, which, together with all previous
dividends, shall have the effect of distributing to the SPR
Stockholders all of SPR&#146;s investment company taxable income
for all taxable periods ending on or before the Effective Date
(computed without regard to any deduction for dividends paid),
if any,
</DIV>

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<DIV align="left" style="font-size: 10pt;">
plus the excess of its interest income, if any, excludable from
gross income under Section&nbsp;103(a) of the Code over its
deductions disallowed under Sections&nbsp;265 and 171(a)(2) of
the Code for all taxable periods ending on or before the
Effective Date and all of its net capital gains realized in all
taxable periods ending on or before the Effective Date (after
reduction for any capital loss carry forward).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;Following the consummation of the Reorganization, GAB
expects to stay in existence and continue its business as a
closed-end management investment company registered under the
1940 Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;Except as contemplated herein, each Fund agrees that,
other than with respect to the dividend contemplated in
Section&nbsp;6(i), during the period from the date hereof to and
including the Effective Date, it will declare and pay dividends
consistent with past practices and the terms of the common stock
and, in the case of GAB, the preferred stock issued by such Fund.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPR undertakes that, if the
Reorganization is effected, it will file, or cause its agents to
file, an application pursuant to Section&nbsp;8(f) of the 1940
Act for an order declaring that SPR has ceased to be a
registered investment company.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Effective Date of the Reorganization.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;The Reorganization shall be effective five
(5)&nbsp;business days after each of the conditions in
Sections&nbsp;8 and 9 has been satisfied or waived by the
applicable party, or at such other time and date as fixed by the
mutual consent of the parties (such date, the &#147;Effective
Date&#148;).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>GAB&#146;s Conditions.</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The obligation of GAB to consummate the Reorganization shall be
subject to the satisfaction or waiver of the following
conditions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;This Agreement shall have been adopted, and the
    Reorganization shall have been approved, by the affirmative vote
    of two-thirds of the votes of all outstanding shares of SPR
    Common Stock entitled to vote thereon on the record date for the
    special meeting of SPR Stockholders; and SPR shall have
    delivered to GAB a copy of the resolutions adopting this
    Agreement and approving the Reorganization adopted by its Board
    of Directors and Stockholders and certified by its Secretary.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (b)&nbsp;SPR shall have furnished to GAB a certificate signed by
    its President (or any Vice President) and its Treasurer, dated
    the Effective Date, certifying that as of such Effective Date
    all representations and warranties made in this Agreement are
    true and correct in all material respects as if made at and as
    of such date and it has complied with all of the agreements and
    satisfied all of the conditions on its part to be performed or
    satisfied at or prior to such date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;GAB shall have received an opinion of Skadden, Arps,
    Slate, Meagher &#38; Flom LLP, as counsel to SPR, in form and
    substance satisfactory to GAB and dated the Effective Date, to
    the effect that (i)&nbsp;SPR is a corporation duly organized,
    validly existing and in good standing in conformity with New
    York Law; (ii)&nbsp;all corporate actions required to be taken
    by SPR to authorize this Agreement and to effect the
    Reorganization have been duly authorized by all necessary
    corporate actions thereof; (iii)&nbsp;the execution and delivery
    of this Agreement does not, and the consummation of the
    Reorganization will not, violate any material provision of the
    Certificate of Incorporation, as amended, or the by-laws, as
    amended, or any agreement (known to such counsel) to which SPR
    is a party or by which SPR is bound; (iv)&nbsp;to the knowledge
    of such counsel, all regulatory or court consents,
    authorizations, approvals, orders or filings required to be
    obtained or made by SPR under the Federal laws of the United
    States or the laws of the State of New York for the transfer of
    SPR&#146;s Assets for GAB Common Stock pursuant to the Agreement
    have been obtained or made; (v)&nbsp;this Agreement has been
    duly authorized, executed and delivered by SPR and, assuming
    that the N-14 Registration Statement complies with the 1933 Act,
    the 1934 Act and the 1940 Act, represents a valid and binding
    agreement, enforceable against SPR in accordance with its terms,
    except as enforceability may be limited by bankruptcy,
    insolvency, fraudulent conveyance, reorganization or other
    similar laws pertaining to the enforcement of creditors&#146;
    rights generally and by equitable principles; and (vi)&nbsp;such
    counsel does not know of any contracts or other</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    documents with respect to SPR related to the Reorganization of a
    character required to be described in the N-14 Registration
    Statement which are not described therein or, if required to be
    filed, filed as required. In giving the opinion set forth above,
    Skadden, Arps, Slate, Meagher &#38; Flom LLP may state that it
    is relying on certificates of officers of SPR with regard to
    matters of fact and certificates and written statements of
    governmental officials with respect to factual matters.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Such counsel shall also state that while such counsel cannot
    make any representation as to the accuracy or completeness of
    statements of fact in the N-14 Registration Statement or any
    amendment or supplement thereto with respect to SPR, nothing has
    come to their attention that would lead them to believe that, on
    the respective effective dates of the N-14 Registration
    Statement and any amendment or supplement thereto, with respect
    to SPR, the N-14 Registration Statement or any amendment or
    supplement thereto contained any untrue statement of a material
    fact or omitted to state any material fact necessary to make the
    statements therein in light of the circumstances under which
    they were made, not misleading with respect to SPR; provided,
    such counsel need not express any opinion or belief as to the
    financial statements, other financial data, statistical data or
    information relating to SPR contained or incorporated by
    reference in the N-14 Registration Statement.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;GAB shall have received an opinion from Willkie Farr
    &#38; Gallagher LLP, as counsel to GAB, in form and substance
    satisfactory to GAB and dated the Effective Date, substantially
    to the effect that, based upon certain facts, assumptions and
    representations, for Federal income tax purposes the acquisition
    by GAB of all or substantially all of the Assets of SPR (other
    than the Reserve) solely in exchange for GAB Common Stock and
    the assumption by GAB of the Stated Liabilities of SPR, followed
    by the distribution by SPR to its stockholders of full shares of
    GAB Common Stock (and the payment in cash in lieu of fractional
    shares) in complete liquidation of SPR, all pursuant to the
    Agreement, constitutes a reorganization within the meaning of
    Section&nbsp;368(a) of the Code, and GAB and SPR will each be a
    &#147;party to a reorganization&#148; within the meaning of
    Section&nbsp;368(b) of the Code. The delivery of such opinion is
    conditioned upon receipt by Willkie Farr &#38; Gallagher LLP of
    representations it shall request of GAB and SPR. Notwithstanding
    anything herein to the contrary, neither GAB nor SPR may waive
    the condition set forth in this Section&nbsp;8(d).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;The Assets or Stated Liabilities of SPR as of the
    Effective Date shall not include any assets or liabilities which
    GAB, by reason of charter limitations or otherwise, may not
    properly acquire or assume, there being no such assets or
    liabilities to the best knowledge of GAB as of the date of this
    Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;The N-14 Registration Statement shall have become
    effective under the 1933 Act and no stop order suspending such
    effectiveness shall have been instituted or, to the knowledge of
    GAB, shall be contemplated by the Commission.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;The Commission shall not have issued an unfavorable
    advisory report under Section&nbsp;25(b) of the 1940 Act, nor
    instituted or threatened to institute any proceeding seeking to
    enjoin consummation of the Reorganization under
    Section&nbsp;25(c) of the 1940 Act; and no other legal,
    administrative or other proceeding shall be instituted or
    threatened which would materially affect the financial condition
    of SPR or would prohibit the Reorganization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;All proceedings taken by SPR and its counsel in
    connection with the Reorganization and all documents incidental
    thereto shall be satisfactory in form and substance to GAB.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;Prior to the Effective Date, SPR shall have declared a
    dividend or dividends which, together with all such previous
    dividends, shall have the effect of distributing to its
    stockholders all of its net investment company taxable income,
    if any, for the tax year of SPR ending on the Effective Date,
    and all of its net capital gain, if any, realized for the tax
    year of SPR ending on the Effective Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;There shall not have occurred any material adverse
    change in the financial condition of SPR or results of
    operations of SPR, provided that any adverse changes in market
    prices of securities in which SPR invests, individually or in
    the aggregate, shall not be deemed to be a material adverse
    change.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SPR&#146;s Conditions.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The obligations of SPR hereunder shall be subject to the
satisfaction or waiver of the following conditions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;This Agreement shall have been adopted, and the
    Reorganization shall have been approved, by the Board of
    Directors of GAB; and GAB shall have delivered to SPR a copy of
    the resolutions, adopted by its Board of Directors and certified
    by its Secretary, so adopting this Agreement and approving the
    Reorganization. (b)&nbsp;GAB shall have furnished to SPR a
    certificate of its President (or any Vice President) and its
    Treasurer dated as of the Effective Date, certifying that
    (i)&nbsp;as of the Effective Date there has been no material
    adverse change in its financial position since the date of
    GAB&#146;s most recent financial statements provided to SPR,
    other than changes in its portfolio securities since that date
    or changes in the market value of its portfolio securities and
    (ii)&nbsp;immediately after the Effective Date, GAB will be in
    compliance with all asset coverage tests applicable to the
    outstanding preferred stock of GAB.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;GAB shall have furnished to SPR a certificate signed by
    its President (or any Vice President), dated the Effective Date,
    certifying that all representations and warranties of GAB made
    in this Agreement are true and correct in all material respects
    with the same effect as if made at and as of such Effective
    Date, and that GAB has complied with all of the agreements and
    satisfied all of the conditions on its part to be performed or
    satisfied at or prior to such date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (d)&nbsp;All proceedings taken by GAB and its counsel in
    connection with the Reorganization and all documents incidental
    thereto shall be satisfactory in form and substance to SPR.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (e)&nbsp;The N-14 Registration Statement shall have become
    effective under the 1933 Act, and no stop order suspending such
    effectiveness shall have been instituted or, to the knowledge of
    SPR, shall be contemplated by the Commission.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (f)&nbsp;The Commission shall not have issued an unfavorable
    advisory report under Section&nbsp;25(b) of the 1940 Act, nor
    instituted or threatened to institute any proceeding seeking to
    enjoin consummation of the Reorganization under
    Section&nbsp;25(c) of the 1940 Act; and no other legal,
    administrative or other proceeding shall be instituted or
    threatened which would materially affect the financial condition
    of SPR or would prohibit the Reorganization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (g)&nbsp;SPR shall have received an opinion from Willkie
    Farr&nbsp;&#38; Gallagher LLP, as counsel to GAB, in form and
    substance satisfactory to SPR and dated the Effective Date, to
    the effect that (i)&nbsp;GAB is a corporation duly organized,
    validly existing and in good standing under the laws of the
    State of Maryland; (ii)&nbsp;the Agreement has been duly
    authorized, executed and delivered by GAB, and, assuming that
    the N-14 Registration Statement complies with the 1933 Act, the
    1934 Act and the 1940 Act, constitutes a valid and legally
    binding agreement of GAB, enforceable against GAB in accordance
    with its terms, except as enforceability may be limited by
    bankruptcy, insolvency, fraudulent conveyance, reorganization or
    other similar laws pertaining to the enforcement of
    creditors&#146; rights generally and by equitable principles;
    (iii)&nbsp;to the knowledge of such counsel all regulatory and
    court consents, authorizations, approvals, orders or filings
    required to be obtained or made by GAB under the Federal laws of
    the United States or the laws of the State of Maryland with
    respect to the issuance of GAB Common Stock in exchange for the
    transfer of SPR&#146;s Assets pursuant to the Agreement have
    been obtained or made; (iv)&nbsp;the N-14 Registration Statement
    has become effective under the 1933 Act, and to such
    counsel&#146;s knowledge no stop order suspending the
    effectiveness of the N-14 Registration Statement has been issued
    and no proceedings for that purpose have been instituted or are
    pending or contemplated under the 1933 Act, and with respect to
    GAB, the N-14 Registration Statement, and each amendment or
    supplement thereto, as of their respective effective dates,
    appear on their face to be appropriately responsive in all
    material respects to the requirements of the 1933 Act, the 1934
    Act and the 1940 Act and the published rules and regulations of
    the Commission thereunder; (v)&nbsp;such counsel does not know
    of any statutes, legal or governmental proceedings or contracts
    with respect to GAB or other documents related to the
    Reorganization of a character required to be described in the
    N-14 Registration Statement that are not described therein or,
    if required to be filed, filed as required; (vi)&nbsp;the
    execution and delivery of this</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Agreement does not, and the consummation of the Reorganization
    will not, violate any material provision of the Articles of
    Incorporation, as amended, the Articles&nbsp;Supplementary, the
    by-laws, as amended, or any agreement (known to such counsel) to
    which GAB is a party or by which GAB is bound; and
    (vii)&nbsp;all corporate actions required to be taken by GAB to
    authorize this Agreement and to effect the Reorganization have
    been duly authorized by all necessary corporate actions on
    behalf of GAB. In giving the opinion set forth above, Willkie
    Farr&nbsp;&#38; Gallagher LLP may state that it is relying on
    certificates of officers of GAB with regard to matters of fact
    and certificates and written statements of governmental
    officials with respect to factual matters. With respect to all
    matters of Maryland law, such counsel shall be entitled to state
    that, with the approval of SPR, they have relied upon the
    opinion of Venable LLP and that their opinion is subject to the
    same assumptions, qualifications and limitations with respect to
    such matters as are contained in the opinion of Venable LLP.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Such counsel also shall state that while such counsel cannot
    make any representation as to the accuracy or completeness of
    statements of fact in the N-14 Registration Statement or any
    amendment or supplement thereto with respect to GAB, nothing has
    come to their attention that would lead them to believe that, on
    the respective effective dates of the N-14 Registration
    Statement and any amendment or supplement thereto, the N-14
    Registration Statement or any amendment or supplement thereto
    contained any untrue statement of a material fact or omitted to
    state any material fact required to be stated therein or
    necessary to make the statements therein not misleading with
    respect to GAB; and the prospectus included in the N-14
    Registration Statement contained any untrue statement of a
    material fact or omitted to state any material fact necessary to
    make the statements therein, in the light of the circumstances
    under which they were made, not misleading with respect to GAB;
    provided, that such counsel need not express any opinion or
    belief as to the financial statements, other financial data,
    statistical data or information relating to GAB included or
    incorporated by reference in the N-14 Registration Statement.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (h)&nbsp;SPR shall have received an opinion from Skadden, Arps,
    Slate, Meagher&nbsp;&#38; Flom LLP, as counsel to SPR, in form
    and substance satisfactory to SPR and dated the Effective Date,
    substantially to the effect that, based upon certain facts,
    assumptions and representations, for Federal income tax purposes
    the acquisition by GAB of all or substantially all of the Assets
    of SPR (other than the Reserve) solely in exchange for GAB
    Common Stock and the assumption by GAB of the Stated Liabilities
    of SPR, followed by the distribution by SPR to its stockholders
    of full shares of GAB Common Stock (and the payment in cash in
    lieu of fractional shares) in complete liquidation of SPR, all
    pursuant to the Agreement, constitutes a reorganization within
    the meaning of Section&nbsp;368(a) of the Code, and GAB and SPR
    will each be a &#147;party to a reorganization&#148; within the
    meaning of Section&nbsp;368(b) of the Code. The delivery of such
    opinion is conditioned upon receipt by Skadden, Arps, Slate,
    Meagher&nbsp;&#38; Flom LLP of representations it shall request
    of SPR and GAB. Notwithstanding anything herein to the contrary,
    neither GAB nor SPR may waive the condition set forth in this
    Section&nbsp;9(h).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;GAB shall have received from the Commission such orders
    or interpretations as are reasonably necessary or desirable
    under the 1933 Act, the 1934 Act and the 1940 Act, and from any
    relevant state securities administrator such orders or
    interpretations as are reasonably necessary and desirable under
    any applicable state securities or blue sky laws, in connection
    with the Reorganization, and all such orders shall be in full
    force and effect.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (j)&nbsp;There shall not have occurred any material adverse
    change in the financial condition of GAB or the consolidated
    financial condition of Gabelli, businesses, or results of
    operations of GAB or Gabelli, provided that any adverse changes
    in market prices of securities in which GAB invests,
    individually or in the aggregate, shall not be deemed to be a
    material adverse change.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination, Postponement
and Waivers.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated and the
Reorganization abandoned at any time (whether before or after
approval thereof by the SPR Stockholders) prior to the Effective
Date, or such Effective Date may be postponed, (i)&nbsp;by mutual
</DIV>

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<DIV align="left" style="font-size: 10pt;">
consent of the Board of Directors of the Funds; (ii)&nbsp;by the
Board of Directors of SPR if any condition of GAB&#146;s
obligations set forth in Section&nbsp;9 of this Agreement has
not been fulfilled or waived by such Board or if GAB has made a
material and intentional misrepresentation herein or in
connection herewith; or (iii)&nbsp;by the Board of Directors of
GAB if any conditions of SPR&#146;s obligations set forth in
Section&nbsp;8 of this Agreement has not been fulfilled or
waived by such Board or if SPR has made a material and
intentional misrepresentation herein or in connection herewith.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;If the transactions contemplated by this Agreement have
not been consummated by December&nbsp;31, 2005, either Fund may
terminate this Agreement by action of its Board of Directors,
except that if the failure to consummate the transactions is the
result of a breach of this Agreement by a Fund, that Fund may
not terminate the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;In the event of termination of this Agreement pursuant
to the provisions hereof, the same shall become void and have no
further effect, and there shall not be any liability on the part
of either Fund or persons who are their directors, officers,
agents or stockholders in respect of this Agreement, except for
any such material breach or intentional misrepresentation, as to
each of which all remedies at law or in equity of the party
adversely affected shall survive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;At any time prior to the Effective Date, either Fund
may, by written instrument signed by its Board of Directors,
(i)&nbsp;extend the time for the performance of any of the
obligations or other acts of the other, (ii)&nbsp;waive any
inaccuracies in the representations and warranties of the other
contained herein and (iii)&nbsp;waive compliance with any of the
agreements of the other or conditions to its obligations
contained herein; provided in each case that, in the judgment of
the Board of Directors of such Fund, after consultation with its
counsel, such action will not have a material adverse effect on
the benefits intended under this Agreement to the stockholders
of the Fund on behalf of which such action is taken.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;This Agreement may not be amended except by an
instrument in writing executed by the parties affected by any
such amendment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;The respective representations and warranties contained
in Sections&nbsp;1 and 2 of this Agreement shall expire with,
and be terminated by, the consummation of the Reorganization,
and none of GAB or SPR or any of their officers, directors,
agents or stockholders shall have any liability with respect to
such representations or warranties after the Effective Date.
This provision shall not protect any officer, director, agent or
stockholder of GAB or SPR against any liability to the entity
for which that officer, director, agent or stockholder so acts
or to its stockholders to which that officer, director, agent or
stockholder otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties in the conduct of such office.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;If any order or orders of the Commission with respect
to this Agreement shall be issued prior to the Effective Date
and shall impose any terms or conditions which are determined by
action of the Boards of Directors of GAB or SPR to be
acceptable, such terms and conditions shall be binding as if a
part of this Agreement without further vote or approval of the
SPR Stockholders, unless such terms and conditions shall result
in a change in the method of computing the number of shares of
GAB Common Stock to be issued pursuant to this Agreement, in
which event, unless such terms and conditions shall have been
included in the proxy solicitation materials furnished to the
SPR Stockholders prior to the meeting at which the
Reorganization shall have been approved, this Agreement shall
not be consummated and shall terminate, unless SPR promptly
shall call a special meeting of SPR Stockholders at which such
conditions so imposed shall be submitted for approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Matters.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;Pursuant to Rule&nbsp;145 under the 1933 Act, and in
connection with the issuance of any shares of GAB Common Stock
to any person who at the time of the Reorganization is, to its
knowledge, an affiliate of a party
</DIV>

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<DIV align="left" style="font-size: 10pt;">
to the Reorganization pursuant to Rule&nbsp;145(c), GAB will
cause to be affixed upon the certificate(s) issued to such
person (if any) a legend as follows:
</DIV>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
    SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE
    TRANSFERRED EXCEPT TO THE GABELLI EQUITY TRUST INC. (OR ITS
    STATUTORY SUCCESSOR) OR ITS PRINCIPAL UNDERWRITER UNLESS
    (I)&nbsp;A REGISTRATION STATEMENT WITH RESPECT THERETO IS
    EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (II)&nbsp;IN THE
    OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH
    REGISTRATION IS NOT REQUIRED.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
and, further, that stop transfer instructions will be issued to
GAB&#146;s transfer agent with respect to such shares. SPR will
provide GAB on the Effective Date with the name of any SPR
Stockholder who is to the knowledge of SPR an affiliate of it on
such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Any notice, request, demand, claim and other
communication required or permitted by any provision of this
Agreement shall be in writing and shall be deemed to have been
given if delivered or mailed, first class postage prepaid,
addressed to GAB at One Corporate Center, Rye, New York
10580-1422, Attn: Bruce N. Alpert, President, with a copy to
Daniel Schloendorn, Esq., Willkie Farr&nbsp;&#38; Gallagher LLP,
787&nbsp;Seventh Avenue, New York, New York 10019, and to SPR at
635&nbsp;Madison Avenue, New York, New York 10022, Attn: Michael
Carey, Secretary, with a copy to Michael Hoffman, Esq.,
c/o&nbsp;Skadden, Arps, Slate, Meagher&nbsp;&#38; Flom LLP, Four
Times Square, New York, New York 10036.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;This Agreement supersedes all previous correspondence
and oral communications between the parties regarding the
Reorganization, constitutes the only understanding with respect
to the Reorganization, may not be changed except by a letter of
agreement signed by each party and shall be governed by and
construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in said state.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall
be deemed to be an original but all such counterparts together
shall constitute but one instrument.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;In case at any time after the Effective Date any
further action is necessary to carry out the purposes of this
Agreement, each Fund will take such further action (including
the execution and delivery of such further instruments and
documents) as the other Fund may reasonably request, all at the
sole cost and expense of the requesting Fund (unless the
non-requesting Fund is obligated to pay such expenses as
described above). SPR acknowledges and agrees that from and
after the Effective Date, GAB shall be entitled to possession of
all documents, books, records, agreements, and financial data of
any sort pertaining to SPR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;All covenants, agreements, representations, and
warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have
been material and relied upon by each Fund, notwithstanding any
investigation made by them or on their behalf.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any
other jurisdiction.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Amended and Restated Agreement and Plan of
Reorganization.
</DIV>


<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    STERLING CAPITAL CORPORATION</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">Wayne S. Reisner
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;Wayne S. Reisner</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:&nbsp;&nbsp;&nbsp;President</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    THE GABELLI EQUITY TRUST INC.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">Bruce N. Alpert
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;Bruce N. Alpert</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:&nbsp;&nbsp;&nbsp;President</TD>
</TR>

<TR>
    <TD style="font-size: 24pt">&nbsp;</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    GABELLI FUNDS, LLC</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    (solely for purposes of Section&nbsp;5(b))</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="left">
    /s/ <FONT style="font-variant:SMALL-CAPS">James E. McKee
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Name:&nbsp;James E. McKee</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="left">
    Title:&nbsp;&nbsp;&nbsp;Secretary</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">A-14
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Exhibit&nbsp;B</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DISSENTERS&#146; RIGHTS STATUTE</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SECTION&nbsp;910 AND SECTION&nbsp;623 OF THE NEW YORK
GENERAL</B>
</DIV>



<DIV align="center" style="font-size: 10pt;">
<B>CORPORATION LAW</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><FONT style="font-variant:SMALL-CAPS">Section&nbsp;910.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Right
of shareholder to receive payment for shares upon merger or
consolidation, or sale, lease, exchange or other disposition of
assets, or share exchange</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;A shareholder of a domestic corporation shall, subject
to and by complying with section&nbsp;623 (Procedure to enforce
shareholder&#146;s right to receive payment for shares), have
the right to receive payment of the fair value of his shares and
the other rights and benefits provided by such section, in the
following cases:
</DIV>


<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;Any shareholder entitled to vote who does not assent to
    the taking of an action specified in clauses&nbsp;(A), (B) and
    (C).</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (A)&nbsp;Any plan of merger or consolidation to which the
    corporation is a party; except that the right to receive payment
    of the fair value of his shares shall not be available:</TD>
</TR>

</TABLE>


<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (i)&nbsp;To a shareholder of the parent corporation in a merger
    authorized by section&nbsp;905 (Merger of parent and subsidiary
    corporations), or paragraph&nbsp;(c)&nbsp;of section&nbsp;907
    (Merger or consolidation of domestic and foreign
    corporations);&nbsp;or</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (ii)&nbsp;To a shareholder of the surviving corporation in a
    merger authorized by this article, other than a merger specified
    in subclause&nbsp;(i), unless such merger effects one or more of
    the changes specified in subparagraph&nbsp;(b) (6)&nbsp;of
    section&nbsp;806 (Provisions as to certain proceedings) in the
    rights of the shares held by such shareholder;&nbsp;or</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (iii)&nbsp;Notwithstanding subclause&nbsp;(ii) of this clause,
    to a shareholder for the shares of any class or series of stock,
    which shares or depository receipts in respect thereof, at the
    record date fixed to determine the shareholders entitled to
    receive notice of the meeting of shareholders to vote upon the
    plan of merger or consolidation, were listed on a national
    securities exchange or designated as a national market system
    security on an interdealer quotation system by the National
    Association of Securities Dealers, Inc.</TD>
</TR>


</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (B)&nbsp;Any sale, lease, exchange or other disposition of all
    or substantially all of the assets of a corporation which
    requires shareholder approval under section&nbsp;909 (Sale,
    lease, exchange or other disposition of assets) other than a
    transaction wholly for cash where the shareholders&#146;
    approval thereof is conditioned upon the dissolution of the
    corporation and the distribution of substantially all of its net
    assets to the shareholders in accordance with their respective
    interests within one year after the date of such transaction.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (C)&nbsp;Any share exchange authorized by section&nbsp;913 in
    which the corporation is participating as a subject corporation;
    except that the right to receive payment of the fair value of
    his shares shall not be available to a shareholder whose shares
    have not been acquired in the exchange or to a shareholder for
    the shares of any class or series of stock, which shares or
    depository receipt in respect thereof, at the record date fixed
    to determine the shareholders entitled to receive notice of the
    meeting of shareholders to vote upon the plan of exchange, were
    listed on a national securities exchange or designated as a
    national market system security on an interdealer quotation
    system by the National Association of Securities Dealers, Inc.</TD>
</TR>


</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;Any shareholder of the subsidiary corporation in a
    merger authorized by section&nbsp;905 or
    paragraph&nbsp;(c)&nbsp;of section&nbsp;907, or in a share
    exchange authorized by paragraph&nbsp;(g)&nbsp;of
    section&nbsp;913, who files with the corporation a written
    notice of election to dissent as provided in
    paragraph&nbsp;(c)&nbsp;of section&nbsp;623.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt;">B-1

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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;Any shareholder, not entitled to vote with respect to a
    plan of merger or consolidation to which the corporation is a
    party, whose shares will be cancelled or exchanged in the merger
    or consolidation for cash or other consideration other than
    shares of the surviving or consolidated corporation or another
    corporation.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><FONT style="font-variant:SMALL-CAPS">Section&nbsp;623.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Procedure
to enforce shareholder&#146;s right to receive payment for
shares</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;A shareholder intending to enforce his right under a
section of this chapter to receive payment for his shares if the
proposed corporate action referred to therein is taken shall
file with the corporation, before the meeting of shareholders at
which the action is submitted to a vote, or at such meeting but
before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and
residence address, the number and classes of shares as to which
he dissents and a demand for payment of the fair value of his
shares if the action is taken. Such objection is not required
from any shareholder to whom the corporation did not give notice
of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders
without a meeting.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;Within ten&nbsp;days after the shareholders&#146;
authorization date, which term as used in this section means the
date on which the shareholders&#146; vote authorizing such
action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the
corporation shall give written notice of such authorization or
consent by registered mail to each shareholder who filed written
objection or from whom written objection was not required,
excepting any shareholder who voted for or consented in writing
to the proposed action and who thereby is deemed to have elected
not to enforce his right to receive payment for his shares.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;Within twenty days after the giving of notice to him,
any shareholder from whom written objection was not required and
who elects to dissent shall file with the corporation a written
notice of such election, stating his name and residence address,
the number and classes of shares as to which he dissents and a
demand for payment of the fair value of his shares. Any
shareholder who elects to dissent from a merger under
section&nbsp;905 (Merger of subsidiary corporation) or
paragraph&nbsp;(c) of section&nbsp;907 (Merger or consolidation
of domestic and foreign corporations) or from a share exchange
under paragraph&nbsp;(g) of section&nbsp;913 (Share exchanges)
shall file a written notice of such election to dissent within
twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features
thereof under section&nbsp;905 or 913.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;A shareholder may not dissent as to less than all of
the shares, as to which he has a right to dissent, held by him
of record, that he owns beneficially. A nominee or fiduciary may
not dissent on behalf of any beneficial owner as to less than
all of the shares of such owner, as to which such nominee or
fiduciary has a right to dissent, held of record by such nominee
or fiduciary.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;Upon consummation of the corporate action, the
shareholder shall cease to have any of the rights of a
shareholder except the right to be paid the fair value of his
shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior
to his acceptance in writing of an offer made by the
corporation, as provided in paragraph&nbsp;(g), but in no case
later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a
timely offer, as provided in paragraph&nbsp;(g), the time for
withdrawing a notice of election shall be extended until sixty
days from the date an offer is made. Upon expiration of such
time, withdrawal of a notice of election shall require the
written consent of the corporation. In order to be effective,
withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the
shareholder as provided in paragraph&nbsp;(g). If a notice of
election is withdrawn, or the corporate action is rescinded, or
a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall
otherwise lose his dissenters rights, he shall not have the
right to receive payment for his shares and he shall be
reinstated to all his rights as a shareholder as of the
consummation of the corporate action, including any intervening
preemptive rights and the right to payment of any intervening
dividend or other distribution or, if any such rights have
expired or any such dividend or distribution other than in cash
has been completed, in lieu thereof, at the election of the
corporation, the fair value thereof in cash as determined by the
board as of the time of
</DIV>


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<DIV align="left" style="font-size: 10pt;">
such expiration or completion, but without prejudice otherwise
to any corporate proceedings that may have been taken in the
interim.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;At the time of filing the notice of election to dissent
or within one month thereafter the shareholder of shares
represented by certificates shall submit the certificates
representing his shares to the corporation, or to its transfer
agent, which shall forthwith note conspicuously thereon that a
notice of election has been filed and shall return the
certificates to the shareholder or other person who submitted
them on his behalf. Any shareholder of shares represented by
certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the
corporation exercised by written notice to him within forty-five
days from the date of filing of such notice of election to
dissent, lose his dissenters rights unless a court, for good
cause shown, shall otherwise direct. Upon transfer of a
certificate bearing such notation, each new certificate issued
therefor shall bear a similar notation together with the name of
the original dissenting holder of the shares and a transferee
shall acquire no rights in the corporation except those which
the original dissenting shareholder had at the time of transfer.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;Within fifteen days after the expiration of the period
within which shareholders may file their notices of election to
dissent, or within fifteen days after the proposed corporate
action is consummated, whichever is later (but in no case later
than ninety days from the shareholders&#146; authorization
date), the corporation or, in the case of a merger or
consolidation, the surviving or new corporation, shall make a
written offer by registered mail to each shareholder who has
filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair
value. Such offer shall be accompanied by a statement setting
forth the aggregate number of shares with respect to which
notices of election to dissent have been received and the
aggregate number of holders of such shares. If the corporate
action has been consummated, such offer shall also be
accompanied by (1)&nbsp;advance payment to each such shareholder
who has submitted the certificates representing his shares to
the corporation, as provided in paragraph&nbsp;(f), of an amount
equal to eighty percent of the amount of such offer, or
(2)&nbsp;as to each shareholder who has not yet submitted his
certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will
be made by the corporation promptly upon submission of his
certificates. If the corporate action has not been consummated
at the time of the making of the offer, such advance payment or
statement as to advance payment shall be sent to each
shareholder entitled thereto forthwith upon consummation of the
corporate action. Every advance payment or statement as to
advance payment shall include advice to the shareholder to the
effect that acceptance of such payment does not constitute a
waiver of any dissenters&#146; rights. If the corporate action
has not been consummated upon the expiration of the ninety day
period after the shareholders&#146; authorization date, the
offer may be conditioned upon the consummation of such action.
Such offer shall be made at the same price per share to all
dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance
sheet of the corporation whose shares the dissenting shareholder
holds as of the latest available date, which shall not be
earlier than twelve months before the making of such offer, and
a profit and loss statement or statements for not less than a
twelve month period ended on the date of such balance sheet or,
if the corporation was not in existence throughout such twelve
month period, for the portion thereof during which it was in
existence. Notwithstanding the foregoing, the corporation shall
not be required to furnish a balance sheet or profit and loss
statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the
shareholders&#146; authorization for or consent to the proposed
corporate action the shareholders were furnished with a proxy or
information statement, which included financial statements,
pursuant to Regulation&nbsp;14A or Regulation&nbsp;14C of the
United States Securities and Exchange Commission. If within
thirty days after the making of such offer, the corporation
making the offer and any shareholder agree upon the price to be
paid for his shares, payment therefor shall be made within sixty
days after the making of such offer or the consummation of the
proposed corporate action, whichever is later, upon the
surrender of the certificates for any such shares represented by
certificates.
</DIV>


<P align="center" style="font-size: 10pt;">B-3

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;The following procedure shall apply if the corporation
fails to make such offer within such period of fifteen days, or
if it makes the offer and any dissenting shareholder or
shareholders fail to agree with it within the period of thirty
days thereafter upon the price to be paid for their shares:
</DIV>


<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;The corporation shall, within twenty days after the
    expiration of whichever is applicable of the two periods last
    mentioned, institute a special proceeding in the supreme court
    in the judicial district in which the office of the corporation
    is located to determine the rights of dissenting shareholders
    and to fix the fair value of their shares. If, in the case of
    merger or consolidation, the surviving or new corporation is a
    foreign corporation without an office in this state, such
    proceeding shall be brought in the county where the office of
    the domestic corporation, whose shares are to be valued, was
    located.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;If the corporation fails to institute such proceeding
    within such period of twenty days, any dissenting shareholder
    may institute such proceeding for the same purpose not later
    than thirty days after the expiration of such twenty day period.
    If such proceeding is not instituted within such thirty day
    period, all dissenters rights shall be lost unless the supreme
    court, for good cause shown, shall otherwise direct.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;All dissenting shareholders, excepting those who, as
    provided in paragraph&nbsp;(g), have agreed with the corporation
    upon the price to be paid for their shares, shall be made
    parties to such proceeding, which shall have the effect of an
    action quasi in rem against their shares. The corporation shall
    serve a copy of the petition in such proceeding upon each
    dissenting shareholder who is a resident of this state in the
    manner provided by law for the service of a summons, and upon
    each nonresident dissenting shareholder either by registered
    mail and publication, or in such other manner as is permitted by
    law. The jurisdiction of the court shall be plenary and
    exclusive.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;The court shall determine whether each dissenting
    shareholder, as to whom the corporation requests the court to
    make such determination, is entitled to receive payment for his
    shares. If the corporation does not request any such
    determination or if the court finds that any dissenting
    shareholder is so entitled, it shall proceed to fix the value of
    the shares, which, for the purposes of this section, shall be
    the fair value as of the close of business on the day prior to
    the shareholders&#146; authorization date. In fixing the fair
    value of the shares, the court shall consider the nature of the
    transaction giving rise to the shareholder&#146;s right to
    receive payment for shares and its effects on the corporation
    and its shareholders, the concepts and methods then customary in
    the relevant securities and financial markets for determining
    fair value of shares of a corporation engaging in a similar
    transaction under comparable circumstances and all other
    relevant factors. The court shall determine the fair value of
    the shares without a jury and without referral to an appraiser
    or referee. Upon application by the corporation or by any
    shareholder who is a party to the proceeding, the court may, in
    its discretion, permit pretrial disclosure, including, but not
    limited to, disclosure of any expert&#146;s reports relating to
    the fair value of the shares whether or not intended for use at
    the trial in the proceeding and notwithstanding subdivision
    (d)&nbsp;of section&nbsp;3101 of the civil practice law and
    rules.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)&nbsp;The final order in the proceeding shall be entered
    against the corporation in favor of each dissenting shareholder
    who is a party to the proceeding and is entitled thereto for the
    value of his shares so determined.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (6)&nbsp;The final order shall include an allowance for interest
    at such rate as the court finds to be equitable, from the date
    the corporate action was consummated to the date of payment. In
    determining the rate of interest, the court shall consider all
    relevant factors, including the rate of interest which the
    corporation would have had to pay to borrow money during the
    pendency of the proceeding. If the court finds that the refusal
    of any shareholder to accept the corporate offer of payment for
    his shares was arbitrary, vexatious or otherwise not in good
    faith, no interest shall be allowed to him.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (7)&nbsp;Each party to such proceeding shall bear its own costs
    and expenses, including the fees and expenses of its counsel and
    of any experts employed by it. Notwithstanding the foregoing,
    the court may, in its discretion, apportion and assess all or
    any part of the costs, expenses and fees incurred by the
    corporation against any or all of the dissenting shareholders
    who are parties to the proceeding, including</TD>
</TR>


</TABLE>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    any who have withdrawn their notices of election as provided in
    paragraph&nbsp;(e), if the court finds that their refusal to
    accept the corporate offer was arbitrary, vexatious or otherwise
    not in good faith. The court may, in its discretion, apportion
    and assess all or any part of the costs, expenses and fees
    incurred by any or all of the dissenting shareholders who are
    parties to the proceeding against the corporation if the court
    finds any of the following: (A)&nbsp;that the fair value of the
    shares as determined materially exceeds the amount which the
    corporation offered to pay; (B)&nbsp;that no offer or required
    advance payment was made by the corporation; (C)&nbsp;that the
    corporation failed to institute the special proceeding within
    the period specified therefor; or (D)&nbsp;that the action of
    the corporation in complying with its obligations as provided in
    this section was arbitrary, vexatious or otherwise not in good
    faith. In making any determination as provided in
    clause&nbsp;(A), the court may consider the dollar amount or the
    percentage, or both, by which the fair value of the shares as
    determined exceeds the corporate offer.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (8)&nbsp;Within sixty days after final determination of the
    proceeding, the corporation shall pay to each dissenting
    shareholder the amount found to be due him, upon surrender of
    the certificates for any such shares represented by certificates.</TD>
</TR>


</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;Shares acquired by the corporation upon the payment of
the agreed value therefor or of the amount due under the final
order, as provided in this section, shall become treasury shares
or be cancelled as provided in section&nbsp;515 (Reacquired
shares), except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or
consolidation may otherwise provide.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;No payment shall be made to a dissenting shareholder
under this section at a time when the corporation is insolvent
or when such payment would make it insolvent. In such event, the
dissenting shareholder shall, at his option:
</DIV>


<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;Withdraw his notice of election, which shall in such
    event be deemed withdrawn with the written consent of the
    corporation;&nbsp;or</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;Retain his status as a claimant against the corporation
    and, if it is liquidated, be subordinated to the rights of
    creditors of the corporation, but have rights superior to the
    non-dissenting shareholders, and if it is not liquidated, retain
    his right to be paid for his shares, which right the corporation
    shall be obliged to satisfy when the restrictions of this
    paragraph do not apply.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>


<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;The dissenting shareholder shall exercise such option
    under subparagraph&nbsp;(1)&nbsp;or (2)&nbsp;by written notice
    filed with the corporation within thirty days after the
    corporation has given him written notice that payment for his
    shares cannot be made because of the restrictions of this
    paragraph. If the dissenting shareholder fails to exercise such
    option as provided, the corporation shall exercise the option by
    written notice given to him within twenty days after the
    expiration of such period of thirty days.</TD>
</TR>


</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;The enforcement by a shareholder of his right to
receive payment for his shares in the manner provided herein
shall exclude the enforcement by such shareholder of any other
right to which he might otherwise be entitled by virtue of share
ownership, except as provided in paragraph&nbsp;(e), and except
that this section shall not exclude the right of such
shareholder to bring or maintain an appropriate action to obtain
relief on the ground that such corporate action will be or is
unlawful or fraudulent as to him.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(l)&nbsp;Except as otherwise expressly provided in this section,
any notice to be given by a corporation to a shareholder under
this section shall be given in the manner provided in
section&nbsp;605 (Notice of meetings of shareholders).
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(m)&nbsp;This section shall not apply to foreign corporations
except as provided in subparagraph&nbsp;(e)(2) of
section&nbsp;907 (Merger or consolidation of domestic and
foreign corporations).
</DIV>


<P align="center" style="font-size: 10pt;">B-5

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PART&nbsp;B</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>INFORMATION REQUIRED IN THE STATEMENT OF ADDITIONAL
INFORMATION</B>
</DIV>

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<DIV align="center" style="font-size: 10pt;">
Acquisition of the Assets of
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
STERLING CAPITAL CORPORATION
</DIV>

<DIV align="center" style="font-size: 10pt;">
100 Wall Street, 11th Floor
</DIV>

<DIV align="center" style="font-size: 10pt;">
New York, New York 10005
</DIV>

<DIV align="center" style="font-size: 10pt;">
(212)&nbsp;980-3360
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
By
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
THE GABELLI EQUITY TRUST INC.
</DIV>

<DIV align="center" style="font-size: 10pt;">
One Corporate Center
</DIV>

<DIV align="center" style="font-size: 10pt;">
Rye, New York 10580
</DIV>

<DIV align="center" style="font-size: 10pt;">
(914)&nbsp;921-5100
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
STATEMENT OF ADDITIONAL INFORMATION
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Statement of Additional Information (&#147;SAI&#148;),
relating specifically to the proposed transfer of all or
substantially all of the assets (other than the Reserve, as
defined in the Proxy Statement/ Prospectus that accompanies this
SAI) of Sterling Capital Corporation (&#147;Sterling
Capital&#148;) to The Gabelli Equity Trust Inc. (the
&#147;Equity Trust&#148;) in exchange solely for full shares of
Equity Trust Common Stock and cash in lieu of fractional shares
of Equity Trust Common Stock, the assumption by the Equity Trust
of the Stated Liabilities (as defined in the Proxy Statement/
Prospectus) of Sterling Capital and the distribution of Equity
Trust Common Stock to the stockholders of Sterling Capital,
consists of this cover page and the following described
documents, each of which accompanies this SAI and is
incorporated herein by reference.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1.&nbsp;Annual Report of the Equity Trust for the year ended
    December&nbsp;31, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2.&nbsp;Annual Report of Sterling Capital for the year ended
    December&nbsp;31, 2004.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Statement of Additional Information is not a prospectus. A
Proxy Statement/ Prospectus, dated August&nbsp;16, 2005,
relating to the above-referenced matter may be obtained without
charge by calling or writing the Equity Trust at the telephone
number or address set forth above. This Statement of Additional
Information should be read in conjunction with the Proxy
Statement/ Prospectus.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Annual Report of Sterling Capital for the fiscal year ended
December&nbsp;31, 2004, the Annual Report of the Equity Trust
for the fiscal year ended December&nbsp;31, 2004 are
incorporated by reference herein. The Annual Reports for
Sterling Capital and the Equity Trust include audited financial
statements, notes to the financial statements and the report of
the independent registered public accounting firm. To obtain a
copy of the Annual and Semi-Annual Reports without charge,
please call 800-949-3456 and 800-GABELLI (800-422-3554) for
Sterling Capital&#146;s and the Equity Trust&#146;s reports,
respectively.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PRO FORMA FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because the net assets of Sterling Capital are less than 10% of
the Equity Trust&#146;s net assets, pro forma financial
statements are not required to be and have not been prepared for
inclusion in the SAI filed in connection with the Reorganization.
</DIV>
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