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<SEC-DOCUMENT>0000950123-07-005865.txt : 20070424
<SEC-HEADER>0000950123-07-005865.hdr.sgml : 20070424
<ACCEPTANCE-DATETIME>20070424171557
ACCESSION NUMBER:		0000950123-07-005865
CONFORMED SUBMISSION TYPE:	497
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20070424
DATE AS OF CHANGE:		20070424
EFFECTIVENESS DATE:		20070424

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ZWEIG TOTAL RETURN FUND INC
		CENTRAL INDEX KEY:			0000836412
		IRS NUMBER:				133474242
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		497
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-139605
		FILM NUMBER:		07785284

	BUSINESS ADDRESS:	
		STREET 1:		900 THIRD AVE., 31ST FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10022
		BUSINESS PHONE:		212 451-1100

	MAIL ADDRESS:	
		STREET 1:		900 THIRD AVE., 31ST FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10022
</SEC-HEADER>
<DOCUMENT>
<TYPE>497
<SEQUENCE>1
<FILENAME>y32550ze497.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 style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 16pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">18,720,000
    Shares&#160;of Common Stock<BR>
    <FONT style="font-size: 20pt">THE ZWEIG TOTAL RETURN FUND,
    INC.<BR>
    </FONT></FONT><FONT style="font-size: 12pt; font-family: 'Times New Roman', Times">Issuable
    Upon Exercise of Non-Transferable<BR>
    Rights to Subscribe For Such Shares&#160;Of Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=84 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Zweig Total Return Fund, Inc. (the &#147;Fund&#148;) is
    issuing non-transferable rights (&#147;Rights&#148;) to its
    shareholders of record as of the close of business on
    April&#160;23, 2007 (the &#147;Record Date&#148;) entitling the
    holders of these Rights to subscribe (the &#147;Offer&#148;) for
    an aggregate of 18,720,000&#160;shares of common stock, par
    value $0.001&#160;per share (the &#147;Common Stock&#148;).
    Shareholders of record will receive one Right for each
    outstanding Fund share owned on the Record Date. The Rights
    entitle the holders to purchase one share of Common Stock for
    every five Rights held, and shareholders of record who fully
    exercise their Rights will be entitled to subscribe for
    additional shares of Common Stock pursuant to an
    over-subscription privilege described in this Prospectus. The
    Fund may increase the number of shares of Common Stock subject
    to subscription by up to 25% of the shares, or up to an
    additional 4,680,000&#160;shares of Common Stock, for an
    aggregate total of 23,400,000&#160;shares. Fractional shares
    will not be issued upon the exercise of Rights. The Rights are
    non-transferable and, therefore, may not be purchased or sold.
    The Rights will not be admitted for trading on the New York
    Stock Exchange (&#147;NYSE&#148;) or any other exchange. See
    &#147;The Offer.&#148; THE SUBSCRIPTION PRICE PER SHARE (THE
    &#147;SUBSCRIPTION PRICE&#148;) WILL BE EQUAL TO THE LOWER OF
    THE NET ASSET VALUE PER SHARE OF THE FUND&#146;S COMMON STOCK
    (&#147;NAV&#148;) AT THE CLOSE OF BUSINESS ON MAY&#160;18, 2007
    (THE &#147;PRICING DATE&#148;) OR 95% OF THE AVERAGE OF THE LAST
    REPORTED SALES PRICE OF A SHARE OF THE FUND&#146;S COMMON STOCK
    ON THE NYSE ON THE PRICING DATE AND THE FOUR PRECEDING BUSINESS
    DAYS.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The Offer will expire at 5:00&#160;p.m., New York City time,
    on May&#160;18, 2007, unless extended as described herein (the
    &#147;Expiration Date&#148;).</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund announced the Offer on December&#160;14, 2006. The
    Fund&#146;s Common Stock trades on the NYSE under the symbol
    &#147;ZTR.&#148; Shares issued upon the exercise of Rights and
    the over-subscription privilege will be listed for trading on
    the NYSE, subject to notice of issuance. The net asset value per
    share of the Fund&#146;s Common Stock at the close of business
    on December&#160;14, 2006 and April&#160;23, 2007, the Record
    Date, were $5.14 and $5.08, respectively, and the last reported
    sales price of a share of the Fund&#146;s Common Stock on the
    NYSE on those dates were $5.80 and $5.56, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund is a diversified, closed-end management investment
    company. Its investment objective is to seek the highest total
    return, consisting of capital appreciation and current income,
    consistent with the preservation of capital. The Fund will
    invest up to 65% of its total assets in U.S.&#160;government
    securities, non-convertible debt securities of domestic issuers
    rated among the two highest rating categories of either
    Moody&#146;s Investors Services, Inc. (&#147;Moody&#146;s&#148;)
    or Standard&#160;&#38; Poor&#146;s Corporation
    (&#147;S&#38;P&#148;) (or, if unrated, of comparable quality as
    determined by the investment adviser, Phoenix/Zweig Advisers LLC
    (the &#147;Investment Adviser&#148;)), and certain foreign
    government securities (collectively, the &#147;Bond
    Investments&#148;), and up to 50% of its total assets in equity
    securities comprised of common, preferred and convertible
    preferred stock. The equity investments will be in primarily
    large-capitalization companies but may also be in investments in
    small- or medium-capitalization companies. The Fund may,
    however, under certain circumstances, invest up to 75% of its
    total assets in equity securities as determined by the
    Investment Adviser. The Fund also, as part of its Bond
    Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    rating categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser).
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>(Continued on the following page)</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
    SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
    COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
    STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
    OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
    CRIMINAL OFFENSE.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>INVESTING IN THE FUND&#146;S SHARES INVOLVES RISKS. SEE
    &#147;RISK FACTORS AND SPECIAL&#160;CONSIDERATIONS&#148; FOR
    FACTORS THAT SHOULD BE CONSIDERED BEFORE&#160;INVESTING IN THE
    COMMON SHARES OF THE FUND.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="41%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterright -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Estimated Proceeds to<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Estimated Price<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Registrant or<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>to Public(1)</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Sales Load</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Other Persons(2)(3)</B>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Per Share
    </FONT>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <FONT style="font-size: 10pt">$5.08
    </FONT>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <FONT style="font-size: 10pt">N/A
    </FONT>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <FONT style="font-size: 10pt">$5.08
    </FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Total Maximum(4)
    </FONT>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <FONT style="font-size: 10pt">$95,097,600
    </FONT>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <FONT style="font-size: 10pt">N/A
    </FONT>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <FONT style="font-size: 10pt">$95,097,600
    </FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>(Footnotes on the following page)</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The date of this Prospectus is April&#160;23, 2007.</I>
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

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

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser is a wholly-owned subsidiary of Phoenix
    Investment Partners, Ltd., a wholly-owned investment management
    subsidiary of The Phoenix Companies, Inc., a NYSE listed
    company. The Investment Adviser engages Zweig Consulting LLC
    (the
    <FONT style="white-space: nowrap">&#147;Sub-Adviser&#148;)</FONT>
    to perform asset allocation research and analysis and provide
    advice thereon to the Investment Adviser. The extent of the
    Fund&#146;s investment in debt and equity securities will be
    determined primarily on the basis of asset allocation techniques
    developed by Dr.&#160;Martin E. Zweig, President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. The Investment Adviser (and its predecessor) has
    provided investment advisory services to the Fund since its
    inception. Dr.&#160;Zweig has been engaged in the business of
    providing investment advisory services for over 35&#160;years.
    While the Investment Adviser seeks to reduce the risks
    associated with investing in debt and equity securities by using
    these techniques, such risks cannot be eliminated. See
    &#147;Investment Objective and Policies.&#148; No assurance can
    be given that the Fund&#146;s investment objective will be
    realized. The Fund&#146;s administrator is Phoenix Equity
    Planning Corporation (the &#147;Administrator&#148;). The
    Fund&#146;s Investment Adviser,
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    and Administrator will benefit from the Offer. See
    &#147;Management of the Fund.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon the completion of the Offer, shareholders of record who do
    not fully exercise their Rights will own a smaller proportional
    interest in the Fund than they owned prior to the Offer. In
    addition, because the Subscription Price may be less than the
    net asset value per share as of the Pricing Date, the Offer may
    result in an immediate dilution of the net asset value per share
    for all shareholders. Although it is not possible to state
    precisely the amount of such decrease in net asset value per
    share, if any, because it is not known how many shares will be
    subscribed for, what the net asset value or market price of the
    Common Stock will be on the Pricing Date or what the
    Subscription Price will be, such dilution could be minimal or
    substantial. Any such dilution will disproportionately affect
    non-exercising shareholders. See &#147;The Offer&#148; and
    &#147;Risk Factors and Special Considerations.&#148; Except as
    described in this Prospectus, shareholders of record will have
    no right to rescind their subscriptions after receipt of their
    payment for shares by the Subscription Agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This Prospectus sets forth concisely the information about the
    Fund that a prospective investor ought to know before investing.
    Investors are advised to read this Prospectus and retain it for
    future reference. A Statement of Additional Information, dated
    April&#160;23, 2007 (the &#147;SAI&#148;), containing additional
    information about the Fund, has been filed with the Securities
    and Exchange Commission (the &#147;Commission&#148;) and is
    incorporated by reference in its entirety into this Prospectus.
    The Table of Contents of the SAI appears on Page&#160;39 of this
    Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders may obtain a copy, free of charge, of the SAI and
    the Fund&#146;s annual and semi-annual report to shareholders,
    or request other information about the Fund, from, and should
    direct all questions and inquires relating to the Offer to, the
    Fund&#146;s Information Agent, Georgeson, Inc. Banks and Brokers
    should call
    <FONT style="white-space: nowrap">(212)&#160;440-9800</FONT>
    collect and all other shareholders should call
    <FONT style="white-space: nowrap">(866)&#160;541-3552.</FONT>
    The Fund makes available, free of charge, the SAI and the
    Fund&#146;s annual and semi-annual report to shareholders at
    http://www.phoenixinvestments.com. The address of the Fund is
    900 Third Avenue, New York, New York 10022, and its telephone
    number is
    <FONT style="white-space: nowrap">(212)&#160;451-1100.</FONT>
    The Commission maintains a web site (http://www.sec.gov) that
    contains the SAI and other information regarding the Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>(Footnotes from the previous page)</I>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 12%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=480 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Estimated, equal to the lower of the NAV at the close of
    business on April&#160;23, 2007 or 95% of the average of the
    last reported sales price of a share of the Fund&#146;s Common
    Stock on the NYSE on April&#160;23, 2007 and the four preceding
    business days.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Before deduction of offering expenses incurred by the Fund,
    estimated at approximately $657,500.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    The funds received by check prior to the final due date of this
    Offer will be deposited into a segregated interest-bearing
    account (which interest will be paid to the Fund) pending
    proration and distribution of the shares.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    Assumes all 18,720,000&#160;shares are purchased at the
    estimated Subscription Price. Pursuant to the over-subscription
    privilege, the Fund may, at the discretion of the Board of
    Directors, increase the number of shares subject to subscription
    by up to 25% of the shares offered hereby. If the Fund increases
    the number of shares subject to subscription by 25%, the Total
    Maximum Estimated Subscription Price and Estimated Proceeds to
    the Fund will be $118,872,000 and $118,872,000, respectively.
    The offering expenses in connection with this offering will be
    charged against paid-in capital of the Fund.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Certain numbers in this Prospectus have been rounded for ease of
    presentation and, as a result, may not total precisely.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

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

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUMMARY</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The following summary is qualified in its entirety by
    reference to the more detailed information included elsewhere in
    this Prospectus. Unless otherwise indicated, the information in
    this Prospectus assumes that the allowable increase of 25% of
    the shares offered hereby pursuant to the over-subscription
    privilege will not occur.</I>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Fund</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Zweig Total Return Fund, Inc. (the &#147;Fund&#148;) is a
    diversified, closed-end management investment company registered
    under the Investment Company Act of 1940, as amended (the
    &#147;1940 Act&#148;). The Fund commenced operations in
    September 1988. The Fund&#146;s investment objective is to seek
    the highest total return, consisting of capital appreciation and
    current income, consistent with the preservation of capital. The
    Fund will invest up to 65% of its total assets in
    U.S.&#160;government securities, non-convertible debt securities
    of domestic issuers rated among the two highest rating
    categories of either Moody&#146;s Investors Services, Inc.
    (&#147;Moody&#146;s&#148;) or Standard&#160;&#38; Poor&#146;s
    Corporation (&#147;S&#38;P&#148;) (or, if unrated, of comparable
    quality as determined by the investment adviser, Phoenix/Zweig
    Advisers LLC (the &#147;Investment Adviser&#148;)), and certain
    foreign government securities (collectively, the &#147;Bond
    Investments&#148;), and up to 50% of its total assets in equity
    securities comprised of common, preferred and convertible
    preferred stock. The equity investments will be in primarily
    large-capitalization companies but may also be in investments in
    small- or medium-capitalization companies. The Fund may,
    however, under certain circumstances, invest up to 75% of its
    total assets in equity securities as determined by the
    Investment Adviser.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund also, as part of its Bond Investments, may invest up to
    10% of its total assets in non-convertible debt securities rated
    below the two highest rating categories of Moody&#146;s or
    S&#38;P (or, if unrated, of comparable quality as determined by
    the Investment Adviser). The Investment Adviser determines the
    level of fixed income investments, and their average maturity,
    in the Fund primarily on the basis of a bond model provided by
    Zweig Consulting LLC (the
    <FONT style="white-space: nowrap">&#147;Sub-Adviser&#148;).</FONT>
    The bond model suggests an overall duration (a measure of risk
    in a bond portfolio) that is implemented by the Fund&#146;s
    portfolio managers. The Fund&#146;s portfolio managers then
    incorporate fundamental analysis to determine which specific
    bonds to own and what maturities to hold to arrive at the
    overall duration of the portfolio. The overall bond portfolio
    generally has a blend of short, medium and long-maturity bonds,
    which balances the overall duration risk with other yield curve
    risks depending on the overall duration suggested by the bond
    model. The portfolio managers will vary the maturities to arrive
    at the appropriate desired average. As of March&#160;31, 2007,
    the bond portfolio had an average maturity of 9.5&#160;years.
    The Fund primarily invests its Bond Investments in
    U.S.&#160;Treasury securities and agency securities of the
    highest quality.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser is a wholly-owned subsidiary of Phoenix
    Investment Partners, Ltd., a wholly-owned investment management
    subsidiary of The Phoenix Companies, Inc. (&#147;Phoenix&#148;),
    a New York Stock Exchange (&#147;NYSE&#148;) listed company. The
    Investment Adviser engages the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    to perform asset allocation research and analysis and provide
    advice thereon to the Investment Adviser. The extent of the
    Fund&#146;s investment in debt and equity securities will be
    determined primarily on the basis of asset allocation techniques
    developed by Dr.&#160;Martin E. Zweig, President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. The Investment Adviser (and its predecessor) has
    provided investment advisory services to the Fund since its
    inception. Dr.&#160;Zweig has been engaged in the business of
    providing investment advisory services for over 35&#160;years.
    While the Investment Adviser seeks to reduce the risks
    associated with investing in debt and equity securities by using
    these techniques, the risk of investment in debt and equity
    securities cannot be eliminated. See &#147;Investment Objective
    and Policies.&#148; No assurance can be given that the
    Fund&#146;s investment objective will be realized.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s outstanding Common Stock, par value
    $0.001&#160;per share (the &#147;Common Stock&#148;) is listed
    and traded on the NYSE. The average weekly trading volume of the
    Common Stock on the NYSE during the year ended December&#160;31,
    2006 was 1,320,127&#160;shares and as of April&#160;23, 2007,
    the average weekly trading volume for 2007 was 1,431,808 shares.
    As of December&#160;31, 2006, the net assets of the Fund were
    $476,845,562.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Phoenix Equity Planning Corporation (the
    &#147;Administrator&#148;) serves as the Fund&#146;s
    administrator and receives from the Fund an administrative fee
    computed at the annual rate of 0.065% of the Fund&#146;s average
    daily net assets. The Fund pays the Investment Adviser a monthly
    investment advisory fee computed at the annual rate of 0.70% of
    the Fund&#146;s average daily net assets. See &#147;Management
    of the Fund.&#148;
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Terms of
    the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund is issuing to its shareholders of record (&#147;Record
    Date Shareholders&#148;) as of the close of business on
    April&#160;23, 2007 (the &#147;Record Date&#148;)
    non-transferable rights (the &#147;Rights&#148;) to subscribe
    for up to an aggregate of 18,720,000&#160;Shares of Common Stock
    (the &#147;Shares&#148;) of the Fund. The Fund may increase the
    number of shares of Common Stock subject to subscription by up
    to 25% of the Shares, or up to an additional
    4,680,000&#160;Shares of Common Stock, for an aggregate total of
    23,400,000&#160;Shares. Each Record Date Shareholder is being
    issued one Right for each whole share of Common Stock owned on
    the Record Date. The Rights entitle the holders thereof to
    subscribe for one Share for every five Rights held (the
    &#147;Offer&#148;). Fractional Shares will not be issued upon
    the exercise of Rights. If a Record Date Shareholder&#146;s
    total ownership is fewer than five shares, such shareholder may
    subscribe for one Share.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Rights may be exercised at any time during the Subscription
    Period, which commences on April&#160;24, 2007 and ends at
    5:00&#160;p.m. New York City time, on May&#160;18, 2007, unless
    extended by the Fund until 5:00&#160;p.m., New York City time,
    to a date not later than May&#160;25, 2007 (such date, as it may
    be extended, is referred to in this Prospectus as the
    &#147;Expiration Date&#148;). A Record Date Shareholder&#146;s
    right to acquire during the Subscription Period at the
    Subscription Price (as described below) one additional Share for
    every five Rights held is hereinafter referred to as the
    &#147;Primary Subscription.&#148; The Rights are evidenced by
    subscription certificates (the &#147;Subscription
    Certificates&#148;), which will be mailed to Record Date
    Shareholders, except as discussed in &#147;The Offer&#160;&#151;
    Foreign Restrictions.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The subscription price per share (the &#147;Subscription
    Price&#148;) will be equal to the lower of the net asset value
    per share of the Fund&#146;s Common Stock (&#147;NAV&#148;) at
    the close of business on May&#160;18, 2007 (the &#147;Pricing
    Date&#148;) or 95% of the average of the last reported sales
    price of a share of the Fund&#146;s Common Stock on the NYSE on
    the Pricing Date and the four preceding business days, unless
    the Offer is extended. Since the Expiration Date and the Pricing
    Date are each May&#160;18, 2007, Record Date Shareholders who
    choose to exercise their Rights will not know at the time of
    exercise the Subscription Price for Shares acquired pursuant to
    such exercise. Record Date Shareholders will have no right to
    rescind a purchase after receipt of their payment for Shares by
    the Fund&#146;s subscription agent, Computershare Trust Company,
    N.A. (&#147;Computershare&#148; or the &#147;Subscription
    Agent&#148;). There is no minimum number of Rights that must be
    exercised in order for the Offer to close.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the over-subscription privilege (the
    &#147;Over-Subscription Privilege&#148;), any Record Date
    Shareholder who fully exercises all Rights issued to such
    shareholder in the Primary Subscription (other than those Rights
    that cannot be exercised because they represent the right to
    acquire less than one Share) will be entitled to subscribe for
    additional Shares at the Subscription Price. Shares available,
    if any, pursuant to the Over-Subscription Privilege are subject
    to allotment and may be subject to increase, as is more fully
    discussed under &#147;The Offer&#160;&#151; Over-Subscription
    Privilege.&#148; For purposes of determining the maximum number
    of Shares a Record Date Shareholder may acquire pursuant to the
    Offer, Record Date Shareholders whose shares of Common Stock are
    held of record by Cede&#160;&#38; Co. Inc. (&#147;Cede&#148;) or
    by any other depository or nominee will be deemed to be the
    holders of the Rights that are issued to Cede or such other
    depository or nominee on their behalf.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Rights are non-transferable. Therefore, only the underlying
    Shares will be listed for trading on the NYSE or any other
    exchange.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Purpose
    of the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors of the Fund has determined that it would
    be in the best interests of the Fund and its shareholders to
    increase the assets of the Fund available for investment,
    thereby enabling the Fund to more fully take advantage of
    investment opportunities consistent with the Fund&#146;s
    investment objective. The Fund&#146;s Board of Directors has
    voted unanimously to approve the terms of the Offer as set forth
    in this Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In reaching its decision, the Board of Directors considered,
    among other things, advice by the Investment Adviser and the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    that new funds would allow the Fund additional flexibility to
    capitalize on available investment opportunities without the
    necessity of having to sell existing portfolio securities that
    the Investment Adviser believes should be held. Proceeds from
    the Offer will allow the Investment Adviser to better take
    advantage of such existing and future investment opportunities.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors also considered that the Offer would
    provide shareholders with an opportunity to purchase additional
    shares of the Fund below its market price. Although the Board of
    Directors believe that a well-subscribed rights offering may
    result in certain economies of scale which could reduce the
    Fund&#146;s expense ratio in future years, there is no assurance
    that by increasing the size of the Fund, the Fund&#146;s
    aggregate expenses, and correspondingly, its expense ratio, will
    be lowered. Finally, the Board of Directors considered that,
    because the Subscription Price per Share may be less than the
    net asset value per share on the Pricing Date, the Offer may
    result in dilution of the Fund&#146;s net asset value per share.
    The Board of Directors believes that the factors in favor of the
    Offer outweigh this possible dilution. See &#147;Risk Factors
    and Special Considerations&#160;&#151; Dilution&#160;&#151; Net
    Asset Value and Non-Participation in the Offer.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser,
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    and Administrator will benefit from the Offer because their fees
    are based on the average net assets of the Fund. It is not
    possible to state precisely the amount of additional
    compensation the Investment Adviser,
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    or Administrator will receive as a result of the Offer because
    it is not known how many Shares will be subscribed for and
    because the proceeds of the Offer will be invested in additional
    portfolio securities, which will fluctuate in value. See
    &#147;Management of the Fund.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The information agent (the &#147;Information Agent&#148;) for
    the Offer is:</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Georgeson, Inc.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Banks and Brokers Call Collect:
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">(212)&#160;440-9800</FONT>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All Others Call Toll-Free:
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">(866)&#160;541-3552</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders may also contact their brokers or nominees for
    information with respect to the Offer.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Important
    Dates to Remember</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="66%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="32%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Event</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Date</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Record Date
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">April&#160;23, 2007
    </FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Subscription Period
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    <FONT style="font-size: 10pt">April&#160;24, 2007 to
    May&#160;18, 2007*
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Expiration Date and Pricing Date
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">May&#160;18, 2007*
    </FONT>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Subscription Certificates and
    Payment for Shares&#160;Due+
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">May&#160;18, 2007*
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Notice of Guaranteed Delivery Due+
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">May&#160;18, 2007*
    </FONT>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Subscription Certificates and
    Payment for Guarantees of Delivery Due
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">May&#160;23, 2007*
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Final Payment for Shares
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    <FONT style="font-size: 10pt">June&#160;1, 2007*
    </FONT>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 12%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=480 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    Unless the Offer is extended to a date not later than
    May&#160;25, 2007.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    + </TD>
    <TD></TD>
    <TD valign="bottom">
    Record Date Shareholders exercising Rights must deliver to the
    Subscription Agent by the Expiration Date either (i)&#160;the
    Subscription Certificate together with payment or (ii)&#160;a
    Notice of Guaranteed Delivery.</TD>
</TR>

</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risk
    Factors and Special Considerations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following summarizes certain matters that should be
    considered, among others, in connection with the Offer. This
    Prospectus contains certain forward-looking statements. Actual
    results could differ materially from those projected in the
    forward-looking statements as a result of certain uncertainties
    set forth below and elsewhere in this Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="35%"></TD>
    <TD width="1%"></TD>
    <TD width="64%"></TD>
</TR>

<TR>
    <TD valign="top">
    Dilution&#160;&#151;  Net Asset Value and Non-Participation  in
    the Offer </TD>
    <TD></TD>
    <TD valign="top">
    Record Date Shareholders who do not fully exercise their Rights
    will, upon the completion of the Offer, own a smaller
    proportional interest in the Fund than they owned prior to the
    Offer. In addition, an immediate dilution of the net asset value
    per share may be experienced by all shareholders as a result of
    the Offer because the Subscription Price per Share may be less
    than the then current net asset value per share, and the number
    of shares outstanding after the Offer may increase in greater
    percentage than the increase in the size of the Fund&#146;s
    assets. Although it is not possible to state precisely the
    amount of such decrease in net asset value per share, if any,
    because it is not known at this time what the Subscription Price
    will be, what the net asset value per share will be on the
    Expiration Date, or what proportion of the Shares will be
    subscribed for, such dilution could be minimal or substantial.
    For example, assuming (i)&#160;all Rights are exercised,
    (ii)&#160;the Fund&#146;s net asset value on the Expiration Date
    is $5.08&#160;per share (the net asset value per share on
    April&#160;23, 2007), and (iii)&#160;the Subscription Price is
    $5.08&#160;per share (equal to the lower of the NAV per share of
    the Fund&#146;s Common Stock at the close of business on
    April&#160;23, 2007 or 95% of the average of the last reported
    sale price per share of the Fund&#146;s Common Stock on the NYSE
    on April&#160;23, 2007 and the four preceding business days),
    then the Fund&#146;s net asset value per share would be reduced
    by approximately $0.01&#160;per share or 0.20%.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Certain Investment Strategies </TD>
    <TD></TD>
    <TD valign="top">
    The extent of the Fund&#146;s investment in debt and equity
    securities will be determined primarily on the basis of asset
    allocation techniques developed by Dr.&#160;Martin E. Zweig,
    President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. While the Investment Adviser seeks to reduce the
    risks associated with investing in debt and equity securities by
    using these techniques, the risk of investment in debt and
    equity securities cannot be eliminated. There is no assurance
    that these asset allocation techniques will provide protection
    from the risks of debt or equity investment, enable the Fund to
    be invested consistent with the major trends of the market or
    enable the Fund to achieve its investment objective. See
    &#147;Investment Objective and Policies&#160;&#151; Investment
    Objective.&#148; In addition, although the Investment Adviser
    believes that the special investment methods discussed in this
    Prospectus under &#147;Investment Objectives and
    Policies&#160;&#151; Special Investment Methods&#148; (including
    purchasing and selling, when such use is deemed appropriate,
    stock index and other futures contracts and purchasing options
    on such futures; purchasing and writing listed put and call
    security options and options on stock indexes; short sales of
    securities; borrowing from banks to purchase securities;
    investing in securities of exchange traded funds, foreign
    issuers and closed-end investment companies; and lending
    portfolio securities to brokers, dealers, banks or other
    recognized institutional borrowers of securities) will further
    the Fund&#146;s investment objective and reduce losses that
    might otherwise occur during a time of general decline in stock
    prices, no assurance can be </TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="35%"></TD>
    <TD width="1%"></TD>
    <TD width="64%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    given that these investment methods will achieve this result.
    These methods may subject an investor in the Fund to greater
    than average risks and costs.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Credit Risk </TD>
    <TD></TD>
    <TD valign="top">
    Investments in debt securities involve credit risk. This is the
    risk that the borrower will not make timely payments of
    principal and interest. The Fund, as part of its Bond
    Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    rating categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser).
    Generally, securities rated below investment grade (high
    yield-high risk fixed income securities&#160;&#151; also
    sometimes referred to as junk bonds) have a greater chance that
    the borrower will be unable to make scheduled interest or
    principal payments when due. Furthermore, to the extent that the
    Fund may invest in such high yield-high risk fixed income
    securities, this will entail greater price volatility and credit
    and interest rate risk than investment-grade securities.
    Analysis of the creditworthiness of high yield-high risk
    borrowers is more complex than for higher-rated securities,
    making it more difficult for the Investment Adviser to
    accurately predict risk. If the Fund pursues missed interest or
    principal payments, there is a risk that the Fund&#146;s
    expenses could increase. In addition, lower-rated securities may
    not trade as often and may be less liquid than higher-rated
    securities. There can be no assurance that the credit rating of
    a Fund investment will remain unchanged over the period of the
    Fund&#146;s ownership of that investment.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Interest Rate Risk </TD>
    <TD></TD>
    <TD valign="top">
    The Fund invests in fixed income debt securities, which gives
    rise to interest rate risk. Such securities may decline in value
    because of changes in market interest rates. When market
    interest rates rise, the market value of such securities
    generally will fall. To the extent that the Fund invests in
    fixed income debt securities, the net asset value and market
    price of the Fund&#146;s shares tend to decline if market
    interest rates rise. Further, while longer term fixed rate
    securities may pay higher interest rates than shorter term
    securities, longer term fixed rate securities also tend to be
    more sensitive to interest rate changes and, accordingly, tend
    to experience larger changes in value as a result of interest
    rate changes.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Equity Risk </TD>
    <TD></TD>
    <TD valign="top">
    Equity investing includes, among other risks, the risk that the
    securities held by the Fund will fall in market value due to
    adverse market and economic conditions, perceptions regarding
    the industries in which the issuers of securities held by the
    Fund participate and the particular circumstances and
    performance of particular companies whose securities the Fund
    holds. Depending on such fluctuations in the market value of
    securities, the net asset value of the Fund may at any point in
    time be less than at the time the shareholder invested in the
    Fund, even after taking into account any reinvestment of
    distributions.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Small- and Medium-Capitalization Stock Risk </TD>
    <TD></TD>
    <TD valign="top">
    While the Fund generally will invest primarily in
    large-capitalization companies, the Fund may invest in companies
    with small- or medium-capitalizations. Small and medium company
    stocks can be more volatile than, and perform differently from,
    larger company stocks. There may be less trading in a small or
    medium company stocks, which means that buy and sell
    transactions in those stocks could have a </TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="35%"></TD>
    <TD width="1%"></TD>
    <TD width="64%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    larger impact on the stock prices than is the case with larger
    company stocks. Small and medium companies may have fewer
    business lines; therefore, changes in any line of business may
    have a greater impact on small and medium company stock prices
    than is the case for a larger company. As a result, the purchase
    or sale of more than a limited number of shares of a small or
    medium company may affect its market price. The Fund may need a
    considerable amount of time to purchase or sell its positions in
    these securities. In addition, small or medium company stocks
    may not be as well known to the investing public.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Unrealized Appreciation </TD>
    <TD></TD>
    <TD valign="top">
    As of December&#160;31, 2006, there was $30,915,003 or
    approximately $0.33 per share of net unrealized appreciation in
    the Fund&#146;s net assets of $476,845,562; if realized and
    distributed, or deemed distributed, such gains would, in
    general, be taxable to shareholders, including holders at that
    time of Shares acquired upon the exercise of Rights. See
    &#147;Taxation.&#148;</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Discount From Net Asset Value </TD>
    <TD></TD>
    <TD valign="top">
    The Fund&#146;s shares of Common Stock have traded in the market
    above, at and below net asset value since the commencement of
    the Fund&#146;s operations in September 1988. The Fund cannot
    predict whether the Fund&#146;s Common Stock will in the future
    trade at a premium to or discount from net asset value. The risk
    of the Common Stock trading at a discount is a risk separate
    from a decline in the Fund&#146;s net asset value. See
    &#147;Market Price and Net Asset Value Information&#148; in this
    Prospectus and &#147;Net Asset Value&#148; in the Statement of
    Additional Information (the &#147;SAI&#148;).</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Distributions </TD>
    <TD></TD>
    <TD valign="top">
    The Fund&#146;s policy is to make monthly distributions equal to
    0.83% of its net asset value (10% distribution yield on an
    annualized basis), and a final distribution at year-end
    consisting of any remaining undistributed net investment income
    and any realized net long-term capital gains in excess of the
    Fund&#146;s capital loss carryforward. If, for any calendar
    year, the total distributions exceed net investment income and
    realized net capital gains, the excess, distributed from the
    Fund&#146;s assets, will generally be treated as a tax-free
    return of capital (up to the amount of the shareholder&#146;s
    tax basis in his or her shares). The amount treated as a
    tax-free return of capital will reduce a shareholder&#146;s
    adjusted basis in his or her shares, thereby increasing his or
    her potential gain or reducing his or her potential loss on the
    sale of his or her shares.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    A return of capital represents a return of a shareholder&#146;s
    original investment in the Fund&#146;s shares, and should not be
    confused with a dividend yield reflecting solely a return on
    investment. Historically, the Fund&#146;s distribution yield has
    included taxable distributions of net income and realized gains,
    and distributions treated as non-taxable return of capital. See
    &#147;Risk Factors and Special Considerations&#160;&#151;
    Distributions.&#148; The Fund anticipates future distributions
    to be characterized in a similar manner. Pursuant to the
    requirements of the 1940 Act and other applicable laws, a notice
    will accompany each monthly distribution with respect to the
    estimated source of the distribution made.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Capital loss carryovers will reduce or, possibly, eliminate the
    Fund&#146;s taxable capital gains in the year(s) to which such
    losses are carried, but </TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    6
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="35%"></TD>
    <TD width="1%"></TD>
    <TD width="64%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    will not reduce the Fund&#146;s current earnings and profits in
    such year(s). Consequently, a greater portion of the Fund&#146;s
    distributions in the year(s) to which the Fund carries and
    applies its capital loss carryovers may be taxable to
    shareholders as ordinary income dividends than would be the case
    if the Fund did not have capital loss carryovers. The
    Fund&#146;s shareholders thus potentially could lose the benefit
    of the Fund&#146;s capital loss carryover to any year in which
    the Fund makes excess distributions because instead of being
    treated as a non-taxable return of capital, the portion of the
    excess distributions equal to the Fund&#146;s capital gains that
    are offset by the capital loss carryover will likely be taxable
    to the Fund&#146;s shareholders, and if taxable, will likely be
    treated as ordinary income rather than as capital gain. See
    &#147;Risk Factors and Special Considerations&#160;&#151;
    Distributions.&#148; Moreover, excess distributions that are
    paid out of capital gains or other non-dividend income of the
    Fund will not qualify for the 15% preferential tax rate. </TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    The Fund also might make distributions to shareholders that
    exceed the Fund&#146;s current earnings and profits. In that
    event, because the Fund does not have positive accumulated
    earnings and profits, the excess distributions will be a
    non-taxable return of capital to a shareholder to the extent the
    distribution does not exceed the shareholder&#146;s tax basis in
    his or her Fund shares, but will also reduce the
    shareholder&#146;s tax basis in his or her Fund shares. </TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    In the event the Fund distributes amounts in excess of its net
    investment income and net realized capital gains, such
    distributions will decrease the Fund&#146;s total assets and,
    therefore, have the likely effect of increasing the Fund&#146;s
    expense ratio. In addition, in order to make such distributions,
    the Fund may have to sell a portion of its investment portfolio
    at a time when independent investment judgment might not dictate
    such action. Shares purchased pursuant to the Offer will be
    issued after the record date for the monthly distribution
    declared in May, and, accordingly, the Fund will not pay a
    monthly distribution with respect to such Shares until the
    distribution to be declared and paid in the next month.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Anti-takeover Provisions </TD>
    <TD></TD>
    <TD valign="top">
    The Fund has provisions in its Articles of Incorporation and
    By-Laws that may have the effect of limiting the ability of
    other entities or persons to acquire control of the Fund, to
    cause it to engage in certain transactions or to modify its
    structure. The Board of Directors is divided into three classes.
    At the annual meeting of shareholders each year, the term of one
    class will expire and directors will be elected to serve in that
    class for terms of three years. This provision could delay for
    up to two years the replacement of a majority of the Board of
    Directors.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FUND&#160;EXPENSES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="94%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B><FONT style="font-size: 10pt">Shareholder Transaction
    Expenses</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <FONT style="font-size: 10pt">Sales Load
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    N/A
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B><FONT style="font-size: 10pt">Annual Expenses
    </FONT></B><FONT style="font-size: 10pt">(as a percentage of the
    Fund&#146;s net assets)(1)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <FONT style="font-size: 10pt">Management and Administration Fees
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.77
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    <FONT style="font-size: 10pt">Other Expenses
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.24
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Total Annual Expenses(2)(3)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.02
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 12%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=480 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes fees payable under the Investment Advisory Agreement
    and Administration Agreement (as defined in this Prospectus).
    These fees are calculated on the basis of the Fund&#146;s
    average net assets. The Investment Adviser is responsible for
    the payment of
    <FONT style="white-space: nowrap">sub-advisory</FONT>
    fees to the
    <FONT style="white-space: nowrap">Sub-Adviser.</FONT>
    &#147;Other Expenses&#148; have been estimated for the current
    fiscal year. See &#147;Management of the Fund.&#148;</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    The Total Annual Expenses in the table above includes fees and
    expenses incurred indirectly by the Fund as a result of its
    investment in other investment companies. The Total Annual
    Expenses in the table above is different from the ratio of
    expenses to average net assets given in the Financial Highlights
    of this Prospectus, which reflects the operating expenses of the
    Fund and does not include acquired fund fees and expenses.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    The indicated 1.02% expense ratio includes dividends on short
    sales. The Other Expenses in the table above includes fees and
    expenses of 0.01% or less that were incurred indirectly by the
    Fund as a result of its investment in other investment
    companies. The expense ratio assumes that the Offer (including
    the Over-Subscription Privilege) is fully subscribed and assumes
    estimated net proceeds from the Offer of approximately
    $118,214,500 (assuming an estimated Subscription Price of
    $5.08&#160;per share). Other expenses for the fiscal year ended
    December&#160;31, 2006 were 0.24% as a percentage of average net
    assets.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    THE FOREGOING FEE TABLE IS INTENDED TO ASSIST
    FUND&#160;INVESTORS IN UNDERSTANDING THE VARIOUS COSTS AND
    EXPENSES THAT AN INVESTOR IN THE FUND&#160;WILL BEAR DIRECTLY OR
    INDIRECTLY.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXAMPLE</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An investor would directly or indirectly pay the following
    expense on a $1,000 investment in the Fund, assuming a 5% annual
    return throughout the periods:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="19%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="10%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="10%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="10%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>One Year</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Three Years</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Five Years</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Ten Years</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="center" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">$10
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <FONT style="font-size: 10pt">$32
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <FONT style="font-size: 10pt">$56
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <FONT style="font-size: 10pt">$125
    </FONT>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This hypothetical example assumes that all dividends and other
    distributions are reinvested at net asset value and that the
    1.02% expense ratio listed under Total Annual Expenses remains
    the same in the years shown. The above tables and the assumption
    in this example of a 5% annual return are required by
    regulations of the Securities and Exchange Commission (the
    &#147;Commission&#148;) applicable to all investment companies;
    the assumed 5% annual return is not a prediction of, and does
    not represent, the projected or actual performance of the
    Fund&#146;s Shares. For a more complete description of certain
    of the Fund&#146;s costs and expenses, see &#147;Management of
    the Fund&#160;&#151; Investment Adviser and
    <FONT style="white-space: nowrap">Sub-Adviser;&#160;&#151;</FONT>
    Investment Advisory Agreement; and&#160;&#151;
    Administrator&#148; in this Prospectus and &#147;Expenses&#148;
    and &#147;Portfolio Transactions and Brokerage&#148; in the SAI.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>This example should not be considered a representation of
    future expenses. The Fund&#146;s actual expenses may be greater
    or less than those shown.</B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FINANCIAL
    HIGHLIGHTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The table below sets forth certain specified information for a
    share of the Fund&#146;s Common Stock outstanding throughout
    each period presented. This information is derived from the
    financial and accounting records of the Fund. The financial
    highlights for the fiscal year ended December&#160;31, 2006 and
    the prior nine years have been audited by PricewaterhouseCoopers
    LLP, independent accountants, whose reports thereon were
    unqualified. The financial statements and notes thereto,
    together with the report of independent accountants has been
    incorporated by reference in the SAI and are available without
    charge by calling Mutual Fund&#160;Services at
    <FONT style="white-space: nowrap">(800)&#160;272-2700</FONT>
    or upon written request to the Fund&#146;s Administrator,
    Phoenix Equity Planning Corporation, One American Row, Hartford,
    CT 06102.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="30%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=09 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=09 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=09 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=09 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=10 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=10 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=10 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=10 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=11 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=11 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=11 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=11 type=hang1 -->
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="38" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2003</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2002</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2001</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2000</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>1999</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>1998</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>1997</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B><FONT style="font-size: 8pt">Per Share Data:</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Net asset value, beginning of year
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.81
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6.63
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.48
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.43
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.61
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B><FONT style="font-size: 8pt">Income From Investment
    Operations:</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Net investment income(1)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.13
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.12
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.12
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.09
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.18
</TD>
<TD nowrap align="left" valign="bottom">
    (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.30
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.33
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.36
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Net realized and unrealized gains
    (losses) on investments
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.22
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.18
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.27
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.35
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.32
</TD>
<TD nowrap align="left" valign="bottom">
    )(5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.02
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.01
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.39
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.80
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Total from investment operations
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.35
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.20
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.30
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.36
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.20
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.14
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.32
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.27
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.72
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.16
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B><FONT style="font-size: 8pt">Dividends and
    Distributions:</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Anti-dilutive effect of share
    repurchase program
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Dividends from net investment income
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.15
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.15
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.14
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.12
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.17
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.22
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.30
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.28
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.33
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.36
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Distributions from net realized
    gains on investments
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.07
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.15
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.09
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.25
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.13
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.46
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.48
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Tax return of capital
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.30
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.24
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.11
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.35
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.45
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.49
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.19
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.41
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.05
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Dilutive effect of common stock
    distributions
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.04
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Total Dividends and Distributions
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.52
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.54
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.38
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.47
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.62
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.71
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.74
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.82
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.84
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.84
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Change in net asset value
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.17
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.34
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.08
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.11
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.82
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.85
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.41
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.54
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.18
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.32
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Effect on net asset value as a
    result of rights offering(2)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.06
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 16pt">
    <FONT style="font-size: 8pt">Net asset value, end of year
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.11
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.81
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6.63
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.48
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.43
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.61
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Market value, end of year(3)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.35
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.01
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.49
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7.05
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6.57
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9.44
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Total investment return(4)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    39.23
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (2.54
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14.89
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.40
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14.06
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18.73
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12.64
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (18.72
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.49
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30.22
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B><FONT style="font-size: 8pt">Ratios/Supplemental
    Data:</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Net assets, end of year (in
    thousands)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    476,846
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    490,027
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    522,101
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    525,687
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    532,763
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    601,655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    671,056
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    714,637
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    757,212
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    677,133
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Ratio of expenses to average net
    assets (excluding dividends on short sales)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.06
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.28
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.03
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.99
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.04
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.97
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.97
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.04
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Ratio of expenses to average net
    assets (including dividends on short sales)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.01
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.10
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.31
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.06
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.99
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.04
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.00
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.97
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.97
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.04
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Ratio of net investment income to
    average net assets
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.47
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.18
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.13
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.66
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.37
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.51
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.87
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.50
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.88
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.30
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <FONT style="font-size: 8pt">Portfolio turnover rate
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21.7
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74.6
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    75.8
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    94.1
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90.8
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    86.3
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    121.6
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    172.3
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    87.9
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    104.7
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 12%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=480 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Computed using average shares outstanding.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Shares were sold at a 5% discount from the average market price.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Closing Price&#160;&#151; New York Stock Exchange, Inc.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    Total investment return is calculated assuming a purchase of
    common stock on the opening of the first business day and a sale
    on the closing of the last business day of each period reported.
    Dividends and distributions, if any, are assumed for the
    purposes of this calculation, to be reinvested at prices
    obtained under the Fund&#146;s Distribution Reinvestment and
    Cash Purchase Plan. Generally, total investment return based on
    net asset value will be higher than total investment return
    based on market value in periods where there is an increase in
    the discount or a decrease in the premium of the market value to
    the net assets from the beginning to the end of such years.
    Conversely, total investment return based on net asset value
    will be lower than total investment return based on market value
    in periods where there is a decrease in the discount or an
    increase in the premium of the market value to the net asset
    value from the beginning to end of such periods.</TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (5) </TD>
    <TD></TD>
    <TD valign="bottom">
    As required, effective January&#160;1, 2001, the Fund adopted
    the provision of AICPA Audit and Accounting Guide for Investment
    Companies and began amortizing premium on debt securities. The
    effect of the change for the year ended December&#160;31, 2001
    is shown below.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="93%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Decrease net investment income
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.02
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Increase net realized and
    unrealized gains and losses
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.02
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Decrease ratio of net investment
    income
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (0.23
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    OFFER</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Terms of
    the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund is issuing to the Record Date Shareholders the Rights
    to subscribe for up to an aggregate of 18,720,000&#160;Shares.
    The Fund may increase the number of shares of Common Stock
    subject to subscription by up to 25% of the Shares, or up to an
    additional 4,680,000&#160;Shares, for an aggregate total of
    23,400,000&#160;Shares. Each Record Date Shareholder is being
    issued one Right for each whole share of Common Stock owned on
    the Record Date. The Rights entitle the holders thereof to
    subscribe for one Share for every five Rights held (1 for 5).
    Fractional Shares will not be issued upon the exercise of
    Rights. A Record Date Shareholder whose total ownership is fewer
    than five shares of Common Stock and, accordingly, receives
    fewer than five Rights will be able to subscribe for one Share
    upon the exercise of all of such Rights received and, if he or
    she subscribes for one Share, may subscribe for additional
    Shares pursuant to the Over-Subscription Privilege. Record Date
    Shareholders who otherwise have remaining fewer than five Rights
    will not be able to purchase a Share upon the exercise of such
    Rights and will not be entitled to receive any cash in lieu
    thereof, although such Record Date Shareholders may subscribe
    for additional Shares pursuant to the Over-Subscription
    Privilege.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Rights may be exercised at any time during the Subscription
    Period, which commences on April&#160;24, 2007 and ends at
    5:00&#160;p.m. New York City time, on May&#160;18, 2007, unless
    extended by the Fund until 5:00&#160;p.m., New York City time,
    to a date not later than May&#160;25, 2007. See &#147;Expiration
    of the Offer&#148; below. The Rights are evidenced by
    Subscription Certificates, which will be mailed to Record Date
    Shareholders, except as discussed below under &#147;Foreign
    Restrictions.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any Record Date Shareholder who fully exercises all Rights
    issued to such shareholder in the Primary Subscription will be
    entitled to subscribe for additional Shares at the Subscription
    Price pursuant to the terms of the Over-Subscription Privilege,
    as described below. Shares available, if any, pursuant to the
    Over-Subscription Privilege are subject to allotment and may be
    subject to increase, as is more fully discussed below under
    &#147;Over-Subscription Privilege.&#148; For purposes of
    determining the maximum number of Shares a shareholder may
    acquire pursuant to the Offer, Record Date Shareholders whose
    shares of Common Stock are held of record by Cede or by any
    other depository or nominee will be deemed to be the holders of
    the Rights that are issued to Cede or such other depository or
    nominee on their behalf.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Purpose
    of the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors of the Fund has determined that it would
    be in the best interests of the Fund and its shareholders to
    increase the assets of the Fund available for investment,
    thereby enabling the Fund to more fully take advantage of
    investment opportunities consistent with the Fund&#146;s
    investment objective. The Fund&#146;s Board of Directors has
    voted unanimously to approve the terms of the Offer as set forth
    in this Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In reaching its decision, the Board of Directors considered,
    among other things, advice by the Investment Adviser and the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    that new funds would allow the Fund additional flexibility to
    capitalize on available investment opportunities without the
    necessity of having to sell existing portfolio securities that
    the Investment Adviser believes should be held. Proceeds from
    the Offer will allow the Investment Adviser to better take
    advantage of such existing and future investment opportunities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors also considered that the Offer would
    provide shareholders with an opportunity to purchase additional
    shares of the Fund below its market price. The Board of
    Directors also believes that a well-subscribed rights offering
    may result in certain economies of scale which could reduce the
    Fund&#146;s expense ratio in future years. However, there is no
    assurance that by increasing the size of the Fund, the
    Fund&#146;s aggregate expenses, and correspondingly, its expense
    ratio, will be lowered. Finally, the Board of Directors
    considered that, because the Subscription Price per Share may be
    less than the net asset value per share on the Pricing Date, the
    Offer may result in dilution of the Fund&#146;s net asset value
    per share. The Board of Directors believes that the factors in
    favor of the Offer outweigh this possible dilution. See
    &#147;Risk Factors and Special Considerations&#160;&#151;
    Dilution&#160;&#151; Net Asset Value and Non-Participation in
    the Offer.&#148;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser,
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    and Administrator will benefit from the Offer because their fees
    are based on the average net assets of the Fund. It is not
    possible to state precisely the amount of additional
    compensation the Investment Adviser,
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    or Administrator will receive as a result of the Offer because
    it is not known how many Shares will be subscribed for and
    because the proceeds of the Offer will be invested in additional
    portfolio securities, which will fluctuate in value. See
    &#147;Management of the Fund.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may, in the future and at its discretion, choose to
    make additional rights offerings from time to time for a number
    of shares and on terms that may or may not be similar to the
    Offer. Any such future rights offerings will be made in
    accordance with the then applicable requirements of the 1940 Act
    and the Securities Act of 1933, as amended.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Over-Subscription
    Privilege</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent Record Date Shareholders do not exercise all of
    the Rights issued to them, any underlying Shares represented by
    such Rights will be offered by means of the Over-Subscription
    Privilege to those Record Date Shareholders who have exercised
    all of the Rights issued to them and who wish to acquire more
    than the number of Shares to which they are entitled. Only
    Record Date Shareholders who exercise all the Rights issued to
    them may indicate on the Subscription Certificate, which they
    submit with respect to the exercise of the Rights issued to
    them, how many Shares they desire to purchase pursuant to the
    Over-Subscription Privilege. If sufficient Shares remain after
    completion of the Primary Subscription, all over-subscription
    requests will be honored in full. If sufficient Shares are not
    available to honor all over-subscription requests, the Fund may,
    at the discretion of the Board of Directors, issue shares of
    Common Stock up to an additional 25% of the Shares available
    pursuant to the Offer, representing 4,680,000 additional shares
    of Common Stock in order to cover such over-subscription
    requests. Regardless of whether the Fund issues additional
    Shares pursuant to the Offer and to the extent Shares are not
    available to honor all over-subscription requests, the available
    Shares will be allocated among those who over-subscribe based on
    the number of shares of Common Stock owned by them on the Record
    Date. This allocation process may involve a series of
    allocations in order to assure that the total number of Shares
    available for over-subscription is distributed, as nearly as
    practicable, on a pro rata basis. The Fund will not offer to
    sell in connection with the Offer any Shares that are not
    subscribed for pursuant to the Primary Subscription or the
    Over-Subscription Privilege.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To the extent Record Date Shareholders do not exercise all of
    the Rights issued to them, and Record Date Shareholders who have
    exercised their Rights do not wish to participate in the
    Over-Subscription Privilege, the Fund will deregister those
    underlying shares not sold thereunder.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Subscription
    Price</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Subscription Price for the Shares to be issued pursuant to
    the Offer will be equal to the lower of the NAV at the close of
    business on May&#160;18, 2007 (the &#147;Pricing Date&#148;) or
    95% of the average of the last reported sales price of a share
    of the Fund&#146;s Common Stock on the NYSE on the Pricing Date
    and the four preceding business days, unless the Offer is
    extended. For example, if the average of the last reported sales
    price of a share on the NYSE on the Pricing Date and the four
    preceding business days of a share of the Fund&#146;s Common
    Stock is $5.75, and if the NAV is $5.00, the Subscription Price
    will be $5.00 (equal to the lower of the NAV or 95% of $5.75).
    The Subscription Price may be equal to or lower than the
    Fund&#146;s then current net asset value per share.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund announced the Offer on December&#160;14, 2006. The net
    asset value per share of Common Stock at the close of business
    on December&#160;14, 2006 and April&#160;23, 2007, was $5.14 and
    $5.08, respectively, and the last reported sales prices of a
    share of the Fund&#146;s Common Stock on the NYSE on those dates
    was $5.80 and $5.56, respectively.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Expiration
    of the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Offer will expire at 5:00&#160;p.m., New York City time, on
    May&#160;18, 2007, unless extended by the Fund until
    5:00&#160;p.m., New York City time, to a date not later than
    May&#160;25, 2007. The Rights will expire on the Expiration Date
    and thereafter may not be exercised. Since the Expiration Date
    and the Pricing Date will be the same date, Record Date
    Shareholders who decide to acquire Shares in the Primary
    Subscription or pursuant to the Over-Subscription Privilege will
    not know when they make such decision the purchase price of such
    Shares. Any extension of the Offer
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    12
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    will be followed as promptly as practicable by announcement
    thereof. Such announcement shall be issued no later than
    9:00&#160;a.m., New York City time, on the next business day
    following the previously scheduled Expiration Date. Without
    limiting the manner in which the Fund may choose to make such
    announcement, the Fund will not, unless otherwise required by
    law, have any obligation to publish, advertise or otherwise
    communicate any such announcement other than by making a release
    to the Dow Jones News Service or such other means of
    announcement as the Fund deems appropriate.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Method of
    Exercise of Rights</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Subscription Certificates, which evidence the Rights, will
    be mailed to Record Date Shareholders or, if a Record Date
    Shareholder&#146;s shares of Common Stock are held by Cede or
    any other depository or nominee on their behalf, to Cede or such
    other depository or nominee. Rights may be exercised by fully
    completing and signing the Subscription Certificate which
    accompanies this Prospectus and mailing it in the envelope
    provided, or otherwise delivering the completed and signed
    Subscription Certificate to the Subscription Agent, together
    with payment in full for the Shares at the estimated payment
    price (the &#147;Estimated Payment Price&#148;) as described
    below under &#147;Payment for Shares.&#148; Rights may also be
    exercised by a Record Date Shareholder contacting his or her
    broker, bank or trust company, which can arrange, on his or her
    behalf, to guarantee delivery of payment (using a &#147;Notice
    of Guaranteed Delivery&#148;) and of a properly completed and
    executed Subscription Certificate. The broker, bank or trust
    company may charge a fee for this service. Fractional Shares
    will not be issued. A Record Date Shareholder whose total
    ownership is fewer than five shares of Common Stock and,
    accordingly, receives fewer than five Rights will be able to
    subscribe for one Share upon the exercise of all of such Rights
    received and, if he or she subscribes for one Share, will be
    able to request additional Shares pursuant to the terms of the
    Offer applicable to the Over-Subscription Privilege. Record Date
    Shareholders who otherwise have remaining fewer than five Rights
    will not be able to purchase a Share upon the exercise of such
    Rights but will be able to request additional Shares pursuant to
    the terms of the Offer applicable to the Over-Subscription
    Privilege. Completed Subscription Certificates must be received
    by the Subscription Agent prior to 5:00&#160;p.m., New York City
    time, on the Expiration Date (unless the guaranteed delivery
    procedures are complied with as described below under
    &#147;Payment for Shares&#148;) at the offices of the
    Subscription Agent at the address set forth below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Shareholders Who Are Record
    Owners.</I>&#160;&#160;Shareholders who are record owners can
    choose between either option set forth under &#147;Payment for
    Shares&#148; below. If time is of the essence, option (2), under
    &#147;Payment for Shares&#148; below, will permit delivery of
    the Subscription Certificate and payment after the Expiration
    Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Shareholders Whose Shares&#160;Are Held By A
    Nominee.</I>&#160;&#160;Shareholders whose shares are held by a
    nominee, such as a broker, bank or trust company, must contact
    such nominee to exercise their Rights. In that case, the nominee
    will complete the Subscription Certificate on behalf of the
    shareholder and arrange for proper payment by one of the methods
    set forth under &#147;Payment for Shares&#148; below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Nominees.</I>&#160;&#160;Nominees who hold shares of Common
    Stock for the account of others must (to the extent required by
    applicable law) notify the beneficial owners of such shares as
    soon as possible to ascertain such beneficial owners&#146;
    intentions and to obtain instructions with respect to the
    Rights. If the beneficial owner so instructs, the nominee should
    complete the Subscription Certificate and submit it to the
    Subscription Agent with the proper payment described under
    &#147;Payment for Shares&#148; below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Information
    Agent</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any questions or requests for assistance may be directed to the
    Information Agent at its telephone number and address listed
    below:
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>The Information Agent for the Offer is:</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Georgeson, Inc.
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    17 State Street, 10th&#160;Floor
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    New York, NY 10004
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Attn: David M. Bobker
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Banks and Brokers Call Collect:
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">(212)&#160;440-9800</FONT>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All Others Call Toll-Free:
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">(866)&#160;541-3552</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders may also contact their brokers or nominees for
    information with respect to the Offer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Information Agent will receive a fee estimated to be
    approximately $7,500, which includes reimbursement for all
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses related to the Offer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Subscription
    Agent</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Subscription Agent is Computershare Trust Company, N.A.,
    which will receive for its administrative, processing, invoicing
    and other services as subscription agent, a fee estimated to be
    approximately $130,000, which includes reimbursement for all
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses related to the Offer. Signed Subscription Certificates
    must be sent, together with payment at the Estimated Payment
    Price for all Shares subscribed in the Primary Subscription and
    Over-Subscription Privilege by one of the methods described
    below, prior to 5:00&#160;p.m., New York City time, on the
    Expiration Date. Alternatively, if using a Notice of Guaranteed
    Delivery, the Notice of Guaranteed Delivery (see &#147;Method of
    Exercise of Rights&#148; above) may also be sent by facsimile to
    <FONT style="white-space: nowrap">(781)&#160;380-3388,</FONT>
    with the originals to be sent promptly thereafter by one of the
    methods described below. Facsimiles should be confirmed by
    telephone to
    <FONT style="white-space: nowrap">(781)&#160;930-4900.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (1)&#160;
</TD>
    <TD align="left">
    BY FIRST CLASS&#160;MAIL ONLY:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 3%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Computershare Trust Company, N.A.<BR>
    Attention: Zweig Funds<BR>
    P.O. Box&#160;859208<BR>
    Braintree, MA 02185
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (2)&#160;
</TD>
    <TD align="left">
    BY EXPRESS MAIL OR OVERNIGHT COURIER:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 3%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Computershare Trust Company, N.A.<BR>
    Attention: Zweig Funds<BR>
    161 Bay State Drive<BR>
    Braintree, MA 02184
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (3)&#160;
</TD>
    <TD align="left">
    GUARANTEE OF DELIVERY: FOR ELIGIBLE INSTITUTIONS ONLY:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 3%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Notice of Guaranteed Delivery may also be sent by facsimile
    to
    <FONT style="white-space: nowrap">(781)&#160;380-3388,</FONT>
    with the originals to be sent promptly thereafter by one of the
    methods described above. Facsimiles should be confirmed by
    telephone to
    <FONT style="white-space: nowrap">(781)&#160;930-4900.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>DELIVERY TO AN ADDRESS OTHER THAN ONE OF THE ADDRESSES LISTED
    ABOVE, OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS
    LISTED ABOVE, WILL NOT CONSTITUTE VALID DELIVERY.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Payment
    for Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Record Date Shareholders who acquire Shares in the Primary
    Subscription and pursuant to the Over-Subscription Privilege may
    choose between the following methods of payment:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;A Record Date Shareholder can send the Subscription
    Certificate together with payment for the Shares acquired in the
    Primary Subscription and for additional Shares subscribed for
    pursuant to the Over-Subscription Privilege to the Subscription
    Agent. Payment should be calculated on the basis of the
    Estimated Payment Price of $5.25&#160;per Share for all Shares
    requested. To be accepted, such payment, together with the
    executed Subscription Certificate, must be received by the
    Subscription Agent at one of the Subscription Agent&#146;s
    offices at the addresses set forth above prior to
    5:00&#160;p.m., New York City time, on the Expiration Date. The
    Subscription Agent will deposit all monies received by it prior
    to the final payment date into a segregated
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    interest-bearing account (which interest will be paid to the
    Fund) pending proration and distribution of the Shares. <B>A
    PAYMENT PURSUANT TO THIS METHOD MUST BE IN UNITED STATES DOLLARS
    BY CHECK DRAWN ON A BANK LOCATED IN THE UNITED STATES, MUST BE
    PAYABLE TO THE ZWEIG TOTAL RETURN FUND, INC. AND MUST ACCOMPANY
    A PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION CERTIFICATE FOR
    SUCH SUBSCRIPTION CERTIFICATE TO BE ACCEPTED.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;Alternatively, a subscription will be accepted by the
    Subscription Agent if, prior to 5:00&#160;p.m., New York City
    time, on the Expiration Date, the Subscription Agent has
    received a Notice of Guaranteed Delivery by facsimile (telecopy)
    or otherwise from a bank, a trust company, or a NYSE member
    brokerage firm guaranteeing delivery of (i)&#160;payment of the
    Estimated Payment Price of $5.25&#160;per share for the Shares
    subscribed for in the Primary Subscription and for any
    additional Shares subscribed for pursuant to the
    Over-Subscription Privilege, and (ii)&#160;a properly completed
    and executed Subscription Certificate. The Subscription Agent
    will not honor a Notice of Guaranteed Delivery unless a properly
    completed and executed Subscription Certificate together with
    full payment is received by the Subscription Agent by the close
    of business on the third business day after the Expiration Date
    (May&#160;18, 2007, unless the Offer is extended).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Within four business days following the Expiration Date
    (May&#160;18, 2007, unless the Offer is extended, the
    &#147;Confirmation Date&#148;), a confirmation will be sent by
    the Subscription Agent to each subscribing Record Date
    Shareholder (or, if the Record Date Shareholder&#146;s shares of
    Common Stock are held by Cede or any other depository or
    nominee, to Cede or such depository or nominee), showing
    (i)&#160;the number of Shares acquired pursuant to the Primary
    Subscription, (ii)&#160;the number of Shares, if any, acquired
    pursuant to the Over-Subscription Privilege, (iii)&#160;the per
    Share and total purchase price of the Shares, and (iv)&#160;any
    additional amount payable by such Record Date Shareholder to the
    Fund or any excess to be refunded by the Fund to such Record
    Date Shareholder, in each case based on the Subscription Price
    as determined on the Pricing Date. If any Record Date
    Shareholder exercises his or her right to acquire Shares
    pursuant to the Over-Subscription Privilege, any such excess
    payment which would otherwise be refunded to the Record Date
    Shareholder will be applied by the Fund toward payment for
    additional Shares acquired pursuant to exercise of the
    Over-Subscription Privilege. Any additional payment required
    from a Record Date Shareholder must be received by the
    Subscription Agent within ten business days after the
    Confirmation Date. Any excess payment to be refunded by the Fund
    to a Record Date Shareholder will be mailed by the Subscription
    Agent to such Record Date Shareholder as promptly as possible.
    All payments by a Record Date Shareholder must be in United
    States dollars by money order or check drawn on a bank located
    in the United States of America and payable to <B>THE ZWEIG
    TOTAL RETURN FUND, INC.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Whichever of the two methods described above is used, issuance
    and delivery of certificates for the Shares purchased are
    subject to collection of checks and actual payment pursuant to
    any Notice of Guaranteed Delivery.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>RECORD DATE SHAREHOLDERS WILL HAVE NO RIGHT TO RESCIND THEIR
    SUBSCRIPTION AFTER RECEIPT OF THEIR PAYMENT FOR SHARES&#160;BY
    THE SUBSCRIPTION AGENT, EXCEPT AS PROVIDED BELOW UNDER
    &#147;POSSIBLE SUSPENSION OR WITHDRAWAL OF THE OFFER.&#148;</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a Record Date Shareholder who acquires Shares pursuant to the
    Primary Subscription or Over-Subscription Privilege does not
    make payment of any additional amounts due by the ninth business
    day after the Confirmation Date, the Fund reserves the right to
    take any or all of the following actions: (i)&#160;sell such
    subscribed and unpaid-for Shares to other Record Date
    Shareholders, (ii)&#160;apply any payment actually received by
    it toward the purchase of the greatest whole number of Shares
    which could be acquired by such holder upon exercise of the
    Primary Subscription or Over-Subscription Privilege, or
    (iii)&#160;exercise any and all other rights or remedies to
    which it may be entitled.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND
    PAYMENT OF THE SUBSCRIPTION PRICE TO THE FUND&#160;WILL BE AT
    THE ELECTION AND RISK OF THE RIGHTS HOLDERS, BUT IF SENT BY MAIL
    IT IS RECOMMENDED THAT SUCH CERTIFICATES AND PAYMENT BE SENT BY
    REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
    REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
    ENSURE DELIVERY TO THE FUND&#160;AND CLEARANCE OF PAYMENT PRIOR
    TO 5:00&#160;P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
    BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT </B>
</DIV>

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    <BR>
    15
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>LEAST FIVE BUSINESS DAYS TO CLEAR AND, AT THE DISCRETION OF
    THE FUND, MAY NOT BE ACCEPTED IF NOT CLEARED PRIOR TO THE
    EXPIRATION DATE, YOU ARE STRONGLY ENCOURAGED TO PAY, OR ARRANGE
    FOR PAYMENT, BY MEANS OF CERTIFIED OR BANK CASHIER&#146;S
    CHECK.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All questions concerning the timeliness, validity, form and
    eligibility of any exercise of Rights will be determined by the
    Fund, whose determinations will be final and binding. The Fund
    in its sole discretion may waive any defect or irregularity, or
    permit a defect or irregularity to be corrected within such time
    as it may determine, or reject the purported exercise of any
    Right. Subscriptions will not be deemed to have been received or
    accepted until all irregularities have been waived or cured
    within such time as the Fund determines in its sole discretion.
    The Fund will not be under any duty to give notification of any
    defect or irregularity in connection with the submission of
    Subscription Certificates or incur any liability for failure to
    give such notification.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Possible
    Suspension or Withdrawal of the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As required by the Commission&#146;s registration form, the Fund
    has undertaken to suspend the Offer until it amends this
    Prospectus if, subsequent to the effective date of the
    Fund&#146;s Registration Statement, the Fund&#146;s net asset
    value declines more than 10% from its net asset value as of such
    effective date. Accordingly, the Fund will notify Record Date
    Shareholders of any such decline and permit them to cancel their
    exercise of Rights.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Non-Transferability
    of Rights</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Rights are non-transferable and, therefore, may not be
    purchased or sold. The Rights will not be listed for trading on
    the NYSE or any other exchange. However, the additional Shares
    of Common Stock to be issued upon the exercise of the Rights and
    the Over-Subscription Privilege will be listed for trading on
    the NYSE, subject to notice of issuance.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Delivery
    of Share Certificates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Stock certificates for all Shares acquired in the Primary
    Subscription will be mailed promptly after the expiration of the
    Offer and full payment for the subscribed Shares has been
    received and cleared. Certificates representing Shares acquired
    pursuant to the Over-Subscription Privilege will be mailed as
    soon as practicable after full payment has been received and
    cleared and all allocations have been effected. Participants in
    the Fund&#146;s Distribution Reinvestment and Cash Purchase Plan
    (the &#147;Plan&#148;) will have any Shares acquired in the
    Primary Subscription and pursuant to the Over-Subscription
    Privilege credited to their shareholder distribution
    reinvestment accounts in the Plan. Participants in the Plan
    wishing to exercise Rights for the shares of Common Stock held
    in their accounts in the Plan must exercise them in accordance
    with the procedures set forth above. Record Date Shareholders
    whose shares of Common Stock are held of record by Cede or by
    any other depository or nominee on their behalf or their
    broker-dealer&#146;s behalf will have any Shares acquired in the
    Primary Subscription credited to the account of Cede or such
    other depository or nominee. Shares acquired pursuant to the
    Over-Subscription Privilege will be credited directly to Cede or
    such other depository or nominee.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Foreign
    Restrictions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Record Date Shareholders whose record addresses are outside the
    United States (for these purposes, the United States includes
    its territories and possessions and the District of Columbia)
    will receive written notice of the Offer; however, Subscription
    Certificates will not be mailed to such shareholders. The Rights
    to which those Subscription Certificates relate will be held by
    the Subscription Agent for such foreign Record Date
    Shareholders&#146; accounts until instructions are received in
    writing with payment to exercise the Rights. If no such
    instructions are received by the Expiration Date, such Rights
    will expire.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Federal
    Income Tax Consequences</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The U.S.&#160;Federal income tax consequences to holders of
    Common Stock with respect to the Offer will be as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    U.S.&#160;Shareholders who receive Rights pursuant to the Offer
    should not recognize taxable income for U.S.&#160;Federal income
    tax purposes upon their receipt of the Rights. If Rights issued
    to a U.S.&#160;Shareholder expire without being sold or
    exercised, no basis should be allocated to such Rights, and such
    Shareholder should not recognize any gain or loss for
    U.S.&#160;Federal income tax purposes upon such expiration.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tax basis of a U.S.&#160;Shareholder&#146;s Common Stock
    should remain unchanged and the shareholder&#146;s basis in the
    Rights should be zero, unless such U.S.&#160;Shareholder
    affirmatively and irrevocably elects (in a statement attached to
    such shareholder&#146;s U.S.&#160;Federal income tax return for
    the year in which the Rights are received) to allocate the basis
    in the Common Stock between such Common Stock and the Rights in
    proportion to their respective fair market values on the date of
    distribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A U.S.&#160;Shareholder who exercises Rights should not
    recognize any gain or loss for U.S.&#160;Federal income tax
    purposes upon the exercise. The tax basis of the newly acquired
    Common Stock should equal the Subscription Price paid for the
    Common Stock (plus the basis, if any, allocated to the Rights in
    the manner described in the immediately preceding paragraph).
    See &#147;Taxation&#148; in this Prospectus and in the SAI.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each U.S.&#160;Shareholder is urged to consult his or her own
    tax advisor with respect to the specific Federal, state and
    local tax consequences to such U.S.&#160;Shareholder of
    receiving Rights in this offer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Employee
    Plan Considerations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders that are employee benefit plans subject to the
    Employee Retirement Income Security Act of 1974, as amended
    (&#147;ERISA&#148;) (including corporate savings and 401(k)
    plans), Keogh or H.R. 10 plans of self-employed individuals and
    Individual Retirement Accounts (&#147;IRAs&#148;) (collectively,
    &#147;Plans&#148;) should be aware of the complexity of the
    rules and regulations governing Plans and the penalties for
    noncompliance, and Plans should consult with their counsel
    regarding the consequences of their exercise of Rights under
    ERISA and the Internal Revenue Code of 1986, as amended (the
    &#147;Code&#148;).
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If all of the Rights are exercised in full and assuming a
    Subscription Price of $5.08&#160;per share, the net proceeds to
    the Fund would be approximately $94,440,100, after deducting
    expenses payable by the Fund in connection with the offering
    estimated to total $657,500. If the Fund increases the number of
    shares of Common Stock subject to subscription by up to
    4,680,000&#160;Shares, in order to satisfy over-subscription
    requests, the additional net proceeds will be approximately
    $23,774,400. However, there can be no assurance that all Rights
    will be exercised in full, and the Subscription Price will not
    be determined until the close of business on the Expiration
    Date. The Investment Adviser has advised the Fund that it
    anticipates that the net proceeds of the Offer will be invested
    in investments conforming to the Fund&#146;s investment
    objective and policies within three months from their receipt by
    the Fund. Pending such investment, the proceeds will be invested
    in cash or cash equivalent short-term obligations including, but
    not limited to, U.S.&#160;Government obligations, certificates
    of deposit, commercial paper and short-term notes. See &#147;The
    Offer&#160;&#151; Purpose of the Offer.&#148;
</DIV>
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    FUND</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund, incorporated in Maryland on July&#160;21, 1988, is a
    diversified, closed-end management investment company registered
    under the 1940 Act. The Fund&#146;s investment objective is to
    seek the highest total return, consisting of capital
    appreciation and current income, consistent with the
    preservation of capital. The Fund will invest up to 65% of its
    total assets in U.S.&#160;government securities, non-convertible
    debt securities of domestic issuers rated among the two highest
    rating categories of either Moody&#146;s or S&#38;P (or, if
    unrated, of comparable quality as determined by the Investment
    Adviser), and certain foreign government securities
    (collectively, the &#147;Bond Investments&#148;), and up to 50%
    of its total assets in equity securities comprised of common,
    preferred and convertible preferred stock. The equity
    investments will be in investments in primarily
    large-capitalization companies but may also be in investments in
    small- or medium-capitalization companies. The Fund may,
    however, under certain circumstances, invest up to 75% of its
    total assets in equity securities as determined by the
    Fund&#146;s Investment Adviser. The Fund also, as part of its
    Bond Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    rating categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser). See
    &#147;Investment Objective and Policies.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser, Phoenix/Zweig Advisers LLC, is a
    Delaware limited liability company and a wholly-owned subsidiary
    of Phoenix Investment Partners, Ltd., a Delaware corporation.
    Phoenix/Zweig Advisers LLC and Phoenix Investment Partners, Ltd.
    are independent investment advisory firms registered with the
    Commission under the Investment Advisers Act of 1940, as
    amended. Such registration does not involve supervision or
    approval by the Commission of investment advice rendered by the
    Investment Adviser. See &#147;Management of the Fund.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    Zweig Consulting LLC, is a New York limited liability company
    and an investment advisory firm registered with the Commission
    under the Investment Advisers Act of 1940, as amended. The
    President of the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    is Dr.&#160;Martin E. Zweig, who has been engaged in the
    business of providing investment advisory services for over
    35&#160;years. See &#147;Management of the Fund.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund completed an initial public offering of
    60,375,000&#160;shares of its Common Stock in September and
    October 1988. The net proceeds to the Fund from such offering
    were approximately $559,912,503. The Fund also received net
    proceeds of approximately $76&#160;million from its April 1998
    rights offering. As of April&#160;23, 2007, the net assets of
    the Fund were $474,838,536, and since inception, the Fund has
    paid or declared distributions (including dividends and capital
    gains distributions) aggregating $1,089,894,527.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s principal office is located at 900 Third Avenue,
    New York, New York 10022, and its telephone number is
    <FONT style="white-space: nowrap">(212)&#160;451-1100.</FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MARKET
    PRICE AND NET ASSET VALUE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shares of the Fund&#146;s Common Stock are listed on the NYSE
    under the symbol &#147;ZTR.&#148; The following table sets forth
    for the calendar quarters indicated: (i)&#160;the high and low
    closing prices per share of the Fund&#146;s Common Stock on the
    NYSE; (ii)&#160;the net asset value per share of the Fund&#146;s
    Common Stock on the day of the high or low closing price; and
    (iii)&#160;the percentage by which the shares of Common Stock of
    the Fund traded at a premium over, or discount from, the
    Fund&#146;s high and low net asset values per share.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="41%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>High<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Net Asset<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Premium<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Low<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Net Asset<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Premium<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Quarter Ended</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Sales Price*</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Value</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Discount)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Sales Price*</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Value</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Discount)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">12/31/04</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.35
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.62
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4.80
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.59
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6.08
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">3/31/05</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.32
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.60
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5.00
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.12
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.45
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6.06
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">6/30/05</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.24
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4.73
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6.11
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">9/30/05</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.16
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.41
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4.62
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.33
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4.32
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">12/31/05</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.12
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (2.48
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.67
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.26
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (11.22
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">3/31/06</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.22
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6.32
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.71
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (10.80
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">6/30/06</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.22
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6.32
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.71
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.05
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6.73
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">9/30/06</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.44
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.13
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.04
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.80
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.95
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (3.03
</TD>
<TD nowrap align="left" valign="bottom">
    )%
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">12/31/06</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.91
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.14
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14.98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.13
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt"><FONT style="white-space: nowrap">3/31/07</FONT>
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15.75
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.31
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.73
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 12%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=480 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    As reported by the NYSE.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s shares of Common Stock have traded in the market
    above, at and below net asset value since the commencement of
    the Fund&#146;s operations in September 1988. The Fund&#146;s
    officers cannot predict whether the Subscription Price will be
    at or below the Fund&#146;s net asset value per Share on the
    Pricing Date. Since the Fund&#146;s inception in 1988, the Fund
    has generally maintained a policy of making monthly
    distributions equal to 0.83% of its net asset value (10% on an
    annualized basis). The Fund&#146;s officers believe that without
    this monthly distribution policy, there would likely be a
    decrease in the amount of any premium at which the Fund&#146;s
    shares would be trading above net asset value or an increase in
    the amount of any discount at which the Fund&#146;s shares would
    be trading from net asset value; however, the Fund&#146;s
    officers cannot predict whether such policy will have this
    effect in the future. See &#147;Distributions; Distribution
    Reinvestment and Cash Purchase Plan.&#148; The Fund is
    authorized to repurchase its shares on the open market when the
    shares are trading at a discount from net asset value. The Fund
    has not engaged in any such repurchases. See &#147;Description
    of Common Stock&#160;&#151; Repurchase of Shares.&#148; Since
    the Fund&#146;s inception, the Board of Directors has maintained
    a policy pursuant to which the Board of Directors considers the
    making of tender offers of the Fund each quarter during periods
    when the Fund&#146;s shares are trading at a discount from net
    asset value. The Fund has not made any such tender offers. See
    &#147;Description of Common Stock&#160;&#151; Tender
    Offers.&#148; The Fund&#146;s Articles of Incorporation provide
    that if during any fiscal quarter beginning on or after
    January&#160;1, 1990, the Fund&#146;s shares trade, on the
    principal securities exchange on which they are traded, at an
    average discount from net asset value of 10% or more, the Fund
    generally is required to submit to shareholders within
    60&#160;days after the end of such quarter, a proposal to
    convert the Fund to an open-end investment company (the
    &#147;Conversion Proposal&#148;). Approval of the Conversion
    Proposal would require the affirmative vote of a majority of the
    outstanding shares of the Fund entitled to be voted thereon. The
    Fund submitted a Conversion Proposal to its shareholders in
    2000, 2001 and 2004 since the Fund&#146;s shares had traded at
    an average discount from net asset value of 10% or more during
    the quarter ended March&#160;31, 2000, the quarter ended
    December&#160;31, 2000 and the quarter ended December&#160;31,
    2003, respectively. The Fund&#146;s shareholders did not approve
    the Conversion Proposal on any of those occasions. See
    &#147;Description of Common Stock&#160;&#151; Provision for
    Conversion to Open-End Fund.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On April&#160;23, 2007, the net asset value per share of Common
    Stock was $5.08 and the last reported sales price was $5.56,
    representing a premium from net asset value per share of 9.45%.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END LOGICAL PAGE -->
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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="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    OBJECTIVE AND POLICIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investment
    Objective</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s investment objective is to seek the highest
    total return, consisting of capital appreciation and current
    income, consistent with the preservation of capital. The Fund
    will invest up to 65% of its total assets in
    U.S.&#160;government securities, non-convertible debt securities
    of domestic issuers rated among the two highest rating
    categories of either Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser), and
    certain foreign government securities (collectively, the
    &#147;Bond Investments&#148;), and up to 50% of its total assets
    in equity securities comprised of common, preferred and
    convertible preferred stock. The equity investments will be in
    investments in primarily large-capitalization companies but may
    also be in investments in small- or medium-capitalization
    companies. If, however, the Investment Adviser perceives a
    change in the relationship between the debt and equity markets
    (such as a change in the spread between the yields of debt and
    equity securities) then, depending on the nature of such change,
    the Fund may increase the percentage of its total assets
    invested in debt securities (including money market instruments)
    or equity securities. The Fund will not, under any
    circumstances, invest more than 75% of its total assets in
    equity securities. The Fund also, as part of its Bond
    Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    rating categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The extent of the Fund&#146;s investment in debt and equity
    securities will be determined by the Investment Adviser
    primarily on the basis of asset allocation techniques developed
    by Dr.&#160;Martin E. Zweig, the President of the Fund&#146;s
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. In an effort to meet the Fund&#146;s investment
    objective, the Fund may use the following investment methods
    when such use is deemed appropriate: purchasing and selling
    interest rate, stock index and other futures contracts and
    purchasing options on such futures; purchasing and writing
    listed put and call security options and options on stock
    indexes; short sales of securities; borrowing from banks to
    purchase securities; investing in securities of exchange traded
    funds, foreign issuers and closed-end investment companies;
    lending portfolio securities to brokers, dealers, banks or other
    recognized institutional borrowers of securities; entering into
    repurchase or reverse repurchase agreements; and purchasing
    when-issued and delayed-delivery securities. See &#147;Special
    Investment Methods.&#148; During periods when the Investment
    Adviser believes an overall defensive position is advisable,
    greater than 50% (and under certain circumstances perhaps all)
    of the Fund&#146;s total assets may be temporarily invested in
    money market instruments and cash. There is no assurance that
    the Fund will use any or all of such methods or, whether or not
    they are used, the Fund will achieve its investment objective.
    The Fund&#146;s investment objective may not be changed without
    the approval of a majority of the Fund&#146;s outstanding voting
    securities. As used in this Prospectus, the term &#147;majority
    of the Fund&#146;s outstanding voting securities&#148; means the
    lesser of either (i)&#160;67% of the shares represented at a
    shareholders meeting at which the holders of more than 50% of
    the outstanding shares are present in person or by proxy, or
    (ii)&#160;more than 50% of the outstanding shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investment
    Policies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The extent of the Fund&#146;s investment in debt and equity
    securities will be determined primarily on the basis of asset
    allocation techniques developed by Dr.&#160;Martin E. Zweig,
    President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. It is expected that the Investment Adviser will
    make most of the decisions with respect to the extent of the
    Fund&#146;s investment in debt and equity securities based on
    these techniques. The debt allocation techniques, which seek to
    identify the risks and trends in the debt markets at any given
    time, will incorporate various indicators, including the
    momentum of bond prices, short-term interest rate trends,
    inflation indicators and general economic and liquidity
    indicators, as well as other market indicators and statistics
    which the Investment Adviser believes tend to point to
    significant trends in the overall performance and the risk of
    the debt markets. The equity allocation techniques, which seek
    to identify the risks and trends in the equity markets at any
    given time, include general market indicators, including
    interest rate and monetary analysis, market sentiment
    indicators, price and trading volume statistics, and measures of
    valuation, as well as other market indicators and statistics
    which the Investment Adviser believes tend to point to
    significant trends in the overall performance and the risk of
    the stock market. These techniques are not an all-in or all-out
    approach that attempts to predict market tops and bottoms.
    Instead, they are intended to be a gradual and disciplined
    approach that reacts to changes in risk levels as determined by
    the indicators. The goal is to be
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    invested consistent with the major trends of the markets. There
    is no assurance that these asset allocation techniques will
    provide protection from the risks of debt or equity investment,
    enable the Fund to be invested consistent with the major trends
    of the markets or enable the Fund to achieve its investment
    objective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The maturities of the debt securities in the Fund&#146;s
    portfolio will vary based in large part on the Investment
    Adviser&#146;s expectations of future changes in interest rates
    using the Investment Adviser&#146;s own internal research and
    debt allocation techniques. The primary consideration in
    choosing among bonds is managing risk related to changes in
    interest rate levels. A bond&#146;s duration measures its
    sensitivity to changes in interest rates (interest rate risk).
    Duration is the approximate percentage change in the price of a
    bond or bond portfolio in response to a 100&#160;basis point
    (one percent) change in the general level of interest rates in
    the market. For example, if a bond portfolio has an average
    duration of five years, the value of such bond portfolio would
    increase by 5% if interest rates declined by 1% and conversely
    would decrease by 5% if interest rates rose by 1%. The longer
    the duration, the greater the bond&#146;s price movement will be
    as interest rates change. The Investment Adviser determines the
    level of fixed income investments, and their average maturity,
    in the Fund primarily on the basis of a bond model provided by
    the
    <FONT style="white-space: nowrap">Sub-Adviser.</FONT>
    The bond model suggests an overall duration (a measure of risk
    in a bond portfolio) that is implemented by the Fund&#146;s
    portfolio managers. The Fund&#146;s portfolio managers then
    incorporate fundamental analysis to determine which specific
    bonds to own and what maturities to hold to arrive at the
    overall duration of the portfolio. The overall bond portfolio
    generally has a blend of short, medium and long-maturity bonds,
    which balances the overall duration risk with other yield curve
    risks depending on the overall duration suggested by the bond
    model. The portfolio managers will vary the maturities to arrive
    at the appropriate desired average. As of March&#160;31, 2007,
    the bond portfolio had an average maturity of 9.5&#160;years.
    The Fund primarily invests the bond portfolio in
    U.S.&#160;Treasury securities and agency securities of the
    highest quality.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The U.S.&#160;government securities (&#147;U.S.&#160;Government
    Securities&#148;) in which the Fund may invest are securities
    issued or guaranteed by the U.S.&#160;government or its agencies
    or instrumentalities (including repurchase agreements secured by
    such instruments). Certain of these securities, including
    U.S.&#160;Treasury bills, notes and bonds, mortgage
    participation certificates guaranteed by GNMA, and Federal
    Housing Administration debentures, are supported by the full
    faith and credit of the United States. Other
    U.S.&#160;Government Securities issued or guaranteed by federal
    agencies or government-sponsored enterprises are not supported
    by the full faith and credit of the United States. These
    securities include obligations supported by the right of the
    issuer to borrow from the U.S.&#160;Treasury, such as
    obligations of Federal Home Loan&#160;Banks, and obligations
    supported only by the credit of the instrumentality, such as
    Federal National Mortgage Association bonds. Debt securities of
    domestic issuers, other than U.S.&#160;Government Securities,
    will be generally limited to those that are rated, as of the
    date of purchase, among the two highest rating categories (Aaa
    and Aa) of Moody&#146;s or the two highest rating categories
    (AAA and AA) of S&#38;P. The Fund also, as part of its Bond
    Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    rating categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The money market instruments in which the Fund may invest
    include U.S.&#160;Government Securities or obligations issued or
    guaranteed by one or more foreign governments or any of their
    political subdivisions, agencies or instrumentalities
    (&#147;Foreign Government Securities&#148;) having a maturity of
    less than one year, commercial paper rated
    <FONT style="white-space: nowrap">A-1</FONT> or
    higher by S&#38;P or
    <FONT style="white-space: nowrap">Prime-1</FONT> or
    higher by Moody&#146;s, or if such commercial paper is not
    rated, issued by companies which have an outstanding debt issue
    rated Aa or higher by Moody&#146;s or AA or higher by S&#38;P,
    repurchase agreements secured by collateral at least equal to
    the repurchase price, and certificates of deposit, bankers&#146;
    acceptances and other short-term obligations issued by domestic
    branches of U.S.&#160;banks that are insured by the Federal
    Deposit Insurance Corporation and have assets in excess of
    $500&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may invest up to 10% of its total assets in Foreign
    Government Securities that, in the opinion of the Investment
    Adviser, do not subject the Fund to unreasonable credit risks.
    The percentage of the Fund&#146;s assets invested in Foreign
    Government Securities will vary depending on the relative yields
    of such securities, the economic and financial markets of the
    countries in which the investments are made, the interest rate
    climate of such countries and the relationship of such
    countries&#146; currencies to the U.S.&#160;dollar. During the
    past year, the Fund has not owned any Foreign Government
    Securities.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
</DIV><!-- END LOGICAL PAGE -->
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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="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s investments in equity securities provide the
    opportunity for enhanced returns through capital appreciation.
    The Investment Adviser expects that the stocks in the
    Fund&#146;s portfolio will be widely diversified by both
    industry and the number of issuers. The Investment Adviser
    expects that a majority of the stocks in the Fund&#146;s
    portfolio will be selected on the basis of a proprietary stock
    selection model that evaluates and ranks approximately 1,000 of
    the largest, most liquid stocks. This stock selection model
    evaluates and ranks such stocks on the basis of various factors,
    which may include earnings momentum, earnings growth,
    <FONT style="white-space: nowrap">price-to-book</FONT>
    value,
    <FONT style="white-space: nowrap">price-to-earnings,</FONT>
    <FONT style="white-space: nowrap">price-to-cash</FONT>
    flow, cash flow trend, payout ratio trend and other market
    measurements. The Investment Adviser then performs further
    analysis of certain of those companies that have been identified
    by the stock selection model, in order to determine whether to
    purchase those stocks. This stock selection model may evolve or
    be replaced by other stock selection models intended to achieve
    the Fund&#146;s investment objective.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Special
    Investment Methods</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may use some or all of the following special investment
    methods where their use appears appropriate to the Investment
    Adviser. No assurance can be given that the Fund will use any or
    all of such investment methods or, if used, that their use will
    achieve its investment objective. The investment methods
    described below are subject to, and should be read in
    conjunction with, the discussion under &#147;Investment
    Restrictions&#148; and &#147;Investment Objective and
    Policies&#148; in the SAI. The restrictions set forth under
    &#147;Investment Restrictions&#148; are fundamental, and thus
    may be changed only with the approval of a majority of the
    Fund&#146;s outstanding voting securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Futures
    Contracts and Related Options.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may purchase and sell stock index futures contracts and
    futures contracts based upon interest rates and other financial
    instruments, and purchase options on such contracts. The Fund
    will not write options on any futures contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are certain risks associated with the use of futures
    contracts and related options. The low margin normally required
    in such trading provides a large amount of leverage. Thus, a
    relatively small change in the price of a contract can produce a
    disproportionately large profit or loss, and the Fund may gain
    or lose substantially more than the initial margin on a trade.
    Although the Fund intends to purchase or sell futures which
    appear to have an active market, there is no assurance that a
    liquid market will exist for any particular contract at any
    particular time. Thus, it may not be possible to close a futures
    position in anticipation of adverse price movements. In
    addition, there may be an imperfect correlation between the
    price movements of the futures contracts and price movements of
    the underlying portfolio securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may purchase or sell futures contracts and related
    options for any purpose deemed appropriate, including but not
    limited to, managing the risks inherent in its investment
    strategy generally and, in particular, in protecting against the
    effect that changes in general market conditions and conditions
    affecting particular industries may have on the values of
    securities held in the Fund&#146;s portfolio, or which the Fund
    intends to purchase.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For example, the Fund may establish short positions in (sell)
    futures contracts to protect against anticipated or potential
    declines in the market value of the Fund&#146;s portfolio of
    securities. For instance, the Fund may establish a short
    position in stock index futures contracts when it anticipates a
    general market or market sector decline that may adversely
    affect the market value of the Fund&#146;s portfolio securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Where the Fund anticipates a significant market or market sector
    advance, establishing long positions in (purchasing) stock index
    futures contracts affords protection against not participating
    in such advance at a time when the Fund is not fully invested.
    Such a long position would serve as a temporary substitute for
    the purchase of individual stocks, which may then be purchased
    in an orderly fashion. As purchases of stock are made, an amount
    of stock index futures contracts which is comparable to the
    amount of stock purchased may be terminated by offsetting
    closing sales transactions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Security
    and Stock Index Options.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may purchase and write listed put and call options on
    securities and on stock indexes that are traded on
    U.S.&#160;securities exchanges at such times as the Investment
    Adviser deems appropriate and consistent with the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Fund&#146;s investment objective. In general, the Fund may
    purchase or write such options to hedge against anticipated or
    potential declines in the market value of the Fund&#146;s
    portfolio of securities, or to facilitate the rapid
    implementation of investment strategies if the Fund anticipates
    a significant market or market sector advance.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Borrowing.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may from time to time increase its ownership of
    securities above the amounts otherwise possible by borrowings
    from banks on an unsecured basis and investing the borrowed
    funds. In addition, the Fund may borrow to finance share
    repurchase or tender offer transactions when its shares are
    trading at a discount from their net asset value. See
    &#147;Description of Common Stock&#160;&#151; Repurchase of
    Shares; Tender Offers.&#148; Any such borrowing will be made
    only from banks, and pursuant to the requirements of the 1940
    Act, will only be made to the extent that the value of the
    Fund&#146;s total assets, less its liabilities other than
    borrowings, is equal to at least 300% of all borrowings
    including the proposed borrowing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Borrowing for investment and to finance share repurchase or
    tender offer transactions increases both investment opportunity
    and investment risk. Since substantially all of the Fund&#146;s
    assets will fluctuate in value, but the obligation resulting
    from the borrowing is relatively fixed, the Fund&#146;s shares
    will increase in value more when the Fund&#146;s assets increase
    in value and decrease more when the Fund&#146;s assets decrease
    in value than would otherwise be the case. In addition, the cost
    of borrowing may exceed the income or gain on any securities
    purchased with the funds borrowed, in which case the Fund&#146;s
    net asset value will decline.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Exchange
    Traded Funds.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may invest in passively managed registered open-end
    investment companies or other baskets of securities, such as
    unit investment trusts, which trade on a national securities
    exchange or NASDAQ and are commonly called exchange-traded funds
    (&#147;ETFs&#148;). These investments represent shares of
    ownership in ETFs that hold portfolios of securities which are
    designed to generally correspond to and closely track the price
    and yield performance of an index of securities. Accordingly,
    ETFs have risks similar to those of stocks and are subject to
    market volatility. Investment returns may fluctuate so that
    invested shares, when redeemed or sold, may be worth more or
    less than their original cost. ETFs may include, among others,
    the Nasdaq-100 Index Tracking Stock (QQQ), Standard&#160;&#38;
    Poor&#146;s Depositary Receipts (SPDRS), the DIAMONDS Trust, and
    other ETF&#146;s as determined from time to time by the
    Investment Adviser.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Foreign
    Securities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may invest up to 10% of its total assets in securities
    of foreign issuers and up to 10% of its total assets in Foreign
    Government Securities. Investments in foreign securities offer
    potential benefits not available through investment solely in
    securities of domestic issuers. Foreign securities offer the
    opportunity to invest in foreign issuers that appear to have
    growth potential, or in foreign countries with economic policies
    or business cycles different from those of the United States, or
    to reduce fluctuations in portfolio value by taking advantage of
    foreign markets that do not move in a manner parallel to United
    States markets. The Fund may also enter into foreign currency
    transactions in connection with its investment activity in
    foreign securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investments in foreign securities present special additional
    risks and considerations not typically associated with
    investments in domestic securities. Foreign investments may be
    affected by changes in foreign currency rates and exchange
    control regulations. There may be less information available
    about a foreign company than a domestic company, and foreign
    companies may not be subject to accounting, auditing and
    reporting standards and requirements comparable to those
    applicable to domestic companies. Foreign securities may be less
    liquid and subject to greater price volatility than domestic
    securities. The foreign markets also have different clearance
    and settlement procedures. Foreign investments may also be
    subject to local economic or political risks, political
    instability and possible nationalization of issuers or
    expropriation of their assets which might adversely affect the
    Fund&#146;s ability to realize or liquidate its investment in
    such securities. Furthermore, legal remedies for defaults and
    disputes may have to be pursued in foreign courts whose
    procedures differ substantially from those of U.S.&#160;courts.
    In the event of a default in payment on foreign securities, the
    Fund may incur increased costs to obtain
    <FONT style="white-space: nowrap">and/or</FONT> to
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    23
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    enforce a judgment against the foreign issuer (or the other
    parties to the transaction) in the United States or abroad, and
    no assurance can be given that the Fund will be able to collect
    on any such judgment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Closed-end
    Investment Companies.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may also invest in other closed-end investment
    companies if the Investment Adviser believes that such
    investments will further the Fund&#146;s investment objective.
    If the Fund purchases shares of another investment company at a
    discount which subsequently declines, the performance of such
    investment generally would be better than if the Fund had
    purchased the underlying portfolio investments of such other
    investment company. Such investments in other investment
    companies will constitute less than 10% of the Fund&#146;s net
    assets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Short
    Sales.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may from time to time make short sales of securities. A
    short sale is a transaction in which the Fund sells a security
    it does not own in anticipation of a decline in market price.
    The Fund may make short sales to offset a potential decline in a
    long position or a group of long positions, or if the Investment
    Adviser believes that a decline in the price of a particular
    security or group of securities is likely. The Fund may also
    make short sales in an attempt to maintain portfolio flexibility
    and facilitate the rapid implementation of investment strategies
    if the Investment Adviser believes that the price of a
    particular security or group of securities is likely to decline.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund determines to make a short sale of a security, it
    must borrow the security. The Fund&#146;s obligation to replace
    the security borrowed in connection with the short sale will be
    fully secured by the proceeds from the short sale retained by
    the broker and by cash or liquid securities deposited in a
    segregated account with the Fund&#146;s custodian.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may make a short sale only if, at the time the short
    sale is made and after giving effect thereto, the market value
    of all securities sold short is 25% or less of the value of its
    net assets and the market value of securities sold short which
    are not listed on a national securities exchange does not exceed
    10% of the Fund&#146;s net assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the short sales described above, the Fund may
    make short sales &#147;against the box.&#148; A short sale
    &#147;against the box&#148; is a short sale where, at the time
    of the short sale, the Fund owns or has the immediate and
    unconditional right, at no added cost, to obtain the identical
    security. The Fund would enter into such a transaction to defer
    a gain or loss for Federal income tax purposes on the security
    owned by the Fund. Short sales against the box are not subject
    to the collateral requirements described above or the percentage
    limitations on short sales described above.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Lending
    Portfolio Securities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may lend portfolio securities, generally on a
    short-term basis, to brokers or dealers in corporate or
    governmental securities, banks or other institutional borrowers
    of securities, and financial institutions as a means of earning
    income. A borrower of securities from the Fund must maintain
    with the Fund cash or U.S.&#160;Government Securities equal to
    at least 100% of the market value of the securities borrowed.
    The Fund may not lend portfolio securities if such loan would
    cause the aggregate amount of all outstanding securities loans
    to exceed 20% of the current market value of the Fund&#146;s net
    assets. If a borrower becomes bankrupt or defaults on its
    obligation to return the loaned security, delays or losses could
    result.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Repurchase
    Agreements.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may from time to time acquire U.S.&#160;Government
    Securities and concurrently enter into so-called
    &#147;repurchase agreements&#148; with the seller, a member bank
    of the Federal Reserve System or primary dealers in
    U.S.&#160;Government Securities, whereby the seller agrees to
    repurchase such securities at the Fund&#146;s cost plus interest
    within a specified time (usually on the next business day).
    Repurchase agreements offer a means of generating income from
    excess cash that the Fund might otherwise hold. Delays in
    payment or losses may result if the other party to the agreement
    defaults or becomes bankrupt. The Fund&#146;s repurchase
    agreements must be fully backed by collateral that is marked to
    market, or priced, each day.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    24
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Reverse
    Repurchase Agreements.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may enter from time to time into reverse repurchase
    agreements whereby the Fund sells an underlying debt instrument
    and simultaneously obtains the commitment of the purchaser, a
    commercial bank or a broker or dealer, to sell the security back
    to the Fund at an agreed upon price on an agreed upon date. The
    value of the underlying securities will be required to be
    maintained at a level at least equal at all times to the total
    amount of the resale obligation, including the interest factor.
    The Fund receives payment for such securities only upon physical
    delivery or evidence of book entry transfer by its custodian.
    The Fund will establish a segregated account with the
    Fund&#146;s custodian, in which the Fund will maintain cash and
    U.S.&#160;Government Securities or other high grade debt
    obligations at least equal in value to the total amount of the
    repurchase obligation, including accrued interest. The value of
    the segregated securities will be
    <FONT style="white-space: nowrap">marked-to-market</FONT>
    on a daily basis to ensure that such value is maintained.
    Reverse repurchase agreements could involve certain risks in the
    event of default or insolvency of the other party, including
    possible delays or restrictions upon the Fund&#146;s ability to
    dispose of the underlying securities. An additional risk is that
    the market value of securities sold by the Fund under a reverse
    repurchase agreement could decline below the price at which the
    Fund is obligated to repurchase them. Reverse repurchase
    agreements will be considered borrowings by the Fund and as such
    will be subject to the restrictions on borrowing described in
    the SAI under &#147;Investment Restrictions.&#148; The value of
    all the Fund&#146;s reverse repurchase agreements will not
    exceed 5% of the Fund&#146;s total assets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Below
    Investment Grade Fixed Income Securities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund, as part of its Bond Investments, may invest up to 10%
    of its total assets in non-convertible debt securities rated
    below the two highest rating categories of Moody&#146;s or
    S&#38;P (or, if unrated, of comparable quality as determined by
    the Investment Adviser). Generally, securities rated below
    investment grade (high yield-high risk fixed income
    securities&#160;&#151; also sometimes referred to as junk bonds)
    have a greater chance that the issuer will be unable to make
    scheduled interest or principal payments when due. Furthermore,
    to the extent that the Fund may invest in such high yield-high
    risk fixed income securities, this will entail greater price
    volatility and credit and interest rate risk than
    investment-grade securities. Analysis of the creditworthiness of
    high yield-high risk issuers is more complex than for
    higher-rated securities, making it more difficult for the
    Investment Adviser to accurately predict risk. If the Fund
    pursues missed interest or principal payments, there is a risk
    that the Fund&#146;s expenses could increase. In addition,
    lower-rated securities may not trade as often and may be less
    liquid than higher-rated securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">When-Issued
    and Delayed-Delivery Securities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may from time to time purchase securities on a
    &#147;when-issued&#148; or &#147;delayed-delivery&#148; basis
    whereby the Fund purchases a bond or stock with delivery of the
    security and payment deferred to a future date. The money to
    purchase such securities will be invested in other securities
    until the Fund receives delivery. This could increase the
    possibility that the Fund&#146;s net asset value would increase
    or decrease faster than would otherwise be the case. There is no
    restriction on the percentage of the Fund&#146;s assets that may
    be invested in when-issued or delayed delivery securities, and
    such securities are not considered to be short sales for
    purposes of the Fund&#146;s Investment Restrictions on short
    sales.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Securities purchased on a when-issued or delayed-delivery basis
    may expose the Fund to risk, since such securities may
    experience fluctuations in value (based upon, in the case of
    bonds, the public&#146;s perception of the creditworthiness of
    the issuer and changes, real or anticipated, in the level of
    interest rates) prior to their time of delivery. In addition,
    the yield available in the market when the delivery takes place
    actually may be higher than that obtained in the transaction
    itself.
</DIV>
<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS AND SPECIAL CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following discusses certain matters that should be
    considered, among others, in connection with the Offer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Dilution&#160;&#151;
    Net Asset Value and Non-Participation in the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Record Date Shareholders who do not fully exercise their Rights
    will, upon the completion of the Offer, own a smaller
    proportional interest in the Fund than they owned prior to the
    Offer. In addition, an immediate dilution of the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    25
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    net asset value per share may be experienced by all shareholders
    as a result of the Offer because the Subscription Price may be
    less than the then current net asset value per share, and the
    number of shares outstanding after the Offer may increase in
    greater percentage than the increase in the size of the
    Fund&#146;s assets. Although it is not possible to state
    precisely the amount of such decrease in net asset value per
    share, if any, because it is not known at this time what the
    Subscription Price will be, what the net asset value per share
    will be on the Pricing Date, or what proportion of the Shares
    will be subscribed for, such dilution could be minimal or
    substantial. For example, assuming (i)&#160;all Rights are
    exercised, (ii)&#160;the Fund&#146;s net asset value on the
    Pricing Date is $5.08&#160;per share (the net asset value per
    share on April&#160;23, 2007), and (iii)&#160;the Subscription
    Price is $5.08&#160;per share (equal to the lower of the NAV at
    the close of business on April&#160;23, 2007 or 95% of the
    average of the last reported sale price of a share of the
    Fund&#146;s Common Stock on the NYSE on April&#160;23, 2007, and
    the four preceding business days), then the Fund&#146;s net
    asset value per share would be reduced by approximately
    $0.01&#160;per share or 0.20%.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Leverage
    and Borrowing</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As discussed above under &#147;Investment Objectives and
    Policies&#160;&#151; Special Investment Methods,&#148; the Fund
    is authorized to borrow. The Fund currently does not have any
    intention to borrow money. Borrowings create an opportunity for
    greater capital appreciation with respect to the Fund&#146;s
    investment portfolio, but at the same time such borrowing is
    speculative in that it will increase the Fund&#146;s exposure to
    capital risk. In addition, borrowed funds are subject to
    interest costs that may offset or exceed the return earned on
    the borrowed funds.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Certain
    Investment Strategies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The extent of the Fund&#146;s investment in debt and equity
    securities will be determined primarily on the basis of asset
    allocation techniques developed by Dr.&#160;Martin E. Zweig,
    President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. While the Investment Adviser seeks to reduce the
    risks associated with investing in debt and equity securities by
    using these techniques, such risks cannot be eliminated. There
    is no assurance that these asset allocation techniques will
    provide protection from the risks of equity investment, enable
    the Fund to be invested consistent with the major trends of the
    market or enable the Fund to achieve its investment objective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, although the Investment Adviser may use one or more
    of the special investment methods discussed above under
    &#147;Investment Objectives and Policies&#160;&#151; Special
    Investment Methods&#148; to further the Fund&#146;s investment
    objective
    <FONT style="white-space: nowrap">and/or</FONT>
    reduce losses that might otherwise occur during a time of
    general decline in stock prices, no assurance can be given that
    these investment methods will be used or, if used, will achieve
    either or both of these results. These methods may subject an
    investor in the Fund to greater than average risks and costs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Credit
    Risk</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investments in debt securities involve credit risk. This is the
    risk that the borrower will not make timely payments of
    principal and interest. The Fund, as part of its Bond
    Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    rating categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser).
    Generally, securities rated below investment grade (high
    yield-high risk fixed income securities&#160;&#151; also
    sometimes referred to as junk bonds) have a greater chance that
    the borrower will be unable to make scheduled interest or
    principal payments when due. Furthermore, to the extent that the
    Fund may invest in such high yield-high risk fixed income
    securities, this will entail greater price volatility and credit
    and interest rate risk than investment-grade securities.
    Analysis of the creditworthiness of high yield-high risk
    borrowers is more complex than for higher-rated securities,
    making it more difficult for the Investment Adviser to
    accurately predict risk. If the Fund pursues missed interest or
    principal payments, there is a risk that the Fund&#146;s
    expenses could increase. In addition, lower-rated securities may
    not trade as often and may be less liquid than higher-rated
    securities. There can be no assurance that the credit rating of
    a Fund investment will remain unchanged over the period of the
    Fund&#146;s ownership of that investment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Interest
    Rate Risk</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund invests in fixed income debt securities, which gives
    rise to interest rate risk. Such securities may decline in value
    because of changes in market interest rates. When market
    interest rates rise, the market value of
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    26
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    such securities generally will fall. To the extent that the Fund
    invests in fixed income debt securities, the net asset value and
    market price of the Fund&#146;s shares tend to decline if market
    interest rates rise. Further, while longer term fixed rate
    securities may pay higher interest rates than shorter term
    securities, longer term fixed rate securities also tend to be
    more sensitive to interest rate changes and, accordingly, tend
    to experience larger changes in value as a result of interest
    rate changes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During periods of declining interest rates, the issuer of a
    security may exercise its option to prepay principal earlier
    than scheduled, forcing the Fund to reinvest in lower yielding
    securities. This is known as call or prepayment risk. Preferred
    and debt securities frequently have call features that allow the
    issuer to redeem the securities prior to their stated
    maturities. An issuer may redeem an obligation if the issuer can
    refinance the debt at a lower cost due to declining interest
    rates or an improvement in the credit standing of the issuer.
    During periods of rising interest rates, the average life of
    certain types of securities may be extended because of slower
    than expected principal payments. This may lock in a below
    market interest rate, increase the security&#146;s duration and
    reduce the value of the security. This is known as extension
    risk.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Equity
    Risk</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Equity investing includes, among other risks, the risk that the
    securities held by the Fund will fall in market value due to
    adverse market and economic conditions, perceptions regarding
    the industries in which the issuers of securities held by the
    Fund participate and the particular circumstances and
    performance of particular companies whose securities the Fund
    holds. An investment in the Fund represents an indirect economic
    stake in the securities owned by the Fund, which are for the
    most part traded on securities exchanges or in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    markets. The market value of these securities, like other market
    investments, may move up or down, sometimes rapidly and
    unpredictably, and the prices of most securities in a market can
    drop substantially at any time. The net asset value of the Fund
    may at any point in time be less than at the time the
    shareholder invested in the Fund, even after taking into account
    any reinvestment of distributions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Small-
    and Medium-Capitalization Stock Risk</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While the Fund generally will invest primarily in
    large-capitalization companies, the Fund may invest in companies
    with small- or medium-capitalizations. Small and medium company
    stocks can be more volatile than, and perform differently from,
    larger company stocks. There may be less trading in small or
    medium company stocks, which means that buy and sell
    transactions in those stocks could have a larger impact on the
    stock prices than is the case with larger company stocks. Small
    and medium companies may have fewer business lines; therefore,
    changes in any line of business may have a greater impact on
    small and medium company stock prices than is the case for a
    larger company. As a result, the purchase or sale of more than a
    limited number of shares of a small or medium company may affect
    its market price. The Fund may need a considerable amount of
    time to purchase or sell its positions in these securities. In
    addition, small or medium company stocks may not be as well
    known to the investing public.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Unrealized
    Appreciation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of December&#160;31, 2006, there was $30,915,003 or
    approximately $0.33&#160;per share of net unrealized
    appreciation in the Fund&#146;s net assets of $476,845,562; if
    realized and distributed, or deemed distributed, such gains
    would, in general, be taxable to shareholders, including holders
    at that time of Shares acquired upon the exercise of Rights. See
    &#147;Taxation.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Discount
    from Net Asset Value</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s shares of Common Stock have traded in the market
    above, at and below net asset value since the commencement of
    the Fund&#146;s operations in September 1988. The Fund cannot
    predict whether the Fund&#146;s Common Stock will in the future
    trade at a premium to or discount from net asset value. The risk
    of the Common Stock trading at a discount is a risk separate
    from a decline in the Fund&#146;s net asset value. See
    &#147;Market Price and Net Asset Value Information&#148; in this
    Prospectus and &#147;Net Asset Value&#148; in the SAI.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    27
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s policy is to make monthly distributions equal to
    0.83% of its net asset value (10% distribution yield on an
    annualized basis), and a final distribution at year-end
    consisting of any remaining undistributed net investment income
    and any realized net long-term capital gains in excess of the
    Fund&#146;s capital loss carryforward. If, for any calendar
    year, the total distributions exceed net investment income and
    realized net capital gains, the excess will generally be treated
    as a tax-free return of capital (up to the amount of the
    shareholder&#146;s tax basis in his or her shares). The amount
    treated as a tax-free return of capital will reduce a
    shareholder&#146;s adjusted basis in his or her shares, thereby
    increasing his or her potential gain or reducing his or her
    potential loss on the sale of his or her shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Historically, the Fund&#146;s distribution yield has included
    distributions of net investment income and realized gains that
    were taxable to the Fund&#146;s shareholders as ordinary income,
    and distributions that were treated as a non-taxable return of
    capital. In 2006, the Fund had a 10% distribution yield, which
    consisted of 2.9% as net investment income, 1.3% as gains
    taxable as ordinary income and 5.8% as return of capital. In
    2005, the Fund had a 10% distribution yield, which consisted of
    2.7% as net investment income, 2.7% as gains taxable as ordinary
    income and 4.6% as return of capital. In the future, the Fund
    anticipates its distribution yield to be characterized in a
    similar manner and be consistent with its policy of monthly
    distributions equal to 0.83% of its net asset value (10%
    distribution yield on an annualized basis). Pursuant to the
    requirements of the 1940 Act and other applicable laws, a notice
    will accompany each monthly distribution with respect to the
    estimated source of the distribution made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund had capital loss carryovers in the amount of
    $21,681,438&#160;million as of December&#160;31, 2006. Capital
    loss carryovers will reduce or, possibly, eliminate the
    Fund&#146;s taxable capital gains in the year(s) to which such
    losses are carried, but will not reduce the Fund&#146;s current
    earnings and profits in such year(s). Consequently, a greater
    portion of the Fund&#146;s distributions in the year(s) to which
    the Fund carries and applies its capital loss carryovers may be
    taxable to shareholders as ordinary income dividends than would
    be the case if the Fund did not have capital loss carryovers.
    The Fund&#146;s shareholders thus potentially could lose the
    benefit of the Fund&#146;s capital loss carryover to any year in
    which the Fund makes excess distributions, because instead of
    being treated as a non-taxable return of capital, the portion of
    the excess distributions equal to the Fund&#146;s capital gains
    that are offset by the capital loss carryover will likely be
    taxable to the Fund&#146;s shareholders, and if taxable, will
    likely be treated as ordinary income rather than as capital
    gain. Moreover, excess distributions that are paid out of
    capital gains or other non-dividend income of the Fund will not
    qualify for the 15% preferential tax rate.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Illustration
    of Loss of Tax Benefit of Capital Loss Carryforwards<BR>
    Related to Distributions in Excess of Taxable Gain</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Shareholders pay additional taxes on distributions when a
    set of 3 conditions exist:</I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    1.&#160;Fund has current year gains (current earnings and
    profits)&#160;&#160;<I>(line b below)</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    2.&#160;Fund has accumulated losses from prior years (capital
    loss carryovers)&#160;&#160;<I>(line c below)</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    3.&#160;Fund pays out distributions that exceed &#147;required
    distributions&#148;&#160;&#160;<I>(line e below)</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Assume the following facts:</I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="90%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Net Income
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(a</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Current year gain (loss)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(b</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Capital loss carryover (CLCO)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(c</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (10
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Distributions to shareholders
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(d</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Excess Distributions (normally
    Return Of Capital)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(e</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Amount of distributions taxable to
    shareholders
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(f</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Amount of capital loss carryover
    benefit lost
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <I>(g</I>
</TD>
<TD nowrap align="left" valign="bottom">
    <I>)</I>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Explanation:</I></B>&#160;&#160;Fund has current year
    gains (b)&#160;so shareholders pay taxes on distributions of
    current year gains (b). The benefit of the capital loss
    carryover (CLCO) (g)&#160;is thereby lost on the portion of the
    excess distribution equal to the current year gain (b).
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    28
</DIV><!-- END LOGICAL PAGE -->
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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="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund also might make distributions to shareholders that
    exceed the Fund&#146;s current earnings and profits. In that
    event, because the Fund does not have positive accumulated
    earnings and profits, the excess distributions will be a
    non-taxable return of capital to a shareholder to the extent the
    distribution does not exceed the shareholder&#146;s tax basis in
    his or her Fund shares, but will also reduce the
    shareholder&#146;s tax basis in his or her Fund shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event the Fund distributes amounts in excess of its net
    investment income and net realized capital gains, such
    distributions will decrease the Fund&#146;s total assets and,
    therefore, have the likely effect of increasing the Fund&#146;s
    expense ratio. In addition, in order to make such distributions,
    the Fund may have to sell a portion of its investment portfolio
    at a time when independent investment judgment might not dictate
    such action. Shares purchased pursuant to the Offer will be
    issued after the record date for the monthly distribution
    declared in May, and, accordingly, the Fund will not pay a
    monthly distribution with respect to such Shares until the
    distribution to be declared and paid in the next month. See
    &#147;Distributions; Distribution Reinvestment and Cash Purchase
    Plan&#148; for a discussion of the Fund&#146;s distribution
    policy.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Anti-takeover
    Provisions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund has provisions in its Articles of Incorporation and
    By-Laws that may have the effect of limiting the ability of
    other entities or persons to acquire control of the Fund, to
    cause it to engage in certain transactions or to modify its
    structure. The Board of Directors is divided into three classes.
    At the annual meeting of shareholders each year, the term of one
    class will expire and directors will be elected to serve in that
    class for terms of three years. This provision could delay for
    up to two years the replacement of a majority of the Board of
    Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These provisions could have the effect of limiting
    shareholders&#146; opportunity to sell their shares at a premium
    over prevailing market prices by discouraging a third party from
    seeking to obtain control of the Fund in a tender offer or
    similar transaction. See &#147;Description of Common
    Stock&#160;&#151; Special Voting Provisions.&#148;
</DIV>
<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MANAGEMENT
    OF THE FUND</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Board of
    Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The management of the Fund, including general supervision of the
    duties performed by the Investment Adviser under the Investment
    Advisory Agreement (as described below), is the responsibility
    of the Fund&#146;s Board of Directors. For certain information
    regarding the Directors and Officers of the Fund, see
    &#147;Management&#160;&#151; Directors and Officers&#148; in the
    SAI.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investment
    Adviser and
    <FONT style="white-space: nowrap">Sub-Adviser</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser, Phoenix/Zweig Advisers LLC, is a
    Delaware limited liability company, with offices at 900 Third
    Avenue, New York, New York 10022. The Investment Adviser became
    the Fund&#146;s investment adviser on January&#160;1, 2000,
    following the acquisition of Zweig Total Return Advisors, Inc.,
    the Fund&#146;s former investment adviser, Zweig/Glaser
    Advisers, the Fund&#146;s former administrator, and Zweig
    Securities Corp. by Phoenix Investment Partners, Ltd. on
    March&#160;1, 1999 (the &#147;Acquisition&#148;). The Investment
    Adviser is a wholly-owned subsidiary of Phoenix Investment
    Partners, Ltd., wholly-owned investment management subsidiary of
    The Phoenix Companies, Inc., a NYSE-listed company.
    Phoenix/Zweig Advisers LLC and Phoenix Investment Partners, Ltd.
    are registered with the Commission under the Investment Advisers
    Act of 1940, as amended. As of December&#160;31, 2006, Phoenix
    Investment Partners, Ltd. had approximately $58&#160;billion in
    assets under management.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to an investment advisory agreement dated March&#160;1,
    1999 (the &#147;Investment Advisory Agreement&#148;), the
    Investment Adviser is responsible for the actual management of
    the Fund&#146;s portfolio. The responsibility for making
    decisions to buy, sell or hold a particular investment rests
    with the Investment Adviser, subject to the supervision of the
    Board of Directors and the applicable provisions of the 1940
    Act. The Investment Adviser is also obligated to provide the
    Fund with such executive, administrative, data processing,
    clerical, accounting and bookkeeping services and statistical
    and research data as are deemed advisable by the Board of
    Directors, except to the extent these services are provided by
    an administrator hired by the Fund. The Investment Adviser may
    consider
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    29
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    analyses from various other sources, including broker-dealers
    with which the Fund does business and affiliates of the
    Investment Adviser.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under a services agreement (the
    <FONT style="white-space: nowrap">&#147;Sub-Advisory</FONT>
    Agreement&#148;) with the Investment Adviser, the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    Zweig Consulting LLC, performs asset allocation research and
    analysis and provides advice thereon to the Investment Adviser.
    The extent of the Fund&#146;s investment in debt and equity
    securities is determined by the Investment Adviser primarily
    utilizing asset allocation techniques developed by
    Dr.&#160;Martin E. Zweig, President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For the services provided by the Investment Adviser under the
    Investment Advisory Agreement, the Fund pays the Investment
    Adviser a monthly fee computed at the annual rate of 0.70% of
    the Fund&#146;s average daily net assets during the previous
    month. For the fiscal years ended December&#160;31, 2006, 2005
    and 2004, the Fund accrued investment advisory fees of
    $3,336,985, $3,511,302 and $3,652,785, respectively. The
    Investment Adviser will pay the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    an annual fee equal to 40% of the investment advisory fees
    received by the Investment Adviser from the Fund, payable
    monthly in arrears.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors, including a majority of the
    disinterested Directors, has the responsibility under the 1940
    Act to approve the continuance of the Investment Advisory
    Agreement and the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement. At a meeting of the Directors held on
    February&#160;15, 2006, the Board of Directors, including a
    majority of the disinterested Directors, approved the
    continuance of the Investment Advisory Agreement and the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement until March&#160;1, 2007. A discussion regarding the
    basis for the approval of this continuance is contained in the
    Fund&#146;s June&#160;30, 2006 Semi-Annual Report to
    Shareholders. At a meeting of the Directors held on
    February&#160;20, 2007, the Board of Directors, including a
    majority of the disinterested Directors, approved the
    continuance of the Investment Advisory Agreement and the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement until March&#160;1, 2008. A discussion regarding the
    basis for the approval of this continuance will be contained in
    the Fund&#146;s June&#160;30, 2007 Semi-Annual Report to
    Shareholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    PXP Securities Corp. or any other brokerage affiliate (the
    &#147;Brokerage Affiliate&#148;) may act as a broker for the
    Fund. In order for the Brokerage Affiliate to effect any
    portfolio transactions for the Fund, the commissions, fees or
    other remuneration received by the Brokerage Affiliate must be
    reasonable and fair compared to the commissions, fees or other
    remuneration paid to other brokers in connection with comparable
    transactions involving similar securities being purchased or
    sold on an exchange during a comparable period of time. The Fund
    will not deal with the Brokerage Affiliate in any portfolio
    transaction in which the Brokerage Affiliate would act as
    principal.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Dr.&#160;Martin
    E. Zweig</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Dr.&#160;Martin E. Zweig, the President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    has been in the business of providing investment advisory
    services for over 35&#160;years. Dr.&#160;Zweig and his
    associates determine asset allocation strategies to assist the
    Investment Adviser in its management of the Fund.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Portfolio
    Managers</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser&#146;s
    <FONT style="white-space: nowrap">day-to-day</FONT>
    stock and bond selections for the Fund are made by
    Mr.&#160;Carlton Neel and Mr.&#160;David Dickerson.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Mr.&#160;Neel is a graduate of Brown University, (B.A., 1990).
    Mr.&#160;Neel has been Senior Vice President of the Fund since
    April 2003 and from March 1999 to June 2002. Mr.&#160;Neel has
    also been Senior Vice President of Euclid Advisors LLC since
    April 2003, as well as from January 2000 to June 2002. From July
    2002 to April 2003, Mr.&#160;Neel founded and managed Shelter
    Rock Capital Partners, L.P. Formerly, he was Senior Vice
    President of Phoenix-Zweig Trust from July 1995 to March 1999,
    Vice President of Zweig Advisors Inc. from July 1995 to December
    1999 and Vice President of Zweig Total Return Advisors, Inc.
    from July 1995 to December 1999.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Mr.&#160;Dickerson is a graduate of Harvard University (B.A.,
    1993), and the Stern School of Business, New York University
    (M.B.A., 2000). Mr.&#160;Dickerson has been a Senior Vice
    President of the Fund since April 2003, and was a Vice President
    of the Fund from January 2000 to June 2002. He has also been a
    Senior Vice President of Euclid Advisors LLC since April 2003,
    and served as a Vice President from April 2000 to June 2002.
    From July 2002 to April 2003, Mr.&#160;Dickerson founded and
    managed Shelter Rock Capital Partners, L.P. Prior to that,
    Mr.&#160;Dickerson has worked in various portfolio management
    and analyst positions with the Fund since 1993.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    30
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The SAI provides additional information about the Portfolio
    Managers&#146; compensation, other accounts managed by the
    Portfolio Managers, and the Portfolio Managers&#146; ownership
    of securities of the Fund.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Investment
    Advisory Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Advisory Agreement sets forth the services to be
    provided by and the fees to be paid to each party, as described
    above. The Investment Advisory Agreement provides that the
    Investment Adviser&#146;s liability to the Fund and its
    shareholders is limited to situations involving its own willful
    misfeasance, bad faith or gross negligence in the performance of
    its duties or by reason of its reckless disregard of its duties
    and obligations under the Investment Advisory Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The services of the Investment Adviser to the Fund are not
    deemed to be exclusive, and the Investment Adviser or any
    affiliate thereof may provide similar services to other
    investment companies and other clients or engage in other
    activities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Advisory Agreement obligates the Investment
    Adviser to provide advisory services and to pay all expenses
    arising from the performance of its obligations under the
    Investment Advisory Agreement, as well as the fees of all
    Directors of the Fund who are employees of the Investment
    Adviser or any of its affiliates. The Fund pays all other
    expenses incurred in the operation of the Fund including, but
    not limited to, direct charges relating to the purchase and sale
    of portfolio securities, interest charges, fees and expenses of
    attorneys and auditors, taxes and governmental fees, cost of
    stock certificates and any other expenses (including clerical
    expenses) of issuance, sale or repurchase of shares of the
    Fund&#146;s Common Stock, expenses in connection with the
    Fund&#146;s Distribution Reinvestment and Cash Purchase Plan,
    membership fees in trade associations, expenses of registering
    and qualifying shares of the Fund&#146;s common stock for sale
    under Federal and state securities laws, expenses of obtaining
    and maintaining any stock exchange listings of the Fund&#146;s
    Common Stock, expenses of printing and distributing reports,
    prospectuses, shareholder notices and proxy materials, expenses
    of corporate data processing and related services, shareholder
    record-keeping and shareholder account services (including
    salaries of shareholder relations personnel), expenses of
    auditors and escrow agents, expenses of printing and filing
    reports and other documents filed with governmental agencies,
    expenses of annual and special shareholders&#146; meetings, fees
    and disbursements of the Fund&#146;s administrator, transfer
    agents, custodians and subcustodians (if any), expenses of
    disbursing dividends and distributions, fees, expenses and
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    costs of Directors of the Fund who are not interested persons of
    the Fund or the Investment Adviser, insurance premiums and
    litigation, indemnification and other expenses not expressly
    provided for in the Investment Advisory Agreement or the
    Administration Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Advisory Agreement will remain in effect from
    year to year if approved annually (i)&#160;by the Board of
    Directors of the Fund or by the holders of a majority of the
    Fund&#146;s outstanding voting securities, and (ii)&#160;by a
    majority of the Directors who are not parties to the Investment
    Advisory Agreement or interested persons of any such party. The
    Investment Advisory Agreement terminates on its assignment by
    either party, and may be terminated without penalty on not more
    than 60&#160;days&#146; prior written notice at the option of
    either party thereto, or by the affirmative vote of the holders
    of a majority of the Fund&#146;s outstanding voting securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Advisory Agreement provides that the Fund may use
    &#147;Zweig&#148; as part of its name for so long as the
    Investment Adviser serves as investment adviser to the Fund. The
    Fund has agreed that, in the event the Investment Advisory
    Agreement is terminated, the Fund will promptly take such
    actions as may be necessary to change its corporate name to one
    not containing the word &#147;Zweig,&#148; and the Fund will
    thereafter not transact business in a corporate name using the
    word &#147;Zweig&#148; in any form or combination whatsoever.
    Phoenix Investment Partners, Ltd. has obtained, pursuant to an
    agreement, an exclusive worldwide license to use the word
    &#147;Zweig&#148; with respect to its investment advisory
    business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times"><FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement sets forth the services to be provided by and the fees
    to be paid to the
    <FONT style="white-space: nowrap">Sub-Adviser.</FONT>
    The
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    has been engaged by the Investment Adviser to perform asset
    allocation techniques, research and analysis and provide advice
    thereon to the Investment Adviser. Pursuant to the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement, the services are rendered by Dr.&#160;Martin E. Zweig
    and his designated research associates on behalf of the
    <FONT style="white-space: nowrap">Sub-Adviser.</FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    31
</DIV><!-- END LOGICAL PAGE -->
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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="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For services provided by the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    to the Fund under the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement, the Investment Adviser will pay the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    an annual fee equal to 40% of the investment advisory fees
    received by the Investment Adviser from the Fund, payable
    monthly in arrears.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement will remain in effect until March&#160;1 of each year,
    provided that from year to year it has been approved annually
    (i)&#160;by the Board of Directors of the Fund or by the holders
    of a majority of the Fund&#146;s outstanding voting securities,
    and (ii)&#160;by a majority of the Directors who are not parties
    to the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement or interested persons of any such party. The
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement terminates on its assignment by either party, and may
    be terminated without penalty on not more than
    60&#160;days&#146; prior written notice at the option of the
    Fund&#146;s Board of Directors, or by the affirmative vote of
    the holders of a majority of the Fund&#146;s outstanding voting
    securities. In addition, either the Investment Adviser or the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    has the right not to renew the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement by giving 60&#160;days&#146; prior written notice to
    the other party.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Administrator</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Administrator, Phoenix Equity Planning Corporation, serves
    as the Fund&#146;s administrator pursuant to an assignment by
    Zweig/Glaser Advisers of the Administration Agreement dated
    March&#160;1, 1999 (the &#147;Administration Agreement&#148;).
    The Administrator generally assists in the administration of the
    Fund&#146;s day to day corporate affairs, subject to the overall
    authority of the Fund&#146;s Board of Directors. The
    Administrator determines the Fund&#146;s net asset value daily,
    prepares such figures for publication on a weekly basis,
    maintains certain of the Fund&#146;s books and records that are
    not maintained by the Investment Adviser, custodian or transfer
    agent, assists in the preparation of financial information for
    the Fund&#146;s income tax returns, proxy statement, quarterly
    and annual shareholder reports, assists in the preparation of
    Commission Reports and responds to shareholder inquiries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund pays the Administrator a monthly fee computed at an
    annual rate of 0.065% of the Fund&#146;s average daily net
    assets during the previous month. Prior to March&#160;1, 2006,
    the Fund paid the Administrator a monthly fee computed at an
    annual rate of 0.13% of the Fund&#146;s average daily net assets
    during the previous month. For the fiscal years ended
    December&#160;31, 2006, 2005 and 2004, the Fund accrued
    administrative fees of $361,210, $652,099, and $678,374.
</DIV>
<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DISTRIBUTIONS;
    DISTRIBUTION REINVESTMENT AND CASH PURCHASE PLAN</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s policy is to make monthly distributions equal to
    0.83% of its net asset value (10% on an annualized basis), and a
    final distribution at year-end consisting of any remaining
    undistributed net investment income and the Fund&#146;s realized
    net long-term capital gains in excess of its capital loss
    carryforward. If, for any calendar year, the total distributions
    exceed net investment income and net realized capital gains, the
    excess will generally be treated as a tax-free return of capital
    (up to the amount of the shareholder&#146;s tax basis in his or
    her shares). The amount treated as a tax-free return of capital
    will reduce a shareholder&#146;s adjusted basis in his or her
    shares, thereby increasing his or her potential gain or reducing
    his or her potential loss on the sale of his or her shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund had capital loss carryovers in the amount of
    $21.7&#160;million as of December&#160;31, 2006. The Fund had
    total 2006 distributions of $47.9&#160;million of which
    $14.0&#160;million was net investment income; $6.7&#160;million
    was current year gains taxable as ordinary income; and
    $27.3&#160;million in distributions in excess of earnings and
    profits. The Fund paid out 10% in distributions of which 2.9%
    was income, 1.3% gains and 5.8% return of capital.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Capital loss carryovers will reduce or, possibly, eliminate the
    Fund&#146;s taxable capital gains in the year(s) to which such
    losses are carried, but will not reduce the Fund&#146;s current
    earnings and profits in such year(s). Consequently, a greater
    portion of the Fund&#146;s dividend distributions in the year(s)
    to which the Fund carries and applies its capital loss
    carryovers may be taxable to shareholders as ordinary income
    dividends than would be the case if the Fund did not have
    capital loss carryovers. Moreover, to the extent that such
    ordinary income dividends are paid out of capital gains or other
    non-dividend income of the Fund, they might not qualify for the
    15% preferential tax rate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund also might make distributions to shareholders that
    exceed the Fund&#146;s current earnings and profits. In that
    event, because the Fund does not have positive accumulated
    earnings and profits, the excess distributions will
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    32
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    be a non-taxable return of capital to a shareholder to the
    extent the distribution does not exceed the shareholder&#146;s
    tax basis in its Fund shares, but will also reduce the
    shareholder&#146;s tax basis in its Fund shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In calculating the amount of each monthly distribution, the
    Fund&#146;s net asset value will be measured as of the business
    day immediately preceding the declaration date of such
    distribution. Pursuant to the requirements of the 1940 Act and
    other applicable laws, a notice will accompany each monthly
    distribution with respect to the estimated source of the
    distribution made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event the Fund distributes amounts in excess of its net
    investment income and net realized capital gains, such
    distributions will decrease the Fund&#146;s total assets and,
    therefore, have the likely effect of increasing the Fund&#146;s
    expense ratio. In addition, in order to make such distributions,
    the Fund may have to sell a portion of its investment portfolio
    at a time when independent investment judgment might not dictate
    such action.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shares purchased pursuant to the Offer will be issued after the
    record date for the monthly distribution declared in May, and,
    accordingly, the Fund will not pay a monthly distribution with
    respect to such Shares until the distribution to be declared and
    paid in the next month.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders may elect to receive all distributions in cash paid
    by check mailed directly to the shareholder by Computershare, as
    dividend paying agent. Pursuant to the Fund&#146;s Automatic
    Reinvestment and Cash Purchase Plan (or the &#147;Plan&#148;),
    shareholders not making such election will have all such amounts
    automatically reinvested by Computershare, as the Plan agent, in
    whole or fractional shares of the Fund, as the case may be.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the Directors of the Fund declare a distribution payable
    either in shares or in cash, as shareholders may have elected,
    then nonparticipants in the Plan will receive cash and
    participants in the Plan will receive the equivalent in shares
    determined as follows: Whenever the market price of the shares
    on the record date for the distribution is equal to or exceeds
    their net asset value, participants will be issued shares at the
    higher of net asset value or 95% of the closing market price of
    the shares on the NYSE on the previous trading day. If the
    shares&#146; net asset value at such time exceeds their market
    price, or if the Fund should declare a distribution payable only
    in cash, Computershare, as agent for the participants, will buy
    shares on the NYSE or elsewhere in the open market, for the
    participants&#146; accounts. If, before Computershare has
    completed its purchases, the market price equals or exceeds the
    net asset value of the shares, Computershare is permitted to
    cease purchasing the shares in the open market and the Fund may
    issue the remaining shares at a price equal to the higher of net
    asset value or 95% of the then market price. Computershare will
    apply all cash received as a distribution to purchase shares on
    the open market as soon as practicable after the payment date of
    such distribution, but in no event later than 30&#160;days after
    such date, except where necessary to comply with applicable
    provisions of the Federal securities laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Participants in the Plan have the option of making additional
    cash payments monthly to Computershare for investment in the
    Fund&#146;s shares. Such payments may be made in any amount from
    $100 to $3,000. Computershare will use all such payments
    received from participants to purchase shares on the open market
    on or about the fifteenth day of each month (or the closest
    business day thereto, if a weekend or holiday). To avoid
    unnecessary cash accumulations, and also to allow ample time for
    receipt and processing by Computershare, it is suggested that
    participants send voluntary cash payments to Computershare at
    least five business days prior to the date for which a voluntary
    purchase is desired. A participant may withdraw a voluntary cash
    payment by written notice, if the notice is received by
    Computershare at least five business days before such payment is
    to be invested.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Computershare maintains all shareholder accounts in the Plan and
    furnishes written confirmations of all transactions in the
    accounts, including information needed by shareholders for
    personal and tax records. Shares in the account of each Plan
    participant will be held by Computershare in non-certificated
    form in the name of the participant, and each shareholder&#146;s
    proxy will include those shares purchased pursuant to the Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There is no charge to participants for reinvesting distributions
    or voluntary cash payments. Computershare&#146;s fees for
    handling reinvestment of distributions will be paid by the Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There will be no brokerage charges with respect to shares issued
    directly by the Fund as a result of distributions payable either
    in stock or in cash. However, each participant will pay a
    pro-rata share of brokerage commissions incurred with respect to
    Computershare&#146;s open market purchases in connection with
    the reinvestment of distributions as well as from voluntary cash
    payments. With respect to purchases from voluntary cash
    payments,
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    33
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Computershare will charge each participant a pro-rata share of
    the brokerage commissions. Brokerage charges for purchasing
    small amounts of stock for individual accounts through the Plan
    are expected to be less than the usual brokerage charges for
    such transactions, as Computershare will be purchasing shares
    for all participants in blocks and prorating the lower
    commission thus attainable. Computershare may use its affiliates
    <FONT style="white-space: nowrap">and/or</FONT>
    affiliates of the Investment Adviser for all trading activity
    relative to the Plan on behalf of Plan participants. Such
    affiliates will receive a commission in connection with such
    trading transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If a shareholder desires to discontinue his or her participation
    in the Plan, the shareholder may either (i)&#160;request
    Computershare to sell part or all of the shares in the account
    and remit the proceeds to the shareholder, net of any brokerage
    commission, or (ii)&#160;ask Computershare for a certificate for
    the number of full shares in his or her account, along with a
    check in payment for any fractional shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although many brokers do participate in the Plan on behalf of
    their customers, a participant in the Plan who does change his
    or her broker may not be able to transfer the shares to another
    broker and continue to participate in the Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The automatic reinvestment of distributions will not relieve
    participants of any income tax that may be payable on such
    distributions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Experience under the Plan may indicate that changes are
    desirable. Accordingly, the Fund reserves the right to amend or
    terminate the Plan as applied to any voluntary cash payments
    made and any dividend or distribution paid subsequent to written
    notice of the change sent to participants in the Plan. The Plan
    also may be amended or terminated by Computershare, with the
    Fund&#146;s prior written consent, upon written notice sent to
    participants in the Plan. All correspondence concerning the Plan
    should be directed to Computershare Trust Company, N.A., P.O.
    Box&#160;859208, Braintree, MA 02185.
</DIV>
<A name='112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF COMMON STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The authorized capital stock of the Fund consists of
    500,000,000&#160;shares of Common Stock, par value
    $0.001&#160;per share, of which 93,530,024&#160;shares were
    outstanding as of April&#160;23, 2007. The Shares when issued,
    will be fully paid and nonassessable. All shares of Common Stock
    are equal as to dividends, assets and voting privileges and have
    no conversion, preemptive or exchange rights. In the event of
    liquidation, each share of Common Stock is entitled to its
    proportion of the Fund&#146;s assets after payment of debts and
    expenses. Shareholders are entitled to one vote per share. All
    voting rights for directors are non-cumulative, which means that
    the holders of more than 50% of the shares of common stock can
    elect 100% of the directors if they choose to do so, and, in
    such event, the holders of the remaining shares of common stock
    will not be able to elect any directors. The Fund&#146;s
    outstanding shares of Common Stock are, and the Shares offered
    hereby will be, listed on the NYSE under the symbol
    &#147;ZTR.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund has no present intention of offering additional shares
    beyond this Offer, except that additional shares may be issued
    under the Distribution Reinvestment and Cash Purchase Plan. See
    &#147;Distributions; Distribution Reinvestment and Cash Purchase
    Plan.&#148; Other offerings of its Common Stock, if made, will
    require approval of the Fund&#146;s Board of Directors. Any
    additional offering will be subject to the requirements of the
    1940 Act that shares may not be sold at a price below the then
    current net asset value (exclusive of underwriting discounts and
    commissions) except in certain circumstances, including in
    connection with an offering to existing shareholders or with the
    consent of a majority of the Fund&#146;s outstanding
    shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Repurchase
    of Shares; Tender Offers</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund is authorized to repurchase its shares on the open
    market when the shares are trading at a discount from net asset
    value, and the Fund may incur debt to refinance share repurchase
    transactions. In addition, pursuant to the 1940 Act, the Fund
    retains the right to repurchase its shares under other
    circumstances on a securities exchange or such other open market
    designated by the Commission (provided that the Fund has
    informed shareholders within the preceding six months of its
    intention to repurchase such shares), by a tender offer open to
    all the Fund&#146;s shareholders, or as otherwise permitted by
    the Commission. When a repurchase of Fund shares is to be made
    that is not to be effected on a securities exchange or such an
    open market or by the making of a tender offer, the 1940 Act
    provides that certain conditions must be met regarding, among
    other things, distribution of net income,
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    34
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    identity of the seller, price paid, brokerage commissions, prior
    notice to shareholders of an intention to purchase shares and
    purchasing in a manner on a basis which does not discriminate
    unfairly against the other shareholders indirectly through their
    interest in the Fund. The Fund may incur debt to finance share
    repurchase transactions (see &#147;Investment Restrictions&#148;
    in the SAI).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund repurchases its shares for a price below their net
    asset value, the net asset value of the shares that remain
    outstanding will be enhanced, but this does not necessarily mean
    that the market price of those outstanding shares will be
    affected, either positively or negatively. The Fund has not
    repurchased any shares of its Common Stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Since the Fund&#146;s inception in 1988, the Board of Directors
    has maintained a policy pursuant to which the Board of Directors
    considers the making of tender offers of the Fund each quarter
    during periods when the Fund&#146;s shares are trading at a
    discount from net asset value. The Board may at any time,
    however, decide that the Fund should not make tender offers. The
    net asset value at which shares may be tendered will be
    established at the close of business on the last day the tender
    offer is open. Since the Fund&#146;s inception, however, the
    Fund has not made any tender offers for the shares of its Common
    Stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any acquisition of shares by the Fund (whether through a share
    repurchase or a tender offer) will decrease the total assets of
    the Fund and therefore have the effect of increasing the
    Fund&#146;s expense ratio. Furthermore, if the Fund borrows to
    finance share repurchases or tender offers, interest on such
    borrowings will reduce the Fund&#146;s net investment income. If
    the Fund must liquidate a portion of its investment portfolio in
    connection with a share repurchase or tender offer, such
    liquidation might be at a time when independent investment
    judgment might not dictate such action and, accordingly, may
    increase the Fund&#146;s portfolio turnover and make it more
    difficult for the Fund to achieve its investment objective.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each person tendering shares will pay to the Fund a reasonable
    service charge to help defray certain costs, including the
    processing of tender forms, effecting payment, postage and
    handling. Any such service charge will be paid directly by the
    tendering shareholder and will not be deducted from the proceeds
    of the purchase. The Fund&#146;s transfer agent will receive the
    fee as an offset to these costs. The Fund expects the cost to
    the Fund of effecting a tender offer will exceed the aggregate
    of all service charges received from those who tender their
    shares. Costs associated with the tender will be charged against
    capital. During the pendency of any tender offer, shareholders
    may ascertain the net asset value of the Fund&#146;s shares by
    calling a telephone number as provided in any tender offer
    materials.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Provision
    For Conversion To Open-End Fund</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If during any fiscal quarter beginning on or after
    January&#160;1, 1990, the Fund&#146;s shares trade, on the
    principal securities exchange on which they are traded, at an
    average discount from net asset value of 10% or more (determined
    on the basis of the discount as of the end of the last trading
    day in each week during such quarter), the Fund&#146;s Articles
    of Incorporation generally require the Board of Directors to
    submit to shareholders a proposal to convert the Fund to an
    open-end investment company (the &#147;Conversion
    Proposal&#148;). The Fund submitted a Conversion Proposal to its
    shareholders in 2000, 2001 and 2004 since the Fund&#146;s shares
    had traded at an average discount from net asset value of 10% or
    more during the quarter ended March&#160;31, 2000, the quarter
    ended December&#160;31, 2000 and the quarter ended
    December&#160;31, 2003, respectively. The Fund&#146;s
    shareholders did not approve the Conversion Proposal on any of
    those occasions. Approval of a Conversion Proposal would require
    the affirmative vote of a majority of the outstanding shares of
    the Fund entitled to be voted thereon. The Fund&#146;s Articles
    of Incorporation provide, however, that a Conversion Proposal
    need not be submitted to shareholders with respect to a quarter
    if a Conversion Proposal was submitted to shareholders with
    respect to the immediately preceding quarter.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the Fund converted to an open-end investment company, its
    shareholders could require the company to redeem their shares at
    any time (except in certain circumstances as authorized by the
    1940 Act) at the next determined net asset value of such shares,
    less such redemption charges, if any, as might be in effect at
    the time of redemption, and such redemption payment must be made
    within seven days. This may require changes in the Fund&#146;s
    portfolio management, since such redemption requests could
    require the Fund&#146;s liquidation of a portion of its
    investment portfolio at a time when independent investment
    judgment might not dictate such action and, accordingly, may
    increase the Fund&#146;s portfolio turnover and make it more
    difficult for the Fund to achieve its
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    35
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    investment objective. In addition, if the Fund converted to an
    open-end investment company, its shares would no longer be
    listed on any stock exchange, and certain of the Fund&#146;s
    expenses (including transfer agency and shareholder services
    expenses) would be greater than those that would be incurred by
    a closed-end investment company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event the Fund&#146;s shareholders did not approve a
    proposal to convert the Fund to an open-end investment company,
    the Fund would continue as a closed-end investment company, but
    pursuant to the Fund&#146;s Articles of Incorporation, the Board
    of Directors would be required to submit to the Fund&#146;s
    shareholders a subsequent Conversion Proposal with respect to
    any subsequent quarter during which there was an average
    discount of 10% or more from net asset value, unless the
    Conversion Proposal had been submitted to shareholders with
    respect to the immediately preceding quarter. The Fund cannot
    predict whether any open market repurchases or tender offer
    purchases of its shares made while the Fund is a closed-end
    investment company would decrease the discount from net asset
    value. To the extent that any such open market repurchases or
    tender offer purchases decreased the average discount from net
    asset value to below 10% for a fiscal quarter, the Fund would
    not be required to submit to its shareholders the Conversion
    Proposal with respect to such quarter.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Special
    Voting Provisions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund has provisions in its Articles of Incorporation and
    By-Laws (collectively, the &#147;Charter Documents&#148;) that
    could have the effect of limiting the ability of other entities
    or persons to acquire control of the Fund, to cause it to engage
    in certain transactions or to modify its structure. The Board of
    Directors is divided into three classes. At the annual meeting
    of shareholders each year, the term of one class will expire and
    directors will be elected to serve in that class for terms of
    three years. This provision could delay for up to two years the
    replacement of a majority of the Board of Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The maximum number of Directors (twelve) may be increased, or a
    Director may be removed from office, only by the affirmative
    vote of the holders of at least 75% of the shares of the Fund
    entitled to be voted for the election of Directors. In addition,
    the affirmative vote of the holders of 75% of the outstanding
    shares of the Fund is required to authorize the conversion of
    the Fund from a closed-end to an open-end investment company
    (except pursuant to the Conversion Proposal described above), to
    amend certain of the provisions of the Articles of Incorporation
    or generally to authorize any of the following transactions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;merger or consolidation or statutory share exchange of
    the Fund with or into any other corporation;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;a sale of all or substantially all of the Fund&#146;s
    assets (other than in the regular course of the Fund&#146;s
    investment activities);&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (iii)&#160;a liquidation or dissolution of the Fund,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    unless such action has been approved, adopted or authorized by
    the affirmative vote of two-thirds of the total number of
    Directors fixed in accordance with the By-Laws, in which case
    the affirmative vote of a majority of the Fund&#146;s
    outstanding shares is required. Such 75% voting requirements
    described above, which are greater than the minimum requirements
    under Maryland law or the Act, can only be changed by a similar
    75% vote. Reference is made to the Charter Documents of the
    Fund, on file with the Commission, for the full text of these
    provisions. See &#147;Further Information.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The provisions of the Charter Documents described above and the
    Fund&#146;s right to repurchase or make a tender offer for
    shares of its common stock could have the effect of depriving
    the owners of shares 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 Fund in a tender
    offer or similar transaction. See &#147;Repurchase of
    Shares&#148; and &#147;Tender Offers.&#148;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    36
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->
<A name='113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TAXATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Federal
    Taxation of the Fund and its Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund has qualified and elected to be treated, and intends to
    continue to qualify and be treated, as a regulated investment
    company under the Internal Revenue Code of 1986, as amended (the
    &#147;Code&#148;). The Fund currently intends to distribute all
    or substantially all its investment company taxable income (all
    taxable income and net short-term capital gains) and its net
    capital gain each year, thereby avoiding the imposition on the
    Fund of Federal income and excise taxes on such distributed
    income and gain. Such distributions from investment company
    taxable income, whether paid in cash or in shares, will be
    taxable as ordinary income to shareholders of the Fund who are
    subject to tax, and the Fund&#146;s capital gain distributions,
    whether paid in cash or in shares, will be taxable as capital
    gain to such shareholders. Distributions in excess of the
    Fund&#146;s earnings and profits will first reduce the adjusted
    tax basis of a shareholder&#146;s shares and, after such
    adjusted tax basis is reduced to zero will constitute capital
    gain to such shareholder (assuming such shares are held as a
    capital asset). For non-corporate U.S.&#160;shareholders, the
    Fund&#146;s capital gains distributions and certain of its
    ordinary income distributions will be taxable at a maximum
    marginal Federal income tax rate of 15%. Shareholders that are
    not subject to tax on their income generally will not be
    required to pay tax on amounts distributed to them.
    Notwithstanding the above, the Fund may decide to retain all or
    part of any net capital gain for reinvestment. After the end of
    each taxable year, the Fund will notify shareholders of the
    Federal income tax status of any distributions, or deemed
    distributions, made by the Fund during such year. For a
    discussion of certain income tax consequences to shareholders of
    the Fund, see &#147;Taxation&#148; in the SAI.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Federal
    Income Tax Consequences Relating to the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following discussion describes certain United States Federal
    income tax consequences of the Offer generally applicable to
    citizens or residents of the United States and U.S.&#160;trusts,
    estates, corporations and any other person who is generally
    subject to U.S.&#160;Federal income tax
    (&#147;U.S.&#160;Shareholders&#148;). This summary is intended
    to be descriptive only and does not purport to be a complete
    analysis or listing of all potential tax effects relevant to the
    ownership of Rights or Common Stock. It assumes that each
    U.S.&#160;Shareholder holds Common Stock as a capital asset.
    Additionally, this summary does not specifically address the
    U.S.&#160;Federal income tax consequences that might be relevant
    to holders of Rights or Common Stock entitled to special
    treatment under the U.S.&#160;Federal income tax laws, such as
    individual retirement accounts and other tax deferred accounts,
    financial institutions, life insurance companies and tax-exempt
    organizations, and does not discuss the effect of state, local
    and other tax laws. Further, this summary is based on
    interpretations of existing law as of the date of this
    Prospectus as contained in the Code, applicable current and
    proposed Treasury Regulations, judicial decisions and published
    administrative positions of the Internal Revenue Service, all of
    which are subject to change either prospectively or
    retroactively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    U.S.&#160;Shareholders who receive Rights pursuant to the Offer
    should not recognize taxable income for U.S.&#160;Federal income
    tax purposes upon their receipt of the Rights. If Rights issued
    to a U.S.&#160;Shareholder expire without being sold or
    exercised, no basis should be allocated to such Rights, and such
    Shareholder should not recognize any gain or loss for
    U.S.&#160;Federal income tax purposes upon such expiration.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The tax basis of a U.S.&#160;Shareholder&#146;s Common Stock
    should remain unchanged and the shareholder&#146;s basis in the
    Rights should be zero, unless such U.S.&#160;Shareholder
    affirmatively and irrevocably elects (in a statement attached to
    such shareholder&#146;s U.S.&#160;Federal income tax return for
    the year in which the Rights are received) to allocate the basis
    in the Common Stock between such Common Stock and the Rights in
    proportion to their respective fair market values on the date of
    distribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A U.S.&#160;Shareholder who exercises Rights should not
    recognize any gain or loss for U.S.&#160;Federal income tax
    purposes upon the exercise. The tax basis of the newly acquired
    Common Stock should equal the Subscription Price paid for the
    Common Stock (plus the basis, if any, allocated to the Rights in
    the manner described in the immediately preceding paragraph).
    The holding period for Common Stock acquired upon the exercise
    of Rights should begin on the date of exercise of the Rights.
    See &#147;Taxation&#148; in the SAI.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Each U.S.&#160;Shareholder is urged to consult his or her own
    tax advisor with respect to the specific Federal, state and
    local tax consequences to such U.S.&#160;Shareholder of
    receiving Rights in this offer.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    37
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CUSTODIAN,
    DIVIDEND PAYING AGENT, TRANSFER AGENT AND REGISTRAR</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    State Street Bank and Trust Company, P.O. Box&#160;5501, Boston,
    Massachusetts
    <FONT style="white-space: nowrap">02206-5501</FONT>
    serves as the Fund&#146;s custodian. Computershare Trust
    Company, N.A., P.O. Box&#160;859208, Braintree, Massachusetts
    02185, serves as the Fund&#146;s dividend paying agent, transfer
    agent and registrar.
</DIV>
<A name='115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The financial statements of the Fund for the year ended
    December&#160;31, 2006, and the financial highlights included in
    this Prospectus, have been so included in reliance on the report
    of PricewaterhouseCoopers LLP, Boston, Massachusetts,
    independent accountants, given on the authority of said firm as
    experts in auditing and accounting.
</DIV>
<A name='116'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The validity of the Shares under Maryland law will be passed on
    for the Fund by Venable LLP, Baltimore, Maryland. Certain other
    matters may be passed on for the Fund by Katten Muchin Rosenman
    LLP, New York, New York, which serves as counsel to the Fund.
</DIV>
<A name='117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">FURTHER
    INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Further information concerning these securities and the Fund may
    be found in the Registration Statement on file with the
    Commission, of which this Prospectus and the SAI incorporated by
    reference herein constitute a part. Financial statements of the
    Fund for fiscal years ended December&#160;31, 2005 and
    December&#160;31, 2006 are included in the Fund&#146;s annual
    reports to shareholders for such years, copies of which are on
    file with and may be inspected at the Commission as indicated
    below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund is subject to the informational requirements of the
    Securities Exchange Act of 1934, as amended (the &#147;Exchange
    Act&#148;), and the 1940 Act, and in accordance therewith, is
    required to file periodic reports, proxy statements and other
    information with the Commission relating to its business,
    financial condition and other matters. Such information is
    available for inspection at the public reference facilities of
    the Commission at Room&#160;1024, 100 F Street, NE, Washington,
    DC 20549. Copies of such information are obtainable by mail,
    upon payment of the Commission&#146;s customary charges, by
    writing to the Commission&#146;s principal office at 100 F
    Street, NE, Washington, DC 20549 at prescribed rates. The
    Commission maintains a web site (http://www.sec.gov) that
    contains periodic reports, proxy statements and other
    information regarding registrants that file documents
    electronically with the Commission. Such reports and other
    information concerning the Fund may also be inspected at the
    offices of the NYSE.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    38
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>
<A name='118'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS<BR>
    OF<BR>
    STATEMENT OF ADDITIONAL INFORMATION</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'><FONT style="font-size: 10pt">INVESTMENT
    OBJECTIVE AND POLICIES</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">3
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#120'><FONT style="font-size: 10pt">INVESTMENT
    RESTRICTIONS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">9
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#121'><FONT style="font-size: 10pt">MANAGEMENT</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">11
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'><FONT style="font-size: 10pt">INVESTMENT ADVISER
    AND
    <FONT style="white-space: nowrap">SUB-ADVISER</FONT></FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">17
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'><FONT style="font-size: 10pt">PORTFOLIO
    MANAGERS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">18
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#124'><FONT style="font-size: 10pt">EXPENSES</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">20
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#125'><FONT style="font-size: 10pt">PORTFOLIO
    TRANSACTIONS AND BROKERAGE</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">20
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#126'><FONT style="font-size: 10pt">NET ASSET
    VALUE</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">21
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#127'><FONT style="font-size: 10pt">TAXATION</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">21
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#128'><FONT style="font-size: 10pt">INDEPENDENT
    ACCOUNTANTS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">24
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#129'><FONT style="font-size: 10pt">PRINCIPAL
    SHAREHOLDERS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">25
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#130'><FONT style="font-size: 10pt">FINANCIAL
    STATEMENTS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">F-1
    </FONT>
</TD>
<TD>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    39
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 89%; margin-left: 5%"><!-- BEGIN LOGICAL PAGE -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>No dealer, salesperson or any other person has been
    authorized to give any information or to make any
    representations other than those contained in this Prospectus in
    connection with the offer made by this Prospectus and, if given
    or made, such information or representations must not be relied
    upon as having been authorized by the Fund, the Investment
    Adviser or the
    <FONT style="white-space: nowrap">Sub-Adviser.</FONT>
    This Prospectus does not constitute an offer to sell or a
    solicitation of any offer to buy any security other than the
    Shares of Common Stock offered by this Prospectus, nor does it
    constitute an offer to sell or the solicitation of any offer to
    buy the Shares of Common Stock by anyone in any jurisdiction in
    which such offer or solicitation is not authorized, or in which
    the person making such offer or solicitation is not qualified to
    do so, or to any such person to whom it is unlawful to make such
    offer or solicitation. Neither the delivery of this Prospectus
    nor any sale made hereunder shall, under any circumstances,
    create any implication that information contained herein is
    correct as of any time subsequent to the date hereof. However,
    if any material change occurs while this Prospectus is required
    by law to be delivered, this Prospectus will be amended or
    supplemented accordingly.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 17%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=84 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="95%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'><B><FONT style="font-size: 10pt">Prospectus
    Summary</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">1</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'><B><FONT style="font-size: 10pt">Fund
    Expenses</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">8</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'><B><FONT style="font-size: 10pt">Financial
    Highlights</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">9</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'><B><FONT style="font-size: 10pt">The
    Offer</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">11</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'><B><FONT style="font-size: 10pt">Use of
    Proceeds</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">18</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'><B><FONT style="font-size: 10pt">The
    Fund</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">18</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'><B><FONT style="font-size: 10pt">Market Price and
    Net Asset Value Information</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">19</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'><B><FONT style="font-size: 10pt">Investment
    Objective and Policies</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">20</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'><B><FONT style="font-size: 10pt">Risk Factors and
    Special Considerations</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">25</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'><B><FONT style="font-size: 10pt">Management of
    the Fund</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">29</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'><B><FONT style="font-size: 10pt">Distributions;
    Distribution Reinvestment and Cash Purchase Plan</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">32</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'><B><FONT style="font-size: 10pt">Description of
    Common Stock</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">34</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'><B><FONT style="font-size: 10pt">Taxation</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">37</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'><B><FONT style="font-size: 10pt">Custodian,
    Dividend Paying Agent, Transfer Agent and
    Registrar</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">38</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'><B><FONT style="font-size: 10pt">Experts</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">38</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'><B><FONT style="font-size: 10pt">Legal
    Matters</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">38</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#117'><B><FONT style="font-size: 10pt">Further
    Information</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">38</FONT></B>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#118'><B><FONT style="font-size: 10pt">Table of
    Contents of Statement of Additional Information</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <B><FONT style="font-size: 10pt">39 </FONT></B>
</TD>
<TD>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">18,720,000&#160;Shares of
    Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 16pt">THE ZWEIG TOTAL RETURN<BR>
    FUND, INC.</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt">Issuable Upon Exercise of<BR>
    Non-Transferable Rights to<BR>
    Subscribe for Such<BR>
    Shares of Common Stock<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 14%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=68 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 14%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=68 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>April&#160;23, 2007</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=480 length=0 -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

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

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PART&#160;B<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE ZWEIG
    TOTAL RETURN FUND, INC.<BR>
    </FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">900 Third
    Avenue, New York, N.Y. 10022</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">STATEMENT
    OF ADDITIONAL INFORMATION</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This Statement of Additional Information (&#147;SAI&#148;) is
    not a Prospectus and should be read in conjunction with the
    Fund&#146;s Prospectus, dated April&#160;23, 2007 (the
    &#147;Prospectus&#148;). This SAI does not include all
    information that a shareholder should consider before purchasing
    shares of the Fund and investors should obtain and read the
    Prospectus prior to purchasing shares. A copy of the Prospectus
    may be obtained without charge by calling the Fund&#146;s
    Information Agent, Georgeson, Inc. Banks and Brokers should call
    <FONT style="white-space: nowrap">(212)&#160;440-9800</FONT>
    collect and all other shareholders should call
    <FONT style="white-space: nowrap">(866)&#160;541-3552.</FONT>
    You may also obtain a copy of the Prospectus on the Securities
    and Exchange Commission&#146;s website (http://www.sec.gov). The
    address of the Fund is 900 Third Avenue, New York, New York
    10022, and its telephone number is
    <FONT style="white-space: nowrap">(212)&#160;451-1100.</FONT>
    This SAI incorporates by reference the entire Prospectus.
    Defined terms used herein shall have the same meaning as
    provided in the Prospectus. The date of this SAI is
    April&#160;23, 2007.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

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

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#119'><FONT style="font-size: 10pt">INVESTMENT
    OBJECTIVE AND POLICIES</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">3
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#120'><FONT style="font-size: 10pt">INVESTMENT
    RESTRICTIONS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">9
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#121'><FONT style="font-size: 10pt">MANAGEMENT</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">11
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#122'><FONT style="font-size: 10pt">INVESTMENT ADVISER
    AND
    <FONT style="white-space: nowrap">SUB-ADVISER</FONT></FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">17
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#123'><FONT style="font-size: 10pt">PORTFOLIO
    MANAGERS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">18
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#124'><FONT style="font-size: 10pt">EXPENSES</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">20
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#125'><FONT style="font-size: 10pt">PORTFOLIO
    TRANSACTIONS AND BROKERAGE</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">20
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#126'><FONT style="font-size: 10pt">NET ASSET
    VALUE</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">21
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#127'><FONT style="font-size: 10pt">TAXATION</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">21
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#128'><FONT style="font-size: 10pt">INDEPENDENT
    ACCOUNTANTS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">24
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#129'><FONT style="font-size: 10pt">PRINCIPAL
    SHAREHOLDERS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">25
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#130'><FONT style="font-size: 10pt">FINANCIAL
    STATEMENTS</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">F-1
    </FONT>
</TD>
<TD>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    2
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='119'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    OBJECTIVE AND POLICIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s investment objective is to seek the highest
    total return, consisting of capital appreciation and current
    income, consistent with the preservation of capital. The Fund
    will invest up to 65% of its total assets in
    U.S.&#160;government securities, non-convertible debt securities
    of domestic issuers rated among the two highest rating
    categories of either Moody&#146;s Investors Services, Inc.
    (&#147;Moody&#146;s&#148;) or Standard&#160;&#38; Poor&#146;s
    Corporation (&#147;S&#38;P&#148;) (or, if unrated, of comparable
    quality as determined by the Investment Adviser), and certain
    foreign government securities (collectively, the &#147;Bond
    Investments&#148;), and up to 50% of its total assets in equity
    securities comprised of common, preferred and convertible
    preferred stock. The equity investments will be in primarily
    large-capitalization companies but may also be in investments in
    small- or medium-capitalization companies. The Fund may,
    however, under certain circumstances, invest up to 75% of its
    total assets in equity securities, as determined by the
    Fund&#146;s Investment Adviser. The Fund also, as part of its
    Bond Investments, may invest up to 10% of its total assets in
    non-convertible debt securities rated below the two highest
    categories of Moody&#146;s or S&#38;P (or, if unrated, of
    comparable quality as determined by the Investment Adviser).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser engages the Fund&#146;s
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    to perform asset allocation research and analysis and provide
    advice thereon to the Investment Adviser. The extent of the
    Fund&#146;s investment in debt and equity securities will be
    determined primarily on the basis of asset allocation techniques
    developed by Dr.&#160;Martin E. Zweig, President of the
    Fund&#146;s
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff. While the Investment Adviser seeks to reduce the
    risks associated with investing in debt and equity securities by
    using these techniques, such risks cannot be eliminated. There
    is no assurance that the Fund will achieve its investment
    objective. See &#147;Investment Objective and Policies&#148; in
    the Prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following describes certain investment strategies in which
    the Investment Adviser may engage, on behalf of the Fund, each
    of which may involve certain special risks.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Futures
    Contracts and Related Options</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may purchase or sell futures contracts for any purpose
    deemed appropriate. Upon entering into a futures contract, the
    Fund will initially be required to deposit with the custodian an
    amount of initial margin using cash or U.S.&#160;Treasury bills
    equal to approximately 2% to 5% of the contract amount. The
    nature of initial margin in futures transactions is different
    from that of margin in securities transactions in that the
    futures contract initial margin does not involve the borrowing
    of funds by customers to finance the transactions. Rather, the
    initial margin is in the nature of a performance bond or good
    faith deposit on the contract which is returned to the Fund upon
    termination of the futures contract, assuming all contractual
    obligations have been satisfied. In addition to initial margin,
    the Fund is required to specifically designate on its accounting
    records cash, liquid debt obligations, liquid equity securities
    or cash equivalents in an amount equal to the notional value of
    all long futures contracts, less the initial margin amount, to
    ensure that the use of such futures contracts is not leveraged.
    If the value of the securities specifically designated declines,
    additional securities, cash or cash equivalents must be
    specifically designated on the accounting records of the Fund so
    that the value of the account will at least equal the amount of
    the Fund&#146;s commitments with respect to such futures
    contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subsequent payments, called maintenance margin, to and from the
    broker, will be made on a daily basis as the price of the
    underlying security fluctuates, making the long and short
    positions in the futures contract more or less valuable, a
    process known as &#147;marking to the market.&#148; For example,
    when the Fund has purchased a futures contract and the price of
    the underlying security has risen, that position will have
    increased in value and the Fund will receive from the broker a
    maintenance margin payment equal to that increase in value.
    Conversely, when the Fund has purchased a futures contract and
    the price of the underlying security has declined, the position
    would be less valuable and the Fund would be required to make a
    maintenance margin payment to the broker. At any time prior to
    expiration of the futures contract, the Fund may elect to close
    the position by taking an opposite position which will operate
    to terminate the Fund&#146;s position in the futures contract. A
    final determination of maintenance margin is then made,
    additional cash is required to be paid by or released to the
    Fund, and the Fund realizes a loss or a gain.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    While futures contracts based on securities provide for the
    delivery and acceptance of securities, such deliveries and
    acceptances are very seldom made. Generally, the futures
    contract is terminated by entering into an offsetting
    transaction. An offsetting transaction for a futures contract
    sale is effected by the Fund entering into a
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    futures contract purchase for the same aggregate amount of the
    specific type of financial instrument with the same delivery
    date. If the price in the sale exceeds the price in the
    offsetting purchase, the Fund immediately is paid the difference
    and thus realizes a gain. If the offsetting purchase price
    exceeds the sales price, the Fund pays the difference and
    realizes a loss. Similarly, the closing out of a futures
    contract purchase is effected by the Fund entering into a
    futures contract sale. If the offsetting sale price exceeds the
    purchase price, the Fund realizes a gain, and if the purchase
    price exceeds the offsetting price, the Fund realizes a loss.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are several risks in trading futures contracts. Market
    prices of futures contracts may be affected by certain factors.
    First, all participants in the futures market are subject to
    initial margin and maintenance margin requirements. Rather than
    meeting maintenance margin requirements, investors may close
    futures contracts through offsetting transactions which could
    distort the normal relationship between the securities and
    futures markets. Second, from the point of view of speculators,
    the margin requirements in the futures market are less onerous
    than margin requirements in the securities market. Therefore,
    increased participation by speculators in the futures market may
    also cause temporary price distortions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, the hours of trading for futures contracts may not
    conform to the hours during which the underlying securities are
    traded. To the extent that the futures contracts markets close
    after the markets for the underlying securities, significant
    price movements can take place in the futures contracts markets
    that cannot be reflected in the markets of the underlying
    securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Positions in futures contracts may be closed out only on an
    exchange or board of trade which provides a secondary market for
    such futures. Although the Fund intends to purchase or sell
    futures only on exchanges or boards of trade where there appears
    to be an active secondary market, there is no assurance that a
    liquid secondary market on an exchange or board of trade will
    exist for any particular contract or at any particular time. In
    such event, it may not be possible to close a futures position
    and, in the event of adverse price movements, the Fund would
    continue to be required to make daily cash payments of
    maintenance margin.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are risks in trading futures contracts, even if such
    contracts are used for risk management purposes. One such risk
    arises due to the imperfect correlation between movements in the
    price of the futures contracts and movements in the price of the
    underlying securities. The price of the futures contract may
    move more than or less than the price of the securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the price of the futures contracts moves less than the price
    of the underlying securities, the transaction will not be fully
    effective, but, if the price of the securities has moved in an
    unfavorable direction, the Fund would be in a better position
    than if it had not entered into a futures transaction at all. If
    the price of the securities has moved in a favorable direction,
    this advantage will be partially offset by the movement in the
    price of the futures contract. If the price of the futures
    contract moves more than the price of the security, the Fund
    will experience either a loss or gain on the futures which will
    not be completely offset by movements in the prices of the
    underlying securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    To compensate for the imperfect correlation of such movements in
    price, the Fund may buy or sell futures contracts in a greater
    dollar amount than the dollar amount of the underlying
    securities if the historical volatility of the prices of such
    securities have been greater than the historical volatility of
    the futures contracts. Conversely, the Fund may buy or sell
    fewer futures contracts if the historical volatility of the
    prices of the underlying securities is less than the historical
    volatility of the futures contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is also possible that, where the Fund has sold futures to
    protect its portfolio against a decline in the market, the
    market may advance and the value of securities held in the
    Fund&#146;s portfolio may decline. If this occurred, the Fund
    would lose money on the futures contracts and also experience a
    decline in value in its portfolio securities. However, while
    this could occur for a very brief period or to a very small
    degree, over time the value of a diversified portfolio will tend
    to move in the same direction as the futures contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Where futures are purchased to protect against a possible
    increase in the cost of securities before the Fund is able to
    invest its cash (or cash equivalents) in an orderly fashion, it
    is possible that the market may decline instead; if the Fund
    then concludes not to invest in the relevant securities at that
    time because of concern as to possible further market decline or
    for other reasons, the Fund will realize a loss on the futures
    contract that is not offset by a reduction in the price of
    securities purchased.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END LOGICAL PAGE -->
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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="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Due to the possibility of price distortion in the futures market
    and because of the imperfect correlation between movements in
    securities and movements in the prices of futures contracts, a
    correct forecast of market trends by the Investment Adviser may
    still not result in a successful risk management transaction
    over a very short period of time.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Security
    and Stock Index Options</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund writes an option, an amount equal to the premium
    received by the Fund is recorded as an asset and as an
    offsetting liability. The amount of the liability is
    <FONT style="white-space: nowrap">&#147;marked-to-market&#148;</FONT>
    daily to reflect the current market value of the option, which
    is the last sale price on the principal exchange on which such
    option is traded or, in the absence of a sale, the mean between
    the latest bid and offering prices. If an option written by the
    Fund expires, or the Fund enters into a closing purchase
    transaction, the Fund will realize a gain (or, in the latter
    case, a loss, if the cost of a closing transaction exceeds the
    premium received) and the liability related to such option will
    be extinguished.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The premium paid by the Fund for the purchase of a put option
    (its cost) is recorded initially as an investment, the value of
    which is subsequently adjusted to the current market value of
    the option. If the current market value of a put option exceeds
    its premium, the excess represents unrealized appreciation;
    conversely, if the premium exceeds the current market value, the
    excess represents unrealized depreciation. The current market
    value of an option purchased by the Fund equals the
    option&#146;s last sale price on the principal exchange on which
    it is traded or, in the absence of a sale, the mean between the
    latest bid and offering prices.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may cover written call options with any assets,
    including equity securities and noninvestment grade debt so long
    as the assets are liquid, unencumbered and marked to market
    daily (&#147;liquid assets&#148;), specifically designated on
    the accounting records of the Fund in amounts sufficient to
    ensure that it is able to meet its obligations under the written
    call option should it be exercised. This method does not reduce
    the potential loss to the Fund should the value of the
    underlying security increase and the option be exercised.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A written put option may be covered with liquid assets
    specifically designated on the accounting records of the Fund.
    While this may help ensure that a Fund will have sufficient
    assets to meet its obligations under the option contract should
    it be exercised, it will not reduce the potential loss to the
    Fund should the value of the underlying security decrease and
    the option be exercised.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    An option position may be closed out only on an exchange which
    provides a secondary market for an option of the same series.
    Although the Fund generally will purchase or write only those
    options for which there appears to be an active secondary
    market, there is no assurance that a liquid secondary market on
    an exchange will exist for any particular option, or at any
    particular time, and for some options no secondary market on an
    exchange may exist. In such event, it might not be possible to
    effect closing transactions in particular options, with the
    result that the Fund would have to exercise its options in order
    to realize any profit and would incur transaction costs on the
    sale of underlying securities pursuant to the exercise of put
    options. If the Fund, as a covered call option writer, is unable
    to effect a closing purchase transaction in a secondary market,
    it will not be able to sell the underlying security until the
    option expires or it delivers the underlying security upon
    exercise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Reasons for the absence of a liquid secondary market on an
    exchange include the following: (a)&#160;there may be
    insufficient interest in trading certain options;
    (b)&#160;restrictions may be imposed by an exchange on opening
    transactions or closing transactions or both; (c)&#160;trading
    halts, suspensions or other restrictions may be imposed with
    respect to particular classes or series of options or underlying
    securities; (d)&#160;unusual or unforeseen circumstances may
    interrupt normal operations on an exchange; (e)&#160;the
    facilities of an exchange or the Options Clearing Corporation
    (the &#147;OCC&#148;) may not at all times be adequate to handle
    current trading volume; or (f)&#160;one or more exchanges might,
    for economic or other reasons, decide or be compelled at some
    future date to discontinue the trading of options (or a
    particular class or series of options), in which event the
    secondary market on that exchange (or in that class or series of
    options) would cease to exist, although outstanding options on
    that exchange that had been issued by the OCC as a result of
    trades on that exchange would continue to be exercisable in
    accordance with their terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, there is no assurance that
    <FONT style="white-space: nowrap">higher-than-anticipated</FONT>
    trading activity or other unforeseen events might not, at times,
    render certain of the facilities of the OCC inadequate, and
    thereby result in the institution by an exchange of special
    procedures which may interfere with the timely execution of
    customers&#146; orders.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The amount of the premiums which the Fund may pay or receive may
    be adversely affected as new or existing institutions, including
    other investment companies, engage in or increase their option
    purchasing and writing activities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event of a shortage of the underlying securities
    deliverable on exercise of a listed option, the OCC has the
    authority to permit other, generally comparable securities to be
    delivered in fulfillment of option exercise obligations. If the
    OCC exercises its discretionary authority to allow such other
    securities to be delivered, it may also adjust the exercise
    prices of the affected options by setting different prices at
    which otherwise ineligible securities may be delivered. As an
    alternative to permitting such substitute deliveries, the OCC
    may impose special exercise settlement procedures.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exchange
    Traded Funds</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may invest in passively managed registered open-end
    investment companies or other baskets of securities, such as
    unit investment trusts, which trade on a national securities
    exchange or NASDAQ and are commonly called exchange-traded funds
    (&#147;ETFs&#148;). These investments represent shares of
    ownership in ETFs that hold portfolios of securities which are
    designed to generally correspond to and closely track the price
    and yield performance of an index of securities. Accordingly,
    ETFs have risks similar to those of stocks and are subject to
    market volatility. Investment returns may fluctuate so that
    invested shares, when redeemed or sold, may be worth more or
    less than their original cost. ETFs may include, among others,
    the Nasdaq-100 Index Tracking Stock (QQQ), Standard&#160;&#38;
    Poor&#146;s Depositary Receipts (SPDRS), the DIAMONDS Trust, and
    other ETF&#146;s as determined from time to time by the
    Investment Adviser.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Foreign
    Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may invest up to up to 10% of its total assets in
    securities of foreign issuers and 10% of its total assets in
    obligations issued or guaranteed by one or more foreign
    governments or any of their political subdivisions, agencies or
    instrumentalities (&#147;Foreign Government Securities&#148;).
    Investments in foreign securities offer potential benefits not
    available through investment solely in securities of domestic
    issuers. Foreign securities offer the opportunity to invest in
    foreign issuers that appear to have growth potential, or in
    foreign countries with economic policies or business cycles
    different from those of the United States, or to reduce
    fluctuations in portfolio value by taking advantage of foreign
    markets that do not move in a manner parallel to United States
    markets. The Fund may also enter into foreign currency
    transactions in connection with its investment activity in
    foreign securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Investments in foreign securities present special additional
    risks and considerations not typically associated with
    investments in domestic securities. Foreign investments may be
    affected by changes in foreign currency rates and exchange
    control regulations. There may be less information available
    about a foreign company than a domestic company, and foreign
    companies may not be subject to accounting, auditing and
    reporting standards and requirements comparable to those
    applicable to domestic companies. Foreign securities may be less
    liquid and subject to greater price volatility than domestic
    securities. Foreign brokerage commissions and custodial fees are
    generally higher than those in the United States. The foreign
    markets also have different clearance and settlement procedures
    and in certain markets there have been times when settlements
    have been unable to keep pace with the volume of securities
    transactions, making it difficult to conduct such transactions.
    Delays or problems with settlements might affect the liquidity
    of the Fund&#146;s portfolio and might adversely affect the
    Fund&#146;s performance. Foreign investments may also be subject
    to local economic or political risks, political instability and
    possible nationalization of issuers or expropriation of their
    assets which might adversely affect the Fund&#146;s ability to
    realize or liquidate its investment in such securities.
    Furthermore, some foreign securities are subject to brokerage
    taxes levied by foreign governments, which have the effect of
    increasing the cost of such investment and reducing the realized
    gain or increasing the realized loss on such securities at the
    time of sale. Furthermore, legal remedies for defaults and
    disputes may have to be pursued in foreign courts whose
    procedures differ substantially from those of the
    U.S.&#160;courts. In the event of a default in payment on
    foreign securities, the Fund may incur increased costs to obtain
    <FONT style="white-space: nowrap">and/or</FONT> to
    enforce a judgment against the foreign issuer (or the other
    parties to the transaction) in the United States or abroad, and
    no assurance can be given that the Fund will be able to collect
    on any such judgment.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    6
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Income earned or received by the Fund from sources within
    foreign countries may be reduced by withholding and other taxes
    imposed by such countries. Tax conventions between certain
    countries and the United States, however, may reduce or
    eliminate such taxes. Any such taxes paid by the Fund will
    reduce its net income available for distribution to shareholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to the provisions of
    <FONT style="white-space: nowrap">Rule&#160;17f-5</FONT>
    under the Investment Company Act of 1940, as amended (the
    &#147;1940 Act&#148;), the Fund&#146;s Board of Directors has
    delegated to the Fund&#146;s Custodian, State Street Bank and
    Trust Company, as the Fund&#146;s Foreign Custody Manager the
    responsibilities for selecting and monitoring any foreign
    custodians that may be used in connection with the Fund&#146;s
    investments in foreign securities. Pursuant to and subject to
    the terms and conditions of the Custodian Contract between State
    Street Bank and Trust Company and the Fund, State Street Bank
    and Trust Company will, among other things, (i)&#160;determine
    that the assets held by foreign custodians are subject to
    reasonable care, based on the standards applicable to custodians
    in the relevant market in which such foreign custodian operates,
    (ii)&#160;determine that the foreign custodial arrangements are
    governed by a written contract that provides reasonable care for
    the Fund&#146;s assets based on such standards,
    (iii)&#160;establish a system to monitor the appropriateness of
    maintaining the Fund&#146;s assets with a particular foreign
    custodian and any material changes in such contract, and
    (iv)&#160;report to the Fund&#146;s Board of Directors with
    respect to the Fund&#146;s foreign custodial arrangements.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Closed-End
    Investment Companies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund invests in other closed-end investment companies,
    the investments made by such other investment companies will be
    effected by independent investment managers, and the Fund will
    have no control over the investment management, custodial
    arrangements or operations of any investments made by such
    investment managers. Some of the funds in which the Fund may
    invest could also incur more risks than would be the case for
    direct investments made by the Fund. For example, they may
    engage in investment practices that entail greater risks or
    invest in companies whose securities and other investments are
    more volatile. In addition, the funds in which the Fund invests
    may or may not have the same fundamental investment limitations
    as those of the Fund itself. While a potential benefit of
    investing in closed-end investment companies would be to realize
    value from a decrease in the discount from net asset value at
    which some closed-end funds trade, there is also the potential
    that such discount could grow, rather than decrease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    By investing in investment companies indirectly through the
    Fund, a shareholder of the Fund will bear not only a
    proportionate share of the expenses of the Fund (including
    operating costs and investment advisory and administrative fees)
    but also, indirectly, similar expenses of the investment
    companies in which the Fund invests. The Fund will not
    (i)&#160;own more than 3% of the voting securities of any one
    investment company; (ii)&#160;invest more than 5% of its assets
    in the securities of any one investment company; or
    (iii)&#160;invest more than 10% of its assets in securities
    issued by other investment companies.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Short
    Sales</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may from time to time make short sales of securities. A
    short sale is a transaction in which the Fund sells a security
    it does not own in anticipation of a decline in market price.
    The Fund may make short sales to offset a potential decline in a
    long position or a group of long positions, or if the Investment
    Adviser believes that a decline in the price of a particular
    security or group of securities is likely. The Fund may also
    make short sales in an attempt to maintain portfolio flexibility
    and facilitate the rapid implementation of investment strategies
    if the Investment Adviser believes that the price of a
    particular security or group of securities is likely to decline.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund determines to make a short sale of a security, it
    must borrow the security. The Fund&#146;s obligation to replace
    the security borrowed in connection with the short sale will be
    fully secured by the proceeds from the short sale retained by
    the broker and by cash or liquid securities deposited in a
    segregated account with the Fund&#146;s custodian. The Fund may
    have to pay a premium to borrow the security. The Fund must also
    pay any dividends or interest payable on the security until the
    Fund replaces the security.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the price of the security sold short increases between the
    time of the short sale and the time the Fund replaces the
    borrowed security, the Fund will incur a loss, and if the price
    declines during this period, the Fund will realize a capital
    gain. Any realized capital gain will be decreased, and any
    incurred loss increased, by the amount of
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    7
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    transaction costs and any premium, dividend or interest which
    the Fund may have to pay in connection with such short sale.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to the short sales described above, the Fund may
    make short sales &#147;against the box.&#148; A short sale
    &#147;against the box&#148; is a short sale where, at the time
    of the short sale, the Fund owns or has the immediate and
    unconditional right, at no added cost, to obtain the identical
    security. The Fund would enter into such a transaction to defer
    a gain or loss for Federal income tax purposes on the security
    owned by the Fund. Short sales against the box are not subject
    to the collateral requirements described above or the percentage
    limitations on short sales described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may make a short sale only if, at the time the short
    sale is made and after giving effect thereto, the market value
    of all securities sold short is 25% or less of the value of its
    net assets and the market value of securities sold short which
    are not listed on a national securities exchange does not exceed
    10% of the Fund&#146;s net assets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">When-Issued
    and Delayed-Delivery Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may purchase securities on a when-issued or forward
    commitment basis. These transactions are also known as
    delayed-delivery transactions. (The phrase &#147;delayed
    delivery&#148; is not intended to include purchases where a
    delay in delivery involves only a brief period required by the
    selling partly solely to locate appropriate certificates and
    prepare them for submission for clearance and settlement in the
    customary way.) Delayed-delivery transactions involve a
    commitment by the Fund to purchase or sell securities at a
    future date (ordinarily up to 90&#160;days later). The price of
    the underlying securities (usually expressed in terms of yield)
    and the date when the securities will be delayed and paid for
    (the settlement date) are fixed at the time the transaction is
    negotiated. When-issued purchases and forward commitments are
    negotiated directly with the selling party.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When-issued purchases and forward commitments enable the Fund to
    lock in what is believed to be an attractive price or yield on a
    particular security for a period of time, regardless of future
    changes in interest rates. For example, in periods of rising
    interest rates and falling bond prices, the Fund might sell debt
    securities it owns on a forward commitment basis to limit its
    exposure to falling prices. In periods of falling interest rates
    and rising prices, the Fund might sell securities it owns and
    purchase the same or similar securities on a when-issued or
    forward commitment basis, thereby obtaining the benefit of
    currently higher yields. The Fund will not enter into such
    transactions for the purpose of leverage.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The value of securities purchased on a when-issued or forward
    commitment basis and any subsequent fluctuations in their value
    will be reflected in the Fund&#146;s net asset value starting on
    the date of the agreement to purchase the securities, and the
    Fund will be subject to the rights and risks of ownership of the
    securities on that date. The Fund will not earn interest on
    securities it has committed to purchase until they are paid for
    and received.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund makes a forward commitment to sell securities it
    owns, the proceeds to be received upon settlement will be
    included in the Fund&#146;s assets. Fluctuations in the market
    value of the underlying securities will not be reflected in the
    Fund&#146;s net asset value as long as the commitment to sell
    remains in effect. Settlement of when-issued purchases and
    forward commitment transactions generally takes place up to
    90&#160;days after the date of the transactions, but the Fund
    may agree to a longer settlement period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund will make commitments to purchase securities on a
    when-issued basis or to purchase or sell securities on a forward
    commitment basis only with the intention of completing the
    transaction and actually purchasing or selling the securities.
    If deemed advisable as a matter of investment strategy, however,
    the Fund may dispose of or renegotiate a commitment after it is
    entered into. The Fund also may sell securities it has committed
    to purchase before those securities are delivered to the Fund on
    the settlement date. The Fund may realize a capital gain or loss
    in connection with these transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund purchases securities on a when-issued or
    forward-commitment basis, the Fund will specifically designate
    on its accounting records securities having a value (determined
    daily) at least equal to the amount of the Fund&#146;s purchase
    commitments. These procedures are designed to ensure that the
    Fund will maintain sufficient assets at all times to cover its
    obligations under when-issued purchase and forward commitments.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    8
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='120'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    RESTRICTIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund has adopted the following fundamental policies which
    cannot be changed without the approval of the holders of a
    majority of its outstanding voting securities (as defined under
    &#147;Investment Objective and Policies&#148; in the
    Prospectus). Except as otherwise noted, all percentage
    limitations set forth below apply immediately after a purchase
    or initial investment, and any subsequent change in any
    applicable percentage resulting from market fluctuations does
    not require elimination of any security or other investment from
    the portfolio. The Fund may not:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    1.&#160;With respect to 75% of its total assets, invest in
    securities of any one issuer if immediately after and as a
    result of such investment more than 5% of the total assets of
    the Fund, taken at market value, would be invested in the
    securities of such issuer. This investment restriction does not
    apply to investments in U.S.&#160;Government Securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    2.&#160;Purchase more than 10% of the outstanding voting
    securities, or any class of securities, of any one issuer. This
    investment restriction does not apply to investments in
    U.S.&#160;Government Securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    3.&#160;Purchase securities which would cause 25% or more of its
    total assets at the time of such purchase to be concentrated in
    the securities of issuers engaged in any one particular industry
    or group of related industries. This investment restriction does
    not apply to investments in U.S.&#160;Government Securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    4.&#160;Purchase or sell real estate; provided that the Fund may
    invest in securities secured by real estate or real estate
    interests or issued by companies which invest in real estate or
    real estate interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    5.&#160;Purchase any securities on margin. For purposes of this
    investment restriction, the following do not constitute margin
    purchases: (i)&#160;effecting short sales, to the extent
    permitted by 9 below, (ii)&#160;making margin deposits in
    connection with any futures contracts or any options the Fund
    may purchase, sell or write, or (iii)&#160;entering into any
    currency transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    6.&#160;Lend any funds or other assets, except that the Fund may
    purchase publicly distributed debt obligations (including
    repurchase agreements) consistent with its investment objective
    and policies, and the Fund may make loans of portfolio
    securities if such loans do not cause the aggregate amount of
    all outstanding securities loans to exceed
    33<FONT style="vertical-align: top; font-size: 70&#37;">1</FONT>/<FONT style="font-size: 70&#37;">3</FONT>%
    of the Fund&#146;s total assets, provided that the loan is
    collateralized by cash or cash equivalents or
    U.S.&#160;Government Securities in an amount equal, on a daily
    basis, to the market value of the securities loaned.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    7.&#160;Borrow money (through reverse repurchase agreements or
    otherwise), except (i)&#160;for temporary emergency purposes in
    amounts not in excess of 5% of the value of the Fund&#146;s
    total assets at the time the loan is made; or (ii)&#160;in an
    amount not greater than
    33<FONT style="vertical-align: top; font-size: 70&#37;">1</FONT>/<FONT style="font-size: 70&#37;">3</FONT>%
    of the Fund&#146;s total assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    8.&#160;Issue senior securities, as defined in the 1940 Act, or
    mortgage, pledge, hypothecate or in any manner transfer, as
    security for indebtedness, any securities owned or held by the
    Fund except as may be necessary in connection with borrowings
    mentioned in&#160;7, above. For the purposes of this investment
    restriction and&#160;7, above, collateral or escrow arrangements
    with respect to the making of short sales, writing of stock
    options, purchase of securities on a forward commitment or
    delayed-delivery basis, and purchase of foreign currency forward
    contracts and collateral arrangements with respect to margin for
    futures contracts and foreign currency forward contracts or
    related options are not deemed to be a pledge of assets and
    neither such arrangements nor the purchase or sale of futures
    contracts, foreign currency forward contracts or related options
    are deemed to be the issuance of a senior security.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    9.&#160;Make any short sales of securities, unless at the time
    the short sale is made and after giving effect thereto,
    (i)&#160;the market value of all securities sold short is 25% or
    less of the value of the Fund&#146;s total assets, (ii)&#160;the
    market value of such securities sold short which are not listed
    on a national securities exchange does not exceed 10% of the
    Fund&#146;s total assets, (iii)&#160;the market value of all
    securities of any one issuer sold short does not exceed 2% of
    the Fund&#146;s total assets, (iv)&#160;short sales are not made
    of more than 2% of the outstanding securities of one class of
    any issuer, and (v)&#160;the Fund maintains collateral deposits
    consisting of cash or U.S.&#160;Government Securities in a
    segregated account which, together with collateral deposited
    with the broker-dealer, are at all times equal to 100% of the
    current market value of the securities sold short. This
    investment
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    restriction does not apply to short sales &#147;against the
    box.&#148; For the purposes of this investment restriction,
    sales of securities on a when-issued or delayed-delivery basis
    are not considered to be short sales.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    10.&#160;Underwrite securities of other issuers except insofar
    as it might be deemed to be an underwriter for purposes of the
    Securities Act of 1933, as amended, in the resale of any
    securities held in its own portfolio.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    11.&#160;Invest more than 10% of the Fund&#146;s total assets in
    securities that at the time of purchase are subject to
    restrictions on disposition under the Securities Act of 1933, as
    amended.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12.&#160;Purchase or sell commodities or commodity or futures
    contracts or options on commodity or futures contracts except in
    compliance with such rules and interpretations of the Commodity
    Futures Trading Commission which exempt the Fund from regulation
    as a commodity pool operator.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='121'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">MANAGEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Directors
    and Officers</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The names and addresses of the Directors and Officers of the
    Fund are set forth below, together with their positions and
    their principal occupations during the past five years and, in
    the case of the Directors, their positions with certain other
    organizations and companies.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <U><FONT style="font-family: 'Times New Roman', Times">DISINTERESTED
    DIRECTORS</FONT></U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="25%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="47%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Portfolios in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Term of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fund<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Name, Address, Age<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Office and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Complex<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Principal Occupation(s)<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Length of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Overseen by<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>During Past 5 Years and<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Position(s) with Fund</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Time Served</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Director</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Other Directorships Held</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Charles H. Brunie <BR><BR>&#160;&#160;Brunie Associates <BR>&#160;&#160;320 Park Avenue, <BR>&#160;&#160;10th&#160;Floor <BR>&#160;&#160;New York, NY 10022<BR><BR>&#160;&#160;DOB: 7/17/30<BR><BR>&#160;&#160;Director</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Term: Until 2009.<BR><BR>Served since: 1988.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Director, The Zweig Fund, Inc.
    (since 1998); Chairman, Brunie Associates (investments) (since
    April 2001); Oppenheimer Capital (1969-2000), Chairman
    (1980-1990), Chairman Emeritus (1990-2000); Chairman Emeritus,
    Board of Trustees, Manhattan Institute (since 1990); Trustee,
    Milton and Rose D. Friedman Foundation for Vouchers (since
    1999); Trustee, Hudson Institute (since 2002); Trustee, American
    Spectator (since 2002); Chartered Financial Analyst (since 1969).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Wendy Luscombe <BR><BR>&#160;&#160;480 Churchtown Rd. <BR>&#160;&#160;Craryville, NY 12521 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">10/29/51</FONT><!-- WS --><BR><BR>&#160;&#160;Director</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Term: Until 2008. <BR><BR>Served since: 2002.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Director of The Zweig Fund, Inc.
    (since 2002); Co-lead Independent Director of the Zweig Total
    Return Fund, Inc. and of The Zweig Fund, Inc. (since 2006);
    Principal, WKL Associates, Inc. (Real Estate Investment
    Consultant) (since 1994); Fellow, Royal Institution of Chartered
    Surveyors; Member, Chartered Institute of Arbitrators; Director,
    Endeavour Real Estate Securities, Ltd. (2000-2006); Director,
    PXRE, Corp. (reinsurance) (since 1994); Member and Chairman of
    Management Oversight Committee, Deutsche Bank, International
    Real Estate Opportunity Fund&#160;1A and 1B (since 2003);
    Trustee, Acadia Realty Trust (since 2004).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Alden C. Olson <BR><BR>&#160;&#160;2711 Ramparte Path <BR>&#160;&#160;Holt, MI 48842 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">5/10/28</FONT><!-- WS --><BR><BR>&#160;&#160;Director</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Term: Until 2007. <BR><BR>Served since: 1996.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Director of The Zweig Fund, Inc.
    (since 1996); Currently retired; Chartered Financial Analyst
    (since 1964); Professor of Financial Management, Investments at
    Michigan State University (1959 to 1990).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">James B. Rogers,&#160;Jr. <BR><BR>&#160;&#160;352 Riverside Dr.<BR>&#160;&#160;New York, NY 10025 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">10/19/42</FONT><!-- WS --><BR><BR>&#160;&#160;Director</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Term: Until 2009. <BR><BR>Served since: 1988.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Director of The Zweig Fund, Inc.
    (since 1986); Private investor (since 1980); Chairman, Beeland
    Interests (Media and Investments) (since 1980); Regular
    Commentator on Fox News (since 2002); Author of &#145;Investment
    Biker: On the Road with Jim Rogers&#145; (1994),&#145;Adventure
    Capitalist&#145; (2003) and &#145;Hot Commodities&#145; (2004);
    Director, Emerging Markets Brewery Fund (1993-2002); Director,
    Levco Series Trust (1996-2006).
    </FONT>
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="25%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="47%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Portfolios in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Term of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fund<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Name, Address, Age<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Office and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Complex<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Principal Occupation(s)<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Length of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Overseen by<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>During Past 5 Years and<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Position(s) with Fund</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Time Served</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Director</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Other Directorships Held</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">R. Keith Walton <BR><BR>&#160;&#160;315 Park Avenue South <BR>&#160;&#160;New York, NY 10010 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">9/28/64</FONT><!-- WS --><BR><BR>&#160;&#160;Director</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Term: Until 2008.<BR><BR>Served since: 2004.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Director of The Zweig Fund, Inc.
    (since 2004); Co-lead Independent Director of the Zweig Total
    Return Fund, Inc. and of The Zweig Fund, Inc. (since 2006);
    Principal and Chief Administrative Officer, Global
    Infrastructure Partners (since 2007); Director, Blue Crest
    Capital Management Funds (since 2006); Executive Vice President
    and Secretary (1996-2007) of the University at Columbia
    University; Director (since 2002), Member, Executive Committee
    (since 2002), Chair, Audit Committee (since 2003), Apollo
    Theater Foundation, Inc.; Director, Orchestra of St. Luke&#146;s
    (since 2000); Vice President and Trustee, The Trinity Episcopal
    School Corporation (since 2003); Member (since 1997), Nominating
    and Governance Committee Board of Directors (since 2004),
    Council on Foreign Relations.
    </FONT>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <U><FONT style="font-family: 'Times New Roman', Times">INTERESTED
    DIRECTOR</FONT></U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="25%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="47%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Portfolios in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Term of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fund<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Name, Address, Age<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Office and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Complex<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Principal Occupation(s)<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Length of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Overseen by<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>During Past 5&#160;Years and<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Position(s) with Fund</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Time Served</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Director</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Other Directorships Held</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">George R. Aylward <BR><BR>&#160;&#160;56 Prospect Street <BR>&#160;&#160;Hartford, CT 06115 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">8/17/64</FONT><!-- WS --><BR><BR>&#160;&#160;Director, Chairman of<BR>&#160;&#160;the Board and <BR>&#160;&#160;President</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Term: Until 2007. <BR><BR>Served since: 2006.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Director, The Zweig Fund, Inc.
    (since 2006); Senior Vice President and Chief Operating Officer,
    Asset Management, The Phoenix Companies, Inc. (2004-present);
    President (since November 2006) and Chief Operating Officer
    (2004-present), Phoenix Investment Partners, Ltd.; President,
    certain funds within the Phoenix Funds Family (since November
    2006); Previously, Executive Vice President, Phoenix Investment
    Partners, Ltd. (2004-November 2006); Vice President, Phoenix
    Life Insurance Company (2002-2004); Vice President, The Phoenix
    Companies, Inc. (2001-2004); Vice President, Finance, Phoenix
    Investment Partners, Ltd. (2001-2002); Assistant Controller,
    Phoenix Investment Partners, Ltd. (1996-2001); Executive Vice
    President, certain funds within the Phoenix Funds Family
    (2004-November 2006).
    </FONT>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <U><FONT style="font-family: 'Times New Roman', Times">OFFICERS
    WHO ARE NOT DIRECTORS</FONT></U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="24%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="58%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Position(s) with<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>the Fund and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Principal Occupation(s)<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Length of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>During Past 5&#160;Years and<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Name, Address and Age</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Time Served</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Other Directorships Held</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Carlton Neel <BR><BR>&#160;&#160;900 Third Avenue <BR>&#160;&#160;New York, NY 10022 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">12/19/67</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">&#160;&#160;Executive Vice President since: 2003. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Executive Vice President of The
    Zweig Fund, Inc. (since 2003); Senior Vice President and
    Portfolio Manager, Phoenix/Zweig Advisers LLC (since 2003);
    Senior Vice President, Euclid Advisers LLC (since 2004);
    Managing Director and Co-Founder, Shelter Rock Capital Partners,
    LP (2002-2003); Senior Vice President and Portfolio Manager,
    Phoenix/Zweig Advisers LLC (1995-2002); Vice President, JP
    Morgan&#160;&#38; Co. (1990-1995).
    </FONT>
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    12
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="24%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="58%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Position(s) with<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>the Fund and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Principal Occupation(s)<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Length of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>During Past 5&#160;Years and<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Name, Address and Age</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Time Served</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Other Directorships Held</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">David Dickerson <BR><BR>&#160;&#160;900 Third Avenue <BR>&#160;&#160;New York, NY 10022 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">12/27/67</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Senior Vice President since: 2003. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Senior Vice President of The Zweig
    Fund, Inc. (since 2003); Senior Vice President and Portfolio
    Manager, Phoenix/Zweig Advisers LLC (since 2003); Senior Vice
    President, Euclid Advisers LLC (since 2004); Managing Director
    and Co-Founder, Shelter Rock Capital Partners, LP (2002-2003);
    Vice President and Portfolio Manager, Phoenix/Zweig Advisers LLC
    (1993-2002).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Marc Baltuch <BR><BR>&#160;&#160;900 Third Avenue <BR>&#160;&#160;New York, NY 10022 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">9/23/45</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Vice President and Chief Compliance Officer since: 2004. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Vice President and Chief Compliance
    Officer of The Zweig Fund, Inc. (since 2004); Chief Compliance
    Officer of Phoenix/Zweig Advisers LLC (since 2004); President
    and Director of Watermark Securities, Inc.(since 1991);
    Secretary of Phoenix-Zweig Trust (1989-2003); Secretary of
    Phoenix-Euclid Market Neutral Fund (1998-2002); Assistant
    Secretary of Gotham Advisors, Inc. (1990-2005); Chief Compliance
    Officer of the Zweig Companies (since 1989) and of the Phoenix
    Funds Complex (since 2004).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Kevin J. Carr <BR><BR>&#160;&#160;One American Row <BR>&#160;&#160;Hartford, CT 06102 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">8/30/54</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Secretary and Chief Legal Officer since: 2005. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Secretary and Chief Legal Officer
    of The Zweig Fund, Inc. (since 2005); Vice President and
    Counsel, Phoenix Life Insurance Company (since 2005); Vice
    President, Counsel, Chief Legal Officer and Secretary, certain
    Funds within Phoenix Fund Complex (since 2005); Compliance
    Officer of Investments and Counsel, Travelers Life and Annuity
    Company (January 2005-May 2005); Assistant General Counsel, The
    Hartford Financial Services Group (1999-2005).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Moshe Luchins <BR><BR>&#160;&#160;900 Third Avenue <BR>&#160;&#160;New York, NY 10022 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">12/22/71</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Vice President since: 2004. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Vice President of The Zweig Fund,
    Inc. (since 2004); Associate Counsel (1996-2005), Associate
    General Counsel (since 2006) of the Zweig Companies.
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Nancy Curtiss <BR><BR>&#160;&#160;56 Prospect Street <BR>&#160;&#160;Hartford, CT 06115 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">11/24/52</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Treasurer since: 2003. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Treasurer of The Zweig Fund, Inc.
    (since 2003); Vice President, Operations (since 2003); Vice
    President, Fund Accounting (1994-2003) and Treasurer
    (1996-2003), Phoenix Equity Planning Corporation. Treasurer,
    multiple funds in the Phoenix Fund Complex (since 1994).
    </FONT>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Jacqueline Porter <BR><BR>&#160;&#160;56 Prospect Street <BR>&#160;&#160;Hartford, CT 06115 <BR><BR>&#160;&#160;DOB: <FONT style="white-space: nowrap">2/19/58</FONT><!-- WS --></FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<FONT style="font-size: 9pt">Vice President and Assistant Treasurer since: 2006. <BR><BR>Expires: Immediately following the 2007 Annual Meeting of Shareholders.</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <FONT style="font-size: 9pt">Vice President and Assistant
    Treasurer of The Zweig Fund, Inc. (since 2006); Assistant Vice
    President, Fund Administration, Phoenix Equity Planning
    Corporation (since 1995); Vice President and Assistant
    Treasurer, multiple funds in the Phoenix Fund Complex (since
    1995).
    </FONT>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    Director considered to be an &#147;interested person,&#148; as
    that term is defined in the 1940 Act. George R. Aylward is
    considered an interested person because, among other things, he
    is an officer of the Fund.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    13
</DIV><!-- END LOGICAL PAGE -->
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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="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s Board of Directors has appointed a standing
    Audit Committee and Nominating Committee. The Fund&#146;s Board
    of Directors has adopted a written charter for the Fund&#146;s
    Audit Committee. The purposes of the Audit Committee are set
    forth in the Audit Committee Charter. The Audit Committee
    assists the Board of Directors in its oversight of the
    Fund&#146;s financial reporting process. The Audit Committee of
    the Board of Directors will normally meet two times during each
    full fiscal year with representatives of the independent
    auditors to discuss and review various matters as contemplated
    by the Audit Committee Charter. The members of the Audit
    Committee, Messrs.&#160;Brunie, Olson, Rogers and Walton and
    Ms.&#160;Luscombe, are &#147;independent&#148; within the
    meaning of the 1940 Act and the NYSE corporate governance
    standards for audit committees. The Fund&#146;s Audit Committee
    held four meetings during the year ended December&#160;31, 2006.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Messrs.&#160;Brunie, Olson and Rogers, each of whom is not an
    interested person of the Fund, are members of the Nominating
    Committee of the Board of Directors. The Nominating Committee
    considers candidates for election to fill vacancies on the Board
    of Directors, and will consider recommendations from
    shareholders for possible nominees. Shareholders are required to
    submit a biography of the recommended candidate to the Secretary
    of the Fund. All shareholder recommended nominee submissions
    must be received by the Fund by the deadline for submission of
    any shareholder proposals which would be included in the
    Fund&#146;s proxy statement for the next annual meeting of the
    Fund. This deadline can be found in the proxy statement for the
    Fund&#146;s most recent annual meeting. When nominating a
    director candidate, shareholders must include in their notice to
    the Fund&#146;s Secretary the required information, as specified
    in Article&#160;II&#160;&#151; Section&#160;3 of the By-Laws.
    Such information includes (i)&#160;as to each person whom the
    shareholder proposes to nominate for election as a director
    (A)&#160;the name, age, business address and residence address
    of such person, (B)&#160;the principal occupation or employment
    of such person, (C)&#160;the class and number of shares of the
    capital stock of the Fund that are beneficially owned by such
    person and (D)&#160;any other information relating to such
    person that is required to be disclosed in solicitations of
    proxies for the election of directors pursuant to
    Regulation&#160;14A under the Securities Exchange Act of 1934 or
    any successor regulation thereto (including without limitation
    such person&#146;s written consent to being named in the proxy
    statement as a nominee and to serving as a director if elected
    and whether any person intends to seek reimbursement from the
    Fund of the expenses of any solicitation of proxies should such
    person be elected a director of the Fund); and (ii)&#160;as to
    the shareholder giving the notice (A)&#160;the name and address,
    as they appear on the Fund&#146;s books, of such shareholder,
    (B)&#160;the class and number of shares of the capital stock of
    the Fund which are beneficially
    <FONT style="white-space: nowrap">and/or</FONT> owned
    or record by such shareholder, (C)&#160;the nature of any such
    beneficial ownership of such stock, the beneficial ownership of
    any such stock held of record by such shareholder but
    beneficially owned by one or more other persons, and the length
    of time for which all such stock has been beneficially owned
    <FONT style="white-space: nowrap">and/or</FONT> owned
    of record by such shareholder, (D)&#160;a representation that
    the shareholder is a holder of record of shares of the Fund
    entitled to vote at such meeting and intends to appear in person
    or by proxy at the meeting to present such nomination(s) and
    (E)&#160;whether the shareholder intends or is part of a group
    which intends to solicit proxies from other shareholders in
    support of such nomination(s).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s Nominating Committee held one meeting during the
    year ended December&#160;31, 2006. The Fund does not have a
    standing compensation committee. All of the Directors, other
    than Mr.&#160;Brunie, attended at least 75% of the total number
    of Board meetings, and his or her respective committee meetings,
    held during the year ended December&#160;31, 2006.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors, including a majority of the
    disinterested Directors, has the responsibility under the 1940
    Act to approve the continuance of the Investment Advisory
    Agreement and the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement. Both the Investment Advisory Agreement and the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement were approved to be continued until March&#160;1, 2007
    at a meeting of the Directors held on February&#160;15, 2006. A
    discussion regarding the basis for the approval of this
    continuance is contained in the Fund&#146;s June&#160;30, 2006
    Semi-Annual Report to Shareholders. At a meeting of the
    Directors held on February&#160;20, 2007, the Board of
    Directors, including a majority of the disinterested Directors,
    approved the continuance of the Investment Advisory Agreement
    and the
    <FONT style="white-space: nowrap">Sub-Advisory</FONT>
    Agreement until March&#160;1, 2008. A discussion regarding the
    basis for the approval of this continuance will be contained in
    the Fund&#146;s June&#160;30, 2007 Semi-Annual Report to
    Shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Direct
    Ownership of Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The dollar range of the Fund&#146;s securities owned by each
    Director in the Fund and the aggregate dollar range of
    securities owned in the Zweig Fund&#160;Complex (as defined
    below under &#147;Executive Compensation&#148;) is set forth
    below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="48%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="14%">&nbsp;</TD>	<!-- colindex=03 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="14%">&nbsp;</TD>	<!-- colindex=03 type=quadright -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Dollar Range of Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Aggregate Dollar Range of Equity<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Director</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Securities in the Fund(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Securities in the Zweig Fund Complex</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Charles H. Brunie
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">Over $100,000
    </FONT>
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">Over $100,000
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Wendy Luscombe
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Alden C. Olson
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">James B. Rogers,&#160;Jr.&#160;
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$1-$10,000
    </FONT>
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">R. Keith Walton
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$1-$10,000
    </FONT>
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">George R. Aylward
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$1-$10,000
    </FONT>
</TD>
<TD>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">$10,001-$50,000
    </FONT>
</TD>
<TD>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    The information as to beneficial ownership is based on
    statements furnished to the Fund by its Directors and reflects
    ownership as of December&#160;31, 2006, except for George R.
    Aylward whose ownership is as of March&#160;14, 2007. Except as
    otherwise indicated, each person has sole voting and investment
    power with respect to the shares owned by him or her. Fractional
    shares are rounded off to the nearest whole share. The Directors
    and officers of the Fund, as a group, beneficially own less than
    1% of the outstanding shares of the Fund.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Executive
    Compensation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The aggregate compensation paid to each of the Directors for the
    year ended December&#160;31, 2006 by the Fund and The Zweig
    Fund, Inc. (ZF), constituting all of the funds to which the
    Investment Adviser provides investment advisory services
    (collectively, the &#147;Zweig Fund&#160;Complex&#148;), and the
    total number of registered investment companies (and separate
    investment portfolios within those companies) in the Zweig
    Fund&#160;Complex with respect to which any of the Directors
    serves as a director or trustee are set forth below. The Fund
    does not pay any fees to, or reimburse expenses of, its Director
    who is considered an &#147;interested person&#148; of the Fund.
    Neither the Fund nor any other fund in the Zweig
    Fund&#160;Complex provides compensation in the form of pension
    or retirement benefits to any of its directors or trustees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="51%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="8%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="13%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Aggregate Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total Compensation from the Zweig<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Director</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>from the Fund</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fund Complex, Including the Fund</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Charles H. Brunie
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    19,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    38,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Wendy Luscombe
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    32,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    65,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Alden C. Olson
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    26,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    53,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">James B. Rogers,&#160;Jr.&#160;
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    25,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">R. Keith Walton
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    31,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    62,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">George R. Aylward
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitation
    of Directors&#146; and Officers&#146; Liability</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s Articles of Incorporation limit the personal
    liability of its Officers and Directors to the Fund and its
    shareholders for money damages to the maximum extent permitted
    by the Maryland General Corporation Law. Accordingly, a
    shareholder will be able to recover money damages against a
    Director or an Officer of the Fund only if he or she is able to
    prove that (a)&#160;the action, or failure to act, by the
    Director or Officer was the result of active and deliberate
    dishonesty which was material to the cause of action adjudicated
    in the proceeding, (b)&#160;the Director or Officer actually
    received an improper benefit or profit in money, property or
    services (in which case recovery is limited to the actual amount
    of such improper benefit or profit), or (c)&#160;the Director or
    Officer acted with willful misfeasance, bad faith, gross
    negligence, or reckless disregard of the duties involved in the
    conduct of his or her office. The limitation also does not apply
    to claims against Directors or Officers arising out of their
    responsibilities under the Federal securities laws. The
    Fund&#146;s Articles of Incorporation do not limit the right of
    the Fund or any shareholder to sue for an injunction or any
    other nonmonetary relief in the event of a breach of a
    Director&#146;s or Officer&#146;s duty of care or other breach
    of duty or responsibility.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    16
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Code of
    Ethics</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund, the Investment Adviser and the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    have each adopted Codes of Ethics pursuant to
    <FONT style="white-space: nowrap">Rule&#160;17j-1</FONT>
    under the 1940 Act. These codes of ethics set forth the terms
    and conditions upon which personnel subject to the codes may
    invest in securities, including securities that may be purchased
    or held by the Fund. These codes contains policies and
    procedures that, among other things, prohibit personnel from
    trading on the basis of material nonpublic information, place
    limitations on personal trading by personnel, impose
    preclearance on certain types of trading, and impose reporting
    obligations on such personnel, including requiring initial and
    annual reports of securities holdings. Copies of the Codes of
    Ethics can be reviewed and copied at the Commission&#146;s
    Public Reference Room in Washington,&#160;D.C. Information on
    the operation of the Public Reference Room may be obtained by
    calling the Commission at 1-202-942-8090. Copies of these Codes
    of Ethics are also available on the EDGAR Database on the
    Commission&#146;s Internet site at http://www.sec.gov, and
    copies of these codes may be obtained, after paying a
    duplicating fee, by electronic request at the following
    <FONT style="white-space: nowrap">E-mail</FONT>
    address: publicinfo@sec.gov, or by writing the Commission&#146;s
    Public Reference Section, Washington,&#160;D.C.
    <FONT style="white-space: nowrap">20549-0102.</FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Proxy
    Voting</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser votes proxies relating to the Fund&#146;s
    portfolio securities in accordance with procedures that have
    been approved by the Fund&#146;s Board of Directors. It is the
    intention of the Fund to exercise stock ownership rights in
    portfolio securities in a manner that is reasonably anticipated
    to further the best economic interests of shareholders of the
    Fund. Accordingly, the Investment Adviser endeavors to analyze
    and vote all proxies that are considered likely to have
    financial implications, and, where appropriate, to participate
    in corporate governance, shareholder proposals, management
    communications and legal proceedings.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If in the voting of proxies, a conflict of interest arises
    between the interests of Fund shareholders, on one hand, and
    those of the Investment Adviser or any affiliated person of the
    Fund, on the other hand, the Investment Adviser may take one or
    more of the following actions, among others, or otherwise give
    weight to the following factors, in addressing material
    conflicts of interest in voting the proxies: (i)&#160;rely on
    the recommendations of an established, independent third party
    with qualifications to vote proxies such as Institutional
    Shareholder Services; or (ii)&#160;abstaining. The Investment
    Adviser will promptly notify the President of the Fund once any
    actual or potential conflict of interest exists. The Investment
    Adviser will not waive any conflict of interest or vote any
    conflicted proxies without the prior written approval of either
    the Board of Directors or the President of the Fund, in which
    case the President will report on the conflict at the next
    following meeting of the Board of Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Shareholders may obtain information regarding how the Fund voted
    proxies during the most recent
    <FONT style="white-space: nowrap">12-month</FONT>
    period ended June&#160;30, 2006, free of charge by calling
    toll-free
    <FONT style="white-space: nowrap">1-800-243-1574</FONT>
    or from the EDGAR Database on the Commission&#146;s Internet
    site at http://www.sec.gov.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<A name='122'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INVESTMENT
    ADVISER AND
    <FONT style="white-space: nowrap">SUB-ADVISER</FONT></FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Investment Adviser, Phoenix/Zweig Advisers LLC, is a
    Delaware limited liability company, with offices at 900 Third
    Avenue, New York, New York 10022. The Investment Adviser became
    the Fund&#146;s investment adviser on January&#160;1, 2000,
    following the acquisition of Zweig Total Return Advisors, Inc.,
    the Fund&#146;s former investment adviser, Zweig/Glaser
    Advisers, the Fund&#146;s former administrator, and Zweig
    Securities Corp. by Phoenix Investment Partners, Ltd. on
    March&#160;1, 1999 (the &#147;Acquisition&#148;). The Investment
    Adviser is a wholly-owned subsidiary of Phoenix Investment
    Partners, Ltd., a wholly-owned investment management subsidiary
    of The Phoenix Companies, Inc., a NYSE-listed company.
    Phoenix/Zweig Advisers LLC and Phoenix Investment Partners, Ltd.
    are Delaware entities and independent advisory firms registered
    with the Commission under the Investment Advisers Act of 1940,
    as amended. As of December&#160;31, 2006, Phoenix Investment
    Partners, Ltd. had approximately $58&#160;billion of assets
    under management.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to an investment advisory agreement dated March&#160;1,
    1999 (the &#147;Investment Advisory Agreement&#148;), the
    Investment Adviser is responsible for the actual management of
    the Fund&#146;s portfolio. The responsibility for making
    decisions to buy, sell or hold a particular investment rests
    with the Investment Adviser, subject to the supervision of the
    Board of Directors and the applicable provisions of the 1940
    Act. The Investment Adviser is also obligated to provide the
    Fund with such executive, administrative, data processing,
    clerical, accounting and
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    bookkeeping services and statistical and research data as are
    deemed advisable by the Board of Directors, except to the extent
    these services are provided by an administrator hired by the
    Fund. The Investment Adviser may consider analyses from various
    other sources, including broker-dealers with which the Fund does
    business and affiliates of the Investment Adviser. Under a
    services agreement (the
    <FONT style="white-space: nowrap">&#147;Sub-Advisory</FONT>
    Agreement&#148;) with the Investment Adviser, the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    Zweig Consulting LLC, performs asset allocation research and
    analysis and provides advice thereon to the Investment Adviser.
    The extent of the Fund&#146;s investment in debt and equity
    securities will be determined primarily on the basis of asset
    allocation techniques developed by Dr.&#160;Martin E. Zweig,
    President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    and his staff.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For the services provided by the Investment Adviser under the
    Investment Advisory Agreement, the Fund will pay the Investment
    Adviser a monthly fee computed at the annual rate of 0.70% of
    the Fund&#146;s average daily net assets during the previous
    month. For the fiscal years ended December&#160;31, 2006, 2005
    and 2004, the Fund accrued investment advisory fees of
    $3,336,985, $3,511,302 and $3,652,785, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    PXP Securities Corp. or any other brokerage affiliate (the
    &#147;Brokerage Affiliate&#148;) may act as a broker for the
    Fund. In order for the Brokerage Affiliate to effect any
    portfolio transactions for the Fund, the commissions, fees or
    other remuneration received by the Brokerage Affiliate must be
    reasonable and fair compared to the commissions, fees or other
    remuneration paid to other brokers in connection with comparable
    transactions involving similar securities being purchased or
    sold on an exchange during a comparable period of time. The Fund
    will not deal with a Brokerage Affiliate in any portfolio
    transaction in which the Brokerage Affiliate would act as
    principal.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Dr.&#160;Martin
    E. Zweig</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Dr.&#160;Martin E. Zweig, the President of the
    <FONT style="white-space: nowrap">Sub-Adviser,</FONT>
    has been in the business of providing investment advisory
    services for over 35&#160;years. Dr.&#160;Zweig and his
    associates determine asset allocation strategies to assist the
    Investment Adviser in its management of the Fund.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<A name='123'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PORTFOLIO
    MANAGERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Portfolio
    Managers</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s portfolio managers (each referred to as a
    &#147;portfolio manager&#148;) are listed below. Each portfolio
    manager manages other investment companies
    <FONT style="white-space: nowrap">and/or</FONT>
    investment vehicles and accounts in addition to the Fund. The
    following tables show, as of December&#160;31, 2006, the number
    of accounts each portfolio manager managed in each of the listed
    categories and the total assets in the accounts managed within
    each category.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="45%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="16%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="14%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Registered<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Other Pooled<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Portfolio Manager</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Investment Companies</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Investment Vehicles</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Other Accounts</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Carlton Neel
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">David Dickerson
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The dollar range of the Fund&#146;s securities owned by each
    portfolio manager and the aggregate dollar range of securities
    owned in the Zweig Fund&#160;Complex (as defined above under
    &#147;Executive Compensation&#148;) is set forth below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="47%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="18%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="26%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Dollar Range of Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate Dollar Range of Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities in the<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities in the Zweig Fund<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Portfolio Manager</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fund(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Complex</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">Carlton Neel
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,001&#160;&#151;&#160;$100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Over $
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">David Dickerson
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,001&#160;&#151;&#160;$50,000&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Over $
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    The information as to beneficial ownership is based on
    statements furnished to the Fund by its portfolio managers and
    reflects ownership as of December&#160;31, 2006. Except as
    otherwise indicated, each person has sole voting and investment
    power with respect to the shares listed as owned by him or her.
    Fractional shares are rounded off to the nearest whole share.
    The portfolio managers of the Fund, as a group, beneficially own
    less than 1% of the outstanding shares of the Fund.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is possible that conflicts of interest may arise in
    connection with the portfolio managers&#146; management of the
    Fund&#146;s investments on the one hand and the investments of
    other accounts or vehicles for which the portfolio managers are
    responsible on the other. For example, a portfolio manager may
    have conflicts of interest in allocating management time,
    resources and investment opportunities among the Fund and the
    other accounts or vehicles he advises. In addition, due to
    differences in the investment strategies or restrictions among
    the Fund and the other accounts, a portfolio manager may take
    action with respect to another account that differs from the
    action taken with respect to the Fund. In some cases, another
    account managed by a portfolio manager may provide more revenue
    to the Investment Adviser. While this may appear to create
    additional conflicts of interest for the portfolio manager in
    the allocation of management time, resources and investment
    opportunities, the Investment Adviser strives to ensure that
    portfolio managers endeavor to exercise their discretion in a
    manner that is equitable to all interested persons. In this
    regard, in the absence of specific account-related impediments
    (such as client-imposed restrictions or lack of available cash),
    it is the policy of the Investment Adviser to allocate
    investment ideas pro rata to all accounts with the same primary
    investment objective.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Portfolio
    Manager Compensation Structure and Method</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Phoenix Investment Partners, Ltd. and its affiliated investment
    management firms (collectively, &#147;PXP&#148;), believe that
    PXP&#146;s compensation program is adequate and competitive to
    attract and retain high-caliber investment professionals.
    Investment professionals at PXP receive a competitive base
    salary, an incentive bonus opportunity and a benefits package.
    Managing Directors and portfolio investment professionals who
    supervise and manage others also participate in a management
    incentive program reflecting their personal contribution and
    team performance. Highly compensated individuals can also take
    advantage of a long-term Incentive Compensation program to defer
    their compensation and potentially reduce their taxes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The bonus package for portfolio managers is based upon how well
    the individual manager meets or exceeds assigned goals and a
    subjective assessment of contribution to the team effort. Their
    incentive bonus also reflects a performance component for
    achieving
    <FONT style="white-space: nowrap">and/or</FONT>
    exceeding performance competitive with peers managing similar
    strategies. Such component is further adjusted to reward
    investment personnel for managing within the stated framework
    and for not taking unnecessary risks. This ensures that
    investment personnel will remain focused on managing and
    acquiring securities that correspond to a fund&#146;s mandate
    and risk profile. It also avoids the temptation for portfolio
    managers to take on more risk and unnecessary exposure to chase
    performance for personal gain. Finally, portfolio managers and
    investment professionals may also receive The Phoenix Companies,
    Inc. stock options
    <FONT style="white-space: nowrap">and/or</FONT> may
    be granted The Phoenix Companies, Inc. restricted stock at the
    direction of the parent&#146;s Board of Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following is a more detailed description of the compensation
    structure of the Fund&#146;s portfolio managers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Base Salary.</I>&#160;&#160;Each portfolio manager is paid a
    fixed base salary, which is determined by PXP and is designed to
    be competitive in light of the individual&#146;s experience and
    responsibilities. PXP&#146;s management uses compensation survey
    results of investment industry compensation conducted by an
    independent third party in evaluating competitive market
    compensation for its investment management professionals.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Incentive Bonus.</I>&#160;&#160;The current Performance
    Incentive Plan for the Fund&#146;s portfolio managers is made up
    of two components:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (1)&#160;Seventy percent of the target incentive is based on
    achieving investment area investment goals and individual
    performance. The Investment Incentive pool will be established
    based on a percentage (as determined by Phoenix Board of
    Directors Compensation Committee) of the Investment
    Adviser&#146;s adjusted operating income. Performance of the
    Investment Adviser&#146;s closed-end and open-end funds is
    measured over one, three and five-year periods against specified
    benchmarks
    <FONT style="white-space: nowrap">and/or</FONT> peer
    groups. The Lipper Large Cap Core peer group is used as the
    benchmark for the equity portion of the Fund, and the Lipper
    General U.S.&#160;Government Funds peer group is used for the
    fixed income portion of the Fund. These benchmarks are subject
    to change dependent upon evaluation of the appropriate groupings.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (2)&#160;Thirty percent of the target incentive is based on the
    profitability of PXP (subject to a ROE performance threshold of
    the Phoenix Companies, Inc., the ultimate parent of the Adviser).
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A portion of the total incentive bonus can be paid in restricted
    stock units of the Phoenix Companies, Inc., which vest over
    three years. Portfolio managers may also receive Phoenix stock
    options
    <FONT style="white-space: nowrap">and/or</FONT> be
    granted Phoenix restricted stock at the direction of the Phoenix
    Board of Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Other Benefits.</I>&#160;&#160;Portfolio managers are also
    eligible to participate in broad-based plans offered generally
    to PXP employees, including broad-based retirement, 401(k),
    health and other employee benefit plans.
</DIV>
<A name='124'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPENSES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For the fiscal years ended December&#160;31, 2006, 2005 and
    2004, the Fund&#146;s net expenses amounted to $4,828,295,
    $5,537,854 and $6,826,505, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Expenses of the Offer will be charged to capital. The
    Fund&#146;s annual expense ratio (including dividends on short
    sales) was 1.01%, 1.10% and 1.31% of the Fund&#146;s average net
    assets for the fiscal years ended December&#160;31, 2006, 2005
    and 2004, respectively.
</DIV>
<A name='125'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PORTFOLIO
    TRANSACTIONS AND BROKERAGE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the purchase and sale of portfolio securities for the Fund,
    the Investment Adviser will seek the best combination of price
    (inclusive of brokerage commissions) and execution, and,
    consistent with that policy, may give consideration to the
    research, statistical and other services furnished by brokers or
    dealers to the Investment Adviser for its use. The Investment
    Adviser is also authorized to place orders with brokers who
    provide supplemental investment, market research and security
    and economic analysis, although the use of such brokers may
    result in a higher brokerage charge to the Fund than the use of
    brokers selected solely on the basis of seeking the best
    combination of price (inclusive of brokerage commissions) and
    execution for the same order. Brokerage may be allocated
    entirely on the basis of net results to the Fund, including the
    difficulty of the order and the reputation of the broker-dealer.
    Research and analysis received by the Investment Adviser may
    benefit the Investment Adviser, the
    <FONT style="white-space: nowrap">Sub-Adviser</FONT>
    and their respective affiliates in connection with their
    services to other clients, as well as the Fund. Subject to the
    foregoing, the Fund may effect a portion of its securities
    transactions through affiliated broker-dealers of the Investment
    Adviser, including PXP Securities Corp. In accordance with the
    provisions of
    <FONT style="white-space: nowrap">Rule&#160;17e-1</FONT>
    under the 1940 Act, the Fund&#146;s Board of Directors has
    adopted certain procedures which are designed to provide that
    brokerage commissions paid to PXP Securities Corp. and any other
    affiliated broker-dealers, are reasonable and fair as compared
    to the brokerage commissions received by other brokers in
    connection with comparable transactions involving similar
    securities being purchased or sold on securities exchanges
    during a comparable period of time. The Fund, however, has no
    obligation to deal with PXP Securities Corp. or any other
    broker-dealer in effecting portfolio transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund paid brokerage commissions of $232,000 to brokers for
    the year ended December&#160;31, 2006, of which $0 was paid to
    PXP Securities Corp., representing 0% of the aggregate brokerage
    commissions paid by the Fund and 0% of the aggregate amount of
    transactions involving the payment of commissions for such year.
    The Fund paid brokerage commissions of $255,000 to brokers for
    the year ended December&#160;31, 2005, of which $0 was paid to
    PXP Securities Corp., representing 0% of the aggregate brokerage
    commissions paid by the Fund and 0% of the aggregate amount of
    transactions involving the payment of commissions for such year.
    The Fund paid brokerage commissions of $543,000 to brokers for
    the year ended December&#160;31, 2004, of which $0 was paid to
    PXP Securities Corp., representing 0% of the aggregate brokerage
    commissions paid by the Fund and 0% of the aggregate amount of
    transactions involving the payment of commissions for such year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A portion of the securities in which the Fund will invest may be
    traded in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    markets, and the Fund intends to deal directly with the dealers
    who make markets in the securities involved, except in those
    circumstances where better prices and execution are available
    elsewhere. Fixed income securities purchased or sold on behalf
    of the Fund normally will be traded in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market on a net basis (i.e. without a commission) through
    dealers acting for their own account and not as brokers or
    otherwise through transactions directly with the issuer of the
    instrument. Some fixed income securities may be purchased and
    sold on an exchange or in
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    transactions conducted on an agency basis involving a
    commission. Futures transactions
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    generally will be effected through those futures commission
    merchants the Fund believes will obtain the most favorable
    results for the Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When the Fund and one or more accounts managed by the Investment
    Adviser or its affiliates propose to purchase or sell the same
    security, the available opportunities will be allocated in a
    manner the Investment Adviser believes to be equitable. In some
    cases, this procedure may affect adversely the price paid or
    received by the Fund or the size of the position purchased or
    sold by the Fund. In other cases, coordination with transactions
    for other accounts and the ability to participate in volume or
    block transactions could benefit the Fund.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Portfolio
    Turnover</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s portfolio turnover rates for the fiscal years
    ended December&#160;31, 2006, December&#160;31, 2005 and
    December&#160;31, 2004 were 21.7%, 74.6% and 75.8%,
    respectively. Portfolio turnover rate is calculated by dividing
    the lesser of the Fund&#146;s annual sales or purchases of
    portfolio securities by the monthly average value of securities
    in the portfolio during the year, excluding portfolio securities
    the maturities of which at the time of acquisition were one year
    or less. Portfolio turnover will not be a limiting factor in
    making investment decisions, and the Fund&#146;s investment
    policies may result in portfolio turnover substantially greater
    than that of other investment companies. A high rate of
    portfolio turnover (over 100%) involves greater brokerage
    commission expense, which must be borne by the Fund and its
    shareholders. A high rate of portfolio turnover may also result
    in the realization of capital gains, and to the extent that
    portfolio turnover results in the realization of net short-term
    capital gains, such gains, when distributed, would be taxed to
    shareholders at ordinary income tax rates.
</DIV>
<A name='126'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">NET ASSET
    VALUE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The net asset value of the Fund&#146;s shares will be determined
    by the Administrator as of the close of regular trading on the
    NYSE, on each day the NYSE is open for trading, by dividing the
    Fund&#146;s total assets, less the Fund&#146;s total
    liabilities, by the total number of Shares outstanding. Net
    asset value will be published weekly in a financial newspaper of
    general circulation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Portfolio securities (including stock options) which are traded
    only on stock exchanges will be valued at the last sale price.
    Securities traded in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market which are National Market Systems securities will be
    valued at the last sale price. Other
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    securities will be valued on the basis of the mean between the
    current bid and asked prices obtained from market makers in such
    securities. Debt securities that mature in 60&#160;days or less
    will be valued at amortized cost, unless the Board of Directors
    determines that such valuation does not constitute fair value.
    Debt securities that have an original maturity of less than
    61&#160;days will be valued at their cost, plus or minus
    amortized discount or premium, unless the Board of Directors
    determines that such valuation does not constitute fair value.
    Futures and options thereon which are traded on commodities
    exchanges will be valued at their closing settlement price on
    such exchange. Securities and assets for which market quotations
    are not readily available, and other assets, if any, will be
    valued at fair value as determined in good faith and pursuant to
    procedures established by the Board of Directors of the Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The outstanding shares of Common Stock are, and the Shares will
    be, listed on the New York Stock Exchange, Inc. The Fund&#146;s
    Shares of Common Stock have traded in the market above, at and
    below net asset value since the commencement of the Fund&#146;s
    operations in September 1988. The Fund&#146;s Officers cannot
    predict whether the Fund&#146;s Common Stock will trade in the
    future at a premium or a discount to net asset value, and if so,
    the level of such premium or discount.
</DIV>
<A name='127'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TAXATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following is a summary of the principal U.S.&#160;Federal
    income, and certain state and local, tax considerations
    regarding the purchase, ownership and disposition of shares of
    the Fund. The summary does not address special tax rules
    applicable to certain classes of investors, such as tax-exempt
    entities, insurance companies and financial institutions. Each
    prospective shareholder is urged to consult his or her own tax
    adviser with respect to the specific Federal, state, local and
    foreign tax consequences of investing in the Fund. The summary
    is based on the laws in effect on the date of this SAI, which
    are subject to change.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund has elected to be treated, has qualified and intends to
    continue to qualify for each taxable year, as a regulated
    investment company under Subchapter M of the Internal Revenue
    Code of 1986, as amended (the &#147;Code&#148;). To so qualify,
    the Fund must comply with certain requirements of the Code
    relating to, among other things, the source of its income and
    the diversification of its assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the Fund complies with such requirements, then in any taxable
    year for which the Fund distributes, in accordance with the
    Code&#146;s timing requirements, ordinary income dividends of at
    least 90% of its investment company taxable income, the Fund
    (but not its shareholders) will be relieved of Federal income
    tax on any income of the Fund, including capital gains, that is
    distributed to shareholders in accordance with the Code&#146;s
    requirements. However, if the Fund retains any investment
    company taxable income or net capital gain, it will be subject
    to a tax at regular corporate rates on the amount retained. If
    the Fund retains any net capital gain, the Fund may designate
    the retained amount as undistributed capital gains in a notice
    to its shareholders who, if subject to U.S.&#160;Federal income
    tax on capital gains, (i)&#160;will be required to include in
    income for Federal income tax purposes, as capital gain, their
    shares of such undistributed amount, and (ii)&#160;will be
    entitled to credit their proportionate shares of the tax paid by
    the Fund against their U.S.&#160;Federal income tax liabilities,
    if any, and to claim refunds to the extent the credit exceeds
    such liabilities. For U.S.&#160;Federal income tax purposes, the
    tax basis of shares owned by a shareholder of the Fund will be
    increased by an amount equal under current law to 65% of the
    amount of undistributed net capital gain included in the
    shareholder&#146;s gross income.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to avoid a 4% Federal excise tax, the Fund must
    distribute (or be deemed to have distributed) by
    December&#160;31 of each calendar year at least 98% of its
    taxable ordinary income for such year, at least 98% of the
    excess of its capital gains over its capital losses, and all
    taxable ordinary income and the excess of capital gains over
    capital losses for the previous year that were not distributed
    for such year and on which the Fund did not pay Federal income
    tax. The Fund intends to distribute at least annually to its
    shareholders all or substantially all of its investment company
    taxable income and its net capital gain, but reserves the right
    to retain and designate as described in the above paragraph, its
    net capital gain.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund&#146;s investments, if any, in securities issued at a
    discount or providing for deferred interest payments or payments
    of interest in kind will generally cause the Fund to realize
    income prior to the receipt of cash payments with respect to
    these securities. Mark to market rules applicable to certain
    options and futures contracts may also require that net gains be
    recognized without a concurrent receipt of cash. In order to
    obtain cash to distribute its income or gains, maintain its
    qualification as a regulated investment company and avoid
    Federal income or excise taxes, the Fund may be required to
    liquidate portfolio securities that it might otherwise have
    continued to hold.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxable
    U.S.&#160;Shareholders&#160;&#151; Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For U.S.&#160;Federal income tax purposes, distributions by the
    Fund, whether reinvested in additional shares or paid in cash,
    generally will be taxable to shareholders who are subject to tax.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Distributions from the Fund&#146;s investment company taxable
    income will be taxable as ordinary income, and generally cannot
    be offset by capital losses. For non-corporate shareholders,
    certain of the Fund&#146;s ordinary income distributions
    received (or deemed received) in taxable years through and
    including 2010 may qualify for the 15% Federal income tax rate
    applicable to &#147;qualified dividend income.&#148; For
    corporate shareholders, certain of the Fund&#146;s ordinary
    income distributions may qualify for the dividends received
    deduction. (However, the entire dividend, including the deducted
    amount, is includable in determining a corporate
    shareholder&#146;s alternative minimum taxable income.) So long
    as the Fund qualifies as a regulated investment company and
    satisfies the 90% distribution requirement, capital gain
    dividends if properly designated as such in a written notice to
    shareholders mailed not later than 60&#160;days after the
    Fund&#146;s taxable year closes, will be taxed to shareholders
    as capital gain which, as to non-corporate shareholders, will be
    taxable at a maximum marginal Federal income tax rate of 15%,
    regardless of how long the shareholder has held his or her Fund
    shares. Distributions, if any, that are in excess of the
    Fund&#146;s current and accumulated earnings and profits, as
    computed for Federal income tax purposes, will first reduce a
    shareholder&#146;s tax basis in his or her shares and, after
    such basis is reduced to zero, will constitute capital gains to
    a shareholder who holds his or her shares as capital assets.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All distributions, whether received in shares or in cash, as
    well as sales and exchanges of Fund shares, must be reported by
    each shareholder who is required to file a U.S.&#160;Federal
    income tax return. For Federal income tax purposes, dividends
    declared by the Fund in October, November or December and paid
    during January of the following year are treated as if they were
    paid by the Fund and received by such shareholders on
    December&#160;31 of the year declared. In addition, certain
    other distributions made after the close of a taxable year may
    be &#147;spilled back&#148; and treated as paid by the Fund
    (other than for purposes of avoiding the 4% excise tax) during
    such year. Such dividends would be taxable to the shareholders
    in the taxable year in which the distribution was actually made
    by the Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund will send written notices to shareholders regarding the
    amount and Federal income tax status of all distributions made
    during each calendar year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With respect to distributions paid in cash or, for shareholders
    participating in the Distribution Reinvestment and Cash Purchase
    Plan (the &#147;Plan&#148;), reinvested in shares purchased in
    the open market, the amount of the distribution for tax purposes
    is the amount of cash distributed or allocated to the
    shareholder. With respect to distributions issued in shares of
    the Fund, the amount of the distribution for tax purposes is the
    fair market value of the issued shares on the payment date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Distributions by the Fund result in a reduction in the net asset
    value of the Fund&#146;s shares and may also reduce their market
    value. Should a distribution reduce the net asset value or
    market value below a shareholder&#146;s cost basis, such
    distribution (to the extent paid from the Fund&#146;s current or
    accumulated earnings and profits) would nevertheless be taxable
    to the shareholder as ordinary income or capital gain as
    described above even though, from an investment standpoint, it
    may constitute a partial return of capital. In particular,
    investors should be careful to consider the tax implications of
    buying shares just prior to a distribution. Since the market
    price of shares purchased at that time may include the amount of
    any forthcoming distribution, investors purchasing shares just
    prior to a distribution will in effect receive a return of a
    portion of their investment in the form of a distribution which
    nevertheless will be taxable to them.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Taxable
    U.S.&#160;Shareholders&#160;&#151; Sale of Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    When a shareholder&#146;s shares are sold, exchanged or
    otherwise disposed of, the shareholder will generally recognize
    gain or loss equal to the difference between the
    shareholder&#146;s adjusted tax basis in the shares and the
    cash, or fair market value of any property, received. Assuming
    the shareholder holds the shares as a capital asset at the time
    of such sale or other disposition, such gain or loss should be
    capital gain or loss which will be long-term if the shares were
    held for more than one year, and short-term if the shares are
    held for one year or less. However, any loss realized on the
    sale, exchange or other disposition of Fund shares with a tax
    holding period of six months or less will be treated as a
    long-term capital loss to the extent of any capital gain
    dividend received by the selling shareholder with respect to
    such shares. Additionally, any loss realized on a sale or other
    disposition of shares of the Fund may be disallowed under
    &#147;wash sale&#148; rules to the extent the shares disposed of
    are replaced with other shares of the Fund within a period of
    61&#160;days beginning 30&#160;days before and ending
    30&#160;days after the shares are disposed of, such as pursuant
    to a distribution reinvestment in shares of the Fund under the
    Plan. If disallowed, the loss will be reflected in an adjustment
    to the basis of the shares acquired.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Backup
    Withholding</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund will be required to report to the Internal Revenue
    Service all distributions, as well as gross proceeds from the
    sale or exchange of Fund shares with respect to which the Fund
    is a payor (such as pursuant to a tender offer), except in the
    case of certain exempt recipients, <U>i.e.</U>, corporations and
    certain other investors to which distributions are exempt from
    the information reporting provisions of the Code. Under the
    backup withholding provisions of Code Section&#160;3406 and
    applicable Treasury regulations, all such reportable
    distributions and proceeds may be subject to backup withholding
    of Federal income tax at the rate of 28% in the case of
    nonexempt shareholders who fail to furnish the Fund with their
    correct taxpayer identification number and with certain required
    certifications or if the Internal Revenue Service or a broker
    notifies the Fund that the number furnished by the shareholder
    is incorrect or that the shareholder is subject to backup
    withholding as a result of failing to report interest or
    dividend income. The Fund may refuse to accept any subscription
    that does not contain any required
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    23
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    taxpayer identification number or certification that the number
    provided is correct. If the backup withholding provisions are
    applicable, any such distributions and proceeds, whether taken
    in cash or reinvested in shares, will be reduced by the amounts
    required to be withheld. Any amounts withheld would be credited
    against a shareholder&#146;s U.S.&#160;Federal income tax
    liability. Investors should consult their tax advisers about the
    applicability of the backup withholding provisions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times"><FONT style="white-space: nowrap">Non-U.S.&#160;Shareholders</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Dividends paid to a shareholder who is not a U.S.&#160;person
    (i.e., a nonresident alien individual, or a foreign corporation,
    foreign partnership, foreign trust or foreign estate) ordinarily
    are subject to U.S.&#160;withholding tax at the rate of 30% (or
    a lower rate provided by an applicable tax treaty) unless the
    dividends are effectively connected with a U.S.&#160;trade or
    business of the shareholder, in which case the dividends are
    subject to tax on a net income basis at the graduated rates
    applicable to U.S.&#160;individuals or domestic corporations
    and, in the case of a shareholder that is a foreign corporation,
    may be subject to U.S.&#160;&#147;branch profit tax.&#148;
    However, &#147;short-term capital gain dividends&#148; and
    &#147;interest-related dividends&#148; paid by the Fund with
    respect to the Fund&#146;s 2006 and 2007 taxable years generally
    will be exempt from 30% withholding. &#147;Short-term capital
    gain dividends&#148; generally are limited to the excess (if
    any) of the Fund&#146;s net short-term capital gains over its
    net long-term capital losses, and &#147;interest-related
    dividends&#148; generally are limited to the Fund&#146;s income
    (less expenses) from interest paid by U.S.&#160;issuers and
    interest paid on deposits with U.S.&#160;banks. Capital gain
    distributions, including amounts retained by the Fund which are
    designated as undistributed capital gains, to a
    <FONT style="white-space: nowrap">non-U.S.&#160;shareholder</FONT>
    will not be subject to U.S.&#160;income or withholding tax
    unless the distributions are effectively connected with the
    shareholder&#146;s trade or business in the U.S.&#160;or, in the
    case of a shareholder who is a nonresident alien individual, if
    the shareholder is present in the U.S.&#160;for 183&#160;days or
    more during the taxable year and certain other conditions are
    met.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Any gain realized by a shareholder who is not a U.S.&#160;person
    upon a sale or other disposition of shares of the Fund will not
    be subject to U.S.&#160;Federal income or withholding tax unless
    the gain is effectively connected with the shareholder&#146;s
    trade or business in the U.S., or in the case of a shareholder
    who is a nonresident alien individual, if the shareholder is
    present in the U.S.&#160;for 183&#160;days or more during the
    taxable year and certain other conditions are met.
    <FONT style="white-space: nowrap">Non-U.S.&#160;persons</FONT>
    who fail to furnish the Fund with an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    or acceptable substitute
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    may be subject to backup withholding at the rate of 28% on
    capital gain dividends and the proceeds of certain sales of
    their shares with respect to which the Fund is a payor (such as
    pursuant to a tender offer). Investors who are not
    U.S.&#160;persons should consult their tax advisers about the
    U.S. and
    <FONT style="white-space: nowrap">non-U.S.&#160;tax</FONT>
    consequences of ownership of shares of, and receipt of
    distributions from, the Fund.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">State and
    Local Taxes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Fund may be subject to state or local taxes in jurisdictions
    in which the Fund may be deemed to be doing business. In
    addition, in those states or localities which have income tax
    laws, the treatment of the Fund and its shareholders under such
    laws may differ from their treatment under Federal income tax
    laws, and an investment in the Fund may have tax consequences
    for shareholders different from those of a direct investment in
    the Fund&#146;s portfolio securities. Shareholders should
    consult their own tax advisers concerning these matters.
</DIV>
<A name='128'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INDEPENDENT
    ACCOUNTANTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    PricewaterhouseCoopers LLP, 125 High Street, Boston,
    Massachusetts 02110, serves as the independent accountants for
    the Fund. In addition to reporting annually on the financial
    statements of the Fund, the Fund&#146;s accountants also review
    certain filings of the Fund with the Commission.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    24
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='129'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PRINCIPAL
    SHAREHOLDERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There are no persons known to the Fund to be control persons of
    the Fund, as such term is defined in Section&#160;2(a)(9) of the
    1940 Act. Except for the following, there is no person known to
    the Fund to hold beneficially 5% or more of the outstanding
    shares of the Fund. As of April&#160;23, 2007, there were
    93,530,024 outstanding shares of the Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="61%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="20%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Address of Record Owner</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount of Record Ownership</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent of Class</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    <FONT style="font-size: 10pt">Cede&#160;&#38; Co.
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    84,413,925*
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90.3
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">55 Water Street
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">New York, New York 10004
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
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    *&#160;As of March&#160;14, 2007.
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    <BR>
    25
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<A name='130'>
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    <B><FONT style="font-family: 'Times New Roman', Times">FINANCIAL
    STATEMENTS</FONT></B>
</DIV>
</A>
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    The audited financial statements and the notes thereto, together
    with the report of PricewaterhouseCoopers LLP thereon, are
    incorporated herein by reference to the Fund&#146;s Annual
    Report to Shareholders for the fiscal year ended
    December&#160;31, 2006. The Fund will furnish, without charge, a
    copy of the foregoing documents upon written request to the
    Fund&#146;s Administrator, Phoenix Equity Planning Corporation,
    One American Row, Hartford, CT 06102, Attention: Shareholders
    Services.
</DIV>

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    <BR>
    F-1
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